Yahoo Finance Cloudflare (NET) to Report Q1 Earnings: What's in Store?
Cloudflare NET is scheduled to report first-quarter 2024 results on May 2, after market close.
The company projects first-quarter revenues of $372.5-$373.5 million. The Zacks Consensus Estimate for the top line is pegged at $372.9 million, indicating a year-over-year improvement of 28.5%.
Cloudflare expects non-GAAP earnings per share of 13 cents for the to-be-reported quarter. The consensus mark for earnings is also pegged at 13 cents per share, implying an improvement of 62.5% from the year-ago quarter’s 8 cents.
The web infrastructure and website security solution provider projects non-GAAP income from operations between $34 million and $35 million. NET’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 56.9%.
Let’s see how things are shaping up for this announcement.
Cloudflare, Inc. Price and EPS Surprise
Cloudflare, Inc. price-eps-surprise | Cloudflare, Inc. Quote
Factors to Note
Cloudflare’s first-quarter performance is likely to have gained from organizations transitioning from traditional firewall and VPN-based cybersecurity solutions to the zero-trust approach. The company’s performance is expected to have benefited from the growing hybrid working trend that needs organizations to secure networks beyond on-premise.
The top line is expected to have gained from accelerated global expansion outside the United States. It is worth mentioning that the company had generated approximately 47.5% of its fourth-quarter 2023 revenues outside the United States.
A diversified clientele is likely to have boosted Cloudflare’s first-quarter top line. NET added around 7,764 new paying customers in the fourth quarter of 2023, bringing the total count to approximately 189,791.
The company also added 198 new large customers (annual billings of more than $100,000), taking the total count to 2,756 at the end of the fourth quarter, up from 2,558 recorded at the end of the third quarter of 2023. This rise in customer base has prevailed for the past 10 quarters. This is expected to have continued in the to-be-reported quarter as well, backed by the increasing demand for the company’s cloud-based offerings amid the continuing digitalizing trend.
The company’s recurring subscription-based business model has been providing relative stability to its top line amid the ongoing macroeconomic uncertainties and geopolitical issues. However, NET’s high exposure to small and medium businesses is likely to have weighed on its performance in the to-be-reported quarter.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for Cloudflare this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that is not the case here.
NET has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Per our model, Arista Networks ANET, Docebo DCBO and Apple AAPL have the right combination of elements to post an earnings beat in their upcoming releases.
Arista Networks has an Earnings ESP of +2.49% and sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Arista Networks have gained 8.9% year to date. ANET is set to report first-quarter 2024 results on May 7.
Docebo has an Earnings ESP of +8.00% and a Zacks Rank #3 at present.
Shares of Docebo have lost 7.5% year to date. DCBO is slated to report first-quarter 2024 results on May 9.
Apple has an Earnings ESP of +0.93% and a Zacks Rank #3 at present.
Shares of Apple have lost 11.5% year to date. AAPL is set to report first-quarter 2024 results on May 2.
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