Cloudflare IPO Roadshow Video

Summary

Cloudflare's mission is to revolutionize Internet infrastructure with a global cloud platform, offering security, performance, and reliability services. With a serverless architecture, they provide an integrated solution that replaces traditional network hardware, serving over 20 million Internet properties. Cloudflare Workers, their serverless development platform, empowers innovation, while their commitment to a neutral, efficient, and secure Internet for all, positions them at the forefront of modern digital transformation.

Takeaways

• 🌐 The Internet's infrastructure was not originally designed for its current scale and complexity, leading to a tangled network of equipment and high maintenance costs.
• 💡 Cloudflare offers a modern solution with a global cloud platform that simplifies the management of Internet security, performance, and reliability from a single dashboard.
• 📈 Over 2 million customers, including 10% of the Fortune 1,000, use Cloudflare's services to power more than 20 million Internet properties.
• 🛡️ Cloudflare's core security services protect customers from sophisticated cyber attacks by leveraging data from millions of properties on its network.
• 🚀 The company has a strong focus on innovation, as evidenced by the development of products like Cloudflare Workers, a serverless platform for modern Internet applications.
• 📊 Cloudflare has experienced significant growth with a compound annual growth rate of 51% over the last three fiscal years and maintains a GAAP gross margin of 77%.
• 💼 The business model is efficient, with low customer acquisition costs and minimal capital expenditure, contributing to the company's high gross margins.
• 🔄 Cloudflare's serverless architecture allows every server in its network to run every service, increasing efficiency and enabling the company to offer free tiers of service.
• 🌍 The company's global network spans over 190 cities in more than 90 countries, ensuring close proximity to the majority of the developed world's Internet-connected population.
• 🛂 Cloudflare Access provides a zero trust security solution that verifies all connections to the Internet, offering a secure and user-friendly alternative to traditional VPNs.
• 🔄 Argo Smart Routing uses Cloudflare's network as a vast sensor to find the fastest routes for data, improving performance with a simple click of a button.

Q & A

What is the primary issue with the current state of the Internet infrastructure?

The primary issue is that the Internet infrastructure was not originally designed for its current usage. It is described as an unruly mess of network equipment connected through a complex cabling system, requiring significant financial investments in hardware and IT support.

What is Cloudflare's vision for improving Internet infrastructure?

Cloudflare envisions a global cloud platform that can manage the security, performance, and reliability of any Internet property, along with cloud services and on-premise hardware, from a single, user-friendly dashboard.

How many Internet properties does Cloudflare currently power?

Cloudflare powers over 20 million Internet properties for both free and paying customers globally.

What percentage of the Fortune 1,000 companies are already paying Cloudflare customers?

Approximately 10% of the Fortune 1,000 companies are already paying Cloudflare customers.

What is Cloudflare's approach to security and performance?

Cloudflare's approach is to develop products that deliver security without sacrificing performance. They have technology that optimizes and routes data intelligently to bypass network congestion.

How does Cloudflare's load balancing product differ from traditional hardware solutions?

Cloudflare's load balancing product operates on a global cloud platform and can handle traffic spikes and unforeseen events in real-time, unlike traditional hardware solutions which are limited by physical constraints and complexity.

What is Cloudflare Workers and how does it contribute to Cloudflare's network?

Cloudflare Workers is a serverless platform that allows developers to run code directly at Cloudflare's edge. It provides a fast, secure, and scalable platform for deploying applications and customizing Cloudflare's performance, security, and reliability solutions.

What are the two main trends driving the change in the Internet infrastructure market?

The two main trends are the transition from on-premise hardware and software to cloud-based services, and the need for a unified control plane to manage configurations across hybrid environments, which traditional network hardware boxes cannot provide.

How does Cloudflare's business model demonstrate efficiency?

Cloudflare's business model demonstrates efficiency through its serverless architecture, which allows for the use of commodity hardware and the ability to serve customers with compelling new products at low marginal costs. This has resulted in high gross margins and rapid revenue growth.

What is Cloudflare's total addressable market based on IDC data?

Cloudflare's total addressable market, based on IDC data, was nearly $32 billion in 2018 and is expected to grow to $47 billion by 2022.

How does Cloudflare's customer adoption process work?

