NET revenue growth is ticking upwards

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Hi all,

If you take the last Cloudflare earnings of 193.6 million, add to them 21.5 million (a tiny bit more than the increase from Q3 to Q4 2021, which was 21.25 million), you obtain 215.1 million for Q1 2022.

Compared to Q1 2021, it represents a 55.8% YoY increase, for a mere 11.1% sequential increase.

I know the above number is conjecture, but it is a likely one, given the revenue increase regularity (see paragraph below). The YoY growth will be even better than 55.8% if the QoQ growth holds at 12%: it will then be 57%.

I know that these growth numbers are not as exciting as those of Datadog or Monday, but they are exceptionally regular. Compared to Datadog, for example, Cloudflare’s revenue growth has been virtually un-impacted by Covid. YoY revenue growth went from 49% in 2019 to 50% in 2020 to 52% in 2021, with no quarterly dip whatsoever. Boring, maybe, but stable.

I also think that Cloudflare’s platform is incredibly sticky, as it enhances the Internet presence of a company across the board, including speed, uptime and security at its core. Once you’ve opted into it, I doubt you dare getting out given the above advantages, especially in these times.

I however confess my ignorance as to what the hyperscalers (most notably Amazon, Google) are up to in terms of providing business networking solutions. Could it be easy for them to replicate Cloudflare’s network and software solutions to create a “better Internet” for companies? Probably, as they have the data centers and fiber links, but their focus is really on selling stuff and ads, as well as collecting user’s data for the same purposes; I don’t know if the two are compatible.

Sedi (Long NET - 12.7%)

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I however confess my ignorance as to what the hyperscalers (most notably Amazon, Google) are up to in terms of providing business networking solutions. Could it be easy for them to replicate Cloudflare’s network and software solutions to create a “better Internet” for companies? Probably, as they have the data centers and fiber links, but their focus is really on selling stuff and ads, as well as collecting user’s data for the same purposes; I don’t know if the two are compatible.

This is something I have been researching over last fall and into this year.

The cloud hyperscalers are moving into “the edge” – but are not moving in the same direction as Cloudflare.

AWS, Azure, and GCP are moving towards more distributed single-tenant distributions (like AWS Outposts), as well as multi-tenant “miniaturized clouds”, both in metro regions (like AWS Local Zones), and at the edge of 5G public cellular networks (like AWS Wavelengths). Those are hub-and-spoke infrastructure, as they require talking to the nearest AWS region for any AWS features not in those distributed mini-cloud environs (say, for using DynamoDB or Kinesis).

Cloudflare is building a globe-spanning edge cloud over its edge network – not a hub-and-spoke model where the customer has to architect how the cloud-native workloads are split between distributed clouds and full regions. It deploys to every server at once, not individual ones. Cloudflare is entirely serverless – you aren’t managing infra (especially in diff regions or distributed clouds), you manage the service itself via API and Workers.

What they’ve been building in this edge cloud is the new R2 distributed object storage, to start making Workers more and more relevant, and open up new use cases for object storage than S3 allowed for with its egress charges. (And more edge-native primitives are coming, like distributed databases and data streaming.)

Pages’s new full-stack features that put the entire front- and back-end stacks everywhere at once, IN FRONT of the CDN. For front-end development, this more closely resembles what Vercel and Netlify are building (Jamstack architecture that deploys web and mobile apps via CDNs), not what the hyperscaler’s provide. For full-stack development - no hyperscaler is yet combining serverless edge compute with front-end web dev (Jamstack) in the same platform.

Cloudflare is carving its own path as an everywhere cloud. Fastly, Vercel, and Netlify are more near to it than what AWS, Azure, and GCP are doing.

(See my blog for way more on all this, including the Horses for Courses on the major cloud vendors’ moves, and Everywhere/Application/Interconnected Cloud pieces for where Cloudflare has been moving over the past year.)

  • muji
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