Cloudflare (NYSE: NET) saw its share price jump this morning as investors had time to digest the results of its second-quarter earnings report, which was released yesterday. The company saw its revenues beat the analyst consensus and it raised its full-year outlook on the back of these positive results. While this did lead to a roughly 22% increase in the company's share price today, the stock is currently down by roughly 44% since the start of the year.
Cloudflare reported second-quarter sales of $234.5 million, representing a 54% increase year-over-year (YoY) and a 3.2% increase on the analyst consensus of $227.3 million. This was due to paying customers increasing YoY from 126,735 in Q2 2021 to 151,803 in Q2 2022. The number of customers with $100,000+ annualized revenue increased by 60.75% YoY to 1,749. The company also reported a dollar-based net retention ratio of 126% for the quarter, which is 2 points higher than during the same period last year and 1 point lower than the previous quarter.
Net cash flow from operating activities increased to $38.3 million in the second quarter of 2022, compared with $7.5 million in 2021. The fall in free cash flow (FCF) was lower in the quarter compared to the previous year. FCF was minus $4.4 million or 2% of total revenue this quarter in comparison, this was minus $7.5 million last year or 6% of total revenue. This resulted in cash, cash equivalents, and available-for-sale securities totaling $1.64 billion.
Cloudflare increased its full-year revenue outlook from its expectations in its first-quarter earnings report. The company forecasts total year-end revenue between $968 million and $972 million. This is up from a forecast of between $955 million and $959 million in the first quarter of the year. Cloudflare's management also anticipates returning to a positive free cash flow position in the second half of the year.
The company also anticipates generating earnings-per-share of $0.03 - $0.04, which is in line with its first-quarter estimate. However, the company expects 343 million outstanding weighted average shares, compared with the 345 million forecast earlier.
Cloudflare saw its share price jump by around 22% today as investors realized how good the company's report was. They were also impressed that the company continues to grow and beat the analyst expectations, which many companies have missed this earnings season.
The company does not appear to be worried about a potential recession as it has raised its revenue outlook. This has garnered the attention of investors searching for any stock with growth potential. The U.S. economy remains in a relatively stronger position than other markets like the UK and EU. This caused investors to view some U.S. tech stocks more favorably than they did at the start of the year.
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