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Cloudflare Announces Fourth Quarter and Fiscal Year 2020 Financial Results
- gigatexal 6y agoNot bad financials. Healthy margins, relatively small (in my mind) losses and revenue growing well. At this rate they should be profitable in a year? 2 maybe?
- weeboid 6y agoFor growth stocks, doesn't this signal stagnation?
- gigatexal 6y agoNot if revenues continue to grow. I think the market awards grow-at-all-costs companies too much. Profits are the best bell-weather of a healthy company. Yes yes Amazon and the like but they invested cash flows back into the business.
- nickysielicki 6y agoDown 6% after hours, for reasons that I don't understand. Personally, I'm more-sure that Cloudflare will be around in 25 years than I am that Facebook will be around in 25 years. Their customers are real-valuable customers paying for a real-valuable service, and that's not going away anytime soon. Meanwhile, their serverless stuff is very cool and unique. I think their durable objects are going to go mainstream someday. They work on hard/interesting/real technology, that's gotta be worth something. I predict that one day, we'll see a C somewhere in "FAANGM".
- BitwiseFool 6y agoCAMFANG?
- alex_young 6y agoFC'G A MAN
- whoisburbansky 6y ago> Down 6% after hours, for reasons that I don't understand. Not trying to be snarky, but this is how I feel about pretty much all AH movement after earnings, for any company. Do you usually not feel this way?
- edmundsauto 6y agoI think this is the most accurate way to feel about market movement. People who give you explanations might be right, but how would they even know? Stock narratives are post hoc divination a without much exploration of alternative explanations. I tell myself that any explanation might be a neat story, but what evidence is there that isn’t just someone’s opinion? (Not much, usually.)
- darkwizard42 6y agoIt pretty much comes down to how expected or unexpected the guidance and exceeds/misses are on the metrics of interest. If you know that FB, GOOG, PINS are all having amazing quarters, you might see SNAPs price rise in advance of their earnings because if some other big ad/social network giants are doing well, surely SNAP will too! Then there are truly amazing beats or misses by companies and the street tracks those as well. A more recent example might be Lyft & Uber. Lyft actually came in at the top end of QoQ rev growth and cut losses well. Uber's options market and stock immediately reflected Lyft's earnings report even though Uber was still 24 hours away from reporting. Uber's report was good not great but the stock had already gained in the day prior and thus not much left to squeeze up. Just my 2 cents on how some of these things happen
- overcast 6y agoThat's why you remain neutral and sell premium, especially on ER with insane volatility crush.
- blantonl 6y agoThe stock has had a 25% run up to earnings in the past month. It's a classic buy the rumor sell the news. Here's your opportunity to buy the dip.
- vmception 6y agoand if it was up you would have said "new information that the market was not able to price in" or "the forward guidance was good" or just congratulate the leadership
- jedberg 6y ago> Down 6% after hours, for reasons that I don't understand. I think the street was hoping for a rosier outlook on profitability next quarter.
- llboston 6y agoRevenue is $125m this quarter, about 50% over last year. P/S is around 60, which might be too high to many people and therefore the correction.
- quickthrowman 6y agoBefore 0% interest and euphoria, 20-40x was a good SaaS NTM/Revenue multiplier. SNOW is upwards of 200x at this point I believe
- DamnYuppie 6y agoMy feeling is that the price had risen expecting a more stellar result or bullish guidance. When the street didn't get that they took their profits and ran. You can watch the same thing happen to CRM and ZM now in the days leading up to their next earnings call.
- spoonjim 6y agoWhat does it mean “the street took their profits and ran”? Who did they sell the stock to?
- aaomidi 6y agoTo buyers who had placed orders way lower than what the stock was worth.
- nostrademons 6y agoFolks like the OP who believe CloudFlare is a good long-term buy but weren't paying attention before the earning's announcement. There's usually some subsegment of investors that believe that earnings are going to be really good, bid up the price beforehand, and figure they'll sell after earnings. If that group is smaller than the folks who see the earnings and figure it actually is a really good buy that they want to own, you get a stock pop after earnings. If the former group is larger than the latter, you get a stock drop. This cycle the former was bigger than the latter for CloudFlare. It's gone the other way both other cycles for CloudFlare and this cycle for other stocks. (Google and Disney, for example, got large after-hours pops after earnings.)
- ac29 6y agoSure but most volume is already institutional, and especially during after hours, there is nearly no retail activity. So, if "the street" took their profits after the earnings release, a different part of said street was buying.