Cloudflare follows a 'land and expand' model where customers often start with a self-service plan and then adopt more enterprise-grade services on longer-term contracts as they expand their usage and see the value in Cloudflare's platform.

Outlines

00:00

🌐 The Evolution and Impact of Cloudflare on Internet Infrastructure

This paragraph introduces the Internet's evolution from a simple network to a complex system requiring extensive and costly hardware. It highlights the financial burden on businesses due to the need for network equipment like firewalls and VPNs. Cloudflare is presented as a disruptive solution, offering a global cloud platform to manage Internet properties' security, performance, and reliability from a unified dashboard. The company's growth is underscored by its customer base of over 2 million, including Fortune 1,000 companies. The paragraph also emphasizes Cloudflare's commitment to innovation and its mission to build a better Internet, as shared by its co-founders Matthew and Michelle, and the positive testimonials from its users.

05:00

🚀 Cloudflare's Business Model and Market Disruption

The second paragraph delves into Cloudflare's business model, emphasizing its efficiency and low customer acquisition costs. It discusses Cloudflare's growth strategies, including its approach to market disruption by replacing traditional network hardware with cloud-based services. The paragraph outlines the transition in the tech industry from on-premise hardware to cloud services and how Cloudflare is leading this shift in network hardware. It also touches on the company's broad market opportunity, expected to grow from $32 billion in 2018 to $47 billion by 2022, and how Cloudflare's platform offers an integrated solution that's distinct from point-cloud providers and public cloud vendors.

10:01

🛡️ Cloudflare's Security and Performance Solutions

This paragraph focuses on Cloudflare's suite of products that address security and performance needs. It describes the company's firewall product, which is designed to be simple, smart, and powerful, and Cloudflare Access, a zero trust security solution that verifies connections for secure access. The paragraph also explains how Cloudflare uses its network as a vast sensor to optimize data routing for performance, and introduces Argo Smart Routing, which improves data transit speeds. Additionally, it covers Cloudflare's load balancing product that facilitates multi-cloud environments and the company's serverless architecture that underpins its ability to offer a wide range of services efficiently.

15:04

🌟 Cloudflare's Global Reach and Customer Advocacy

The fourth paragraph highlights Cloudflare's extensive global network, spanning over 190 cities in more than 90 countries, and its efficient business model that has allowed for increased revenue without proportional cost increases. It discusses the company's two interconnected flywheels that drive efficiency: its serverless network architecture and its commitment to serving a broad customer base. The paragraph also emphasizes Cloudflare's customer-centric approach, which has resulted in a high Net Promoter Score and strong customer advocacy. It outlines the company's customer segments, from developers and small businesses to large enterprises, and its 'land and expand' sales model.

20:04

🤝 Cloudflare's Commitment to a Neutral and Open Internet

In this paragraph, Cloudflare's stance on neutrality and its dedication to an open Internet are underscored. It discusses the company's guiding principles and how they influence its initiatives like Project Galileo, which protects at-risk organizations, and the Athenian Project, which supports state and local governments. The paragraph also touches on Cloudflare's hiring practices, its low turnover rate, and its commitment to attracting top talent to help solve significant Internet challenges. It concludes with a reaffirmation of Cloudflare's mission to build a better Internet and its ongoing dedication to this goal.

25:08

🌱 Cloudflare's Growth and Dedication to the Internet's Future

The final paragraph reflects on Cloudflare's journey, its unwavering commitment to its mission, and its alignment with industry trends. It emphasizes the company's business model, which does not rely on selling ads or user data, and its focus on making the Internet more secure, faster, and more reliable. The paragraph also discusses the vast opportunities ahead for Cloudflare as it continues to help organizations enhance their networks and empower the next generation of online innovation. It concludes with a forward-looking statement that signifies Cloudflare is just beginning its mission to improve the Internet for everyone.

Keywords

💡Internet infrastructure

Internet infrastructure refers to the fundamental systems and components that support the operation of the Internet, including hardware, software, and network connections. In the video, Cloudflare is presented as a company that is revolutionizing this infrastructure by offering a global cloud platform to manage security, performance, and reliability of Internet properties, which is a significant shift from the traditional unruly mess of network equipment.

