This Cloud Software Provider Not Only Earned Large Customers In Q2, It Also Earned Price Target Hikes By Analyst

Cloudflare, Inc NET clocked 54% revenue growth in Q2 to $234.5 million beating the consensus.

It saw a record addition of 212 large customers in Q2. It also achieved positive operating cash flow. 

Credit Suisse analyst Phil Winslow reiterated Outperform rating and knocked down the price target from $150 to $125. He remained impressed with the Q2 beat despite consensus expectation for a deceleration.

Winslow acknowledged the contribution from the Area 1 acquisition and the updated outlook implying continued strength. He was also impressed by the large deal momentum with Cloudflare adding record ARR customers.

Winslow continued to view Cloudflare as uniquely positioned, given the company’s differentiated serverless architecture, efficient and rapidly expanding global network, cloud-native approach for integrated network, application, and Zero Trust services, and the emerging opportunity and strong positioning in edge computing.

KeyBanc analyst Thomas Blakey reiterated his Overweight rating and $98 PT, citing the revenue beat in the challenging market. He also acknowledged the deterioration of some metrics in Europe.

The outlook remained aligned with his estimates, and he found it prudent amid the current macro. Blakey found the ‘conservative’ 40%+ revenue growth is a testament to the company’s value prop delivering secure, fast, global easy-to-use connectivity at a higher customer ROI. 

Blakey continued to view NET as a scarce growth asset targeting large pools of secularly underpinned IT spending, with 2Q results supporting his view. 

RBC Capital analyst Matthew Hedberg had an Outperform rating and $62 PT. He appreciated the revenue growth minus deceleration.

Hedberg highlighted the addition of record large customer addition, strong operating cash flow, and revenue guidance above consensus.

Price Action: NET shares traded higher by 24.9% at $73 on the last check Friday.