Cloudflare Stock Rallies More Than 10% As Results, Outlook Exceed Expectations

Network cybersecurity company's stock has been volatile amid a stormy outlook for cloud software

“During economic slowdowns, we believe that it’s important to show discipline and optimize for efficiency,” Cloudflare Inc. Chief Executive Matthew Prince said Thursday.

Cloudflare Inc. shares jumped in the extended session Thursday, after the cybersecurity company issued an outlook slightly above Wall Street expectations in a stormy cloud-software climate.

Cloudflare (NET) shares popped nearly 20% in after-hours trading, then cooled down to gains closer to 10% after the company's results cleared the bar set a quarter ago, when shares declined after the results. That was part of a roller-coaster ride for the stock, which shot up 20% after August's report.

Cloudflare executives on Thursday forecast adjusted earnings of 3 cents to 4 cents a share on revenue of $290 million for the first quarter, and 15 cents to 16 cents a share on revenue of $1.33 billion to $1.34 billion for the year. Analysts had estimated 3 cents a share on revenue of $250.6 million for the first quarter, and 15 cents a share on revenue of $1.31 billion for the year.

"In the fourth quarter, we delivered record operating profit, operating margin, and free cash flow," Cloudflare co-founder and Chief Executive Matthew Prince said in a statement. "We also surpassed more than 2,000 large customers paying us over $100,000 per year and signed a record number of deals greater than $500,000."

The company reported a fourth-quarter loss of $45.9 million, or 14 cents a share, compared with a loss of $77.5 million, or 24 cents a share, in the year-ago period. The adjusted loss, which excludes stock-based compensation expenses and other items, was 6 cents a share, compared with break-even a share in the year-ago period.

Revenue rose to $274.7 million from $193.6 million in the year-ago quarter. Analysts surveyed by FactSet had forecast net income of 5 cents a share on revenue of $250.6 million.

"During economic slowdowns, we believe that it's important to show discipline and optimize for efficiency," Prince said. "We have our hands on the levers of our business and a full-throttle innovation engine that is the envy of the industry."

Cloudflare's stock price is down 47.1% over the past 12 months, while the S&P 500 index fell 9.7% and the tech-heavy Nasdaq dropped 18.6%.