Cloudflare currently trades at $191.75 per share and has shown little upside over the past six months, posting a small loss of 2.4%. The stock also fell short of the S&P 500’s 6.7% gain during that period.

Given the weaker price action, is now a good time to buy NET? Or should investors expect a bumpy road ahead? Find out in our full research report, it’s free.

Why Are We Positive On NET?

With a massive network spanning more than 310 cities in over 120 countries, Cloudflare (NYSE: NET) provides a global network that delivers security, performance and reliability services to protect websites, applications, and corporate networks.

1. Billings Surge, Boosting Cash On Hand

Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.

Cloudflare’s billings punched in at $694.9 million in Q4, and over the last four quarters, its year-on-year growth averaged 33%. This performance was fantastic, indicating robust customer demand. The high level of cash collected from customers also enhances liquidity and provides a solid foundation for future investments and growth.

2. Projected Revenue Growth Is Remarkable

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite, though some deceleration is natural as businesses become larger.

Over the next 12 months, sell-side analysts expect Cloudflare’s revenue to rise by 28.8%, close to its 38.1% annualized growth for the past five years. This projection is eye-popping and indicates the market is baking in success for its products and services.

3. Customer Acquisition Costs Are Recovered in Record Time

The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.

Cloudflare is very efficient at acquiring new customers, and its CAC payback period checked in at 25.4 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give Cloudflare more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.

Final Judgment

These are just a few reasons why we think Cloudflare is a great business. With its shares lagging the market recently, the stock trades at 24.3× forward price-to-sales (or $191.75 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.

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