If you are considering becoming a 1M/1M premium member and would like to join our mailing list to receive ongoing information, please sign up here.

Subscribe to our Feed

Cloud Stocks: Recently Public Cloudflare has New Edge

Posted on Monday, Feb 24th 2020

Website infrastructure and security company Cloudflare went public in September last year and recently reported a strong quarter. With a new acquisition and a PaaS edge, the company looks promising.

Cloudflare’s Financials

Revenues for the fourth quarter grew 51% to $83.9 million, ahead of the Street’s estimate of $79.1 million. Net loss was $28.2 million, compared with a loss of $16.7 million a year ago. Non GAAP EPS was $0.06 compared with the Street’s estimate of $0.07.

Fiscal year 2019 revenue grew 49% to $287 million. GAAP gross profit was $223.6 million, or 77.9% gross margin, compared to $149.1 million, or 77.4%, in fiscal 2018. GAAP net loss was $105.8 million, compared to $87.2 million for fiscal 2018. Non-GAAP net loss was $69.5 million, compared to $59.5 million for fiscal 2018. GAAP net loss per share was $0.72, compared to $1.08 for fiscal 2018. Non-GAAP net loss per share was $0.48, compared to $0.73 for fiscal 2018.

The company added a record 300,000 customers during the fourth quarter and ended 2019 with 2.6 million total customers, up 34% y-o-y. It added over 5,800 paying customers in Q4 and now has over 82,000 paying customers, up 22% y-o-y. Its large customer count increased 76% to 550 total large customers with a net add of 237 large customers over the year and 75 over the quarter. Its large customers are defined as customers with over $100,000 in annualized billings. The number of Internet properties using Cloudflare platform grew by 10 million to 26 million in 2019.

Dollar-based net retention stood at 112% in the fourth quarter, which shows that existing customers tend to renew their Cloudflare contracts at larger sizes. This metric is also on the rise, moving up from 110% in the third quarter.

For the first quarter, Cloudflare forecast revenues of $87-$88 million with a non-GAAP net loss of $0.06-$0.05 per share. The market estimates revenues of $87.71 million with net loss of $0.06 per share. Cloudflare expects to end fiscal 2020 with revenues of $389-$393 million with a loss of $0.21-$0.19 per share. The market was looking for revenues of $510.89 million with loss of $0.14 per share.

Cloudflare’s New Offerings and Acquisition

San Francisco-based CloudFlare was founded in 2009 by Harvard students Michelle Zatlyn, Matthew Prince, and their friend Lee Holloway as an online service that helps improve website performance while ensuring security. As the world shifts towards scalable cloud services, Cloudflare has also built a large cloud network that spans 200 cities worldwide and is within less than 100 milliseconds of nearly everyone connected to the Internet. Last month, it announced Cloudflare for Teams to ensure that the people and teams within its organization can access the tools they need to do their job while staying safe from malware and other online threats.

The Cloudflare for Teams suite is built around two complementary products, Cloudflare Access and Cloudflare Gateway that leverage its unified, global platform and its extensive threat intelligence data. Cloudflare Access is a modern-day VPN, providing fast and granular access control for internal and external applications. Cloudflare Gateway is the modern next-generation firewall for malware and ensure compliance with organization policies on any device anywhere in the world without sacrificing performance. It has already won clients like Ericsson, Ziff Davis, and 23andMe.

In January, Cloudflare announced the acquisition of browser isolation startup S2 Systems founded in 2018 by former Microsoft employees. Based in Kirkland, Washington, S2 develops remote browser isolation technology that executes browser code in the cloud rather than on the user’s device. This solution keeps security threats safely isolated from end devices, protecting against one of the biggest enterprise security threats. The company expects S2 technology to enhance Cloudflare for Teams, ensuring it can protect even the most security-conscious organizations without slowing them down. Terms of the deal were not disclosed. S2’s employees will move into Cloudflare’s new Seattle office following the acquisition.

