Cloudflare Stock Slides On Q3 Earnings: Revenues Up 32%, Accelerated AI Innovation And More

Cloudflare Inc NET shares are trading lower in Thursday's after-hours session on the heels of the company's third-quarter results. Here's a rundown of the report.

Q3 Earnings: Cloudflare reported third-quarter revenue of $335.6 million, which beat the analyst consensus estimate of $330.53 million by 1.53 percent and up 32% year-over-year. 

The company reported adjusted earnings of 16 cents per share, up from 6 cents in the prior year's quarter, beating the analyst consensus estimate of 10 cents.

Net cash flow from operating activities came in at $68.1 million, up from $42.7 million on a year-over-year basis. Free cash flow was $34.9 million in the quarter, versus negative free cash flow of $4.6 million in the comparable quarter last year. 

Cloudflare ended the quarter with $1.574 billion in cash, equivalents and available-for-sale securities.

"In our third quarter, we relentlessly innovated and accelerated our efforts in AI, announcing the most complete platform to deploy fast, secure, compliant AI inference at scale with Workers AI—along with several partnerships and collaborations with the who's who of AI," said Matthew Prince, co-founder and CEO of Cloudflare.

"We believe inference is the biggest opportunity in AI, and inference tasks will largely be run on end devices and on connectivity clouds like Cloudflare."

Outlook: Cloudflare expects fourth-quarter revenue to be in the range of $352 million to $353 million. The company anticipates fourth-quarter adjusted earnings of 12 cents per share. 

Full-year 2023 revenue is expected to be between $1.286 billion and $1.287 billion against consensus of $1.28 billion. Full-year adjusted earnings are expected to be between 45 cents and 46 cents per share versus a consensus of 37 cents. 

"By the end of 2024, we expect to have inference-optimized GPUs running in nearly every location where Cloudflare operates worldwide—within milliseconds of every Internet user," Prince added.

See Also: Block Q3 Earnings Shines: Revenue Up 24%, Cash App Users Up 11%, $1B Buyback And More

NET Price Action: Cloudflare shares were down 6.97% after hours at $52.60 at the time of publication, according to Benzinga Pro.

Photo: Garrett Heath from Flickr.