Cloudflare (NYSE:NET) Shares Gap Up on Earnings Beat

Cloudflare, Inc. (NYSE:NET) gapped up prior to trading on Friday following a stronger than expected earnings report. The stock had previously closed at $244.51, but opened at $286.97. Cloudflare shares last traded at $275.1820, with a volume of 2,291,429 shares trading hands.

The company reported $0.38 EPS for the quarter, topping analysts’ consensus estimates of $0.34 by $0.04. The company had revenue of $782.51 million during the quarter, compared to analysts’ expectations of $737.16 million. Cloudflare had a negative net margin of 8.21% and a negative return on equity of 3.88%. Cloudflare’s revenue for the quarter was up 39.2% on a year-over-year basis. During the same period last year, the business earned $0.27 EPS.

Trending Headlines about Cloudflare

Here are the key news stories impacting Cloudflare this week:

• Positive Sentiment: Cloudflare reported Q3 revenue of $782.5 million, up 39.2% year over year and above analyst expectations. Adjusted EPS of $0.38 also beat consensus. Cloudflare Q3 results and guidance
• Positive Sentiment: The company raised its full-year revenue projection to about $2.96 billion from prior guidance of $2.86–$2.87 billion. Its next-quarter revenue outlook was also stronger than analysts expected. Cloudflare raises full-year outlook
• Positive Sentiment: Enterprise adoption continued to expand: customers spending more than $100,000 annually grew 25% year over year. Management also cited record sales productivity and the company’s first “Act 4” revenue. Three takeaways for long-term investors
• Neutral Sentiment: Needham kept a Buy rating but lowered its price target to $365 from $380; Cantor Fitzgerald cut its target to $310 from $340 and maintained Neutral. The target reductions temper, but do not erase, the positive earnings signal. Needham price target
• Negative Sentiment: Despite rapid sales growth, gross margin fell, free cash flow grew more slowly than revenue, and the GAAP operating loss widened—potential concerns about profitability and the quality of growth. Cloudflare sales, margins and earnings reaction

Analysts Set New Price Targets

Several equities research analysts have recently commented on the stock. Guggenheim lifted their price objective on shares of Cloudflare from $160.00 to $190.00 and gave the stock a “buy” rating in a research note on Friday. Piper Sandler reissued an “overweight” rating and issued a $337.00 target price (up from $333.00) on shares of Cloudflare in a research report on Friday. Citizens Jmp reissued a “market outperform” rating and issued a $394.00 target price on shares of Cloudflare in a research report on Monday, August 31st. Wedbush started coverage on Cloudflare in a research note on Tuesday. They issued an “outperform” rating for the company. Finally, Zacks Research raised Cloudflare from a “strong sell” rating to a “hold” rating in a research report on Tuesday. Twenty-five research analysts have rated the stock with a Buy rating, eight have issued a Hold rating and four have issued a Sell rating to the stock. According to MarketBeat.com, the stock currently has a consensus rating of “Moderate Buy” and an average target price of $333.75.

Insider Activity

In other Cloudflare news, CFO Thomas J. Seifert sold 12,500 shares of the stock in a transaction that occurred on Monday, October 19th. The stock was sold at an average price of $299.59, for a total transaction of $3,744,875.00. Following the completion of the transaction, the chief financial officer owned 104,958 shares of the company’s stock, valued at $31,444,367.22. This represents a 10.64% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Michelle Zatlyn sold 33,003 shares of the firm’s stock in a transaction on Tuesday, September 8th. The shares were sold at an average price of $277.43, for a total value of $9,156,022.29. Following the completion of the transaction, the insider owned 69,775 shares in the company, valued at $19,357,678.25. The trade was a 32.11% decrease in their position. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold 259,057 shares of company stock worth $79,516,905 in the last quarter. Corporate insiders own 10.66% of the company’s stock.

Institutional Trading of Cloudflare

A number of hedge funds have recently bought and sold shares of NET. Andra AP fonden increased its holdings in shares of Cloudflare by 44.5% in the second quarter. Andra AP fonden now owns 48,356 shares of the company’s stock valued at $11,861,000 after purchasing an additional 14,900 shares during the last quarter. Plato Investment Management Ltd purchased a new position in Cloudflare during the second quarter worth approximately $1,499,000. Insight Holdings Group LLC acquired a new position in Cloudflare during the first quarter worth $6,768,000. Independent Financial Group LLC acquired a new position in Cloudflare during the first quarter worth $3,484,000. Finally, Capula Management Ltd boosted its stake in Cloudflare by 97.1% during the first quarter. Capula Management Ltd now owns 13,526 shares of the company’s stock worth $2,791,000 after buying an additional 6,662 shares during the last quarter. Institutional investors and hedge funds own 82.68% of the company’s stock.

Cloudflare Trading Up 12.6%

The company has a current ratio of 1.82, a quick ratio of 1.82 and a debt-to-equity ratio of 1.22. The company has a fifty day simple moving average of $319.02 and a 200-day simple moving average of $249.31. The company has a market capitalization of $97.35 billion, a PE ratio of -474.84, a PEG ratio of 206.44 and a beta of 1.37.

Cloudflare Company Profile

Cloudflare, Inc (NYSE: NET) provides cloud connectivity, security and performance services for websites, applications, corporate networks and other internet-connected resources. Its global network is designed to help organizations improve the reliability, speed and security of digital services while reducing the complexity of managing internet infrastructure.

The company’s offerings include content delivery and authoritative domain name system services, distributed denial-of-service protection, web application and application programming interface security, bot management, and network security tools.