💡Band-aid network hardware boxes

The term 'band-aid network hardware boxes' is used in the script to describe traditional network devices like firewalls and load balancers that are seen as temporary fixes to network issues. The script implies that these devices are costly and require significant investment in IT support, which Cloudflare aims to replace with a more efficient and unified cloud-based solution.

💡Cloudflare

Cloudflare is the company central to the video's narrative, offering services that enhance Internet security, performance, and reliability. It is portrayed as an innovator in Internet infrastructure, providing a global cloud platform accessible through a single dashboard, which is a stark contrast to the traditional, fragmented approach to network management.

💡Global cloud platform

A global cloud platform, as mentioned in the script, is a network of servers and services that are distributed worldwide and accessible over the Internet. Cloudflare's platform is highlighted as the next step in Internet infrastructure, allowing for the management of various services from a centralized location, which is a key aspect of their value proposition.

💡Cyber attacks

Cyber attacks are attempts to damage, disrupt, or gain unauthorized access to digital systems. The video emphasizes Cloudflare's core security services that protect customers from such attacks, leveraging data from millions of properties on their network to identify and neutralize threats, which is a critical component of their service offering.

💡Performance

In the context of the video, 'performance' relates to the speed and efficiency of Internet services. Cloudflare aims to improve the performance of its customers' Internet properties by optimizing data routing to bypass congestion and enhancing the speed of applications, as illustrated by the customer testimonial mentioning increased agility and response time.

💡Reliability

Reliability, as discussed in the script, is the ability of an Internet property to remain operational and consistent. Cloudflare's products are designed to ensure that customers' Internet properties are always available, even during traffic spikes or unforeseen events, which is a fundamental aspect of their service commitment.

💡Serverless platform

A serverless platform, such as Cloudflare Workers mentioned in the script, allows developers to build and run applications without having to manage the infrastructure. This platform is significant because it enables modern Internet applications to be developed and deployed at the edge of the network, leveraging Cloudflare's extensive global reach.

💡Hybrid environments

Hybrid environments refer to the combination of on-premise, SaaS, and public cloud solutions that businesses use. The script discusses how Cloudflare provides a unified control plane for managing network configurations across these diverse environments, which is essential for businesses transitioning to cloud services.

💡GAAP gross margin

GAAP (Generally Accepted Accounting Principles) gross margin is a financial metric that indicates the profitability of a company's core business operations. The video script highlights Cloudflare's GAAP gross margin of 77%, showcasing the company's efficient business model and strong financial performance.

💡Net Promoter Score

Net Promoter Score (NPS) is a metric that measures customer satisfaction and loyalty. The script mentions Cloudflare's high NPS of 68, indicating that their customers are highly satisfied and likely to recommend their services, which reflects positively on the company's reputation and customer experience.

Highlights

The Internet's infrastructure is outdated and inefficient, with businesses spending billions on network hardware like firewalls and VPNs.

Cloudflare offers a global cloud platform to manage Internet security, performance, and reliability from a single dashboard.

Over 2 million customers use Cloudflare, including 10% of the Fortune 1,000 companies.

Cloudflare is praised for its extension of teams, making applications faster and more reliable.

The company's mission is to build a better Internet through its innovative global cloud platform.

Cloudflare's network spans 190 cities in over 90 countries, serving likely any Internet user today.

Adoption of Cloudflare is strong in healthcare, industrial, transportation, government, education, and non-profit sectors.

Cloudflare's integrated platform replaces traditional network hardware boxes with cloud services.

The company's security services protect against sophisticated cyber attacks using data from millions of properties.

Cloudflare challenges the trade-off between security and performance, improving both with its products.

Reliability is a key focus, ensuring Internet properties never go down despite potential issues.

Cloudflare Workers is a serverless platform opening Cloudflare's network for modern Internet applications.

Cloudflare's efficiency is demonstrated through high gross margins and low customer acquisition costs.

The company's growth is driven by a transition from on-premise hardware to cloud services.

Cloudflare provides a unified control plane for managing hybrid environments.

The company disrupts traditional IT markets with its integrated global cloud platform.

Cloudflare's products are designed to be easy to use, contributing to its global scale and customer base.

The company's architecture allows for the deployment of changes across its network in seconds.

Cloudflare Workers enables developers to run code directly on Cloudflare's edge, expanding possibilities.

