To The Moon

$Cloudflare, Inc.(NET)$

let's talk about Cloudflare.Let's see how things unfold. But shifting gears to stocks that seem to climb steadily.

Looking back at last quarter’s guidance, they projected total revenue between $451 million and $452 million, income from operations between $57 million and $58 million, and non-GAAP net income per share at $1.18.

However, their actual Q4 results exceeded expectations. Revenue came in at $459.99 million, reflecting a 27% year-over-year growth. Non-GAAP income from operations was $67.20 million.

For Q1, they now anticipate total revenue of $468 million to $469 million, representing 24% year-over-year growth. They expect non-GAAP income from operations between $54 million and $55 million, about a 30% increase YoY. Meanwhile, non-GAAP net income per share is projected at 16 cents, which is interestingly flat compared to the previous year.

Looking at full-year guidance, Cloudflare expects revenue between $2.09 billion and $2.094 billion. It’s curious how precise they are with these numbers—I think they could widen the range to allow for some flexibility. If they meet these projections, it would represent 25% growth over 2024.

Non-GAAP income from operations is expected to be between $272 million and $276 million, a 20% increase from 2024. Lastly, non-GAAP net income per share is estimated between $0.79 and $0.80, reflecting only a 7% increase from 2024, which is a bit surprising given their history of beating analyst estimates.

Overall, while their revenue and operating income projections remain strong, the relatively modest EPS growth for 2025 stands out.

Now, if Cloudflare continues to significantly outperform expectations as it has in recent quarters, that 7% EPS growth could end up being much higher. But for now, that's what they're guiding toward, which I find interesting.

As for how the market reacted—investors loved it. Cloudflare surged over 17% on Friday, at one point climbing more than 20% intraday. You might wonder why, given that their reported earnings and fundamentals didn’t seem particularly groundbreaking. But if you dig deeper into their supplemental report, there are some key positives that likely drove the rally.

Strong Business Metrics:

• Paying customer growth accelerated to 25% in Q4. This is a key metric for Cloudflare, as their model relies on offering free services to attract users and then converting them into paying customers.

• Large customers (>$100K in annual revenue) grew 27% YoY. This is a strong signal of enterprise adoption.

• Dollar-based net retention rate had been declining for three consecutive quarters but ticked up slightly in Q4—a positive sign.

• Remaining Performance Obligations (RPO), which represents future revenue from signed agreements, was up 35% YoY and 12% QoQ. Notably, 70% of that revenue is expected in the next 12 months—a strong indicator of near-term growth.

My Thoughts:

Overall, Cloudflare’s earnings were solid. They’re clearly a high-growth business, with revenue expanding in the high 20s% range in a booming industry. And we haven’t even touched on Edge Computing, which I see as their most compelling long-term opportunity.

That said, some investors question the valuation, as the stock keeps climbing. And while I understand that concern, it’s important to remember that not everyone trades based on fundamentals alone. Momentum, technicals, and future prospects play a big role in stock movements.

Cloudflare sits at the intersection of cybersecurity, cloud computing, and edge computing—all fast-growing trends. Plus, with investors shifting funds away from AI hardware (Mag 7) into smaller-cap software stocks, Cloudflare is benefiting.

A major highlight from their earnings call was their discussion on AI inference and agents. While much of the AI spending so far has been on model training, the next phase will focus on inference and deployment, areas where Cloudflare’s Workers platform excels. As more companies prioritize AI-driven applications, Cloudflare is positioned as a key player.

When you put all of this together, it’s easy to see why the stock has been on such a strong run.

Here’s my take—I added Cloudflare to my portfolio back in August, when it felt like not many people were talking about it. I liked their products, their customer acquisition strategy, and their potential in Edge Computing. Plus, I wanted a smaller-cap tech stock to balance out my portfolio, which was already heavy on mega-cap tech. We discussed all of this back then, and fortunately, things played out really well over the last six months. On top of that, the technical setup at the time looked solid, so it was a bet I felt was worth taking—and so far, it’s paid off big.

That said, on Friday, I decided to sell half of my Cloudflare position. I still hold 100 shares, and I plan to let them ride because my long-term thesis on the company hasn’t changed. We haven’t even seen the full potential of their Edge Computing and AI inference capabilities yet.

But here’s how I looked at it:

• My investment doubled in six months, and the stock is now trading at extremely high valuations.

• That kind of move doesn’t happen often, and when it does, I see it as a gift.

• At the end of the day, we’re investing to make money, and sometimes it makes sense to take profits.

By selling half my position, I essentially recouped my initial investment, and now I can reallocate that capital elsewhere while letting the rest of my Cloudflare shares continue to run.

Now, I sold at the open on Friday, and the stock has gone up even more since then—which is totally fine. Doubling my money in six months is a massive win, and I’m still holding a stake in the company. Plus, I now have some extra cash to put into another opportunity. Spoiler alert—I’m looking for something similar to Cloudflare to invest in next.

The Bigger Lesson Here

I see plenty of skeptical comments like these:

• Be cautious with this one—I don’t think it will end well.

• Stock-based compensation is growing faster than revenue—that’s a red flag.

• Do they even have a competitive moat?

These kinds of concerns are valid, but they also assume that stocks only move based on fundamentals—which just isn’t true.

The reality is that stocks move for many reasons— Gambler, News momentum, technicals, sector trends, and investor sentiment all play a role. So when people dismiss a stock because of stock-based comp or a supposed lack of a moat, they might be missing the bigger picture.

Now, does this mean I was right and they were wrong? Not at all. I’ve made my share of bad calls too. But the point is that you have to trust your own strategy and make decisions based on what makes sense for you—not based on what others think.

There will always be people ready to tell you why your investment is a bad idea. But at the end of the day, it’s your money, not theirs.

So: Have a plan. Stick to it. Be consistent. And stop worrying about what other people think—because, honestly, they probably don’t know either.

Hope you all have a great day—Financial Independence is true freedom, so keep building and stacking wins.

@Daily_Discussion @TigerPM @TigerObserver @Tiger_comments @TigerClub

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.