Revenue exceeds expectations, continuous large orders Cloudflare's strong performance in Q1 receives collective bullish sentiment from Wall Street

According to the Zhitong Finance APP, on Friday during pre-market trading, Cloudflare (NET.US) saw its stock price surge by about 11%, as the company's impressive quarterly earnings report and forward guidance received widespread optimism from analysts. Bank of America Securities maintained a "Buy" rating with a target price of $160. Analysts led by Madeline Brooks stated that Cloudflare's first-quarter revenue reached $479 million, exceeding guidance by $10 million and surpassing market expectations by 300 basis points, demonstrating strong performance. The analysts added that large orders for Secure Access Service Edge (SASE) and Workers products became the main drivers, highlighting the company's advantageous position in popular end markets such as cybersecurity and artificial intelligence (AI) empowerment. Although the 11% operating profit margin was slightly below expectations, the company increased its marketing investment (accounting for 38% of revenue, up from 36% in Q4 2024) to seize growth opportunities. Brooks and her team noted that while management maintained its full-year guidance, there are multiple upside potentials. "AI applications are shifting from model training to large-scale implementation, which is Cloudflare's core advantage, and the company's investments in the SASE field are gaining widespread recognition in the high-end market." The analysts added that despite the valuation being higher than that of high-growth SaaS companies, Cloudflare is one of the few companies that can achieve a rebound in growth while continuously improving its fundamentals. Jefferies maintained a "Hold" rating on Cloudflare but lowered the target price from $170 to $150. Analysts led by Brent Thill stated that Cloudflare's revenue exceeded expectations by 2.3% (a five-quarter high), while maintaining the revenue guidance for 2025. Although there have not yet been macro headwinds, the company remains cautious about its revenue guidance. The analysts added that a five-year, $130 million contract confirms its infrastructure value and strategic position in the AI era. The first-quarter operating profit margin only met expectations, which is slightly disappointing given the revenue exceeded expectations, but large orders confirm market potential. Morgan Stanley maintained its "Overweight" rating and raised the target price from $144 to $150. Analyst Keith Weiss and his team stated that simultaneously securing nine-figure large orders and a seven-year contract strongly demonstrates the platform's value and clients' confidence in continuous innovation. "With a strong GTM team, Cloudflare has become a versatile player that can thrive in uncertain environments," the analysts added