What happened

Shares of cloud-based network security specialist Cloudflare (NYSE:NET) are trading 17.6% higher at 3:10 p.m. EDT, just ahead of the company's first-quarter earnings report. The report is scheduled for publication just after the closing bell, either confirming or refuting the bullish industry signals that were sent by Cloudflare's sector rivals earlier this week.

So what

The COVID-19 crisis has been good to some businesses, including email security expert Zix (NASDAQ:ZIXI), edge services specialist Fastly (NYSE:FSLY), and cybersecurity generalist Fortinet (NASDAQ:FTNT). All of these companies reported earnings this Wednesday evening and their shares are skyrocketing today. At press time, Fastly shares traded 47.7% higher while Fortinet sported a 22.3% return and Zixi's shares were up by 15%.

Two yellow Ethernet cables are plugged into a white cloud and held together with a closed padlock.

Image source: Getty Images.

Now what

It's no surprise to see Cloudflare riding the coattails of several proven success stories in the same corner of the cloud security market. Social distancing is good news for cloud computing companies because remote work connections need protection from malicious network attacks and attempts to steal sensitive business data. That's what these companies do, and the market largely failed to see these robust earnings reports coming -- until the impressive filings actually started to drop in.

For the record, your average analyst expects Cloudflare to post a net loss of $0.06 per share on roughly $87 million in top-line sales tonight. General trends around the cloud-based security niche suggest that these targets could be much too conservative.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.