SAN FRANCISCO - Cloudflare, Inc. (NYSE:NET) reported better-than-expected third-quarter earnings and revenue but saw its shares plummet 9% in after-hours trading due to a disappointing fourth-quarter sales forecast.
The connectivity cloud company posted adjusted earnings per share of $0.20 for the third quarter, surpassing the analyst estimate of $0.18. Revenue came in at $430.1 million, exceeding the consensus estimate of $424.14 million and representing a 28% increase YoY.
Despite the strong Q3 performance, Cloudflare's Q4 revenue guidance of $451-452 million fell short of the $455.7 million analyst consensus, triggering the sharp stock decline. The company's full-year 2024 revenue outlook of $1.661-1.662 billion was roughly in line with expectations.
Matthew Prince, co-founder & CEO of Cloudflare, commented on the results: "I am pleased with our results for the third quarter—exceeding expectations for revenue, operating margin, and free cash flow while also reaching a key inflection point in the transformation of our go-to-market organization."
Cloudflare reported non-GAAP income from operations of $63.5 million, or 14.8% of revenue, compared to $42.5 million, or 12.7% of revenue, in the same quarter last year. The company's operating cash flow was $104.7 million, representing 24% of revenue.
The company added a record 219 large customers in the quarter, with Prince noting that 35% of the Fortune 500 are now paying Cloudflare customers.
For Q4 2024, Cloudflare expects adjusted EPS of $0.18, slightly above the consensus of $0.17. The company raised its full-year 2024 adjusted EPS guidance to $0.74, compared to the analyst estimate of $0.72.
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