Key takeaways
- Cloudflare shares rose sharply after the company beat analysts’ fourth-quarter earnings and sales estimates and issued upbeat guidance for the current quarter.
- CEO Mathew Price said the company signed its largest new customer deal and largest renewal during the quarter, helping drive record annual contract value.
- Cloudflare stock may see profit-taking near $132, encountering potential chart resistance from the March 2022 high.
Cloudflare, Inc.
Source: TradingView.com.
Cloudflare (NET) shares rose nearly 25% in premarket trading Friday after the cybersecurity and content delivery solutions provider delivered a better-than-expected quarterly report and issued first-quarter guidance above Street estimates, driven by large customer additions and growth. demand for cloud security services.
For the December quarter, the San Francisco-based company posted adjusted earnings of 15 cents per share on revenue of $362.5 million, while analysts expected earnings per share (EPS) of 12 cents on sales of 353. 1 million dollars. In addition, revenue grew 32% compared to the previous year.
Cloudflare co-founder and CEO Matthew Prince attributed the strong quarter to signing large customers, expanding into the government sector, and growth of the company’s cloud-based network-as-a-service (NaaS) solution, Cloudflare One. .
“To close out the year, the strength of our business was driven by strong momentum with large customers, significant progress in the public sector and growth in Cloudflare One,” Price said in the earnings release. He added that the company signed its largest new customer deal and its largest renewal during the quarter, helping drive record annual contract value.
Looking ahead, Cloudflare projects adjusted earnings of 13 cents per share in the current quarter, one cent above analysts’ model of 12 cents per share. Importantly, the lower end of the company’s top-line guidance range, between $372.5 million and $373.5 million, is above Wall Street’s first-quarter revenue estimate of $372. 3 million dollars.
The cloud solutions company said it remains focused on supplying software developers with graphics processing units (GPUs) used for artificial intelligence (AI), and said it plans to install GPUs in most of its network this year. The company also said it aims to grow its security services business, aimed at enterprise clients and government agencies amid a rise in cybersecurity attacks since the Middle East conflict broke out in October last year.
NET stock broke out of an ascending triangle pattern with above-average volume leading to gains, indicating investors were expecting a spectacular quarterly report, which the company delivered. If an earnings-driven rally extends beyond this week, keep an eye on the $132 level as a potential area of resistance on the chart. In this region, investors are likely to consolidate their profits near the notable March 2022 high.
Cloudflare shares rose 24.9% to $112.80 about an hour before the opening bell rang.
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