General
May 10, 2021
8 minutes read

Analysis: Cloudflare Drops Q1′ 21 Earnings Report

In our latest series of breaking down earnings reports, we’re reporting on Cloudflare, a web infrastructure and security company that helps…

In our latest series of breaking down earnings reports, we’re reporting on Cloudflare, a web infrastructure and security company that helps protect a great deal of the websites you likely visit.

Cloudflare has unveiled its latest earnings report for the first quarter of this year ending March 31, 2021. The report showed strong revenue growth for Cloudflare as it added a record number of large enterprise customers.

By the numbers:

Cloudflare reported $138mn in first-quarter revenue, up 51% year-over-year. Its revenue growth was propelled by the company adding a record number of large enterprise customers, roughly 120 in the quarter. Such customers now bring in over half of its total revenue.

Overall, Cloudflare reported a net loss of $40mn in the quarter.

Cloudflare’s net cash flow in the quarter was $24mn, compared to a negative $14mn in the same period a year ago.

For its forecast, Cloudflare is projecting to bring in somewhere between $146mn and $147mn in sales in its next fiscal quarter. For the full year 2021, it’s projecting between $612mn and $616mn in sales, a solid rise from its $431mn revenue in 2020.

Highlights:

Cloudflare now has 4 million total customers in total, most of whom are small customers each bringing in small-dollar sales. The lion’s share of the company’s sales now comes from large enterprise customers which are more stable and reliable for bringing in sales.

Cloudflare hasn’t been profitable on a net basis since going public in 2019 as it spends big on growth. At that, the company’s periodical net losses have been in the low double-digit millions and not that large compared to its revenue.

Cloudflare had $1bn in cash and cash equivalents at Q1 ending so can sustain more substantial losses as a sacrifice for its growth. Notably, the reported gross profit margins from the company’s business have consistently hovered around 80%, implying a high chance at net profitability if it lessens marketing and R&D spend.

Photo: Cloudflare CEO Matthew Prince, credit: World Economic Forum, licensed under CC BY-NC-SA 2.0