Cloudflare’s New Edge

Other new products gaining traction are Magic Transit and Workers edge computing platform. Magic Transit is a software-defined networking product that offers IP transit with DDoS protection, next-gen firewall, and traffic acceleration for on-premise and data center networks from a single, easy-to-use interface.

Workers edge computing platformallows developers to build and deploy serverless applications on the Cloudflare edge network. Cloudflare Workers provides a lightweight JavaScript execution environment that allows developers to augment existing applications or create entirely new ones without configuring or maintaining infrastructure. The superior speed of development and flexibility that the platform offers is proving to be a differentiating factor in a large percentage of Cloudflare’s new deals.

Cloudflare’s primary competition is from on-premise network hardware vendors such as Cisco, F5, Check Point, FireEye, Imperva, Palo Alto Networks, Juniper Networks, and Riverbed. Other competitors Zscaler, OpenDNS (Cisco), Akamai, Limelight, Fastly, Edgecast (Verizon), Dyn (Oracle), Neustar, UltraDNS as well as some services provided by the major public cloud vendors including AWS, GCP, Azure, and Alibaba.

Cloudflare went public on the NYSE under the ticker NET at a list price of $15. Its stock closed 19% higher on the opening day at $17.9 for a market cap of $5.25 billion. Before going public, it had raised $182 million in venture funding and was last valued at $3.2 billion. Its stock is currently trading at $21.02 at a market cap of $6.33 billion.  

