nelson21
2021-12-27
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Cloudflare Stock: Momentum Spike Has Fizzled Out - Now Back Within Buy Zone<blockquote>Cloudflare股票：势头飙升已经消退——现在回到买入区域</blockquote>
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{"i18n":{"language":"zh_CN"},"detailType":1,"isChannel":false,"data":{"magic":2,"id":696939526,"tweetId":"696939526","gmtCreate":1640593246771,"gmtModify":1640593247159,"author":{"id":3581678664547146,"idStr":"3581678664547146","authorId":3581678664547146,"authorIdStr":"3581678664547146","name":"nelson21","avatar":"https://static.tigerbbs.com/f3bfb16048c75dbf023d98c18914333e","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":11,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":38,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body><p>Pls like</p></body></html>","htmlText":"<html><head></head><body><p>Pls like</p></body></html>","text":"Pls like","highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/696939526","repostId":1119282541,"repostType":4,"repost":{"id":"1119282541","kind":"news","pubTimestamp":1640592014,"share":"https://www.laohu8.com/m/news/1119282541?lang=zh_CN&edition=full","pubTime":"2021-12-27 16:00","market":"us","language":"en","title":"Cloudflare Stock: Momentum Spike Has Fizzled Out - Now Back Within Buy Zone<blockquote>Cloudflare股票：势头飙升已经消退——现在回到买入区域</blockquote>","url":"https://stock-news.laohu8.com/highlight/detail?id=1119282541","media":"Seeking Alpha","summary":"Summary\n\nCloudflare is one of our highest conviction companies.\nCloudflare stock's momentum spike ha","content":"<p><b>Summary</b></p><p><blockquote><b>总结</b></blockquote></p><p> <ul> <li>Cloudflare is one of our highest conviction companies.</li> <li>Cloudflare stock's momentum spike has fizzled out, and it has dropped nicely into our buy zone.</li> <li>We discuss why we think long-term investors can consider adding now.</li> </ul> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/9fc5ef750ea3016ea632581c55ad066d\" tg-width=\"1536\" tg-height=\"1022\" width=\"100%\" height=\"auto\"><span>Steve Jennings/Getty Images Entertainment</span></p><p><blockquote><ul><li>Cloudflare是我们最有信心的公司之一。</li><li>Cloudflare股票的势头已经消退，它已经很好地落入我们的买入区域。</li><li>我们讨论为什么我们认为长期投资者现在可以考虑增加。</li></ul><p class=\"t-img-caption\"><span>史蒂夫·詹宁斯/盖蒂图片社</span></p></blockquote></p><p> <b>Investment Thesis</b></p><p><blockquote><b>投资论文</b></blockquote></p><p> Cloudflare, Inc.(NYSE:NET) is another of our highest conviction tech companies whose stock recently dropped back into our buy zone. Investors who need an introduction can refer to one of our previous articles. We had also discussed its thesis just before its FQ3 report card was released. We cautioned investors not to follow the momentum spike heading into its earnings with our Neutral call back then. The stock has fallen more than 28% since our article was published. Notably, a robust FQ3 performance also led to us revising our estimates upwards.</p><p><blockquote>Cloudflare，Inc.（纽约证券交易所代码：NET）是我们最有信心的另一家科技公司，其股票最近回落至我们的买入区域。需要介绍的投资者可以参考我们之前的一篇文章。就在第三季度成绩单发布之前，我们还讨论了它的论文。我们当时警告投资者不要跟随其盈利势头飙升，采取中性看涨期权。自我们的文章发表以来，该股已下跌超过28%。值得注意的是，第三季度的强劲表现也导致我们上调了预期。</blockquote></p><p> We also observed that its momentum spike that we cautioned earlier seems to have fizzled out. Therefore, we believe the entry point might be less risky now for investors who have been waiting to add exposure. Consequently, we think it's apt to update why we believe it's back within our buy zone.</p><p><blockquote>我们还观察到，我们之前警告的动量峰值似乎已经消失。因此，我们认为，对于一直在等待增加风险敞口的投资者来说，现在的切入点风险可能较小。因此，我们认为很容易更新为什么我们认为它回到了我们的买入区域。</blockquote></p><p> <b>Cloudflare Stock YTD Performance</b></p><p><blockquote><b>Cloudflare股票年初至今表现</b></blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/7d77d264c8185ed4c2ba14ed0d4ee1c5\" tg-width=\"640\" tg-height=\"331\" width=\"100%\" height=\"auto\"><span>NET stock YTD performance (as of 23 December '21).</span></p><p><blockquote><p class=\"t-img-caption\"><span>年初至今净股票表现（截至21年12月23日）。</span></p></blockquote></p><p> NET stock has had a spectacular year so far. When its upward momentum spiked in November, its YTD returns reached 180%. However, the recent retracement in growth stocks has also lowered its price to more reasonable levels. Consequently, its YTD gains have also compressed dramatically, down to 80.6%. Nonetheless, it's still well ahead of the broad market, making it a fantastic year for NET investors.</p><p><blockquote>到目前为止，NET stock度过了辉煌的一年。当其上涨势头在11月份飙升时，其年初至今的回报率达到了180%。然而，近期成长股的回撤也将其价格降至更合理的水平。因此，其年初至今的涨幅也大幅压缩，降至80.6%。尽管如此，它仍然远远领先于大盘，这对于净投资者来说是美妙的一年。</blockquote></p><p> <b>Why is Cloudflare One of Our Highest Conviction Companies?</b></p><p><blockquote><b>为什么Cloudflare是我们最有信心的公司之一？</b></blockquote></p><p> Keen investors should be aware that the company has often telegraphed that it's a networking company. Its software-defined architecture is capable of supporting both on-premise and cloud workloads. It's also capable of delivering solutions for both hybrid and multi-cloud environments. Therefore, the company operates a highly scalable business model. Its capability has also allowed it to compete effectively across multiple spectrums against legacy on-premise and cloud-native peers.</p><p><blockquote>敏锐的投资者应该知道，该公司经常表示它是一家网络公司。其软件定义的架构能够支持内部和云工作负载。它还能够为混合和多云环境提供解决方案。因此，该公司运营着高度可扩展的商业模式。