Cloudflare Earnings: Strong Execution in a Tough Macroenvironment Makes for a Solid Quarter

We are maintaining our $60 fair value estimate for narrow-moat Cloudflare after the firm reported strong third-quarter results and guidance mostly in line with our expectations. Earlier this year, the company highlighted sales execution challenges that had hampered its financial results and guidance. Since then, we believe that it has rebounded, posting strong top-line growth and improved profitability against a tough macro backdrop while working to improve its sales personnel challenges. We view the shares as fairly valued, trading in 3-star territory.