Oppenheimer has increased its price target for Cloudflare (NET, Financial) to $200, up from $165, while maintaining an Outperform rating on the stock. This decision follows discussions with Phil Winslow, Cloudflare’s Vice President of Strategic Finance & Investor Relations, which highlighted several growth drivers for the company.
The firm is optimistic about Cloudflare’s prospects due to strong performance in areas such as SASE security, bolstered by Magic WAN adoption and enhanced security features like CASB and DLP. Additionally, Cloudflare’s Worker capabilities are gaining traction among developers through advanced features that shift processes left.
Furthermore, Cloudflare is focusing on AI workloads through new edge compute technologies like MCP and A2A, alongside a newly introduced container service for AI applications. Oppenheimer is particularly confident in Cloudflare’s potential to exceed expectations for the calendar year 2025, with a forecasted revenue growth exceeding 30% and an objective to reach $5 billion in annual recurring revenue by the end of 2028.
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 $148.04 with a high estimate of $200.00 and a low estimate of $70.00. The average target implies an downside of 13.38% from the current price of $170.92. 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 $142.75, suggesting a downside of 16.48% from the current price of $170.92. 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.
