Cloudflare (NET) - Investing Ideas
Cloudflare (NET) is a top investment idea right now
Cloudflare (NYSE: NET)
Cloudflare is celebrating it’s 10th year of being a forward thinking internet company. They are expanding rapidly and this small tech company is growing into a great stock for investors. This company is still under the radar and most people have never heard of Cloudflare.Â
I break down some of the reasons why I’m investing in Cloudflare (NYSE: NET).
Cloudflare is tech company focused on web infrastructure, website security, and cyber security. They are based in San Francisco and have around 1,700 employees. Their primary focus is on content delivery network and internet security but they are expanding into edge cloud and more security. Cloudflare has won a number of awards from Forbes, Fast Company, and Entrepreneur naming them things like top startup to watch and most innovative company. They are not just a company to watch though, they deserve a place in a tech or security focused investment portfolio.
Image Source: Cloudflare Investors Relations
Cloudflare Revenue Growth
2016: $85 million
2017: $135 million
2018: $193 million
2019: $287 million
2020 Estimate: Revenue of $404 to $408 million
Cloudflare has been growing revenue in the 45–50% range consistently each year. This growth is exactly what high growth investors are looking for. Since Cloudflare is growing at this rate, it gives them a better chance of outperforming big tech, ETFs, and many large funds that follow the market.
More About Cloudflare
Cloudflare creates products to make the internet smarter, faster, and safer. Their products are for Internet Infrastructure, Applications, Network Security, and Developers. Examples exclude: DDoS protection, Content Delivery Network, and Load Balancing. These products help applications and websites run securely so you can benefit from them. They also help prevent cyber security attacks so your data is safe when you login or use an application. Cloudflare has over 96,000 paying customers and 637 of them are spending over $100,000 per year. They have around 16% of the Fortune 1000 as paying customers with tons of room to grow.
Image Source: Cloudflare Investor Relations
Recent Financials
Cloudflare Announces Third Quarter 2020 Financial Results
11/05/2020
Third quarter revenue totaled $114.2 million, representing an increase of 54% year-over-year
Q3 GAAP net loss per share of $0.09, representing an improvement of $0.26 year-over-year; non-GAAP net loss per share of $0.02, representing an improvement of $0.14 year-over-year
Strong large customer growth, adding a record of roughly 100 net large enterprise customers in the quarter, in addition to our first $10 million ARR customer
Cloudflare is showing strength in their growth in both revenue and large Enterprise customers. Since they are growing revenue at 54% this places them in the high growth category. They also added 100 net large Enterprise customers in one quarter and that will drive future growth as well since these customers can expand over time.
Cloudflare is hiring
Cloudflare is growing fast and expanding around the world. They are hiring for 200+ open roles on their website in a variety of technical and business roles. They are hiring for roles in Europe and Asia so they are making a big push to expand and generate new revenue for investors. This is a great sign for a mid-sized tech company and their international expansion is so important!
Cloudflare Stock
Cloudflare (NYSE: NET) stock has ranged from $23–43 per share over the last 6 months. As of early October 2020, it is around $42 per share. Since Cloudflare is growing and expanding rapidly around the world, I have a price target of $52 plus over the next 12 months.
ABOUT ME
I spent 8 years working in Tech in sales and marketing roles at startups and large enterprise. I worked on high growth teams selling software to leading companies in North America. Over the years, I became a top performer and went to various offices to train others on how to sell software and grow teams. Now, I’m a full-time investor, options trader, and independent writer. I’m following my passion for investing that started 13 years ago. Thank you for supporting my work as a writer and I hope you find value in my research, articles and perspective.
MY PORTFOLIO TOP 8 HOLDINGS
Zoom Video (ZM): 10.46%
Fastly (FSLY): 6.63%
Amazon (AMZN): 6.37%
Cloudflare (NET): 5.16%
CrowdStrike (CRWD): 5.08%
Twilio (TWLO): 5.07%
Peloton (PTON): 5.05%
Datadog (DDOG): 4.87%
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Disclosure: I own shares and call options for Cloudflare (NET). This article is not investment advice.
Great note! Thank you for sharing. I own Cloudfare haven't missed Fastly. It seems that edge computing is all the rage these days. Any ideas how much exposure does cloud fare has to Edge computing vs CDN?