Efficiency in building the network contributes to Cloudflare's compelling business model.

Cloudflare's commitment to serving everyone drives product development and market approach.

The company's sales cycles are efficient, with a focus on the land and expand model.

Cloudflare's culture emphasizes curiosity, transparency, and principled actions.

The company's initiatives like Project Galileo protect vulnerable voices on the Internet.

Cloudflare's mission attracts top talent focused on solving significant Internet challenges.

Cloudflare's business model aligns with making the Internet more secure, faster, and reliable for all.

The company is positioned to grow with the Internet, offering vast opportunities for online innovation.

Transcripts

The Internet wasn't built for what it's become.

Many of us tend to think that the Internet just works, but behind the

scenes, it's another story: an unruly mess of network equipment strung

together through a spider web of cabling.

Tens of billions of dollars each year are spent by businesses and

organizations around the world on these band-aid network hardware boxes:

firewalls, load balancers, VPNs, WAN optimizers, and the list goes on and on.

You're lucky if you're able to afford them, and then you need to spend millions more

on the I.T. organization to support them.

At Cloudflare, we believe there's a better way.

Cloudflare represents the next step of Internet infrastructure:

a global cloud platform to manage the security, performance, and reliability

of any Internet property,

along with any combination of cloud services and on-premise hardware

from a single dashboard that anyone can use.

Today, over 2 million free and paying customers globally use Cloudflare

to power over 20 million Internet properties, including many of the world's leading companies.

Approximately 10% of the Fortune 1,000 are already paying Cloudflare customers.

We're Cloudflare, and we're helping build a better Internet.

Cloudflare has been fantastic.

The way I like to describe it to people is that it feels like an extension of our team.

Cloudflare is our outer edge.

It makes our application faster, more reliable.

I like the continued innovation and push that Cloudflare brings.

We’re looking at better agility, better response time in terms of support.

Better operational capabilities.

Cloudflare actually understands the Internet.

Our team looked at the innovation over the last couple of years and

said, "Hey, this is definitely the horse to bet on in the future."

Cloudflare is just bringing incredible value to our business.

I'm Matthew.

And I'm Michelle, and we're the co-founders of Cloudflare.

Cloudflare's mission is to help build a better Internet.

We've built one of the world's largest global cloud platforms,

providing Internet security, performance, and reliability services to

everyone from individual developers and small businesses to large

governments and Fortune 1,000 companies that require enterprise-grade solutions.

Today, Cloudflare's global network spans over 190 cities in more than 90 countries worldwide.

With over 20 million Internet properties using Cloudflare,

if you’ve used the Internet today, it's likely you’ve used our network.

We see strong adoption from verticals like healthcare with companies like Gilead and Lab Corp.,

the industrial and transportation verticals with companies like United Technologies, Reliance Steel, and Norwegian Air,

and among government, education, and non-profit organizations

like the FBI and the U.S. Department of State.

Cloudflare offers an integrated global cloud platform

which provides security, performance, and reliability services

for everything connected to the Internet, replacing and improving the

functionality delivered by network hardware boxes.

Our core security services help protect customers from large and

increasingly sophisticated online cyber attacks.

Informed by the millions of properties on our network, our intelligent systems use data

on cyber attacks against any one of our customers to better protect every customer.

For a long time, the widely held view was that better

security meant a sacrifice in performance.

At Cloudflare, we've never been willing to make that compromise.

We aim to develop products that deliver security while also improving performance.

And we've developed technology that intelligently

optimizes and routes data around the world, bypassing network congestion.

The next pillar of our platform is reliability.

There are so many things that can go wrong on the Internet, even when you’re doing everything right.

Our security and performance products

are designed to make sure your Internet property never goes down.

In addition, we offer dedicated features like load balancing that help

you handle traffic spikes and unforeseen events in real-time.

Finally, we're really excited to have opened our own serverless

platform to outside developers with a product called Cloudflare Workers,

which we believe stands to make Cloudflare's network the next

frontier for modern Internet applications.

Security, performance, reliability, and a bleeding-edge development platform.

These are the pillars at the heart of what Cloudflare does.

I'm Thomas Seifert, Cloudflare's Chief Financial Officer.

Before joining Cloudflare two years ago, I had the opportunity to serve

as CFO at other leading technology companies, including Symantec and AMD.

