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On Friday, Bernstein SocGen Group adjusted its outlook on Cloudflare Inc . (NYSE:NET) shares, increasing the price target from $80.00 to $100.00, while retaining a Market Perform rating. The revision follows Cloudflare’s release of its Q4 2024 earnings, which were notably robust and aligned with FY25 consensus expectations. According to InvestingPro data, the stock currently trades at $141.52, suggesting potential overvaluation relative to its Fair Value estimate.
Cloudflare’s recent financial results exceeded its revenue guidance by 1.9%, marking the most significant outperformance since the same quarter the previous year. The company’s impressive 30.04% revenue growth and 77.53% gross profit margin demonstrate strong operational execution. The company also demonstrated promising signs for future growth, with an improvement in Net Revenue Retention (NRR) by 1%. However, the analyst anticipates a potential dip in NRR next quarter due to the leap year comparison before it begins to rise again.
The company’s customer base growth was particularly strong, with record net additions in both the over $100K and under $100K categories, surpassing even the surge seen during the COVID period. Despite the company’s growth since then, these figures represent an impressive achievement.
Operational efficiency has remained a highlight for Cloudflare, as evidenced by their bottom line. The company managed to surpass consensus expectations in Non-GAAP Operating Margin (OpM) by 180 basis points (bps) and maintained a nearly flat margin compared to previous quarters. This was achieved while still aggressively investing in sales and capital expenditures to foster further growth. InvestingPro analysis reveals a healthy current ratio of 3.37, indicating strong liquidity management. Discover 14 additional key insights about Cloudflare’s financial health with an InvestingPro subscription.
The analyst’s commentary highlighted Cloudflare’s ability to deliver solid financial performance amid continued investment, a factor that could set a positive example in an earnings season where other companies might struggle to meet expectations.
In other recent news, Cloudflare reported a significant 26.9% year-over-year increase in its fourth-quarter revenue for 2024, amounting to $459.9 million. This surpassed both BTIG’s and the Street’s estimates. The operating income for the quarter was $67.2 million, a figure that exceeded BTIG’s projection by a considerable margin. Looking ahead, Cloudflare’s midpoint guidance for 2025 anticipates revenues of $2.092 billion, marking a 25.3% year-over-year growth.
Cloudflare has also made notable strides in securing larger deals, including signing its largest-ever new customer during the quarter. The company expects to see a meaningful acceleration in capacity and ramped representatives in the second half of 2025, following its progress in go-to-market (GTM) strategy changes initiated a year prior.
In other developments, Cloudflare announced the appointment of Michelle Zatlyn as Co-Chair of the Board. Zatlyn will serve alongside current CEO Matthew Prince, maintaining her operational responsibilities within the company. Analysts from JMP Securities and Needham have expressed confidence in the company’s future, raising their price targets for Cloudflare’s stock. However, despite the positive outlook, BTIG maintains a Neutral rating on Cloudflare stock due to its post-market close trading valuation.
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