(Reuters) – Cloudflare forecast fourth-quarter revenue below estimates on Thursday, hurt by intense competition in the cybersecurity market while businesses cut back on spending in an uncertain economy.
Shares of the San Francisco, California-based company fell close to 8% in extended trading.
Sticky inflation and high interest rates have led customers to cut back on expenses, hurting firms like Cloudflare, that sells tools and software, grouped as content delivery network (CDN) services, that help companies manage their applications on the internet.
The company expects fourth-quarter revenue in a range of $451 million to $452 million, compared with analysts’ average estimate of $455.7 million, according to data compiled by LSEG.
It forecast quarterly adjusted net income per share of 18 cents per share, slightly above estimates of 17 cents apiece.
The company’s third-quarter revenue rose 28% to $430.1 million, compared with estimates of $424.1 million.
Cybersecurity firms such as Palo Alto Networks and Crowdstrike Holdings have gained market share as companies look to adopt consolidated platforms for a variety of applications, threatening Cloudflare’s share.
Peer Akamai also forecast fourth-quarter revenue below estimates on Thursday, expecting a pullback in spending from clients.
Still, Cloudflare raised its 2024 revenue forecast to a range of $1,661 billion to $1,662 billion, up from its prior expectations between $1,657 billion to $1,659 billion.
(Reporting by Arsheeya Bajwa in Bengaluru; editing by Alan Barona)
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