其能力还使其能够在多个领域与传统的本地和云原生同行有效竞争。</blockquote></p><p> NET may have started serving the long-tail small-and-medium businesses (SMB). However, it has gained significant traction in the enterprise space as it penetrates with remarkable effectiveness. Therefore, it has also allowed Cloudflare to scale its TAM from $32B in 2018 to $100B by 2024. Consensus estimates point to revenue of just $646.8M for FY21 (Cloudflare guided for $647.5M at the midpoint). Therefore, we believe that the company is undoubtedly still in the early innings of its rapidly-expanding market opportunities.</p><p><blockquote>NET可能已经开始为长尾中小企业（SMB）提供服务。然而，随着它以显著的效率渗透，它在企业领域获得了巨大的牵引力。因此，它还允许Cloudflare将其TAM从2018年的320亿美元扩大到2024年的1000亿美元。市场普遍估计2021财年的收入仅为6.468亿美元（Cloudflare的中值指导为6.475亿美元）。因此，我们认为，该公司无疑仍处于快速扩张市场机会的早期阶段。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/eb7cddd302c8b3166c4bbb9c4f6ce858\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Cloudflare paying customers. Data source: Company filings</span></p><p><blockquote><p class=\"t-img-caption\"><span>Cloudflare付费客户。数据来源：公司备案</span></p></blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/571e5f97779f0b582bf7c05534eadbb1\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Cloudflare enterprise customers. Data source: Company filings</span></p><p><blockquote><p class=\"t-img-caption\"><span>Cloudflare企业客户。数据来源：公司备案</span></p></blockquote></p><p> Cloudflare has scaled so quickly that it has nearly 4M customers globally. In addition, 132K are paying, which grew at a CAGR of 29.3% over the last three years. Notably, it has also gained significant traction in its enterprise base. Its enterprise customers increased to 1,260 in FQ3'21, representing a phenomenal CAGR of 69% over the previous three years. Moreover, Cloudflare emphasized that \"nearly 20% of all websites use Cloudflare today.\"</p><p><blockquote>Cloudflare的扩展速度如此之快，以至于在全球拥有近400万客户。此外，有13.2万人正在付费，过去三年复合年增长率为29.3%。值得注意的是，它在企业基础上也获得了巨大的吸引力。其企业客户在21年第三季度增加到1,260家，过去三年的复合年增长率高达69%。而且，Cloudflare强调，“如今所有网站中有近20%使用Cloudflare。”</blockquote></p><p> So, what makes Cloudflare's business model so scalable? First of all, investors need to understand that the company designed a complete technology stack that's highly efficient to scale. CFO Thomas Seifert articulated (edited):</p><p><blockquote>那么，是什么让Cloudflare的商业模式如此可扩展呢？首先，投资者需要了解该公司设计了一个可高效扩展的完整技术堆栈。首席财务官托马斯·塞弗特(Thomas Seifert)表示（编辑）：</blockquote></p><p></p><p> The network certainly is the competitive moat we have. The bigger we get in terms of data that moves through the network, the larger the product and service offering that runs on this network, and the faster those flywheels turn. It starts with the hardware stack. It's an off-the-shelf hardware stack. That's why our CapEx efficiency is so incredibly good. And on this hardware stack, we run a completely integrated homogeneous software stack. So this allows us literally to offer every product we have and every service we offer on every server in every city and every location. (5th Annual Virtual Wells Fargo TMT Summit) It's such a critical competitive moat that Cloudflare believes its competitors cannot match even if they try to invest. The company's points-of-presence (POP) has expanded to more than 250 cities. As a result, it has gained tremendous clout and influence with the local internet service providers (ISP). Notably, these ISPs depend on Cloudflare to help them optimize their costs. They leverage Cloudflare's superior reliability, latency, and cost-effectiveness of its massive network.</p><p><blockquote>网络无疑是我们拥有的竞争护城河。我们在网络中移动的数据越多，在这个网络上运行的产品和服务就越大，这些飞轮转动得越快。它从硬件堆栈开始。这是一个现成的硬件堆栈。这就是为什么我们的资本支出效率如此之好。并且在这个硬件堆栈上，我们运行一个完全集成的同构软件堆栈。因此，这使我们能够在每个城市和每个地点的每台服务器上提供我们拥有的每一种产品和每一项服务。（第五届年度虚拟富国银行TMT峰会）这是一条至关重要的竞争护城河，Cloudflare认为其竞争对手即使试图投资也无法匹敌。该公司的接入点(POP)已扩展到250多个城市。因此，它在当地互联网服务提供商（ISP）中获得了巨大的影响力。值得注意的是，这些ISP依赖Cloudflare来帮助他们优化成本。他们利用Cloudflare庞大网络的卓越可靠性、延迟和成本效益。</blockquote></p><p> Consequently, it has allowed Cloudflare to co-locate its hardware in these ISPs' data centers. In addition, it helps the company to significantly \"drive down its bandwidth and co-location expenses.\" Cloudflare emphasized: \"This symbiotic relationship that we have with ISPs and the efficiency of our serverless network architecture allows us to introduce new products on our network at low marginal cost.\"</p><p><blockquote>因此，它允许Cloudflare将其硬件放在这些ISP的数据中心。此外，它还帮助该公司显着“降低带宽和托管费用”。Cloudflare强调：“我们与ISP的这种共生关系以及我们的无服务器网络架构的效率使我们能够以较低的边际成本在我们的网络上推出新产品。”</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f39da1f0d583ef247df4df47a02a9bbb\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Gross margins comps (LTM). Data source: S&P Capital IQ</span></p><p><blockquote><p class=\"t-img-caption\"><span>毛利率比较（LTM）。数据来源：标普资本智商</span></p></blockquote></p><p> Cloudflare and the CDN leaders Fastly(NYSE:FSLY), and Akamai(NASDAQ:AKAM)(Cloudflare has maintained that it's not a pure-play CDN) recognize network, bandwidth, and co-location costs in their cost of revenue. Readers can quickly glean how its competitive moat has afforded superior gross margins over time. Accordingly, Cloudflare is confident that its competitors cannot easily replicate its advantages by increasing CapEx intensity. Cloudflare emphasized (edited):</p><p><blockquote>Cloudflare和CDN领导者Fastly（纽约证券交易所股票代码：FSLY）和Akamai（纳斯达克股票代码：AKAM）（Cloudflare坚称它不是纯粹的CDN）在其收入成本中承认网络、带宽和托管成本。