Friday, February 23, 2024

Cloudflare stock jumps 21% on earnings beat as the company wins larger deals

Matthew Prince, co-founder and CEO of Cloudflare Inc., during the Fortune Brainstorm AI conference in San Francisco, California, United States, Monday, December 11, 2023. The conference brings together leaders in machine learning and artificial intelligence to evaluate the industry and examine new business cases for AI. Photographer: David Paul Morris/Bloomberg via Getty Images

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Cloud Flare Shares rose 21% in extended trading Thursday after the web security and content distribution provider reported quarterly results and guidance that came in stronger than analysts had expected.

Here’s how the company performed, compared to estimates from analysts surveyed by LSEG, formerly known as Refinitiv:

  • Earnings per share: 15 cents, adjusted, versus 12 cents expected
  • Income: $362.5 million, versus $353.1 million expected

Cloudflare’s revenue increased approximately 32%, consistent with third-quarter growth, according to a release. The company’s net loss of $27.9 million, or 8 cents per share, narrowed from $45.9 million in the year-earlier quarter.

Matthew Prince, co-founder and CEO of Cloudflare, said in the release that Cloudflare signed its largest new customer contract and largest renewal to date during the quarter, which translates to annual contract value the highest in the company’s history. In a conference call with analysts, Prince mentioned the affairs of the U.S. Commerce Department.

Cloudflare strives to provide software developers with graphics processing units that they can use for artificial intelligence. The company had installed GPUs in 120 cities by the end of 2023, above its internal goal of 100, Prince said.

“By the end of 2024, we expect to be able to deploy GPUs in almost every city that makes up Cloudflare’s global network and in milliseconds on almost every internet-connected device in the world,” Prince said. The network was present in more than 310 cities as of December 31.

The company also wants to expand by selling security services to businesses and government agencies. Cyberattacks have become more frequent since Hamas carried out a terrorist attack in Israel in October, Prince said.

Also Thursday, Cloudflare said that board member and former CEO Mark Anderson Alteryx, joined Cloudflare as president, replacing Marc Boroditsky. Private equity firms Clearlake Capital Group and Insight Partners announced in December that they would acquire Alteryx for $4.4 billion. Prince said he and co-founder and chief operating officer Michelle Zatlyn aren’t going anywhere.

As for guidance, Cloudflare reported adjusted net income per share of 13 cents on revenue of $372.5 million to $373.5 million in the first quarter. Analysts polled by LSEG expected adjusted earnings of 12 cents per share and revenue of $372.3 million.

For all of 2024, Cloudflare’s earnings outlook was above consensus, but missed the middle of the revenue range slightly. The company expects adjusted earnings per share of 58 cents to 59 cents and revenue of $1.648 billion to $1.652 billion. Analysts polled by LSEG expected adjusted earnings per share of 56 cents and revenue of $1.652 billion.

Excluding after-hours movement, Cloudflare stock is up about 8% year to date, while the S&P 500 has gained about 5% during the same period.

WATCH: AI is a trend that will be with us for some time, says Matthew Prince, CEO of CloudFlare.

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