Cloudflare (NET), a web infrastructure and cybersecurity company, declined 6.6% in yesterday’s extended trading session after providing a lower-than-expected fourth-quarter revenue outlook. Nevertheless, NET delivered a strong performance in the third quarter, beating both earnings and revenue estimates.
The company’s Q3 revenues increased 28% year-over-year to $430.1 million and surpassed the consensus estimate of $424.14 million. NET’s performance was driven by robust customer growth and a strong product portfolio. Interestingly, Cloudflare added a record 219 large customers, with 35% of the Fortune 500 now relying on its services. Investors should note that the Fortune 500 is a list of the top 500 U.S. companies by revenue.
Further, NET reported adjusted EPS of $0.20, which exceeded the average analysts’ estimate of $0.18 and climbed 25% from the year-ago quarter.
Cloudflare Issues Weak-Than-Expected Q4 Outlook
Despite the solid Q3 performance, Cloudflare’s fourth-quarter revenue guidance of $451 to $452 million fell short of analyst expectations of $455 million. Further, NET anticipates full-year 2024 revenue of $1.66 billion, in line with the consensus estimate.
Cloudflare expects reduced customer spending and heightened competition in the cybersecurity market to negatively impact its performance in the near term.
Is NET Stock a Good Buy?
Turning to Wall Street, NET stock has a Hold consensus rating based on two Buys, four Holds, and two Sells assigned in the last three months. At $87.63, the average Cloudflare price target implies an 8.4% downside potential. Shares of the company have gained 32% in the past six months.
