Why Cloudflare Inc (NYSE:NET) stock is under pressure

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Cloudflare Inc (NYSE:NET) stock fell over 5% in the pre-market session of Feb 12th, 2021 (Source: Google finance) after the company posted lower than expected results for the fourth quarter of FY 20. The company reported Non-GAAP net loss of $7.4 million, compared to $16.4 million in the fourth quarter of 2019. The company generated negative net cash flow from operations of $8.8 million, compared to negative $8.6 million for the fourth quarter of 2019. The company generated negative free cash flow of $23.5 million, or 19% of total revenue, compared to negative $23.5 million, or 28% of total revenue, in the fourth quarter of 2019. Cash, cash equivalents, and available-for-sale securities were $1,032.1 million as of December 31, 2020. The dollar-based net retention of 119%, which represents an improvement of 300 basis points sequentially, on the back of continued strength from large enterprise customers.

NET in the fourth quarter of FY 20 has reported the adjusted loss per share of 2 cents while reported the adjusted revenue growth of 50 percent to $125.93 million in the fourth quarter of FY 20. The company delivered the Non-GAAP gross profit of $98.3 million, or 78.1% gross margin, compared to $66.0 million, or 78.7%, in the fourth quarter of 2019.

For the first quarter of 2021, the company expects the total revenue to be in the range of $130 to $131 million, Non-GAAP loss from operations to be in the range of $9 to $8 million and Non-GAAP net loss per share to be in the range of $0.03 to $0.02.

For the full year 2021, the company expects the total revenue to be in the range of $589 to $593 million, Non-GAAP loss from operations to be in the range of $25 to $21 million and Non-GAAP net loss per share to be in the range of $0.09 to $0.08.

Meanwhile, the company has recently announced Project Fair Shot to provide a free and fair way for vaccine distributors around the world to use digital queues to safely scale their efforts. Project Fair Shot is expected to enable any government, municipality, hospital, pharmacy, or other organization facilitating the distribution of the COVID-19 vaccine access to Cloudflare Waiting Room, a transparent digital queue.

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