Cloudflare Stock (NASDAQ:NET) Rises after Q2-2024 Earnings Beat
Cloudflare (NASDAQ:NET) shares spiked in after-hours trading after the company announced its Q2-2024 earnings. The company posted earnings per share (EPS) of $0.20, which not only surpassed analysts’ forecasts of $0.14 but also doubled from $0.10 a year ago. Cloudflare's revenue jumped 30% year-over-year to $401 million, beating the predicted $394.1 million.
The company consistently exceeds EPS expectations, which reinforces its reputation for strong performance. This quarter, Cloudflare’s gross profit saw a significant boost, with GAAP results showing $312.0 million, or a 77.8% gross margin, compared to $233.3 million and a 75.6% margin in the same period last year.
On a non-GAAP basis, gross profit rose to $316.6 million with a margin of 79.0%. Operating income improved dramatically, as GAAP losses shrank to $34.7 million and non-GAAP income surged to $57.0 million, or 14.2% of revenue, up from 6.6% last year. Below is its historical non-gaap gross profit margin trend.
The company also saw a boost in net cash flow from operations, rising to $74.8 million, and free cash flow improved to $38.3 million, or 10% of revenue.
Another important metric to note is remaining performance obligations (RPO), which keep increasing every quarter for Cloudflare, as you can see below. Remaining Performance Obligations represent the total value of contracted revenue that has yet to be recognized. This metric is important because it indicates the company's future revenue pipeline. RPO includes deferred revenue (billed and unearned) and contracted revenue that has not yet been billed.
It provides insights into a company's future financial performance and growth potential by showing the amount of revenue expected to be earned from existing contracts. The increase in RPO for Cloudflare suggests a growing backlog of revenue that the company is set to recognize in future periods, signaling strong demand for its services.
Source: @finchat_io on X
The company’s revenue trend (the image below doesn’t include Q2) is also impressive.
What’s Next?
Cloudflare is looking ahead with optimism, forecasting next quarter's revenue at about $423.5 million, which aligns with analysts' expectations. For the full year 2024, the company anticipates revenue between $1.657 billion and $1.659 billion, with non-GAAP net income per share expected to be in the $0.70 to $0.71 range.
