Cloud Stocks: Recently Public Cloudflare Has New Edge

Website infrastructure and security company Cloudflare (NET) went public in September last year and recently reported a strong quarter. With a new acquisition and a PaaS edge, the company looks promising.

Cloudflare’s Financials

Revenues for the fourth quarter grew 51% to $83.9 million, ahead of the Street’s estimate of $79.1 million. Net loss was $28.2 million, compared with a loss of $16.7 million a year ago. Non GAAP EPS was $0.06 compared with the Street’s estimate of $0.07.

Fiscal year 2019 revenue grew 49% to $287 million. GAAP gross profit was $223.6 million, or 77.9% gross margin, compared to $149.1 million, or 77.4%, in fiscal 2018. GAAP net loss was $105.8 million, compared to $87.2 million for fiscal 2018. Non-GAAP net loss was $69.5 million, compared to $59.5 million for fiscal 2018. GAAP net loss per share was $0.72, compared to $1.08 for fiscal 2018. Non-GAAP net loss per share was $0.48, compared to $0.73 for fiscal 2018.

The company added a record 300,000 customers during the fourth quarter and ended 2019 with 2.6 million total customers, up 34% y-o-y. It added over 5,800 paying customers in Q4 and now has over 82,000 paying customers, up 22% y-o-y. Its large customer count increased 76% to 550 total large customers with a net add of 237 large customers over the year and 75 over the quarter. Its large customers are defined as customers with over $100,000 in annualized billings. The number of Internet properties using Cloudflare platform grew by 10 million to 26 million in 2019.

Dollar-based net retention stood at 112% in the fourth quarter, which shows that existing customers tend to renew their Cloudflare contracts at larger sizes. This metric is also on the rise, moving up from 110% in the third quarter.

For the first quarter, Cloudflare forecast revenues of $87-$88 million with a non-GAAP net loss of $0.06-$0.05 per share. The market estimates revenues of $87.71 million with net loss of $0.06 per share. Cloudflare expects to end fiscal 2020 with revenues of $389-$393 million with a loss of $0.21-$0.19 per share. The market was looking for revenues of $510.89 million with loss of $0.14 per share.

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Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs ...

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