Cloudflare Earnings Report

Investment Analysis Clubs Saul’s Investing Discussions
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Since no one has posted it yet, here is Cloudflare’s (NET’s) earnings:

Third quarter revenue totaled $114.2 million, representing an increase of 54% year-over-year

Non-GAAP net loss per share of $0.02, representing an improvement of $0.14 year-over-year

Strong large customer growth, adding a record of roughly 100 net large enterprise customers in the quarter, in addition to our first $10 million ARR customer

“Our third quarter represented many significant milestones including surpassing $100M in revenue, crossing 100,000 paying customers, and releasing more than a dozen new products and features,” said Matthew Prince, co-founder & CEO of Cloudflare. “I’m incredibly proud that we exceeded financial, customer, and innovation milestones, all while providing our services, at no cost, to state and local governments to ensure that cyberattacks don’t disrupt the United States 2020 elections. The world has never needed the Internet more than it has over the last nine months, and we’re laser focused on helping to keep it fast, reliable, and secure.”

Third Quarter Fiscal 2020 Financial Highlights

Revenue: Total revenue of $114.2 million, representing an increase of 54% year-over-year.

Non-GAAP gross profit was $88.2 million, or 77.3% gross margin, compared to $58.3 million, or 78.9%, in the third quarter of 2019.

Operating Loss: Non-GAAP loss from operations was $4.5 million, or 4.0% of total revenue, compared to $18.1 million, or 24.5% of total revenue, in the third quarter of 2019.

Net Loss: Non-GAAP net loss was $5.7 million, compared to $18.5 million in the third quarter of 2019.

Non-GAAP net loss per share was $0.02, compared to $0.16 in the third quarter of 2019.

Cash Flow: Net cash flow from operations was $2.0 million, compared to negative $17.8 million for the third quarter of 2019.
Free cash flow was negative $17.9 million, or 16% of total revenue, compared to negative $33.6 million, or 45% of total revenue, in the third quarter of 2019.

Cash, cash equivalents, and available-for-sale securities were $1,051.3 million as of September 30, 2020.

After rising about 10% in the past two days, they are up another 7%-8% in the aftermarket.

Saul

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Outstanding report!

Accelerating revenues

Positive cash flow quarter

100 new enterprise customers!

Looking forward to the call starting in a few moments.

Best,
Matt

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That’s where I put most of my Fastly money. In the aftermarket they are now up 10%, and are making new all-time highs. Fastly will have to rise almost 100% to get back to where they were several weeks ago, and think about make in ga new all-time high.

What more can I say?

Saul

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I was looking for this data, as compared to FSLY’s modest large/enterprise customer growth…

Strong large customer growth, adding a record of roughly 100 net large enterprise customers in the quarter, in addition to our first $10 million ARR customer

Additional data I was looking for:

Rev growth rate accelerating sequentially(54%, vs 48% last q)

For rev growth to continue to accelerate, Q4 rev needs to be north of $129Mish; compare that to the sandbagged guidance of $118M they gave and that’s around a 9% beat, right in their “beat” sweet spot.

And remember, we are almost halfway through Q4…
Most everything else looks good/as expected.

Strong quarter.

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For rev growth to continue to accelerate, Q4 rev needs to be north of $129Mish; compare that to the sandbagged guidance of $118M they gave and that’s around a 9% beat, right in their “beat” sweet spot.

I haven’t read the cc transcript yet, but keep in mind that Q4 should be a full quarter where everyone that was using their six months of free service will now have to be paying. I’m curious to see what kind of conversion they get on this.

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“I’m curious to see what kind of conversion they get on this.”

I believe I heard him say they were converting around 70%? I searched the transcript and release and couldn’t find the numbers. It may only be in the presentation recording.

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“Over the course of Q3, we began conversations with all of them to transition from the free offer to becoming paying customers. We are happy with how that went. 75% of customers transitioned from free to paid accounts that included some great new logos like JetBlue Travel Products, OneTrust and Delivery Hero. For some customers, who are still particularly hard to get by COVID, we allowed them to continue with the free offering until they can get their feet back under them. Teams is a very high margin product for us, so this doesn’t cost us much.”

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For me, the biggest surprise was that they added 99 Enterprise customers (Both them and their competitor define it as customers paying >$100K/year) over 90 days, while there best competitor added 9. Cloudflare already dominates the SMB space. So in Q3, they showed that they really dominate the entire Edge space. That I believe is more material than the extent of revenue beat.

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