- csomar 6y agoTraders to other investors. Usually Wall Street traders have some valuation model based on revenue. If the target isn't met, that reduces their model's price. Some people are less sophisticated and will just buy CloudFlare because they want to buy into the company. It's also possible that the price just adjusts to the new level (though usually there is some volume at every pip)
- Uehreka 6y agoI don’t get why people still say FAANG, even. Netflix is doing great and has some great tech, but these days it seems like they’re way more of a TV megastudio with a really great engineering dept than a tech giant like Apple, Amazon, Facebook and Google. Sure, they’re no slouches, but it feels like any acronym that includes Netflix needs to also include Microsoft for sure. In fact, by the time you get to Netflix I feel like you’d have to have included Salesforce, Tesla, maybe even Twitter, and probably half a dozen names that aren’t coming to me right now.
- catmanjan 6y agoMost times I see faang it's in the context of tech jobs, and Netflix is notorious for its wages - just my perspective as an outsider in Australia...
- nostrademons 6y agoMuch of that's historical reputation, though. Netflix actually underpays compares to some of its peers in the valley now. As of early 2020 my perception (somewhat based on levels.fyi data, as well as personal & friends' salary data) is that the ordering is roughly FaceBook > Snap > AirBnB > Google > Lyft > Stripe > Uber > Netflix > Microsoft > Apple > Amazon > (old-line tech like IBM, Oracle, HP, Juniper, Cisco). This was pre-COVID and tends to move around a lot with stock prices though.
- comp_throw7 6y agoI think if you compare based on sign-on offers offered to candidates with comparable experience, rather than compensation with multiple years of differential stock movement factored in, you get an ordering more like: Snap > Netflix > Pinterest > (Airbnb, Uber, Lyft) > Facebook > Google > Amazon > Apple > Microsoft. Stripe isn't publicly traded, but if we took for granted their RSU valuation without any discount, it'd be up there with Netflix. Lack of refreshers may knock Netflix down one or two spots, I suppose, but they do have a practice of giving substantial raises for performance, so maybe not. After all, the interesting thing to a prospective candidate isn't how much money the engineers working at those companies are making now, it's what sort of offer(s) they can expect. (Also, all cash comp > 50%+ RSU, imo, even if you bake in an implicit growth factor to equity. The volatility should probably carry a significant penalty.)
- xwdv 6y agoThree. Day. Rule.
- prewett 6y agoCloudflare seems like a promising stock, but the dual-class shares really put me off. It doesn't even look like Class B is even traded; at least for, say, Google, you can buy their Class B stock.
- selectodude 6y agoYou can't buy class B google stock. It's owned solely by Larry Page, Sergei Brin, and a handful by Eric Schmidt and others. They're not traded on public markets and give Page and Brin alone 51 percent of all voting rights. Furthermore, if any class B shares are sold, they're converted to class A and lose their 10x voting power.
- enos_feedler 6y agoInteresting, I've always seen two stocks listed (GOOG and GOOGL) but upon further inspection, they are class A and class C. I assumed one was voting and one wasn't but i guess not!
- OJFord 6y agoYou assumed correctly, but the privately held B class gives more votes. 10 per share to A's 1, iirc.
- quickthrowman 6y agoClass A shares (GOOGL) have one vote, Class C shares (GOOG) have 0 votes
- tedunangst 6y agoGoogle public shares are class A and class C. And because the world is upside down, the class C shares which don't vote trade at a slight premium.
- dmead 6y agocloudflare has been talked about on WSB and /r/stocks for months. it's probably pumped a good bit already and this was a reality check.
- notyourwork 6y agoTo be concerned with any noise associated with WSB or others is dependent on your time horizon. If Im buying Cloudflare because I plan to own it in 5-10 years, that is likely moot. If you want to get rich quick, its a bet like any other.
- Traster 6y ago>I predict that one day, we'll see a C somewhere in "FAANGM". Honestly, this is such a stupid game. The original acronym was FANG. It included Netflix which at the time it was coined was orders of magnitude smaller than Apple, the acronym didn't include Apple, and now it has about 10 different deriviations which does and does not include Netflix (whose core business has been invaded by not only Apple and Amazon but also Disney and HBO), but does include Microsoft - which isn't whilst very successful, isn't dominant anywhere. The whole value of FANG was that it spelt out the word fang - beyond that, it was completely devoid of meaningful value. It works in the same way that a big red button Jim Cramers' desk works. It doesn't.
