Workflow
Can Cloudflare's Workers Platform Lead Its Next Phase of Growth?
CloudflareCloudflare(US:NET) ZACKSยท2025-06-11 14:50

Core Insights - Cloudflare's Workers platform is emerging as a significant driver of future growth, highlighted by a record deal exceeding $100 million, indicating a shift in perception among large customers towards Cloudflare's capabilities beyond security and networking [1][10] Company Performance - In the first quarter of 2025, Cloudflare reported a remarkable 4,000% year-over-year increase in inference requests on its Workers AI tool, showcasing strong growth in AI-driven usage [4][10] - The company's shares have increased by 66.5% year-to-date, significantly outperforming the Zacks Internet - Software industry's growth of 13.2% [9] Product Development - The Workers platform, launched in 2017, has attracted over three million developers, facilitating the building and running of applications closer to users [2] - The introduction of the Model Context Protocol (MCP) server within the Workers platform aims to enhance AI model integration, enabling clients to deploy AI agents for various tasks, which could lead to increased upselling and customer acquisition [5][10] Competitive Landscape - Cloudflare competes with major players like Alphabet and Amazon, which also offer serverless and container-based edge deployment solutions. However, Cloudflare's configuration-less auto-scaling and high-performance global network position it favorably in this competitive environment [6][8] Valuation and Earnings Estimates - Cloudflare's forward price-to-sales ratio stands at 26.61X, significantly higher than the industry average of 5.68X, indicating a premium valuation [11] - The Zacks Consensus Estimate for Cloudflare's fiscal 2025 and 2026 earnings suggests year-over-year growth of 5.33% and 31.62%, respectively, although recent revisions indicate downward adjustments for both years [12]