And I'm uniquely excited about the opportunity ahead of us at Cloudflare.

Cloudflare is disrupting a very large and significant total addressable market

that has allowed us to grow revenue from a compound

annual growth rate of 51% over the last three fiscal years.

But more importantly, we've been able to deliver this revenue with a

GAAP gross margin of 77%.

At the core of Cloudflare is an efficiency that is demonstrated across our entire business model

It shows in the high gross margin we generate from growing revenue,

and in the low CapEx we need to deploy

and build out the footprint and capacity of our network.

It shows in the efficiency of our go-to-market and our low customer acquisition cost

It shows in the efficiency of how we launch products and bring new products to market.

And more importantly, it has allowed

us to grow revenue with multiple and independent growth drivers.

We all know what a good experience looks like, and one of the main

reasons in choosing Cloudflare was because of the experience that we would be getting.

The team overwhelmingly said, “We've gotta go this route.

Look at how much they have outpaced everyone."

We're betting on the technology for the future, not the technology for the past.

So having a broad network, having global companies now

running at full enterprise scale, gives us great comfort.

It's dead clear that no one is innovating in this space as fast as Cloudflare is.

The technology industry is undergoing a massive transition

from on-premise hardware and software that customers buy to

services in the cloud that they rent.

We first saw this transition at the software stack as companies like

Salesforce and Workday disrupted legacy on-premise software with

cloud-based software as a service solutions.

Storage and compute soon followed the same trend as legacy hardware

companies were disrupted by cloud vendors like AWS, Microsoft Azure,

and Google's Cloud Platform. Today, the same transition to the cloud is

occurring with network hardware, as enterprises continue to abandon the

maze of band-aid boxes in favor of network services built for the cloud.

Cloudflare is at the forefront of this transition, as we

consolidate and improve on the functionality historically provided by

companies like Cisco, Juniper, and F5.

There are several trends driving this change.

In the past, if an organization wanted Internet security, performance, and reliability,

it had to buy rooms full of expensive network appliances

and hire I.T. teams just to manage them.

While there were some companies that could afford this, the cost was prohibitive for many.

Businesses are at different stages in this transition to the cloud.

Most still have some equipment running on-premise, some in SaaS

vendors, and some in the public cloud.

Businesses want a single unified control plane to manage their

configuration across these hybrid environments, and the band-aid boxes

of the past simply aren't built to work in tandem with the cloud.

This is where Cloudflare shines.

We give our customers a single dashboard they can use to manage their

network configuration and have it apply across all their cloud-based

services, SaaS applications, and on-premise hardware.

We believe our platform disrupts several large and well-established

I.T. markets.

We are disrupting a total addressable market that, based on our

analysis of IDC data, was nearly $32 billion dollars in 2018, and

that's expected to grow to $47 billion by 2022.

This total addressable market comprising security, performance, and

reliability services doesn't include opportunities that we have in

adjacent markets such as serverless computing.

And by virtue of the way we've architected our network, as we grow, our

efficiency and ability to serve our customers with compelling new

products grows with it.

It's really amazing to partner with a vendor who's not just providing a

great enterprise service, but also helping to move forward the security on the Internet.

One of the things we didn't expect to happen is that

the majority of traffic coming into our infrastructure would get faster

response times, which is incredible.

Zendesk just got 50% faster for all of these customers around

the world because we migrated to Cloudflare.

I'm Jen Taylor and I'm Head of Product at Cloudflare.

We solve the problems that customers used to need to buy boxes for,

from companies like Cisco, F5, Juniper and Check Point to address,

But we deliver them as a service. On Cloudflare, each of these is a

separate SKU available from the same intuitive dashboard, where turning

one on is as simple as a single click.

Once you've adopted any Cloudflare service, it's incredibly easy to adopt others:

70% of our enterprise customers use four or more Cloudflare services.

I won't attempt to introduce all of Cloudflare products,

but will instead highlight just a few of them to illustrate

the breadth of our product suite, like our firewall, our zero trust

security solution, our intelligent routing, and our load balancing products.

These products all work together seamlessly and are managed

from the same integrated dashboard.

They join the complete solution of other security, performance, and

reliability products we've built to solve our customers' needs.

Let's start with our firewall product.

