Cloudflare, Inc.

Despite the heightened economic unpredictability, Cloudflare had a good quarter and managed to deliver an all-around beat. The company generated $234 million in sales in Q2, up 54% from the same period last year. They now have 1,749 customers that pay them more than $100,000 annually after recently adding 212 additional large customers. Among them, a Fortune 500 energy business agreed to a three-year, $784,000 contract. In Q2, Cloudflare won agreements to incorporate Workers as a Service as a preferred development environment with one of the leading e-commerce platforms, one of the fastest-growing online development platforms, and a next-generation database platform. However, their pipeline creation decreased in Q1, sales cycles were longer, and clients took longer to pay their invoices. Among new product launches, the management announced Turnstile, a quick, private solution to replace CAPTCHA and help validate humanity across the Internet. We give Cloudflare’s stock a ‘Hold’ rating with a revised target price.