读者可以快速了解其竞争护城河如何随着时间的推移提供卓越的毛利率。因此，Cloudflare相信其竞争对手无法通过增加资本支出强度轻松复制其优势。Cloudflare强调（已编辑）：</blockquote></p><p> <i>This build-out is not a function of CapEx</i>. So you cannot just replicate that by saying, here is $1 billion, let's be in 250 cities. What makes that network so efficient is that it's the most interconnected network on the planet, with thousands of interconnections to other networks. And this is hard to compete with and replicate because dollars and CapEx are just not going to get you into those interconnects. So, it allows us to continue powering more and more of the infrastructure for the people who are actually accessing the web. And that scalability comes from the technical infrastructure and the way that we have been able to have a very symbiotic relationship with the other network providers around the world in order to connect everywhere. (Wells Fargo TMT and RBC Conference) <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f52c039f93892b0942acf170ab0cb93e\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Cloudflare SG&A and R&D margins. Data source: S&P Capital IQ</span></p><p><blockquote><i>这种扩建不是资本支出的函数</i>.所以你不能简单地说，这是10亿美元，让我们在250个城市。该网络之所以如此高效，是因为它是地球上互连性最强的网络，与其他网络有数千个互连。这很难与之竞争和复制，因为资金和资本支出无法让您进入这些互连。因此，它使我们能够继续为真正访问网络的人提供越来越多的基础设施。这种可扩展性来自技术基础设施以及我们能够与世界各地的其他网络提供商建立非常共生关系的方式，以便在任何地方进行连接。（富国TMT和RBC会议）<p class=\"t-img-caption\"><span>Cloudflare SG&A和研发利润率。数据来源：标普资本智商</span></p></blockquote></p><p> Hence, we believe that Cloudflare's strong gross margins give it tremendous flexibility to invest. Readers can observe that its R&D margins accounted for 30.2% of its revenue over the last twelve months (LTM). We believe that such a strong commitment to innovation will keep Cloudflare at the fore of its leadership. While Fastly's LTM R&D margin was higher at 35.3%, the company couldn't match Cloudflare's highly competitive gross margin advantage. Akamai's LTM R&D margin came in at just 13.9%, as the company is focusing more on leveraging profits than growth.</p><p><blockquote>因此，我们认为Cloudflare强劲的毛利率为其投资提供了巨大的灵活性。读者可以观察到，其研发利润率占过去12个月收入的30.2%（LTM）。我们相信，这种对创新的坚定承诺将使Cloudflare保持领先地位。虽然Fastly的LTM研发利润率较高，为35.3%，但该公司无法与Cloudflare极具竞争力的毛利率优势相媲美。Akamai的LTM研发利润率仅为13.9%，因为该公司更注重利用利润而不是增长。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8523463296f548f472ba8d2252e272c4\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Cloudflare revenue YoY change, and GAAP EBITDA margins. Data source: S&P Capital IQ</span></p><p><blockquote><p class=\"t-img-caption\"><span>Cloudflare收入同比变化和GAAP EBITDA利润率。数据来源：标普资本智商</span></p></blockquote></p><p> As such, Cloudflare's exceptional business model has allowed it highly consistent topline growth over the last two years. Notably, it has also been improving its operational efficiencies as it scales. As a result, on a GAAP basis, its EBITDA margin has improved to -8.5% in FQ3'21, compared to -47.5% two years ago.</p><p><blockquote>因此，Cloudflare卓越的商业模式使其在过去两年中实现了高度一致的营收增长。值得注意的是，随着规模的扩大，它也在提高运营效率。因此，按照GAAP计算，其EBITDA利润率在21年第三季度提高至-8.5%，而两年前为-47.5%。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/03d98ef1d4addcabcbc0b865cb981606\" tg-width=\"640\" tg-height=\"395\" width=\"100%\" height=\"auto\"><span>Cloudflare revenue and adjusted EBITDA margins mean consensus estimates. Data source: S&P Capital IQ</span></p><p><blockquote><p class=\"t-img-caption\"><span>Cloudflare收入和调整后EBITDA利润率意味着共识估计。数据来源：标普资本智商</span></p></blockquote></p><p></p><p> Consensus estimates also pointed to robust topline expansion over the next three years. Cloudflare's revenue is estimated to increase at a CAGR of 40% from FY20-23. Moreover, its adjusted EBITDA is expected to grow even faster. Cloudflare is projected to post an adjusted EBITDA margin of 11.6% by FY23, compared to just 3.6% in FY20. Hence, Cloudflare is still in the early stages of its massive growth.</p><p><blockquote>共识估计还表明，未来三年营收将强劲扩张。预计从20-23财年开始，Cloudflare的收入将以40%的复合年增长率增长。此外，其调整后的EBITDA预计将增长更快。2023财年预计Cloudflare调整后EBITDA利润率为11.6%，而2020财年仅为3.6%。因此，Cloudflare仍处于大规模增长的早期阶段。</blockquote></p><p> <b>So, is NET Stock a Buy Now?</b></p><p><blockquote><b>那么，NET股票现在值得买入吗？</b></blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/cd5cf860d8b13e68290ca0adbe54eafa\" tg-width=\"640\" tg-height=\"384\" width=\"100%\" height=\"auto\"><span>NET stock EV/NTM Revenue 2Y mean.</span></p><p><blockquote><p class=\"t-img-caption\"><span>净股票EV/NTM收入2年平均值。</span></p></blockquote></p><p> We know that stocks like Cloudflare's would never be cheap. They will likely continue to trade at a premium valuation, given its moat and excellent execution. CEO Matthew Prince and his two other co-founders (COO and CTO, respectively) continue to play an integral role in shaping Cloudflare's future developments. NET stock is trading at an EV/NTM Revenue of 52.7x, markedly above its 2Y mean of 34.5x. Typically, we wouldn't even consider stocks with such a high premium. However, NET stock isn't just another stock. Investors should also consider that the company will gain significant operating leverage moving forward. Therefore, we think a DCF valuation model might provide more clarity within reasonable assumptions.</p><p><blockquote>我们知道像Cloudflare这样的股票永远不会便宜。鉴于其护城河和出色的执行力，它们可能会继续以溢价估值进行交易。首席执行官Matthew Prince和他的另外两位联合创始人（分别为首席运营官和首席技术官）继续在塑造Cloudflare的未来发展中发挥不可或缺的作用。净股票的EV/NTM收入为52.7倍，明显高于34.5倍的2年平均水平。