Cloudflare Inc. experiences a decline in shares, but reports an improvement in Q3 revenue and earnings. Q4 outlook raises concerns. Implications on cybersecurity market and focus on AI.
Cloudflare Inc. experienced a 6% decline in its shares during Thursday's extended session. The cybersecurity company, while surpassing revenue expectations for the latest quarter, fell slightly short with its top-line view for the ongoing quarter.
In the third quarter, Cloudflare reported a net loss of $23.5 million, or 7 cents per share, which showed a significant improvement compared to the loss of $42.5 million, or 13 cents per share, in the same quarter of the previous year. On an adjusted basis, Cloudflare earned 16 cents per share, up from 6 cents per share a year prior. Analysts' projections were around 10 cents per share.
The revenue for the quarter rose to $335.6 million from $253.9 million, surpassing analysts' expectations of $330.5 million.
Looking ahead to the fourth quarter, Cloudflare executives predict revenue between $352 million and $353 million, accompanied by adjusted earnings per share of 12 cents. However, according to FactSet consensus, analysts had estimated revenue of $356 million and adjusted EPS of 10 cents.
Cloudflare's positive earnings report coincided with fellow cybersecurity company Fortinet Inc.'s earnings release, which included a significant miss on its outlook. This guidance seemed to have a negative effect on the sector during the extended session, as shares of Palo Alto Networks Inc. and Zscaler Inc. both experienced declines.
Overall, Cloudflare's latest results indicate strong revenue growth and a promising future. However, the company will need to address the concerns raised by its Q4 outlook while capitalizing on the growing opportunities in the field of artificial intelligence and inference tasks.
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