Shares in global cloud services provider Cloudflare (NET) fell more than 14% in premarket trading Friday after the company posted a soft current-quarter sales outlook that overshadowed quarterly results that came in ahead of Wall Street expectations.1
The San Francisco-based company guided current-quarter revenue of $393.5 million to $394.5 million, with the midpoint of that range sitting below the $394.5 million expected by analysts, sparking investor concerns of slowing top-line growth.2
Bloomberg. “Cloudflare Shares Tumble on Disappointing Revenue Outlook.”
Uncertainty over the macroeconomic outlook has presented challenges for the company in recent months as enterprise customers try to balance managing their online content within more confined technology spending budgets. Cloudflare also faces increasing competition from cybersecurity giants Palo Alto Networks (PANW) and CrowdStrike (CRWD) that offer competitively priced unified solutions for managing multiple applications and websites.3
Revenue Boosted by New High-Ticket Customers
For the March quarter, the company reported adjusted earnings of 16 cents per share, nudging ahead of the consensus view pegged at 13 cents a share. Revenue in the period of $378.6 million grew 30% from a year earlier and topped analysts’ average forecast of $373.7 million.2
In a bright spot, the company grew its customers who generate $100,000 or more in annualized revenue by 33% from the prior year’s corresponding quarter, taking that cohort’s total count to 2,878.4
Revenue growth in the latest quarter was “fueled by a record number of net-new customers year-over-year spending more than $100,000, $500,000, and $1 million with Cloudflare on an annualized basis,” co-founder and CEO Matthew Prince said in the company’s earnings release.1
Level to Watch Amid Earnings-Driven Selling
Since gapping above an ascending triangle after posting better-than-expected financial results in February, the Cloudflare share price filled the gap to trade around the initial breakout level leading into the company’s earnings report.
Amid news-related selling, investors should monitor the $76 area, a region on the chart where the price finds a confluence of support from a multi-month horizontal trendline and the closely-watched 200-day moving average.
Cloudflare shares were down 14.1% at $76.46 at around 6:45 a.m. ET.
The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.
As of the date this article was written, the author does not own any of the above securities.
Do you have a news tip for Investopedia reporters? Please email us at
SPONSORED
Trade on the Go. Anywhere, Anytime
One of the world’s largest crypto-asset exchanges is ready for you. Enjoy competitive fees and dedicated customer support while trading securely. You’ll also have access to Binance tools that make it easier than ever to view your trade history, manage auto-investments, view price charts, and make conversions with zero fees. Make an account for free and join millions of traders and investors on the global crypto market.