通常情况下，我们甚至不会考虑溢价如此高的股票。然而，净股票不仅仅是另一只股票。投资者还应考虑到，该公司未来将获得显着的运营杠杆。因此，我们认为DCF估值模型可能会在合理的假设范围内提供更多清晰度。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/44aa88643408f3ce0ad33a44efb7f7bc\" tg-width=\"901\" tg-height=\"595\" width=\"100%\" height=\"auto\"><span>NET stock DCF valuation model. Data source: S&P Capital IQ, company filings, author</span></p><p><blockquote><p class=\"t-img-caption\"><span>净股票DCF估值模型。数据来源：S&P Capital IQ，公司文件，作者</span></p></blockquote></p><p> Therefore, we believe that the stock has now dropped back into our buy zone. Moreover, it seems to be supported along its 50-week moving average support level, which has been reliable since last year.</p><p><blockquote>因此，我们认为该股现已回落至我们的买入区域。此外，它似乎受到50周移动平均线支撑位的支撑，该支撑位自去年以来一直可靠。</blockquote></p><p> As such,<i>we revise our rating on NET stock to Buy</i>.</p><p><blockquote>因此，<i>我们将净股票评级修改为买入</i>.</blockquote></p><p></p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Cloudflare Stock: Momentum Spike Has Fizzled Out - Now Back Within Buy Zone<blockquote>Cloudflare股票：势头飙升已经消退——现在回到买入区域</blockquote></title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 12.5px; color: #7E829C; margin: 0;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nCloudflare Stock: Momentum Spike Has Fizzled Out - Now Back Within Buy Zone<blockquote>Cloudflare股票：势头飙升已经消退——现在回到买入区域</blockquote>\n</h2>\n<h4 class=\"meta\">\n<p class=\"head\">\n<strong class=\"h-name small\">Seeking Alpha</strong><span class=\"h-time small\">2021-12-27 16:00</span>\n</p>\n</h4>\n</header>\n<article>\n<p><b>Summary</b></p><p><blockquote><b>总结</b></blockquote></p><p> <ul> <li>Cloudflare is one of our highest conviction companies.</li> <li>Cloudflare stock's momentum spike has fizzled out, and it has dropped nicely into our buy zone.</li> <li>We discuss why we think long-term investors can consider adding now.</li> </ul> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/9fc5ef750ea3016ea632581c55ad066d\" tg-width=\"1536\" tg-height=\"1022\" width=\"100%\" height=\"auto\"><span>Steve Jennings/Getty Images Entertainment</span></p><p><blockquote><ul><li>Cloudflare是我们最有信心的公司之一。</li><li>Cloudflare股票的势头已经消退，它已经很好地落入我们的买入区域。</li><li>我们讨论为什么我们认为长期投资者现在可以考虑增加。</li></ul><p class=\"t-img-caption\"><span>史蒂夫·詹宁斯/盖蒂图片社</span></p></blockquote></p><p> <b>Investment Thesis</b></p><p><blockquote><b>投资论文</b></blockquote></p><p> Cloudflare, Inc.(NYSE:NET) is another of our highest conviction tech companies whose stock recently dropped back into our buy zone. Investors who need an introduction can refer to one of our previous articles. We had also discussed its thesis just before its FQ3 report card was released. We cautioned investors not to follow the momentum spike heading into its earnings with our Neutral call back then. The stock has fallen more than 28% since our article was published. Notably, a robust FQ3 performance also led to us revising our estimates upwards.</p><p><blockquote>Cloudflare，Inc.（纽约证券交易所代码：NET）是我们最有信心的另一家科技公司，其股票最近回落至我们的买入区域。需要介绍的投资者可以参考我们之前的一篇文章。就在第三季度成绩单发布之前，我们还讨论了它的论文。我们当时警告投资者不要跟随其盈利势头飙升，采取中性看涨期权。自我们的文章发表以来，该股已下跌超过28%。值得注意的是，第三季度的强劲表现也导致我们上调了预期。</blockquote></p><p> We also observed that its momentum spike that we cautioned earlier seems to have fizzled out. Therefore, we believe the entry point might be less risky now for investors who have been waiting to add exposure. Consequently, we think it's apt to update why we believe it's back within our buy zone.</p><p><blockquote>我们还观察到，我们之前警告的动量峰值似乎已经消失。因此，我们认为，对于一直在等待增加风险敞口的投资者来说，现在的切入点风险可能较小。因此，我们认为很容易更新为什么我们认为它回到了我们的买入区域。</blockquote></p><p> <b>Cloudflare Stock YTD Performance</b></p><p><blockquote><b>Cloudflare股票年初至今表现</b></blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/7d77d264c8185ed4c2ba14ed0d4ee1c5\" tg-width=\"640\" tg-height=\"331\" width=\"100%\" height=\"auto\"><span>NET stock YTD performance (as of 23 December '21).</span></p><p><blockquote><p class=\"t-img-caption\"><span>年初至今净股票表现（截至21年12月23日）。</span></p></blockquote></p><p> NET stock has had a spectacular year so far. When its upward momentum spiked in November, its YTD returns reached 180%. However, the recent retracement in growth stocks has also lowered its price to more reasonable levels. Consequently, its YTD gains have also compressed dramatically, down to 80.6%. Nonetheless, it's still well ahead of the broad market, making it a fantastic year for NET investors.</p><p><blockquote>到目前为止，NET stock度过了辉煌的一年。当其上涨势头在11月份飙升时，其年初至今的回报率达到了180%。然而，近期成长股的回撤也将其价格降至更合理的水平。因此，其年初至今的涨幅也大幅压缩，降至80.6%。尽管如此，它仍然远远领先于大盘，这对于净投资者来说是美妙的一年。</blockquote></p><p> <b>Why is Cloudflare One of Our Highest Conviction Companies?</b></p><p><blockquote><b>为什么Cloudflare是我们最有信心的公司之一？</b></blockquote></p><p> Keen investors should be aware that the company has often telegraphed that it's a networking company. Its software-defined architecture is capable of supporting both on-premise and cloud workloads. It's also capable of delivering solutions for both hybrid and multi-cloud environments. Therefore, the company operates a highly scalable business model. Its capability has also allowed it to compete effectively across multiple spectrums against legacy on-premise and cloud-native peers.</p><p><blockquote>敏锐的投资者应该知道，该公司经常表示它是一家网络公司。其软件定义的架构能够支持内部和云工作负载。它还能够为混合和多云环境提供解决方案。因此，该公司运营着高度可扩展的商业模式。其能力还使其能够在多个领域与传统的本地和云原生同行有效竞争。