This segment is a part in the series : Cloud Stocks

. Smartsheet Acquiring Bootstrapped Startups to Drive Growth
. Bootstrapped Unicorn Atlassian is Acquiring Capital Efficient Startups
. Netflix Price Hike Ruffles Competition
. How Will Carbon Black Differentiate?
. ServiceNow Grows Through Addition of Capital-Efficient Startups
. Zendesk and Freshworks Follow Different Acquisition Strategies
. Tableau Grows Through Small Acquisitions
. Open Platform Strategy Stands Intuit in Good Stead
. Will GoDaddy Follow the PaaS Route?
. Adobe Delivers Via PaaS
. A Look at Oracle’s 2018 M&A Activity
. What Apps Will Drive More Traction for Cloudera?
. Slack's App Focus Will Be Key to Post-IPO Success
. IBM Counts on its Cloud and Platform for the Turnaround
. Atlassian Acquires From its PaaS Marketplace
. What Should SAP Acquire to Triple its Value by 2023?
. Expect ServiceNow to Acquire From App Marketplace
. Should Follow a PaaS Strategy?
. How Upwork Can Leverage the Virtual Company Trend
. Qualys Scouting For Acquisitions
. Should SAP Acquire Zendesk or Freshworks?
. HubSpot Counts on its API Strategy
. SurveyMonkey Eyes Acquisitions for Growth
. Workday Wants to Disrupt Cloud Computing Using Machine Learning
. Einstein and Open-Source Platform Lead the Charge for Salesforce
. DocuSign Prepares to Beat Rival Adobe
. Veeva Soars, But Dassault Acquires Medidata for $5.8 Billion
. Tableau Acquisition Signals Massive Analytics Push for Salesforce
. Oracle Joins Hands with Microsoft to Take on Amazon
. GoDaddy is Making Strategic Acquisitions for the Next Level of Growth
. Alteryx Sees Strong Momentum
. Adobe Leveraging Magento and Marketo to Deliver Blockbuster Performance
. Is Slack Overvalued?
. How Will Cloudera Address the Competition?
. Zoom is Not Bothered by Cisco or Microsoft
. Domo Counts on Enterprise Revenue for Growth
. Netflix Plays with Pricing and Games to Attract Subscribers
. CrowdStrike Has a Successful IPO
. Atlassian Crosses the Billion Dollar Revenue Milestone
. ServiceNow Believes Strength Lies in Tie-ups
. Partnerships are the Mantra for BlackLine
. SurveyMonkey Counts on Enterprise Segment for Growth
. HubSpot Soars to a New High
. Intuit Pushes AI to Simplify Tax Filing
. Splunk Sees Strong Cloud Momentum
. Forescout Partners with Big Names
. Smartsheet Tapping into the Government Sector
. Salesforce Continues its Shopping Spree
. Palo Alto Networks Targets the IoT Security Market
. DocuSign Focuses on the Mortgage Sector
. Oracle Brags About Autonomous Database
. Blackbaud Acquires YourCause to Grow Addressable Market
. The Market Expects a Lot More from Adobe
. Anaplan Makes its First Acquisition Post IPO
. Activist Investor Drives Market Interest in Box
. MongoDB's Formula for Success
. Coupa Aims for $1B Revenue
. Dropbox on a Rocky Road
. Medallia Banks on Acquisitions
. IBM Banks on AI
. Time For Skepticism with Netflix
. SAP Riding High on the Cloud
. Amazon's Faster Shipping Hurting its Earnings
. ServiceNow CEO Change Signals Focus on Acquisitions
. Will Google Acquire Fitbit?
. HubSpot Focuses on Its Platform
. BlackLine Partners with Google Cloud
. Rapid7’s Focus on Cloud SIEM Pays Off
. Splunk Bets Big on Data Streaming
. Intuit's QBO Scores Big
. VMware Builds Up With Acquisitions
. Palo Alto Targets $5B Revenue by 2022
. Workday Targeting Procure-to-Pay Cycle
. Will Salesforce Acquire DocuSign?
. Okta Targets Enterprise Customers
. MongoDB Eyeing China With Alibaba Partnership
. Twilio Counts on API Upgrades for Growth
. Adobe Revs up its Experience Platform
. Top 20 for 2020
. Anaplan Sees Expanding Use Cases
. Dropbox Gears Up to Regain Lost Valuation
. Forescout Fails to Deliver
. Enterprise Bet Pays Off for SurveyMonkey
. SAP Bets Big on Experience Management
. Twilio Steps up Investment in 2020 to Preserve Growth Momentum
. Zendesk, Freshworks Focus on Marketplaces and Integrations
. Proofpoint Targets Insider Threats Through Acquisition
. RingCentral's Powerful Partner Strategy Would Augment with PaaS
. Qualys Counts on Google and Microsoft for Growth
. Shopify Soars on Improved Merchant Offerings
. HubSpot Believes in the Importance of PaaS
. BlackLine Remains Focused on SAP Integration
. Recently Public Cloudflare has New Edge
. GoDaddy is on a Shopping Spree
. Intuit Targets Online User Base Through Acquisition
