Cloudflare Q4 Earnings & Revenues Beat: Will the Stock Move Upward?

Cloudflare NET reported fourth-quarter 2024 non-GAAP earnings of 19 cents per share, which beat the Zacks Consensus Estimate by 5.6%. The bottom line increased 26.7% year over year.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.NET’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 20.65%.NET’s fourth-quarter revenues increased 27% year over year to $459.9 million, which surpassed the consensus mark by 1.8%.The year-over-year improvement in revenues can be attributed to the sustained momentum in the onboarding of large new enterprises, remarkable progress in the public sector and continued high prioritization of security by its customers and a zero-trust approach.NET’s stronger-than-expected fourth-quarter 2024 results, driven by a huge inflow of large enterprises outside the U.S. region, accompanied by a raised first-quarter outlook, are anticipated to positively impact the stock’s movement, which climbed 11.7% in the after-market trading following the results.In the past year, shares of NET have surged 69.8% compared with the Zacks Internet - Software industry’s return of 32.1%.Cloudflare, Inc. Price, Consensus and EPS Surprise Cloudflare, Inc. price-consensus-eps-surprise-chart | Cloudflare, Inc. QuoteCloudflare’s Q4 DetailsNET’s top-line performance was positively impacted by its mix of customer segments (Channel Partners and Direct Customers).Revenues from Channel Partners (22% of total revenues) were $101.4 million, up 63.8% year over year.Fourth-quarter revenues from Direct Customers (78% of total revenues) were $358.6 million, up 19.3% year over year.NET had 237,714 paying customers in the fourth quarter, up 25.3% year over year. NET added 232 new customers who contributed more than $100,000 in annual revenues. The total count of such customers reached 3,497 at the end of the quarter.NET’s fourth-quarter non-GAAP gross profit increased 24.7% year over year to $356.8 million. The non-GAAP gross margin contracted 130 basis points (bps) year over year to 77.6%.Non-GAAP operating income for the quarter jumped to $67.2 million from $39.8 million in the year-ago quarter. The non-GAAP operating margin expanded 360 bps year over year to 14.6%.NET’s Balance Sheet & Cash FlowAs of Dec. 31, 2024, Cloudflare had cash, cash equivalents and available-for-sale securities of $1.86 billion, up from $1.82 billion as of Sept. 30, 2024.NET generated an operating cash flow of $127.3 million and a free cash flow of $47.8 million.NET Initiates Q1 and FY25 GuidanceFor the first quarter, Cloudflare expects revenues in the $468-$469 million range.The Zacks Consensus Estimate for revenues is pegged at $471.8 million, suggesting a year-over-year rise of 24.6%.Non-GAAP income from operations in the first quarter is expected to be between $54 million to $55 million. Non-GAAP earnings are anticipated to be 16 cents per share.The Zacks Consensus Estimate for earnings is pegged at 19 cents per share, indicating a year-over-year rise of 18.8%.For 2025, NET anticipates revenues between $2.09 billion and $2.094 billion. The consensus mark for revenues is pegged at $2.07 billion, suggesting a year-over-year rise of 24.8%.Non-GAAP income from operations is projected to be in the range of $272-$276 million. Non-GAAP earnings per share are anticipated to be between 79 cents and 80 cents.The Zacks Consensus Estimate for earnings is pegged at 84 cents per share, indicating a year-over-year increase of 13.8%.Zacks Rank and Other Stocks to ConsiderCurrently, NET carries a Zacks Rank #2 (Buy).Arista Networks ANET, Celestica CLS and Pitney Bowes PBI are some other top-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. Arista, Celestica and Pitney Bowes sport Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The consensus mark for ANET’s 2025 earnings has been revised upward by a penny to $2.42 per share over the past 60 days, indicating a 17.5% year-over-year increase. ANET shares have surged 67.1% in the past year.The consensus mark for CLS’ 2025 earnings has been revised upward by 33 cents to $4.75 per share over the past seven days, indicating a 22.4% year-over-year increase. CLS shares have skyrocketed 254.8% in the past year.The consensus mark for PBI’s 2025 earnings has been revised upward by 4 cents to $1.12 per share over the past 30 days, indicating a 180% year-over-year increase. PBI shares have rallied 120.9% in the past year.Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. Nuclear energy is an ideal replacement.Leaders from the US and 21 other countries recently committed to TRIPLING the world’s nuclear energy capacities. 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