Cloudflare (NYSE: NET) stock jumped over 6%

Cloudflare (NYSE: NET) stock jumped over 6% on Friday Morning, boosted by solid Q1 2025 results.

Cloudflare (NYSE:NET) stock price rose more than 6% Friday morning, as the cloud services provider beat Q1 earnings estimates and customer growth remained strong.

Cloudflare Revenue, Earnings Beat Estimates

Cloudflare reported revenue of $479.1 million, up 27% year-over-year and ahead of the $469.65 million estimate. This marked one of the strongest quarters for Cloudflare, and shares extended their 80.41% gain over the past year.

Net income reached $58.4 million, or EPS of $0.16. Operating profit hit $56 million, reflecting an 11.7% margin.

"We are pleased to report a strong start to the year with Q1 revenue exceeding expectations and adjusted EPS in line with guidance,” said Matthew Prince, CEO of Cloudflare. “We continue to see strong demand for Cloudflare's products and services as organizations increasingly rely on us to secure their applications and networks.”

Key Highlights:

Customer numbers continue to scale, with 3,527 customers spending over $100,000 annually. This represents a 23% increase year-over-year.

Management also highlighted the signing of the largest contract in company history, a deal exceeding $100 million.

Dollar-based net retention rate held steady at 111%, indicating stable spending among existing clients, though it remained flat compared to the prior quarter.

Remaining performance obligations (RPO), an indicator of future revenue, rose 39% year-over-year to $1.864 billion.

"We are executing well and remain focused on driving sustainable long-term growth despite the challenging macroeconomic environment," said Prince.

Gross margin stood at 77.1%, above the company’s long-term target range of 75% to 77%, but decreased by 240 basis points from a year earlier.

Executives flagged macroeconomic volatility and longer sales cycles as challenges but maintained confidence in sustaining growth.

Cash and equivalents totaled $1.9 billion, providing ample liquidity for operations and expansion.

Despite pressures from evolving internet trends and AI, demand for its cybersecurity and network services remains robust.

Cloudflare Inc. Q1 2025 Earnings Summary:

EPS: $0.16 (beat by $0.01)Revenue: $479.1M (beat by $9.45M)

Key Takeaways:

Customer numbers continue to scale, with 3,527 customers spending over $100,000 annually. This represents a 23% increase year-over-year.

Management also highlighted the signing of the largest contract in company history, a deal exceeding $100 million.

Dollar-based net retention rate held steady at 111%, indicating stable spending among existing clients, though it remained flat compared to the prior quarter.

Remaining performance obligations (RPO), an indicator of future revenue, rose 39% year-over-year to $1.864 billion.

"We are executing well and remain focused on driving sustainable long-term growth despite the challenging macroeconomic environment," said Prince.

Gross margin stood at 77.1%, above the company’s long-term target range of 75% to 77%, but decreased by 240 basis points from a year earlier.

Executives flagged macroeconomic volatility and longer sales cycles as challenges but maintained confidence in sustaining growth.

Cash and equivalents totaled $1.9 billion, providing ample liquidity for operations and expansion.

Despite pressures from evolving internet trends and AI, demand for its cybersecurity and network services remains robust.

"We are pleased to report a strong start to the year with Q1 revenue exceeding expectations and adjusted EPS in line with guidance,” said Matthew Prince, CEO of Cloudflare. "We continue to see strong demand for Cloudflare's products and services as organizations increasingly rely on us to secure their applications and networks."

For Q2 2025, Cloudflare expects revenue in the range of $500 million to $501 million, signaling a 25% growth year-over-year. Full-year guidance was also raised to between $2.090 billion and $2.094 billion, again targeting a 25% growth rate.

Cloudflare's stock has shown massive returns for investors over multiple time frames. Year to date, the shares are up 22.88%, sharply contrasting with the S&P 500's 3.71% decline.

Looking at the past year, shares of NET have surged 80.41%, compared to the index's 8.62% gain.

Over three years, the stock