</blockquote></p><p> NET may have started serving the long-tail small-and-medium businesses (SMB). However, it has gained significant traction in the enterprise space as it penetrates with remarkable effectiveness. Therefore, it has also allowed Cloudflare to scale its TAM from $32B in 2018 to $100B by 2024. Consensus estimates point to revenue of just $646.8M for FY21 (Cloudflare guided for $647.5M at the midpoint). Therefore, we believe that the company is undoubtedly still in the early innings of its rapidly-expanding market opportunities.</p><p><blockquote>NET可能已经开始为长尾中小企业（SMB）提供服务。然而，随着它以显著的效率渗透，它在企业领域获得了巨大的牵引力。因此，它还允许Cloudflare将其TAM从2018年的320亿美元扩大到2024年的1000亿美元。市场普遍估计2021财年的收入仅为6.468亿美元（Cloudflare的中值指导为6.475亿美元）。因此，我们认为，该公司无疑仍处于快速扩张市场机会的早期阶段。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/eb7cddd302c8b3166c4bbb9c4f6ce858\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Cloudflare paying customers. Data source: Company filings</span></p><p><blockquote><p class=\"t-img-caption\"><span>Cloudflare付费客户。数据来源：公司备案</span></p></blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/571e5f97779f0b582bf7c05534eadbb1\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Cloudflare enterprise customers. Data source: Company filings</span></p><p><blockquote><p class=\"t-img-caption\"><span>Cloudflare企业客户。数据来源：公司备案</span></p></blockquote></p><p> Cloudflare has scaled so quickly that it has nearly 4M customers globally. In addition, 132K are paying, which grew at a CAGR of 29.3% over the last three years. Notably, it has also gained significant traction in its enterprise base. Its enterprise customers increased to 1,260 in FQ3'21, representing a phenomenal CAGR of 69% over the previous three years. Moreover, Cloudflare emphasized that \"nearly 20% of all websites use Cloudflare today.\"</p><p><blockquote>Cloudflare的扩展速度如此之快，以至于在全球拥有近400万客户。此外，有13.2万人正在付费，过去三年复合年增长率为29.3%。值得注意的是，它在企业基础上也获得了巨大的吸引力。其企业客户在21年第三季度增加到1,260家，过去三年的复合年增长率高达69%。而且，Cloudflare强调，“如今所有网站中有近20%使用Cloudflare。”</blockquote></p><p> So, what makes Cloudflare's business model so scalable? First of all, investors need to understand that the company designed a complete technology stack that's highly efficient to scale. CFO Thomas Seifert articulated (edited):</p><p><blockquote>那么，是什么让Cloudflare的商业模式如此可扩展呢？首先，投资者需要了解该公司设计了一个可高效扩展的完整技术堆栈。首席财务官托马斯·塞弗特(Thomas Seifert)表示（编辑）：</blockquote></p><p></p><p> The network certainly is the competitive moat we have. The bigger we get in terms of data that moves through the network, the larger the product and service offering that runs on this network, and the faster those flywheels turn. It starts with the hardware stack. It's an off-the-shelf hardware stack. That's why our CapEx efficiency is so incredibly good. And on this hardware stack, we run a completely integrated homogeneous software stack. So this allows us literally to offer every product we have and every service we offer on every server in every city and every location. (5th Annual Virtual Wells Fargo TMT Summit) It's such a critical competitive moat that Cloudflare believes its competitors cannot match even if they try to invest. The company's points-of-presence (POP) has expanded to more than 250 cities. As a result, it has gained tremendous clout and influence with the local internet service providers (ISP). Notably, these ISPs depend on Cloudflare to help them optimize their costs. They leverage Cloudflare's superior reliability, latency, and cost-effectiveness of its massive network.</p><p><blockquote>网络无疑是我们拥有的竞争护城河。我们在网络中移动的数据越多，在这个网络上运行的产品和服务就越大，这些飞轮转动得越快。它从硬件堆栈开始。这是一个现成的硬件堆栈。这就是为什么我们的资本支出效率如此之好。并且在这个硬件堆栈上，我们运行一个完全集成的同构软件堆栈。因此，这使我们能够在每个城市和每个地点的每台服务器上提供我们拥有的每一种产品和每一项服务。（第五届年度虚拟富国银行TMT峰会）这是一条至关重要的竞争护城河，Cloudflare认为其竞争对手即使试图投资也无法匹敌。该公司的接入点(POP)已扩展到250多个城市。因此，它在当地互联网服务提供商（ISP）中获得了巨大的影响力。值得注意的是，这些ISP依赖Cloudflare来帮助他们优化成本。他们利用Cloudflare庞大网络的卓越可靠性、延迟和成本效益。</blockquote></p><p> Consequently, it has allowed Cloudflare to co-locate its hardware in these ISPs' data centers. In addition, it helps the company to significantly \"drive down its bandwidth and co-location expenses.\" Cloudflare emphasized: \"This symbiotic relationship that we have with ISPs and the efficiency of our serverless network architecture allows us to introduce new products on our network at low marginal cost.\"</p><p><blockquote>因此，它允许Cloudflare将其硬件放在这些ISP的数据中心。此外，它还帮助该公司显着“降低带宽和托管费用”。Cloudflare强调：“我们与ISP的这种共生关系以及我们的无服务器网络架构的效率使我们能够以较低的边际成本在我们的网络上推出新产品。”</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f39da1f0d583ef247df4df47a02a9bbb\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Gross margins comps (LTM). Data source: S&P Capital IQ</span></p><p><blockquote><p class=\"t-img-caption\"><span>毛利率比较（LTM）。数据来源：标普资本智商</span></p></blockquote></p><p> Cloudflare and the CDN leaders Fastly(NYSE:FSLY), and Akamai(NASDAQ:AKAM)(Cloudflare has maintained that it's not a pure-play CDN) recognize network, bandwidth, and co-location costs in their cost of revenue. Readers can quickly glean how its competitive moat has afforded superior gross margins over time. Accordingly, Cloudflare is confident that its competitors cannot easily replicate its advantages by increasing CapEx intensity. Cloudflare emphasized (edited):</p><p><blockquote>Cloudflare和CDN领导者Fastly（纽约证券交易所股票代码：FSLY）和Akamai（纳斯达克股票代码：AKAM）（Cloudflare坚称它不是纯粹的CDN）在其收入成本中承认网络、带宽和托管成本。