US Stock Market Move | Q2 Guidance Weakens, Cloudflare (NET.US) Plunges Nearly 25% After Earnings

On Friday, Cloudflare (NET.US) plunged nearly 25% after its performance, now trading at $193.16. On the news front, in the first quarter ending on March 31, Cloudflare's revenue reached $639.8 million, a significant increase of 34% year-on-year, exceeding LSEG's consensus expectation of $621.9 million. Adjusted earnings per share (EPS) were $0.25, exceeding analysts' expectations of $0.23 by about 9%. GAAP net loss was $22.9 million ($0.07 loss per share), significantly narrowing from the $38.45 million loss ($0.11 loss per share) in the same period last year. Cloudflare provided revenue guidance for the second quarter of $664 to $665 million, with an adjusted EPS of $0.27. While the EPS guidance aligns with market expectations, the revenue midpoint of $664.5 million is slightly lower than LSEG's consensus expectation of $665.3 million - a gap of only about $8 million, less than 0.12% of the guidance midpoint. Additionally, Cloudflare announced a global workforce reduction of approximately 20%, affecting over 1,100 employees across all functions and regions. CEO Prince and co-founder Michelle Zatlyn emphasized in an internal memo to employees that the layoffs were not about cost-cutting, but a strategic personnel adjustment based on fundamental changes in work styles driven by AI. Analysts and commentators widely believe that the combination of weak Q2 guidance and large-scale layoffs has triggered market panic selling.