Internet security and content delivery network Cloudflare (NYSE:NET) announced better-than-expected results in Q2 CY2024, with revenue up 30% year on year to $401 million. The company expects next quarter's revenue to be around $423.5 million, in line with analysts' estimates. It made a non-GAAP profit of $0.20 per share, improving from its profit of $0.10 per share in the same quarter last year.
Cloudflare (NET) Q2 CY2024 Highlights:
Revenue: $401 million vs analyst estimates of $394.5 million (1.6% beat)
Adjusted Operating Income: $56.95 million vs analyst estimates of $35.56 million (60.1% beat)
EPS (non-GAAP): $0.20 vs analyst estimates of $0.14 (42.1% beat)
Revenue Guidance for Q3 CY2024 is $423.5 million at the midpoint, roughly in line with what analysts were expecting
The company slightly lifted its revenue guidance for the full year from $1.65 billion to $1.66 billion at the midpoint
Gross Margin (GAAP): 77.8%, up from 75.6% in the same quarter last year
Free Cash Flow of $38.28 million, similar to the previous quarter
Billings: $421.7 million at quarter end, up 22.9% year on year
Market Capitalization: $26.33 billion
“We had a strong second quarter, crossing $1.6 billion in annualized revenue and growing 30% year-over-year. The world is still complicated, but our team remained focused on execution and delivered terrific results, including a double-digit year-over-year improvement in sales productivity,” said Matthew Prince, co-founder & CEO of Cloudflare.
Founded by two grad students of Harvard Business School, Cloudflare (NYSE:NET) is a software as a service platform that helps improve security, reliability and loading times of internet applications and websites.
Sales GrowthAs you can see below, Cloudflare's revenue growth has been incredible over the last three years, growing from $152.4 million in Q2 2021 to $401 million this quarter.
This quarter, Cloudflare's quarterly revenue was once again up a very solid 30% year on year. On top of that, its revenue increased $22.39 million quarter on quarter, a very strong improvement from the $16.13 million increase in Q1 CY2024. This is a sign of acceleration of growth and great to see.
Next quarter's guidance suggests that Cloudflare is expecting revenue to grow 26.2% year on year to $423.5 million, slowing down from the 32.2% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 25.6% over the next 12 months before the earnings results announcement.
Gross Margin & Pricing PowerWhat makes the software-as-a-service model so attractive is that once the software is developed, it usually doesn't cost much to provide it as an ongoing service.
These costs include servers, licenses, and certain personnel, and leverage on them can decide the winners in competitive markets because they determine how much can be invested into new products, sales, and talent.
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