读者可以快速了解其竞争护城河如何随着时间的推移提供卓越的毛利率。因此，Cloudflare相信其竞争对手无法通过增加资本支出强度轻松复制其优势。Cloudflare强调（已编辑）：</blockquote></p><p> <i>This build-out is not a function of CapEx</i>. So you cannot just replicate that by saying, here is $1 billion, let's be in 250 cities. What makes that network so efficient is that it's the most interconnected network on the planet, with thousands of interconnections to other networks. And this is hard to compete with and replicate because dollars and CapEx are just not going to get you into those interconnects. So, it allows us to continue powering more and more of the infrastructure for the people who are actually accessing the web. And that scalability comes from the technical infrastructure and the way that we have been able to have a very symbiotic relationship with the other network providers around the world in order to connect everywhere. (Wells Fargo TMT and RBC Conference) <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f52c039f93892b0942acf170ab0cb93e\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Cloudflare SG&A and R&D margins. Data source: S&P Capital IQ</span></p><p><blockquote><i>这种扩建不是资本支出的函数</i>.所以你不能简单地说，这是10亿美元，让我们在250个城市。该网络之所以如此高效，是因为它是地球上互连性最强的网络，与其他网络有数千个互连。这很难与之竞争和复制，因为资金和资本支出无法让您进入这些互连。因此，它使我们能够继续为真正访问网络的人提供越来越多的基础设施。这种可扩展性来自技术基础设施以及我们能够与世界各地的其他网络提供商建立非常共生关系的方式，以便在任何地方进行连接。（富国TMT和RBC会议）<p class=\"t-img-caption\"><span>Cloudflare SG&A和研发利润率。数据来源：标普资本智商</span></p></blockquote></p><p> Hence, we believe that Cloudflare's strong gross margins give it tremendous flexibility to invest. Readers can observe that its R&D margins accounted for 30.2% of its revenue over the last twelve months (LTM). We believe that such a strong commitment to innovation will keep Cloudflare at the fore of its leadership. While Fastly's LTM R&D margin was higher at 35.3%, the company couldn't match Cloudflare's highly competitive gross margin advantage. Akamai's LTM R&D margin came in at just 13.9%, as the company is focusing more on leveraging profits than growth.</p><p><blockquote>因此，我们认为Cloudflare强劲的毛利率为其投资提供了巨大的灵活性。读者可以观察到，其研发利润率占过去12个月收入的30.2%（LTM）。我们相信，这种对创新的坚定承诺将使Cloudflare保持领先地位。虽然Fastly的LTM研发利润率较高，为35.3%，但该公司无法与Cloudflare极具竞争力的毛利率优势相媲美。Akamai的LTM研发利润率仅为13.9%，因为该公司更注重利用利润而不是增长。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8523463296f548f472ba8d2252e272c4\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Cloudflare revenue YoY change, and GAAP EBITDA margins. Data source: S&P Capital IQ</span></p><p><blockquote><p class=\"t-img-caption\"><span>Cloudflare收入同比变化和GAAP EBITDA利润率。数据来源：标普资本智商</span></p></blockquote></p><p> As such, Cloudflare's exceptional business model has allowed it highly consistent topline growth over the last two years. Notably, it has also been improving its operational efficiencies as it scales. As a result, on a GAAP basis, its EBITDA margin has improved to -8.5% in FQ3'21, compared to -47.5% two years ago.</p><p><blockquote>因此，Cloudflare卓越的商业模式使其在过去两年中实现了高度一致的营收增长。值得注意的是，随着规模的扩大，它也在提高运营效率。因此，按照GAAP计算，其EBITDA利润率在21年第三季度提高至-8.5%，而两年前为-47.5%。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/03d98ef1d4addcabcbc0b865cb981606\" tg-width=\"640\" tg-height=\"395\" width=\"100%\" height=\"auto\"><span>Cloudflare revenue and adjusted EBITDA margins mean consensus estimates. Data source: S&P Capital IQ</span></p><p><blockquote><p class=\"t-img-caption\"><span>Cloudflare收入和调整后EBITDA利润率意味着共识估计。数据来源：标普资本智商</span></p></blockquote></p><p></p><p> Consensus estimates also pointed to robust topline expansion over the next three years. Cloudflare's revenue is estimated to increase at a CAGR of 40% from FY20-23. Moreover, its adjusted EBITDA is expected to grow even faster. Cloudflare is projected to post an adjusted EBITDA margin of 11.6% by FY23, compared to just 3.6% in FY20. Hence, Cloudflare is still in the early stages of its massive growth.</p><p><blockquote>共识估计还表明，未来三年营收将强劲扩张。预计从20-23财年开始，Cloudflare的收入将以40%的复合年增长率增长。此外，其调整后的EBITDA预计将增长更快。2023财年预计Cloudflare调整后EBITDA利润率为11.6%，而2020财年仅为3.6%。因此，Cloudflare仍处于大规模增长的早期阶段。</blockquote></p><p> <b>So, is NET Stock a Buy Now?</b></p><p><blockquote><b>那么，NET股票现在值得买入吗？</b></blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/cd5cf860d8b13e68290ca0adbe54eafa\" tg-width=\"640\" tg-height=\"384\" width=\"100%\" height=\"auto\"><span>NET stock EV/NTM Revenue 2Y mean.</span></p><p><blockquote><p class=\"t-img-caption\"><span>净股票EV/NTM收入2年平均值。</span></p></blockquote></p><p> We know that stocks like Cloudflare's would never be cheap. They will likely continue to trade at a premium valuation, given its moat and excellent execution. CEO Matthew Prince and his two other co-founders (COO and CTO, respectively) continue to play an integral role in shaping Cloudflare's future developments. NET stock is trading at an EV/NTM Revenue of 52.7x, markedly above its 2Y mean of 34.5x. Typically, we wouldn't even consider stocks with such a high premium. However, NET stock isn't just another stock. Investors should also consider that the company will gain significant operating leverage moving forward. Therefore, we think a DCF valuation model might provide more clarity within reasonable assumptions.</p><p><blockquote>我们知道像Cloudflare这样的股票永远不会便宜。鉴于其护城河和出色的执行力，它们可能会继续以溢价估值进行交易。首席执行官Matthew Prince和他的另外两位联合创始人（分别为首席运营官和首席技术官）继续在塑造Cloudflare的未来发展中发挥不可或缺的作用。净股票的EV/NTM收入为52.7倍，明显高于34.5倍的2年平均水平。通常情况下，我们甚至不会考虑溢价如此高的股票。