Cloudflare (NET)

Another cyber-security company is coming public, their main competitor is Fastly (FSLY)

Alex Clayton has written a detailed S1 breakdown :


Cloudflare offers a wide range of network services to 2 million free and paying customers across 20 million internet properties globally. Their product is a unified control plane that includes security, performance, and reliability — essentially all the network infrastructure a company would need to operate online in a cloud-first world. The company’s mission “is to help build a better Internet”. Cloudflare calls out the massive move to the cloud and the inability for legacy network approaches — such as a myriad of standalone “band-aid” hardware boxes — to effectively address the network needs of complex, heterogeneous (and cloud-first) infrastructure environments that exist today. The company says “there is literally no place to install such a box in the cloud.” Cloudflare has massive adoption of their products and while the vast majority of customers use their products for free, they had almost 75,000 paying customers (as of 30-Jun-2019) and did $129.2M in revenue in the first 6 months of 2019, up 48% YoY.

Cloudflare is the leading cloud-first CDN and network services provider and has major trends moving in their favor — the move to cloud infrastructure and the increased need for secure and performant applications/websites. They also have a fairly efficient business and are ~40% bigger (and growing slightly faster) than their nearest competitor, Fastly, on an LTM-revenue basis. I suspect the public markets will look past the operating losses given their revenue growth, market leadership, and fairly efficient, self-serve model. Similar to essentially all the previous high-growth SaaS IPOs over the past few years, Cloudflare should fare well in the public markets.…


Interestingly, Ben Thompson at Stratechery has had a few daily articles on Cloudflare recently (

Most of them are for paid subscribers - well worth the $100/yr if you follow technology & SAAS and want a perspective on the business, not stock pick.

One of the interesting tidbit highlighted: Cloudflare Workers (, where customers can write their application and deploy them instantly to the cloudflare infrastructure in 193 cities.

The advantage of this is that you have a sort of virtual collocation to end customers vs. AWS which is more centralized. It’s not going to displace Amazon AWS, but for certain applications where you want to minimize data latency, that might be interesting.