Cloudflare’s Stock (NYSE: NET) Set for 52 Week Highs as Earnings Boost Bulls

Cloudflare went into earnings yesterday on the back of some significant momentum, with the stock price (NYSE: NET) having added more than 25% through the first month or so of 2025. The bar was set high, and the numbers duly delivered, with the immediate reaction being further upside for the stock. A pre-market price of $155.70 reflects a gain of 10% in extended hours trading, and would see Cloudflare's stock price hit a new 52 week high on the open.

The company delivered a 27% year-over-year increase in revenue, with AI advancements and customer-centric product development being key highlights. Earnings per share came in at $0.19, representing a beat on the $0.18 markets were looking for.

Cloudflare's revenue for Q4 2024 reached $459.59 million, against the street's expectation of $452.12 million. This strong revenue growth comes alongside a gross margin of 77.6%, comfortably exceeding its long-term target of between 75% to 77%. The company's operating profit stood at $67.2 million, reflecting an operating margin of 14.6%.

Financially, the company maintained a robust position with free cash flow reported at $47.8 million for the quarter and $166.9 million for the full year. However, it's notable that the free cash flow saw a slight decrease from $50.7 million in the same quarter last year.

Cloudflare's customer base expanded significantly, with large customers increasing by 27% year-over-year to 3,497. This growth was matched by a dollar-based net retention rate of 111%, up 1 percentage point from the previous quarter. Furthermore, the company recorded a net income of $68.8 million or $0.19 per diluted share.

At the end of the quarter, Cloudflare held $1.86 billion in cash and equivalents, showcasing strong liquidity. The remaining performance obligations (RPO) climbed 36% year-over-year, totaling $1.687 billion.

For Q1 2025, Cloudflare anticipates revenue between $468 million to $469 million, representing a 24% increase over the previous year. The full-year 2025 revenue guidance is projected to reach between $2.090 billion and $2.094 billion, which would be a 25% increase year-over-year.

CEO Matthew Prince emphasized AI as a critical area of innovation, particularly focusing on inference and agents. He also highlighted the importance of open AI models and Cloudflare's commitment to offering competitive pricing for inference tasks. The company is also preparing to provide its entire platform under FedRAMP High compliance to strengthen its federal business.