Cloudflare Sets Ambitious, and Realistic, Growth Target

Shares of Cloudflare (NYSE: NET) were hammered on Friday despite beating analyst estimates on all fronts with its third-quarter report. The edge computing company is feeling no real pain from the current economic environment. Cloudflare grew revenue by 47% year over year and signed up 159 enterprise customers with annual budgets exceeding $100,000. There are now 1,908 of these large customers on Cloudflare's platform.

While Cloudflare's results were impressive, its long-term outlook was the real story. After reaching $1 billion in annualized revenue in the third quarter, Cloudflare has plans to grow that number to $5 billion over the next five years. To reach that goal, revenue would need to grow at a compound annual rate of about 38%.

This target may seem ambitious, especially considering the state of the economy. Here's why it's doable for this edge computing leader.

Massive market opportunities

Cloudflare got its start protecting websites and servers from attacks. Its platform slides between end users and servers, detecting and absorbing malicious traffic. This requires a global network, which Cloudflare has expanded to over 275 cities in 100 countries over the years.