Core Viewpoint - Cloudflare is expected to report second-quarter 2025 results with anticipated revenues between $500 million and $501 million, reflecting a year-over-year growth of 24.87% [1][8] Revenue Expectations - The Zacks Consensus Estimate for Cloudflare's second-quarter revenues is $500.7 million [1] - The company expects non-GAAP earnings of 18 cents per share, which is a decline of 10% from the same quarter last year [2] Earnings Performance - Cloudflare has beaten the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 14.88% [3] Factors Influencing Q2 Results - Transition from traditional cybersecurity solutions to a zero-trust approach is expected to benefit Cloudflare's performance [6] - The company has seen a rise in high-value contracts and aggressive global expansion, with approximately 50% of its 2024 revenues generated outside the United States [7][8] - The addition of around 13,105 new paying customers in Q1 2025 has brought the total to approximately 250,819, contributing to revenue growth [8] Competitive Landscape - Cloudflare faces intense competition from larger players like Akamai Technologies and Amazon Web Services, as well as from Palo Alto Networks in the cybersecurity space [15][16] - The market for web infrastructure and security services is becoming increasingly competitive, with new entrants and niche players emerging [15] Investment Considerations - Cloudflare's delayed revenue recognition due to large funding deals may create near-term headwinds for metrics like Dollar-Based Net Retention, which remained flat at 111% in Q1 2025 [14] - The company has invested heavily in enhancing its sales and marketing capabilities, which has negatively impacted operating margins [18] Stock Performance and Valuation - Year-to-date, Cloudflare's shares have surged 84.2%, outperforming the Zacks Internet - Software industry's growth of 17.4% [11] - The stock is trading at a premium with a forward 12-month P/S of 28.58X compared to the industry's 5.82X, indicating a stretched valuation [12]