- pbiggar 6y agoFAANG was originally about companies that paid massive engineering salaries, which is why Netflix was included and Microsoft wasn't.
- reducesuffering 6y agoNo it wasn't. Cramer coined it due to just FANG (not apple) being totally dominant in their markets and having meteoric rises in stock prices at that time.[0] [0]https://en.wikipedia.org/wiki/Big_Tech#FAANG https://en.wikipedia.org/wiki/Big_Tech#FAANG
- rvz 6y ago> Down 6% after hours, for reasons that I don't understand. Well time to buy some on Friday near market close then before it reaches >$100.
- christophilus 6y agoI imagine that insiders are allowed to sell after earnings releases. My bet is there’s a blackout window that opens after earnings and insiders exercise their options, causing selling pressure. Just a guess though. It sure how to validate it.
- subsaharancoder 6y agothis is typical behavior of stocks, even with stellar earnings many of them go down after hours, go checkout Corsair
- Thaxll 6y agoWorth $28B and only have revenues of $450M a year, that should explain, this compagny is overevaluated.
- thefounder 6y agoThe whole market is overvalued. It has become a kind of bitcoin. Fundamentals don't matter anymore. It's positioning and volume.
- MuffinFlavored 6y ago> The whole market is overvalued. This is actually fake news and I'll tell you why. Bond yields have never been this low. No other alternatives to park capital if you are seeking yield/return. The market is actually correctly valued if you take M2 money circulation/supply into account as well. Something like that. I read it on r/investing. You have to sift through the weed/penny stock posts to find the good information.
- deleted 6y ago[deleted]
- khyryk 6y agoI've been thinking about this for a while. Let's say that the USD is indeed 40% devalued and the market melted up significantly as a result of this -- does this not make "value" stocks a massive bargain? That is, if something was at a PE of 10 before the money printing, has maintained reasonable fundamentals, and remains at a PE of 10, isn't it stunningly undervalued if the same money printing is used to justify "growth" stock rallies?
- christophilus 6y agoIt depends on how inflation affects the business. A lot of value companies don’t really have pricing power, and will likely have to eat some of the inflation. Edit: but yes. If we see inflation coming, it’s better to have a dollar now than a dollar in the future, so I guess that should favor value. Hm. Investing is tricky.
- gsich 6y agoBetter find a way to add the C In "GMAFIA".
- mathattack 6y agoThe valuation is based on hyper-aggressive growth expectations that compound over time. If you shave even a few percent off the growth projections stock takes a hit. It’s hard to switch your CDN provider in the short term, but it’s feasible that Amazon, MSFT or Google could bump them out of every large enterprise in the long term.
- acdha 6y ago> It’s hard to switch your CDN provider in the short term, but it’s feasible that Amazon, MSFT or Google could bump them out of every large enterprise in the long term. That's what I'd worry about, too: for a large company, there's a fairly large cost to dealing with each new vendor. Once Amazon, Microsoft, Google, etc. has a CDN which is competitive for your needs someone is going to ask whether the extra benefits are greater than the cost of managing a contract, security, training, etc.
- goalieca 6y agoSo next step for cloudflare is to provide a cloud.
- acdha 6y agoThey’re already starting that with Workers & similar but it’s a LONG way from what enterprise customers want. Even if they have some modern stuff they’ll almost inevitably ask for the ability to run some old Windows 2008 server they’ve been meaning to get rid off.
- mathattack 6y agoIt’s a huge investment. Look at how hard it’s been for Google and Oracle.
- dcolkitt 6y agoDoes Cloudflare have any defensible moat? If Google or Microsoft decided to muscle Cloudflare out of business tomorrow, what’s to stop them? In comparison, we already know that Google can’t take out Facebook.
- tidepod12 6y agoThe major Cloudflare products (namely the CDN, WAF, DDoS protection, DNS management, and even serverless workers) are already replicated in AWS, GCP, and Azure. AFAIK the main thing that draws people to Cloudflare instead is "it's easier to use than bloated AWS/etc." And while that might be a completely valid value proposition, I'm not sure if it's a long term winner, especially as more and more companies migrate to the big 3 cloud providers. It reminds me a lot of Dropbox and the situation where for years Dropbox's value proposition was "yea OneDrive and iCloud provide the same service, but people like Dropbox because it is independent, unbloated, and simpler to use". But over time that's become less true, and as more and more companies move to using O365, they end up getting OneDrive as part of the deal anyway. And once you're already working in an environment with OneDrive, why continue using Dropbox?
