Cloudflare (NET) had a lot to crow about after reporting its Q4 results but not enough to justify the most optimistic expectations for the cloud-services company over the next 12 months, Oppenheimer analyst Timothy Horan said Friday in a new research note.

The company overnight beat consensus estimate for the three months ended Dec. 31 by narrow margins on both its bottom- and top-lines. Its revenue forecast for Q1 and 2025 revenue were also in line with analyst views but the company's outlook for adjusted per-share earnings for the current quarter and fiscal year lagged.

Revenue growth, however, continued to slow, slipping to 27% during the final three months of 2024 from the 30% year-over-year pace during the first half of the year and likely needing another quarter before bottoming out, Horan said.

Other Q4 metrics are positive, he said, with a "very strong" increase in billings and its dollar-based net retention rate also edging higher. Sales force productivity and bookings also increased and Horan said he believes revenue growth at Cloudflare can again top 30%, supported by product improvements and a "dominant" inferencing advantage for its artificial intelligence applications.

Nevertheless, Horan said he was cutting his stock rating for Cloudflare to perform from outperform based on valuation, explaining its projected discounted cash flow "does not support a price target a $180+ price target."

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