nelson21
2021-12-27
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Cloudflare Stock: Momentum Spike Has Fizzled Out - Now Back Within Buy Zone<blockquote>Cloudflare 股票：势头飙升已经失败 - 现在又回到买入区域</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":[],"wearingBadges":[],"fanSize":38,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"title":"","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.laohunote.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：势头飙升已经失败 - 现在又回到买入区域</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是我们信念最高的公司之一。</li><li>Cloudflare 股票的势头飙升已经消失，并很好地跌入了我们的买入区域。</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/盖蒂图片社娱乐</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.（纽约证券交易所股票代码：NET）是我们最受信任的另一家科技公司，其股票最近回落到我们的买入区域。需要介绍的投资者可以参考我们之前的一篇文章。在第三季度成绩单发布之前，我们还讨论了它的论文。当时，我们警告投资者不要追随中性看涨期权带来的盈利势头飙升。自我们的文章发表以来，该股已下跌超过 28%。值得注意的是，第三季度强劲的业绩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，我们之前警告的势头飙升似乎已经失败。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，我们认为它很容易更新为什么我们相信它又回到了我们的买入区内。</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>年初至今的净股票表现（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，近期成长型股票的回调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好的一年。</blockquote></p><p> <b>Why is Cloudflare One of Our Highest Conviction Companies?</b></p><p><blockquote><b>为什么Cloudflare是我们信念最高的公司之一？</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，该公司经常发电报称自己是一家网络公司。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。其功能还使其能够在多个频谱上与传统的内部部署和云原生同行进行有效竞争。</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型企业（SMB）提供服务。然而，随着它以显著的有效性渗透，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 32B 美元扩展到 2024 年的 100B 美元。普遍估计 21 财年的收入仅为 6.468 亿美元（Cloudflare 中点指导为 6.475 亿美元）。因此，我们认为该公司无疑仍处于其快速扩张的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：公司文件</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：公司文件</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，以至于它在全球拥有近400万客户。此外，还有 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，它在其企业基础上也获得了显著的吸引力。其企业客户在 2021 年第三季度增至 1,260 家，在过去三年中，CAGR 达到了惊人的 69%。此外，Cloudflare强调，“如今有近20%的网站使用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的商业模式如此具有可扩展性呢？首先，投资者需要了解该公司设计了一个完整的技术堆栈，具有很高的扩展效率。首席财务官 Thomas Seifert 阐述（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>网络无疑是我们的竞争护城河。就通过网络传输的数据而言，我们获得的数据越大，在该网络上运行的产品和服务就越大，这些飞轮转动的速度就越快。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高。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件产品和每一项服务。（第五届年度虚拟富国银行 TMT 峰会）这是一个如此重要的竞争护城河，以至于 Cloudflare 认为其竞争对手即使试图投资也无法匹敌。该公司的网点 (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和影响力。值得注意的是，这些ISP依靠Cloudflare来帮助他们优化成本。它们利用了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在这些ISP的数据中心共享其硬件。此外，它还帮助公司显着“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引入新产品。”</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：S&P Capital IQ</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）在其收入成本中认识到网络、带宽和托管成本。读者可以很快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易复制其优势。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>所以你不能简单地复制，说这里有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联程度最高的网络，与其他网络有数千个互连。这很难与之竞争和复制，因为美元和资本支出不会让你进入这些互连。因此，它允许我们继续为实际访问网络的人们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，以便连接到任何地方。（富国银行TMT和加拿大皇家银行会议）<p class=\"t-img-caption\"><span>Cloudflare SG&A 和 R&D 利润。数据来源：S&P Capital IQ</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，我们相信 Cloudflare 强劲的毛利率为其提供了巨大的投资灵活性。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：S&P Capital IQ</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持续的营收增长。值得注意的是，随着规模的扩大，它也一直在提高运营效率。因此，根据 GAAP，其 EBITDA 利润率从两年前的 -47.5% 提高到 2021 年第三季度的 -8.5%。</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 利润率是普遍预期。数据来源：S&P Capital IQ</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。Cloudflare 的收入预计从 20-23 财年开始将以 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 调整后的 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，现在净股票值得买入吗？</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（分别是首席运营官和首席技术官）继续在塑造Cloudflare的未来发展方面发挥着不可或缺的作用。净股票的 EV/NTM 收入为 52.7 倍，明显高于 2 年平均水平 34.5 倍。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种股票。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的清晰度。