- rusteh1 6y agoI wouldn't call Cloudfront bloated. It is under featured if anything, the product has seen little change in the past few years.
- taf2 6y agoHowever unlike Cloudflare it does support multiple origins with a IMO pretty simple to understand nginx like location x maps to origin b and location c maps to origin... This feature alone is one reason I stopped looking further into Cloudflare...
- ternaryoperator 6y agoI don't dispute the point you're making, but Dropbox for my purposes is way ahead of OneDrive. In particular, OneDrive offers only "eventual sync," whereas in Dropbox, you change a file and it's quickly replicated on other systems. Also, OneDrive has a fixed ceiling of ~ 200K files per OneDrive. Dropbox allows you way more than that. So, while I see your point that eventually OneDrive could displace Dropbox entirely, I believe that Dropbox still has plenty to offer at the moment.
- m12k 6y ago> Down 6% after hours, for reasons that I don't understand. A stock doesn't go up or down based on whether it does well or poorly, it does so based on how it performs relative to the expectations that were already priced into it. If it does well, but not as well as the market was expecting, then it will still go down.
- deleted 6y ago[deleted]
- ptero 6y ago> Down 6% after hours, for reasons that I don't understand "Buy on the rumors, sell on the news". Sell on the news part I think
- jvanderbot 6y agoThe stock market is not about buying ownership in long-term stable, profitable companies, unless you zoom wwaaaaaaaaaaay out on the charts. Day to day it's about riding hype up and jumping off before anyone else. CISCO was a great example of this back in the day. https://www.fool.com/investing/2020/12/27/2020-incredible-stock-market-rally-risk-tolerance/ https://www.fool.com/investing/2020/12/27/2020-incredible-st...
- maxk42 6y ago> The stock market is not about buying ownership in long-term stable, profitable companies Good - CloudFlare has never been profitable once.
- gifnamething 6y agoThat's all of FAANGM. Their last year looked pretty good.
- tootie 6y agoIt's a mantra of stock trading to buy on rumor and sell on news. This report was likely already priced in based on estimates.
- deleted 6y ago[deleted]
- Tarq0n 6y agoIf the last few years should have thought us anything it's that stock prices don't matter. The only time they become material to the business is if they urgently needs to raise capital, and are for some reason unable to access capital markets (unlikely in the current era of quantitative easing). They are on the other hand a very easy indicator of sentiment around the business and therefore attract way more attention than they deserve.
- adam_arthur 6y agoThe stock ran up close to 20% in the last month. An even stronger earnings beat than reported was already priced in. Even after the 7% decline, it's still higher than 1 month ago.
- cholmon 6y agoRevenue is up 50%, but profit margin is down a bit, 76.6% in 2020 versus 77.9% in 2019. Plus, the upper range of their expected 2021 revenue is ~$593 million, which would be about 40% revenue growth if I did that math right ($431 * 1.38 = $594). So less growth, decreasing margins = sell I guess?
- noncoml 6y agoGenuine question, why are you looking at the gross profit margin? .
- noncoml 6y agoNet loss is increasing, operating expenses increasing, cash flow looks bad. Not sure there is anything to like about this stock other than speculation. And it's already a 12yo company
- deleted 6y ago[deleted]
- aranibatta 6y agoMACFANG has a nice ring to it.
- AznHisoka 6y agoThe stock is up 400% from a year ago. Is CloudFlare really 400% more valuable than a year ago?
- efwfwef 6y agoWhat? There's more chance that Facebook will be much more part of your life in 25 years than Cloudflare. Internet technology comes and go, social networks are here to stay. More than that, VR is going to boom in the next 10 years.
- abdabab 6y ago> Internet technology comes and go, social networks are here to stay. Like Google+, Friendster and Myspace?
- efwfwef 6y agoGoogle+ was never here to stay, it came after Facebook and never grew. I'm not sure what Friendster is, I guess it was never popular internationally? Myspace got eaten by other social networks, so I'm not sure what you're trying to disprove?
- risyachka 6y agoCloudflare like many other companies is pretty volatile. 6% is nothing for them. It happens from time to time without any reason.
- dreaminvm 6y agoSolid results with exceptional margins and a healthy FY21 outlook. I wonder if markets just have unrealistic expectations (from the craziness of GME/AMC and cannbis stocks) or people are just taking profits on a ~400% run up since IPO.
- subsaharancoder 6y agothe latter, people booking unrealized gains pre-earnings, then post earnings it finds a comfortable price point, then more people buy and we rinse and repeat..
