Cloudflare’s (NET) see a 24% Jump as Q4 Earnings & Sales Top Estimates

Cloudflare’s NET stock experienced a 24% leap in an extended trading session on Thursday, following exceptional fourth-quarter results for 2023. Earnings and sales both outperformed the Zacks Consensus Estimate and saw improvement from the previous year.

The company posted non-GAAP earnings of 15 cents per share, trouncing the Zacks Consensus Estimate of 12 cents. This marked a year-over-year spike of 150%, compared to 6 cents per share during the same quarter last year.

NET’s revenues for the quarter were $362.5 million, eclipsing the Zacks Consensus Estimate of $352.7 million and up 32% from the previous year. This revenue growth stemmed from an influx of new clients and increased interest from large enterprises, prompted by a heightened demand for enhanced security and a zero-trust approach.

The company’s impressive performance reflects its ongoing commitment to product innovation, a shift toward subscription-based services, continual product development, and sustained investment in infrastructure expansion.

52% of NET’s total revenues came from the United States, with the remaining 48% originating from international markets.

Furthermore, Cloudflare added more paying customers in the fourth quarter, with a net dollar-based retention rate exceeding 115%. Altogether, the company had 189,791 paying customers during the quarter, a 17% year-over-year increase.

In the fourth quarter of 2023, NET drew 198 new customers each generating over $100,000 in annual revenues. The total count of such high-revenue customers hit 2,756 at the end of the quarter.

On the operations side, Cloudflare’s non-GAAP gross profit rose to $286 million, up 34.5% year over year. Non-GAAP operating expenses also increased by 25.8% to $246.2 million. However, as a percentage of revenues, these expenses dropped to 67.9% from 71.2% in the previous year.

The company’s cash, cash equivalents and available-for-sale securities were at $1.67 million as of Dec 31, 2023, an increase from $1.57 million as of Sep 30, 2023.

Looking ahead, Cloudflare has set its sights on revenue between $372.5 and $373.5 million for Q1 2024, and projected non-GAAP net income per share of 13 cents. For the fiscal year of 2024, NET expects to realize a top line in the range of $1.648-$1.652 billion and a non-GAAP net income per share between 58-59 cents.