然而，净股票不仅仅是另一只股票。投资者还应考虑到，该公司未来将获得显着的运营杠杆。因此，我们认为DCF估值模型可能会在合理的假设范围内提供更多清晰度。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/44aa88643408f3ce0ad33a44efb7f7bc\" tg-width=\"901\" tg-height=\"595\" width=\"100%\" height=\"auto\"><span>NET stock DCF valuation model. Data source: S&P Capital IQ, company filings, author</span></p><p><blockquote><p class=\"t-img-caption\"><span>净股票DCF估值模型。数据来源：S&P Capital IQ，公司文件，作者</span></p></blockquote></p><p> Therefore, we believe that the stock has now dropped back into our buy zone. Moreover, it seems to be supported along its 50-week moving average support level, which has been reliable since last year.</p><p><blockquote>因此，我们认为该股现已回落至我们的买入区域。此外，它似乎受到50周移动平均线支撑位的支撑，该支撑位自去年以来一直可靠。</blockquote></p><p> As such,<i>we revise our rating on NET stock to Buy</i>.</p><p><blockquote>因此，<i>我们将净股票评级修改为买入</i>.</blockquote></p><p></p>\n<div class=\"bt-text\">\n\n\n<p> 来源：<a href=\"https://seekingalpha.com/article/4476832-cloudflare-stock-now-back-within-buy-zone\">Seeking Alpha</a></p>\n<p>为提升您的阅读体验，我们对本页面进行了排版优化</p>\n\n\n</div>\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"NET":"Cloudflare, Inc."},"source_url":"https://seekingalpha.com/article/4476832-cloudflare-stock-now-back-within-buy-zone","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1119282541","content_text":"Summary\n\nCloudflare is one of our highest conviction companies.\nCloudflare stock's momentum spike has fizzled out, and it has dropped nicely into our buy zone.\nWe discuss why we think long-term investors can consider adding now.\n\nSteve Jennings/Getty Images Entertainment\nInvestment Thesis\nCloudflare, Inc.(NYSE:NET) is another of our highest conviction tech companies whose stock recently dropped back into our buy zone. Investors who need an introduction can refer to one of our previous articles. We had also discussed its thesis just before its FQ3 report card was released. We cautioned investors not to follow the momentum spike heading into its earnings with our Neutral call back then. The stock has fallen more than 28% since our article was published. Notably, a robust FQ3 performance also led to us revising our estimates upwards.\nWe also observed that its momentum spike that we cautioned earlier seems to have fizzled out. Therefore, we believe the entry point might be less risky now for investors who have been waiting to add exposure. Consequently, we think it's apt to update why we believe it's back within our buy zone.\nCloudflare Stock YTD Performance\nNET stock YTD performance (as of 23 December '21).\nNET stock has had a spectacular year so far. When its upward momentum spiked in November, its YTD returns reached 180%. However, the recent retracement in growth stocks has also lowered its price to more reasonable levels. Consequently, its YTD gains have also compressed dramatically, down to 80.6%. Nonetheless, it's still well ahead of the broad market, making it a fantastic year for NET investors.\nWhy is Cloudflare One of Our Highest Conviction Companies?\nKeen investors should be aware that the company has often telegraphed that it's a networking company. Its software-defined architecture is capable of supporting both on-premise and cloud workloads. It's also capable of delivering solutions for both hybrid and multi-cloud environments. Therefore, the company operates a highly scalable business model. Its capability has also allowed it to compete effectively across multiple spectrums against legacy on-premise and cloud-native peers.\nNET may have started serving the long-tail small-and-medium businesses (SMB). However, it has gained significant traction in the enterprise space as it penetrates with remarkable effectiveness. Therefore, it has also allowed Cloudflare to scale its TAM from $32B in 2018 to $100B by 2024. Consensus estimates point to revenue of just $646.8M for FY21 (Cloudflare guided for $647.5M at the midpoint). Therefore, we believe that the company is undoubtedly still in the early innings of its rapidly-expanding market opportunities.\nCloudflare paying customers. Data source: Company filings\nCloudflare enterprise customers. Data source: Company filings\nCloudflare has scaled so quickly that it has nearly 4M customers globally. In addition, 132K are paying, which grew at a CAGR of 29.3% over the last three years. Notably, it has also gained significant traction in its enterprise base. Its enterprise customers increased to 1,260 in FQ3'21, representing a phenomenal CAGR of 69% over the previous three years. Moreover, Cloudflare emphasized that \"nearly 20% of all websites use Cloudflare today.\"\nSo, what makes Cloudflare's business model so scalable? First of all, investors need to understand that the company designed a complete technology stack that's highly efficient to scale. CFO Thomas Seifert articulated (edited):\n\n The network certainly is the competitive moat we have. The bigger we get in terms of data that moves through the network, the larger the product and service offering that runs on this network, and the faster those flywheels turn. It starts with the hardware stack. It's an off-the-shelf hardware stack. That's why our CapEx efficiency is so incredibly good. And on this hardware stack, we run a completely integrated homogeneous software stack. So this allows us literally to offer every product we have and every service we offer on every server in every city and every location. (5th Annual Virtual Wells Fargo TMT Summit)\n\nIt's such a critical competitive moat that Cloudflare believes its competitors cannot match even if they try to invest. The company's points-of-presence (POP) has expanded to more than 250 cities. As a result, it has gained tremendous clout and influence with the local internet service providers (ISP). Notably, these ISPs depend on Cloudflare to help them optimize their costs. They leverage Cloudflare's superior reliability, latency, and cost-effectiveness of its massive network.