Cloudflare (NET) Q1 Earnings Report Preview: What To Look For

Petr Huřťák /
2024/05/01 3:06 am EDT

Internet security and content delivery network Cloudflare (NYSE:NET) will be reporting results tomorrow afternoon. Here's what to look for.

Cloudflare beat analysts' revenue expectations by 2.7% last quarter, reporting revenues of $362.5 million, up 32% year on year. It was a good quarter for the company, with a decent beat of analysts' billings estimates.

Is Cloudflare a buy or sell going into earnings? Read our full analysis here, it's free.

This quarter, analysts are expecting Cloudflare's revenue to grow 28.6% year on year to $373.3 million, slowing from the 36.8% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.13 per share.

Cloudflare Total Revenue

The majority of analysts covering the company have reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Cloudflare has only missed Wall Street's revenue estimates once over the last two years, exceeding top-line expectations by 1.6% on average.

Looking at Cloudflare's peers in the software development segment, only F5 has reported results so far. It met analysts' revenue estimates, posting year-on-year sales declines of 3.1%. The stock was down 9.3% on the results.

Read our full analysis of F5's earnings results here.

Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 thanks to cooling inflation. The start of 2024 has been a different story as mixed signals have led to market volatility, and while some of the software development stocks have fared somewhat better, they have not been spared, with share prices down 4% on average over the last month. Cloudflare is down 8% during the same time and is heading into earnings with an average analyst price target of $101.3 (compared to the current share price of $87.4).

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