- cma 6y agoCloudflare is still up 10% for the month.
- deleted 6y ago[deleted]
- BasedInfra 6y agoI mean this absolutely no thesis and it's money I can lose but been invest in companies that have solid, quality documentation. As one of them cloudflare's done me a solid so far.
- xorx 6y agoMaybe I'm too old, and stuck in the mud with the pre-ICANN intention of the original TLDs, but does it seem odd to anyone else that they host their network services on .com and their corporate information on .net?
- judge2020 6y agoI think the joke here is that their stock symbol is NET.
- azinman2 6y agoSurprised they could get that after all the net related terminology in the early 2000s.
- lazerpants 6y agoYour comment sent me down a research hole. Turns out, stock ticker symbols can be reused but I can find no evidence that NET was used before, which seems impossible.
- mike_d 6y agoCloudflare.net is behind Cloudflare, but the actual site is hosted by Q4. They provide hosted investor relations portals for a bunch of publicly traded companies. Putting it on a non-cloudflare.com domain puts it outside the security context of the main site and they don't have to worry if it gets hacked. Google does something similar by hosting third-party stuff on withgoogle.com and a handful of other domains.
- byhemechi 6y agoCloudflare is one of those things that if I'm asked about it I'll sound more positive than astroturfing. Their API's a re great, I've had to contact support once and my experience was good and their rates are certainly reasonable for the scale of projects I've used them on.
- stemlord 6y agoLets not forget Cloudflare practices deplatforming based on political bias.
- lame-robot-hoax 6y agoYou don’t have an inherent right to a private company’s services. That extends to a website whose main attraction is a forum that is discriminatory against people of certain races, religions, and sexual orientations, which are protected classes. Political affiliation is not a protected class.
- sneak 6y agoArbitrary censorship of legal content for consenting adults is still utterly despicable, even when undertaken by private companies against content which is not associated with membership in a protected class. It's still censorship, it's still paternalistic, it's still bias, and it's still wrong. Imagine if the phone company denied you access to their privately owned towers because you criticized them on a phone call, or if gmail decided that you aren't allowed to email your own family members links to a certain domain name they deem unsavory or "inappropriate". (The latter is already the case.)
- aikinai 6y agoThat's exactly why phone companies are bound by extra regulations. They are deemed core infrastructure and private censorship from phone networks would effectively be public censorship. If CloudFlare or Gmail became the only way to communicate online, they would certainly fall under the same regulations, but they're not even close. You can still host any legal website you want and email your family any legal content you want.
- buckybadger14 6y agoWhat is the market for cloudflare? Do you think every company who has a website will use some of their products? Understanding TAM...
- marktolson 6y agoI can't speak for everyone but for every site I've created I run it through Cloudflare. Even if it's just for DNS. It takes care of so many things that would otherwise require config/setup, costs or maintenance at the click of a button.
- de6u99er 6y agoMy issue with Cloudflare is, that they don't do any content checks. I remember a friend of a friend who knows someone who participated in various Anonymous missions, that CloudFlare is protecting islamic terrorist forums, and recently I learned fom another friend of a friend that they are also protecting QAnon's and Trump's online forum where rrcent insurrection was allegedly planned and coordinated. There's tons if alternatives for those who don't want to do business with such a company. E.g.: https://www.g2.com/products/cloudflare/competitors/alternatives https://www.g2.com/products/cloudflare/competitors/alternati...
- lolinder 6y agoThat sounds to me like a good thing. I don't want to trust a company with my critical infrastructure if they have a habit of moderating their customers' content.
- Archio 6y agoGenuine question. If you found out that your water utility was servicing an Islamist group’s house, would you cancel your service because you don’t want to do business with them?
- 0xy 6y agoThis is a feature for me. I'm glad Cloudflare is hosting them, because the actual owners are MORE accessible to law enforcement.
- throwawaysea 6y agoAre there good alternatives to Cloudflare when it comes to DDOS protection? I’m interested in this especially in the perspective of avoiding censorship, either from activist hackers or companies like Cloudflare making arbitrary decisions on allowed and disallowed content.
- drpebcak 6y agoYou’d have a hard time finding a service at scale that wouldn’t kick you off for the kind of things cloudflare does. All the big players remove certain types of content from their platforms.
- mediocre-one 6y agoIf I recall it correctly, Cloudflare was/is one of the few that are not trying to mine your data for sale. At least that's what I felt when their DNS surfaced. Hope the same goes for the rest of their services. In @ around 30$, out around 58$. Now I have some regrets T.T