Cyber security firm Cloudflare (NET) will release its Q122 earnings this week on May 5.
Cloudflare is a cloud platform that provides a variety of network services to businesses all over the world, including content delivery. It also provides security services and protects websites from malicious attacks.
Year-to-date, the corporation has lost approximately 29% of its value. Macroeconomic market factors, such as the Russia/Ukraine conflict, mounting supply-chain disruptions, rising inflation, and interest rate hikes, have recently impacted the stock price.
However, due to increasing demand for cybersecurity products, the company has seen substantial top-line growth in recent quarters.
In terms of earnings, Cloudflare reported strong results in the fourth quarter. Revenues of $193.6 million were up 54% year-over-year and above the consensus estimate of $184.85 million. Meanwhile, adjusted earnings of $0.00 per share were in line with consensus projections and better than the prior year’s adjusted loss of 2 cents per share.
Let’s take a look at the company’s prospects for the upcoming quarter.
Website Traffic Remains Encouraging
We have used TipRanks’ Website Traffic Tool to look at the company’s website user statistics, which allows us to see online visit counts by quarter, month, or location.
We discovered through the tool that overall projected visits to the Cloudflare website increased in Q2. In particular, the total projected global visits to cloudfare.com increased by 0.13% sequentially from the fourth quarter.
Furthermore, according to TipRanks’ new algorithm, website visits to cloudfare.com spiked 102.84% year-over-year compared to Q1 2021.
Will the Earnings Momentum Continue in Q1?
According to analysts, Cloudflare is projected to report adjusted earnings of less than $0.01 per share in the first quarter.
Meanwhile, experts forecast Cloudflare to report revenues of $205.65 million for the first quarter.
Wall Street’s Take
Truist analyst Josh Fishbein maintained a Buy rating but decreased the price target to $180 from $200 per share.
The analyst believes that the ongoing trend of cloud migration in the global enterprise will benefit infrastructure and security software companies. As a result, Cloudflare and other software companies should continue to outperform this year and raise their expectations.
On TipRanks, Cloudflare stock commands a Moderate Buy consensus rating based on nine Buys and seven Holds. The average NET price target of $153.44 implies upside potential of approximately 71% to current levels.
Bottom Line
While Cloudflare’s short-term prospects remain cloudy due to macro headwinds, current technology trends like enterprise digital transformation and 5G adoption, as well as the constant launch of new products, should sustain its growth.
Furthermore, Cloudflare’s products should continue to be in high demand as a result of increased cyberattacks.
It will be fascinating to see if the company can continue to improve its top-line numbers this quarter.
Learn more about the Website Traffic tool in this video by Youtube sensation Tom Nash.
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