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Cloudflare, Inc. NET shares gained 8.4% during Thursday’s extended trading session after the company reported non-GAAP earnings of 16 cents per share for the first quarter of 2025 that matched the Zacks Consensus Estimate. The bottom line was also flat on a year-over-year basis as the benefits of higher revenues were fully offset by increased costs, higher interest expenses as well as taxes.
Cloudflare’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and met in one, delivering an average surprise of 14.9%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
First-quarter revenues increased 27% year over year to $479.1 million, which surpassed the consensus mark by 2.2%. The year-over-year improvement in revenues can be attributed to the sustained momentum in the onboarding of large new enterprise customers, remarkable progress in the public sector, continued high prioritization of security by its customers and a zero-trust approach.
Cloudflare, Inc. Price, Consensus and EPS Surprise
Cloudflare, Inc. price-consensus-eps-surprise-chart | Cloudflare, Inc. Quote
Cloudflare’s Q1 Details
Cloudflare’s top-line performance was positively impacted by its mix of customer segments (Channel Partners and Direct Customers). Revenues from Channel Partners (23% of total revenues) were $112.6 million, up 59.8% year over year. First-quarter revenues from Direct Customers (77% of total revenues) were $366.5 million, up 18.9% year over year.
Cloudflare had 250,819 paying customers at the end of the first quarter, up 27% year over year. It added 30 new customers during the quarter who contributed more than $100,000 in annual revenues. The total count of such customers reached 3,527 at the end of the quarter.
Cloudflare’s first-quarter non-GAAP gross profit increased 22.7% year over year to $369.3 million. However, the non-GAAP gross margin contracted 240 basis points (bps) year over year to 77.1%.
Non-GAAP operating income for the quarter jumped to $56 million from $42.4 million in the year-ago quarter. The non-GAAP operating margin expanded 50 bps year over year to 11.7%.
Cloudflare’s Balance Sheet & Cash Flow
As of March 31, 2025, Cloudflare had cash, cash equivalents and available-for-sale securities of $1.91 billion, up from $1.86 billion as of Dec. 31, 2024.
Cloudflare generated an operating cash flow of $145.8 million and a free cash flow of $52.9 million during the first quarter.
Cloudflare’s FY25 & Q2 Guidance
NET reiterated its guidance for full-year 2025. For 2025, it continues to anticipate revenues between $2.09 billion and $2.094 billion. The consensus mark for revenues is pegged at $2.09 billion, suggesting a year-over-year rise of 25.3%.