Shares of Cloudflare (NYSE:) are down more than 15% in premarket trading Friday after the company’s Q2 earnings forecast missed expectations.

The consensus estimate of 0.16c was exceeded by 1c net Q1 adjusted earnings per share The revenue came in at $212.2million, surpassing analyst expectations of $205.7 million. Just above the expected 78.4%, the adjusted gross margin was at 78.7%.

Cloudflare anticipates a loss adjusted per share between 1c and $0 in Q2. Analysts were expecting EPS to be 0.26c. On the other hand, revenue is projected to be between $226.5 and $227.5 millions. This compares with the $218 million estimate. According to the company, an operating loss of between $1 million and $2 million is expected in Q2.

NET anticipates an adjusted EPS of between 3c and 4c for the entire year. This is in contrast to analysts’ consensus of 3.5c. The FY revenue range is between $955million and $959 million. This compares to the analyst consensus of 3.5c. Analysts were expecting $929.9 million.

Forecasts for FY adjusted operating profits range from $10 million to $13 million.

Morgan Stanley analyst Keith Weiss said that the move lower in after-hours despite good results is a result of the “highest growth adjusted multiple in software.”

“Despite the >60% pullback in shares, NET remains the amongst the most expensive names in our coverage group, trading at ~18x EV/CY23revenues or 0.45x EV/Sales/Growth (AH price of ~$70/share)versus high growth peers like CRWD, DDOG, MDB, SNOW and ZS trading at an average 0.40X EV/Sale/Growth multiple. Due to the high multiple and unforgiving market environment, decelerating billings will likely add pressure to the multiple. That said, given the quality of the asset, we would look to any significant pullbacks in the stock to get more aggressive on the shares,” Weiss said.

BTIG analyst Gray Powell saw “strong” results “in an unforgiving market for tech stocks.”

“While the overall report was very good, there were some items to debate such as lower than expected OCF and underlying (secondary) metrics like RPO and billings that moderately decelerated off of tough comps. This, combined with a tough market for growth stocks, caused NET shares to fall 10% AMC. NET is still a strong company and will continue to see 50% growth over the next year. At 18.5x 2023E EV/sales, we think the risk reward is balanced,” Powell told clients in a note.

By Senad Karaahmetovic