Oppenheimer has elevated its price target for Cloudflare (NET, Financial) from $150 to $165 while maintaining an Outperform rating on the stock. The adjustment follows Cloudflare's impressive first-quarter performance for fiscal year 2025, highlighted by a 27% increase in revenue compared to the same period last year. Additionally, the company reported solid figures with a dollar-based net retention rate of 111% and showed progress in reducing churn rates while enhancing sales productivity.
The management team at Cloudflare has adopted a cautious approach regarding future guidance but has kept its full-year 2025 growth forecast steady at 25%. Oppenheimer expresses confidence in Cloudflare's ability to continue surpassing expectations, especially due to the growing success of its Workers platform. As a result, the firm anticipates ongoing strong performance throughout the year.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 28 analysts, the average target price for Cloudflare Inc (NET, Financial) is $145.83 with a high estimate of $200.00 and a low estimate of $70.00. The average target implies an upside of 9.14% from the current price of $133.62. More detailed estimate data can be found on the Cloudflare Inc (NET) Forecast page.
Based on the consensus recommendation from 34 brokerage firms, Cloudflare Inc's (NET, Financial) average brokerage recommendation is currently 2.3, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Cloudflare Inc (NET, Financial) in one year is $140.97, suggesting a upside of 5.5% from the current price of $133.62. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Cloudflare Inc (NET) Summary page.
NET Key Business Developments
Release Date: May 08, 2025
- Revenue: $479.1 million, up 20% year-over-year.
- Gross Margin: 77.1%, above the long-term target of 75% to 77%.
- Operating Profit: $56 million, representing an operating margin of 11.7%.
- Free Cash Flow: $52.9 million, 11% of revenue.
- Large Customers: 3,527 customers paying more than $100,000, a 23% increase year-over-year.
- Dollar-Based Net Retention: 111%, flat quarter-to-quarter.
- Net Income: $58.4 million, or diluted net income per share of $0.16.
- Cash and Equivalents: $1.9 billion.
- Remaining Performance Obligations (RPO): $1.864 billion, up 39% year-over-year.
- Q2 2025 Revenue Guidance: $500 million to $501 million, up 25% year-over-year.
- Full Year 2025 Revenue Guidance: $2.090 billion to $2.094 billion, up 25% year-over-year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cloudflare Inc (NET, Financial) achieved a revenue of $479.1 million, marking a 20% year-over-year increase.
- The company closed the quarter with 3,527 customers paying more than $100,000, a 23% increase year-over-year.
- Cloudflare Inc (NET) landed the largest contract in its history, a deal worth over $100 million.
- The company's gross margin was 77.1%, above the long-term target of 75% to 77%.
- Free cash flow was strong at $52.9 million, representing 11% of revenue.
Negative Points
- Dollar-based net retention was flat quarter-to-quarter at 111%, indicating no growth in customer spending.
- Gross margin decreased by 240 basis points year-over-year.
- The company faces a volatile macroeconomic environment, which adds uncertainty to future performance.
- There is increased pressure from AI-driven internet trends affecting media companies.
- Sales cycles are expected to potentially increase over time as deals become larger and more complex.
