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Cloudflare Soars 21% on Upbeat Q2 Results, Raised Guidance

Story Highlights

Cloudflare delivered a robust Q2 quarter, and the full-year outlook remains buoyant. Top Investors also seem very positive about the stock at the moment. 


Cybersecurity company Cloudflare, Inc. (NYSE: NET) reported better-than-expected results for the second quarter ended June 30, 2022. Both revenue and earnings topped the consensus estimates. Furthermore, the company raised its revenue outlook for the year.

Following the results, the shares of the company appreciated by an impressive 21% in the extended trading hours.

Q2 Earnings Snapshot

Cloudflare reported quarterly revenues of $234.5 million, up 53.9% from the previous year’s quarter. Moreover, the figure topped the consensus estimate of $227.3 million. The growth in revenues was driven by the record addition of 212 large customers during the quarter, taking the total to 1,749.

The company reported break-even earnings for the quarter, compared to a loss of $0.02 per share reported in the previous year. Also, the figure came in better than the consensus estimate of a loss of $0.01 per share.

Meanwhile, Cloudflare’s operating loss for the quarter came in at $0.9 million, narrower than the previous year’s figure of $4 million.

Notably, Cloudflare’s cash flow activities also improved. The company’s net cash flow from operating activities was $38.3 million, which denotes a massive jump of 411% from the previous year.

Upbeat Revenue Guidance

Cloudflare provided revenue guidance for the third quarter as well as 2022.

For the third quarter, the company expects to witness revenues in the range of $250 million to $251 million, which is above the consensus estimate of $246.9 million.

For the full year of 2022, Cloudflare anticipates revenues to come in the range of $968 million to $972.0 million. This range is above its earlier revenue expectations of $955 million to $959 million. The consensus estimate is pegged at $958.4 million.

Management’s Commentary

Cloudflare management remains bullish about the demand for its products even amid a tough economic environment. CEO of Cloudflare, Matthew Prince said, “I’m confident Cloudflare will continue to grow stronger even through the tough economic times that may be ahead.”

Top investors seem to share the company’s optimism and are bulking up on the company’s stock.

TipRanks’ Stock Investors tool shows that top investors currently have a Very Positive stance on NET. Further, 10.2% of the top portfolios tracked by TipRanks, increased their exposure to NET stock over the past 30 days.

Overall, the Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on seven Buys and eight Holds. The NET average price target of $89.07 implies the stock has an upside potential of 52.4% from current levels. Shares have declined 51.9% over the past year.

Key Takeaways

Cloudflare has reported strong numbers for the second quarter. With revenues rising and the company’s bottom line improving, the company remains in a favorable position for growth. Meanwhile, the company raised its revenue outlook for the year, which reflects its solid prospects.

Yet, macroeconomic headwinds continue to remain a concern.  

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