Cloudflare (NET) is my top watch list stock. They reported yesterday. Taking a quick look, their numbers seemed to be right in line with expectations rather than seeing any kind of immediate benefit from WFH. They had a strong quarter, metrics trended about as expected and management reaffirmed all previous FY guidance. The call reads strong and confident.
One thing that piqued my interest was the early traction of their Cloudflare for Teams product (https://blog.cloudflare.com/introducing-cloudflare-for-teams…). In essence, it’s NET’s version of a cloud-based VPN or firewall (think ZScaler).* NET has offered it for free until September and has seen over 1,000 companies come on board. That obviously has a chance to pay dividends down the road, but is likely to have limited impact other than slightly pressuring gross margins the next couple of quarters.
The stock saw a big surge yesterday after FSLY’s glowing report. It’s subsequently dipped today after a report that’s probably being viewed as more good than great.
Anyone else have an opinion on their Q? Maybe muji?
- I hope I’m not oversimplifying that from a tech standpoint.
27 Likes
Thanks Stocknovice, for starting this thread. I agree, Earnings result were in line for pre-Corona. And didn’t surprise to the upside so share price wasn’t taken up to rarefied air where FSLY went the day after they reported.
With 8.5% of my port in NET I’m interested in the long term success of this company as well as increasing the share price. FSLY yoy Rev growth 37%) share price up 50% on slower growth than NET yoyrev growth 48%); but FSLY with improved EPS(GAAP beats by 2cents) compared to NET (GAAP misses by 2cents). So OK, I agree that the freemium model of Net and particularly the choice of not charging for Teams, until Sept I believe, will bring down short term metrics.
2/24/20 ‘Bottomline, NET profitability picture will look very different from FSLY or ZS.’, Nilvest.
Can’t say we weren’t warned; but, I’m hoping that NET share price won’t perform like ESTC (although lately a bit improved).
I think of ESTC because I see them both as relatively complicated stories and that the perception the market seems to have of they’re being second class among the competition. I’d like to think that my ability to follow a more complicated story and that my valuing quality (optionality) over quantity (short term metrics) would make my choices in which companies to invest, in the long run, more profitable. Is that me being foolish and ‘fighting the market’?
1 Like