Cloudflare stock price surged by over 15% in the extended hours after the tech giant released strong financial results and boosted its guidance amid the ongoing AI demand. NET jumped to $208, up sharply from the year-to-date low of $160. So, will this surge continue?
CloudFlare reported strong financial results
CloudFlare is one of the most important companies globally as it powers most of the websites in existence today. It provides several services, with its DNS solutions being the most important.
A good example of this is what happened last year when it suffered an outage, which affected companies like ChatGPT, Shopify, Claude, PayPal, and Discord. It is used by over 332k paying customers.
This usage has led to substantial revenue and profitability growth in the past few years. Data compiled by Seeking Alpha shows that the net revenue has been in a strong uptrend in the past few years, moving from $431 million in 2020 to over $1.6 billion in 2024.
The company published its financial results, which showed that its growth accelerated in the last quarter of the year. Its revenue jumped by 33% to over $614 million, bringing its annual figure to over $2.17 billion.
CloudFlare has a gross margin of 73.6% and strong cash generation, with the net cash flow soaring to over $190 million in the quarter.
The management guided to higher revenue and profitability growth in the coming year. It now expects that the revenue will be between $620 million and $621 million in the current quarter, while the annual figure will be between $2.75 billion and $2.79 billion.
The net income from operations are expected to keep rising this quarter and this year, with the figures coming in at $71 million and $382 million this year.
The management cited the strong demand from the AI industry, which continues to accelerate this year. In a statement, the CEO said:
“The shift toward AI and agents represents a fundamental re-platforming of the Internet that’s driving demand across Cloudflare’s services. If agents are the new users of the web, Cloudflare is the platform they run on and the network they pass through.”
On the positive side, there are signs that the company is not all that overvalued, especially when considering key metrics like the Rule of 40. It has a forward growth rate of 22% and a levered FCF margin of 18%, giving it a metric of 40%.
Cloudflare stock price technical analysis
The weekly timeframe chart shows that the NET stock was in a strong bearish trend before the earnings. It moved from the record high of $260 to a low of $160. It then rebounded to $207, the 23.6% Fibonacci Retracement level.
The stock has remained above the 100-week Exponential Moving Average (EMA), which is a bullish sign. It formed a bullish flag pattern, a popular continuation sign in technical analysis.
Therefore, the most likely scenario is where it continues rising as bulls target the key resistance at $260, its highest point in November.
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