</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：势头飙升已经失败 - 现在又回到买入区域</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：势头飙升已经失败 - 现在又回到买入区域</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是我们信念最高的公司之一。</li><li>Cloudflare 股票的势头飙升已经消失，并很好地跌入了我们的买入区域。</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/盖蒂图片社娱乐</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.（纽约证券交易所股票代码：NET）是我们最受信任的另一家科技公司，其股票最近回落到我们的买入区域。需要介绍的投资者可以参考我们之前的一篇文章。在第三季度成绩单发布之前，我们还讨论了它的论文。当时，我们警告投资者不要追随中性看涨期权带来的盈利势头飙升。自我们的文章发表以来，该股已下跌超过 28%。值得注意的是，第三季度强劲的业绩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，我们之前警告的势头飙升似乎已经失败。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，我们认为它很容易更新为什么我们相信它又回到了我们的买入区内。</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>年初至今的净股票表现（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，近期成长型股票的回调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好的一年。</blockquote></p><p> <b>Why is Cloudflare One of Our Highest Conviction Companies?</b></p><p><blockquote><b>为什么Cloudflare是我们信念最高的公司之一？</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，该公司经常发电报称自己是一家网络公司。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。其功能还使其能够在多个频谱上与传统的内部部署和云原生同行进行有效竞争。</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型企业（SMB）提供服务。然而，随着它以显著的有效性渗透，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 32B 美元扩展到 2024 年的 100B 美元。普遍估计 21 财年的收入仅为 6.468 亿美元（Cloudflare 中点指导为 6.475 亿美元）。因此，我们认为该公司无疑仍处于其快速扩张的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：公司文件</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：公司文件</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，以至于它在全球拥有近400万客户。此外，还有 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，它在其企业基础上也获得了显著的吸引力。其企业客户在 2021 年第三季度增至 1,260 家，在过去三年中，CAGR 达到了惊人的 69%。此外，Cloudflare强调，“如今有近20%的网站使用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的商业模式如此具有可扩展性呢？首先，投资者需要了解该公司设计了一个完整的技术堆栈，具有很高的扩展效率。首席财务官 Thomas Seifert 阐述（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>网络无疑是我们的竞争护城河。就通过网络传输的数据而言，我们获得的数据越大，在该网络上运行的产品和服务就越大，这些飞轮转动的速度就越快。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高。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件产品和每一项服务。（第五届年度虚拟富国银行 TMT 峰会）这是一个如此重要的竞争护城河，以至于 Cloudflare 认为其竞争对手即使试图投资也无法匹敌。该公司的网点 (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和影响力。值得注意的是，这些ISP依靠Cloudflare来帮助他们优化成本。它们利用了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在这些ISP的数据中心共享其硬件。此外，它还帮助公司显着“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引入新产品。”</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：S&P Capital IQ</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）在其收入成本中认识到网络、带宽和托管成本。读者可以很快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易复制其优势。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>所以你不能简单地复制，说这里有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联程度最高的网络，与其他网络有数千个互连。这很难与之竞争和复制，因为美元和资本支出不会让你进入这些互连。因此，它允许我们继续为实际访问网络的人们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，以便连接到任何地方。（富国银行TMT和加拿大皇家银行会议）<p class=\"t-img-caption\"><span>Cloudflare SG&A 和 R&D 利润。数据来源：S&P Capital IQ</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，我们相信 Cloudflare 强劲的毛利率为其提供了巨大的投资灵活性。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：S&P Capital IQ</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持续的营收增长。值得注意的是，随着规模的扩大，它也一直在提高运营效率。因此，根据 GAAP，其 EBITDA 利润率从两年前的 -47.5% 提高到 2021 年第三季度的 -8.5%。</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 利润率是普遍预期。数据来源：S&P Capital IQ</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。Cloudflare 的收入预计从 20-23 财年开始将以 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 调整后的 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，现在净股票值得买入吗？</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（分别是首席运营官和首席技术官）继续在塑造Cloudflare的未来发展方面发挥着不可或缺的作用。净股票的 EV/NTM 收入为 52.7 倍，明显高于 2 年平均水平 34.5 倍。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种股票。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的清晰度。</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":3001,"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,"subscribersOnly":false,"subscribersOnlyAccessible":false,"xxTargetLangEnum":"ZH_CN"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/696939526"}
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