Cloudflare, Inc. (NYSE:NET) Just Released Its First-Quarter Results And Analysts Are Updating Their Estimates

It's been a mediocre week for Cloudflare, Inc. (NYSE:NET) shareholders, with the stock dropping 15% to US$74.40 in the week since its latest first-quarter results. The results overall were pretty much dead in line with analyst forecasts; revenues were US$379m and statutory losses were US$0.10 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Cloudflare

Taking into account the latest results, the consensus forecast from Cloudflare's 29 analysts is for revenues of US$1.65b in 2024. This reflects a notable 19% improvement in revenue compared to the last 12 months. Losses are supposed to decline, shrinking 20% from last year to US$0.43. Before this latest report, the consensus had been expecting revenues of US$1.65b and US$0.40 per share in losses. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although revenue forecasts held steady, the consensus also made a modest increase to its losses per share forecasts.

As a result, there was no major change to the consensus price target of US$97.51, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Cloudflare at US$135 per share, while the most bearish prices it at US$50.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Cloudflare's revenue growth is expected to slow, with the forecast 27% annualised growth rate until the end of 2024 being well below the historical 35% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.5% per year. So it's pretty clear that, while Cloudflare's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Cloudflare. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Cloudflare going out to 2026, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Cloudflare , and understanding these should be part of your investment process.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.