Cloudflare Stock Plunges On Weak Revenue Guidance

Cloudflare (NET) on Thursday reported first-quarter earnings that topped estimates while revenue roughly met expectations. But Cloudflare stock plunged on a weak June-quarter revenue outlook.

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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 22% to 46.50 in extended trading on the stock market today.

“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.”

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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