Cloudflare (NET) reported first-quarter earnings that topped estimates while revenue roughly met expectations. But Cloudflare stock plunged early Friday on a weak June-quarter and full-year 2023 revenue outlook.
Reported after the market close, Cloudflare earnings were 8 cents, up from 1-cent profit a year earlier. Revenue for NET stock climbed 37% to $290.2 million, the San Francisco-based company said.
Analysts predicted March-quarter profit of 3 cents a share and revenue growth of 37% to $290.8 million.
Cloudflare stock plunged 21% to close at 47.05 on the stock market today.
NET Stock: Weakening Economy
“Management noted increasing macroeconomic uncertainty over the quarter that resulted in lengthening sales cycles and a back-end weighted quarter,” RBC Capital Markets analyst Matthew Hedberg said in a note to clients. “Guidance assumes a continuation of these trends with revenue growth moving lower for Q2 and 2023 against increased profitability.”
At Jefferies, analyst Brent Thill said in a report: “Cloudflare saw macro conditions worsen in Q1 with average sales cycles growing 27% longer overall. NET also noted increased deal scrutiny, collection delays and slower than expected expansion. Cloudflare saw these macro headwinds intensify in March and sees them potentially persisting through the rest of 2023.”
Heading into the Cloudflare earnings report, the stock had climbed 33% in 2023.
Started in 2009, Cloudflare speeds up and provides security for web applications routed through its intelligent global network.
Cloudflare Stock: Revenue Guidance Tops Views
For the current June quarter, Cloudflare projected revenue of $305.5 million at the midpoint of its outlook. Analysts had projected revenue of $319.8 million.
Some analysts expect 2023 upside from Cloudflare’s ties to artificial-intelligence startup OpenAI. The company provides secure links to cloud services when consumers sign up to use OpenAI’s ChatGPT, a conversational chatbot.
Further, one concern for shareholders has been that the company could lose 2023 revenue from cryptocurrency customers.
In addition, Cloudflare stock owns a Relative Strength Rating of 88 out of a best-possible 99, according to IBD Stock Checkup.
Also, NET stock owns an entry point of 66.30.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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