Not About to Flare Out; Cloudflare Posts Strong Financials Despite Macro Pressures; Maintain $60 FVE

We are maintaining our $60 fair value estimate for narrow-moat Cloudflare after the firm checked off fiscal 2022 with a strong set of financial results, in line with our estimates. We continue to have a positive outlook on Cloudflare’s ability to penetrate upmarket (or enterprise) customers while expanding sales within its client base. Despite near-term macropressures affecting the firm’s net retention metric, we remain confident of the long-term viability of Cloudflare’s land-and-expand strategy. With shares up almost 10% after hours, we believe that the market has calibrated its valuation to reflect the firm’s strong fundamentals that we have reiterated in previous quarters. As a result, we view the firm’s shares as fairly valued.