. Should Palo Alto Networks Acquire ZScaler?
. Why Salesforce Buying Vlocity Proves the Growing Importance of PaaS
. Datadog Performing Well Post Recent IPO
. Workday Should Open Up About its PaaS Success
. Anaplan Focuses on API Connectors for its Platform
. Veeva
. Five9 Strengthens its PaaS Focus
. RealPage Brings AI and SaaS to Real Estate
. Splunk Should Open up About its PaaS Metrics
. Okta Benefiting from App Diversity
. Oracle Sees Growth Momentum
. Xero Focuses on a PaaS Strategy
. DocuSign Resilient to COVID-19
. Smartsheet Looking up to Enterprise Customers for Growth
. Paylocity Delivers Solid Results
. Q2 Holdings Expands TAM with Acquisitions
. New Relic Focuses on PaaS
. AppFolio Leverages AI for Product Enhancement
. Will Adobe Open Up About its PaaS Statistics?
. Change Healthcare Pushes APIs
. Dropbox Needs to Share API Metrics
. Upwork Improves Monetization
. MongoDB has Miles to go
. Nutanix Needs to Define a PaaS Strategy
. Cloudera Focuses on Hybrid Cloud
. Atlassian Gears Up for Growth, Unfazed by Covid-19
. Shopify Helps Merchants Pivot to Online Stores
. ServiceNow Steady in Turbulent Seas
. RingCentral Sees Strong Traction
. Twilio Hits 52-Week High Amidst COVID Crisis
. HubSpot Lowers Outlook Amidst Virus Concerns
. Proofpoint Acquiring Even Amidst Crisis
. BlackLine Looks Solid At The Face of Covid-19
. GoDaddy Continues to Acquire
. Qualys Expands Cloud Offerings to Soar to New Highs
. Zendesk Struggling Amidst the Downturn
. Alteryx Bounces Back Despite Low Outlook
. Palo Alto Networks Continues to Acquire
. Workday Extends its PaaS Strategy
. Splunk Rides High on Cloud Initiatives
. Salesforce Partners with Workday to Address the New Normal
. Veeva Scales New Highs
. Is Smartsheet’s Pullback a Buying Opportunity?
. MongoDB Soars Even in the Crisis
. Okta Reiterates Outlook
. Is Anaplan a Prospect for Oracle, SAP?
. Oracle Relies on Autonomous Offerings
. Adobe Shifts its Focus
. Paycom Confident Under Current Conditions
. DocuSign Soars to Record Highs
. Paylocity Acquires Amid Crisis
. Datadog's Integrations and Upgrades Help it Soar
. AppFolio Improves Offerings for Current Conditions
. SurveyMonkey Should Get Into PaaS
. Model N Soars to a Record High
. Appian Focuses on RPA for Growth
. Slack Beefs up its Portfolio
. Coupa Expands into Treasury Services
. CrowdStrike Soars to Record Highs
. Guidewire Expands Cloud Offerings
. Dropbox Should Focus on PaaS
. Talend Expands Data Offering Through Partners
. IBM Expands Cloud Partners
. One Medical Supports COVID-19 Care Digitally
. Microsoft Rides High on Teams and Gaming
. Investors Say Yes to nCino’s IPO
. Nutanix Focuses on Government and Media Verticals
. SAP Rethinks Qualtrics Acquisition
. Tenable Expands Into Industrial Cyber-Security
. ServiceNow Expands Ties with Zoom
. Cloudera Powers its Data Platform with Partnerships
. Atlassian Continues to Acquire from PaaS Ecosystem
. Shopify Soars to an All-Time High
. The PaaS Landscape
. HubSpot Focuses on the Enterprise Segment
. GoDaddy Restructures During COVID
. Akamai's Security Solutions Thriving
. Blackline Needs a PaaS Strategy
. Twilio - A Successful PaaS Story
. Zendesk Invests in the Future
. Qualys Continues to Acquire Indian Startups
. ZoomInfo Lists Despite COVID-19
. Analysis of Alteryx PaaS Strategy
. Fastly Needs to Diversify from TikTok
. Way to Go, Salesforce
. Intuit Continues to Acquire
. VMware Continues Buying Spree
. Analysis of Five9's PaaS Strategy
. Okta Expands Alliances to Attract Enterprises
. Palo Alto Continues to Acquire
. Analysis of Splunk's PaaS Strategy
. BigCommerce Goes Big with IPO
. Analysis of Workday's PaaS Strategy
. Analysis of Anaplan's PaaS Strategy
. Sees Strong Demand
. Analysis of MongoDB's PaaS Strategy
. Analysis of Wix's Platform Strategy
. New Relic Product Upgrades Deliver Growth
. What Should Proofpoint Acquire?
. Smartsheet Should Follow Atlassian’s Example
. Adobe's Relentless Growth Continues
. SurveyMonkey's PaaS Prospects
. DocuSign Acquires Amid COVID
. Paylocity Counts on Video
. The Unstoppable Veeva
. Magic Software Acquires to Expand in Europe
. What Can Cloud Startups Do To Raise Seed Capital in 2021?
. Guardant Seeks to Disrupt Oncology Testing
. Dropbox Adds Security Capabilities
. Domo Growing Steadily
. Nutanix Focuses on the Hybrid Cloud

Hacker News
() Comments

Featured Videos