\nConsequently, it has allowed Cloudflare to co-locate its hardware in these ISPs' data centers. In addition, it helps the company to significantly \"drive down its bandwidth and co-location expenses.\" Cloudflare emphasized: \"This symbiotic relationship that we have with ISPs and the efficiency of our serverless network architecture allows us to introduce new products on our network at low marginal cost.\"\nGross margins comps (LTM). Data source: S&P Capital IQ\nCloudflare and the CDN leaders Fastly(NYSE:FSLY), and Akamai(NASDAQ:AKAM)(Cloudflare has maintained that it's not a pure-play CDN) recognize network, bandwidth, and co-location costs in their cost of revenue. Readers can quickly glean how its competitive moat has afforded superior gross margins over time. Accordingly, Cloudflare is confident that its competitors cannot easily replicate its advantages by increasing CapEx intensity. Cloudflare emphasized (edited):\n\nThis build-out is not a function of CapEx. So you cannot just replicate that by saying, here is $1 billion, let's be in 250 cities. What makes that network so efficient is that it's the most interconnected network on the planet, with thousands of interconnections to other networks. And this is hard to compete with and replicate because dollars and CapEx are just not going to get you into those interconnects. So, it allows us to continue powering more and more of the infrastructure for the people who are actually accessing the web. And that scalability comes from the technical infrastructure and the way that we have been able to have a very symbiotic relationship with the other network providers around the world in order to connect everywhere. (Wells Fargo TMT and RBC Conference)\n\nCloudflare SG&A and R&D margins. Data source: S&P Capital IQ\nHence, we believe that Cloudflare's strong gross margins give it tremendous flexibility to invest. Readers can observe that its R&D margins accounted for 30.2% of its revenue over the last twelve months (LTM). We believe that such a strong commitment to innovation will keep Cloudflare at the fore of its leadership. While Fastly's LTM R&D margin was higher at 35.3%, the company couldn't match Cloudflare's highly competitive gross margin advantage. Akamai's LTM R&D margin came in at just 13.9%, as the company is focusing more on leveraging profits than growth.\nCloudflare revenue YoY change, and GAAP EBITDA margins. Data source: S&P Capital IQ\nAs such, Cloudflare's exceptional business model has allowed it highly consistent topline growth over the last two years. Notably, it has also been improving its operational efficiencies as it scales. As a result, on a GAAP basis, its EBITDA margin has improved to -8.5% in FQ3'21, compared to -47.5% two years ago.\nCloudflare revenue and adjusted EBITDA margins mean consensus estimates. Data source: S&P Capital IQ\nConsensus estimates also pointed to robust topline expansion over the next three years. Cloudflare's revenue is estimated to increase at a CAGR of 40% from FY20-23. Moreover, its adjusted EBITDA is expected to grow even faster. Cloudflare is projected to post an adjusted EBITDA margin of 11.6% by FY23, compared to just 3.6% in FY20. Hence, Cloudflare is still in the early stages of its massive growth.\nSo, is NET Stock a Buy Now?\nNET stock EV/NTM Revenue 2Y mean.\nWe know that stocks like Cloudflare's would never be cheap. They will likely continue to trade at a premium valuation, given its moat and excellent execution. CEO Matthew Prince and his two other co-founders (COO and CTO, respectively) continue to play an integral role in shaping Cloudflare's future developments. NET stock is trading at an EV/NTM Revenue of 52.7x, markedly above its 2Y mean of 34.5x. Typically, we wouldn't even consider stocks with such a high premium. However, NET stock isn't just another stock. Investors should also consider that the company will gain significant operating leverage moving forward. Therefore, we think a DCF valuation model might provide more clarity within reasonable assumptions.\nNET stock DCF valuation model. Data source: S&P Capital IQ, company filings, author\nTherefore, we believe that the stock has now dropped back into our buy zone. Moreover, it seems to be supported along its 50-week moving average support level, which has been reliable since last year.\nAs such,we revise our rating on NET stock to Buy.","news_type":1,"symbols_score_info":{"NET":0.9}},"isVote":1,"tweetType":1,"viewCount":1969,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"CN","currentLanguage":"CN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":7,"xxTargetLangEnum":"ZH_CN"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/696939526"}
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