Cloudflare is reporting after the bell tomorrow, Feb 10. I’ve found it good practice to document my expectations in advance, so I know how to quickly react to earnings. Price action is oftem swift, so I want to take advantage of after hours trading. Posting it here in case anyone finds it helpful or has meaningful disagreement and rationale around why my expectations may be off base. I like to track and predict the metrics that the company include in the press release as “important” numbers. For Cloudflare, this is Revenue Growth, Free Cash Flow (FCF), and the number of Large Customers. I’m expecting another consistently strong quarter from Cloudflare, as shown in the table below. If I see numbers that are Below my expectations, that is an indicator to sell and shrink my position. If the report meets my expectations, I typically hold my existing postition. In most cases I would add if the numbers come in and exceed expectations.
For Cloudflare in particular, I think expectations have to be in the 10-13% growth where they landed for most of their public reporting lifetime. But there is optimism for them to start exceeding expectations with the sheer volume of new products being announced and well documented on this forum.
Cloudflare Earnings Expectations
Rev YoY SQoQ TTM YoY FCF GM DBNRR Large Cust YoY SQoQ
F18 Q3 50.07 -22.1
F18 Q4 55.50 11% -29.0 77% 294
F19 Q1 61.73 11% -22.1 77% 336 14%
F19 Q2 67.42 9% 234.7 -16.9 78% 122% 387 15%
F19 Q3 73.94 48% 10% 258.6 -33.6 78% 121% 451 17%
F19 Q4 83.93 51% 14% 287.0 -23.5 78% 526 79% 17%
F20 Q1 91.25 48% 9% 316.5 -30.6 77% 117% 556 65% 6%
F20 Q2 99.72 48% 9% 348.8 49% -20.2 76% 115% 637 65% 15%
F20 Q3 114.16 54% 14% 389.1 50% -17.9 76% 116% 736 63% 16%
F20 Q4 125.90 50% 10% 431.0 50% -23.5 77% 119% 828 57% 13%
F21 Q1 138.10 51% 10% 477.9 51% -2.2 77% 123% 945 70% 14%
F21 Q2 152.43 53% 10% 530.6 52% -9.8 77% 124% 1088 71% 15%
F21 Q3 172.30 51% 13% 588.7 51% -39.7 78% 124% 1260 71% 16%
**Mid-point Company Guidance:**
F21 Q4 (G) 184.5 7%
**My Expectations:**
Below <189.5 <10% <-10 <123% <1400
Meets ~193 10-13% -10 to -4 123-124% 1400-1440
Exceeds >195 >13% >-4 >124% >1440
*F21 Q3 FCF included 29.4MM cash outflow related to repurchase of 2025 convertible senior notes.
I hope you find this helpful. If there’s continued interest, I’ll post these for my other holdings in advance of their earnings announcements.
Cheers,
Daws (Long NET ~6%)