What Happened?
Shares of internet security and content delivery network Cloudflare (NYSE: NET) jumped 6.8% in the afternoon session after the company reported impressive first quarter 2025 results with key top line metrics including sales and billings exceeding Wall Street's expectations.
The quarter featured a record-breaking deal driven by its Workers developer platform, signaling that Cloudflare's push into programmable cloud services is gaining serious traction. Also worth highlighting was how much new business was pulled in, as Cloudflare recorded the strongest gain in new long-term contracts they've had in three years.
On the other hand, its EPS guidance for next quarter missed, although full-year EPS guidance was maintained. Overall, it was a strong quarter given the solid top line growth and growing adoption of its platform.
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What The Market Is Telling Us
Cloudflare’s shares are very volatile and have had 23 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 15 days ago when the stock gained 5.2% on the news that stocks extended their rebound, led by strong gains in the technology sector, as renewed optimism surrounding U.S.–China trade negotiations lifted investor sentiment.
Contributing to the bullish tone was a standout earnings report from enterprise software leader ServiceNow, which topped Wall Street's expectations on RPO, profit and earnings. More importantly, the company's remaining performance obligations (RPO), a key forward-looking metric for future revenue, gave investors confidence that enterprise customers were not pulling back spending amidst uncertain macro.
The optimism was further reinforced by solid results from Texas Instruments and Lam Research. Their performance was especially encouraging for semiconductor stocks, which had been under pressure due to their exposure to global trade tensions. These results suggested that, despite macroeconomic uncertainties, demand in key tech verticals remained resilient.
Cloudflare is up 18.1% since the beginning of the year, but at $133.16 per share, it is still trading 24.6% below its 52-week high of $176.50 from February 2025. Investors who bought $1,000 worth of Cloudflare’s shares 5 years ago would now be looking at an investment worth $4,725.
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