The job of a firewall is simple: keep the bad guys out.

But historically, firewalls have been complicated to deploy and manage,

and they lack the scale and shared intelligence you need in today's

threat landscape. We went for simple, smart, and powerful.

If you can create a filter for your email inbox, you can author a firewall rule.

As with all our products, our firewall is informed by

our massive global network, which behaves like an immune system,

always learning how to identify and neutralize novel threats.

Now let's look at Cloudflare Access, our zero trust security solution.

Security is as much about keeping the bad guys out as it is about only

letting the good guys in. It used to be that to create a secure system,

people would secure the perimeter of their systems with a VPN.

But in today's threat landscape, that's not enough.

Cloudflare Access verifies anything and everything trying to connect to

the Internet. Access also makes life so much better for the end user

because they don't have to deal with a clunky client and configurations.

Fast, easy, and secure.

Shifting gears to performance: at Cloudflare, we leverage the scale and

the scope of our network to act as a vast sensor network to monitor all

of the transit routes across the Internet. This helps us identify not

just the most logical route, but the fastest route.

Argo Smart Routing works like Waze for the Internet, using that shared

intelligence to route data around Internet traffic jams.

Typically, when our customers enable Argo Smart Routing, they see a

performance boost just by clicking one button.

Finally, let's talk about our load balancing product.

Cloudflare's load balancing helps customers load balance between

single, hybrid cloud, and multi-cloud environments.

This means our customers can be truly multi-cloud, which simply isn't

feasible in the world of hardware boxes.

We think about load balancing the same way we're thinking about all of

our functionality, built on the same platform, and you turn it on the

same way: simply clicking a button in the dashboard.

These are just a few of the many products available with Cloudflare's

integrated global cloud platform.

And the key thing to remember is that each of these products runs on

every server across the same global network infrastructure.

My name is John Graham-Cumming, and I'm Cloudflare's Chief Technology Officer

here at Cloudflare's London office — one of our eleven offices worldwide.

You just heard about the broad suite of products that we

deliver to our millions of customers spanning security, performance,

and reliability. At the heart of these products, and our ability to

continuously innovate and improve on them, is our network and the

wholly proprietary software stack that runs across it.

Rather than deploy different hardware and software for each product we

sell, we built our network to allow for every server, in every city, to

run every Cloudflare service.

We refer to this architecture as serverless because it means we can

deploy standard commodity hardware and our product developers and

customers do not need to worry about the underlying servers.

Our entire software stack is proprietary and built in-house.

This integrated stack has made scaling, debugging, optimizing, and

operating our platform easier and cheaper than competing services.

It also allows us to deploy changes across our entire worldwide network

in a matter of seconds.

Our software automatically manages the deployment, prioritization, and

execution of our own code and our customers' code across our network.

Whenever we add additional services to our network, the entire network

becomes more efficient.

The efficiency of our network has allowed us to offer basic versions of

our core products for free.

We estimate that we operate within 100 milliseconds of 99% of

the developed world's Internet connected population.

For context, the blink of an eye is 300 to 400 milliseconds.

We intend to continue expanding our network to better serve our

customers globally and enable new types of applications, while

relentlessly seeking to drive down our unit costs.

This is one reason why we've been able to grow our global network while

achieving a GAAP gross margin of 77% in 2018.

Our serverless architecture and the software stack that runs across it

is at the heart of everything we do.

It is the foundation from which we deliver world class security,

performance, and reliability products for over 20 million Internet properties.

What's more, we've been able to productize the network itself.

Cloudflare Workers is our bleeding edge development platform

built to fully leverage the breadth and power of Cloudflare's network.

Workers provides customers the opportunity to customize and configure

our performance, security, and reliability solutions.

It also provides a fast, secure, and scalable platform where companies

deploy whole applications, including for use cases that simply were not

feasible before Cloudflare Workers.

It's amazing to see what developers are already doing as they leverage

our platform to invent the future.

A great example is our customer Optimizely, which use Cloudflare Workers

to reinvent its core website experimentation product to make it

faster and more scalable than ever.

We needed a way to push this type of decision making and computation

out to the edge, and Workers ultimately surfaced as the no-brainer tool of choice there.

Once we started using Workers, it was really fast to

get up to speed. It was like, oh, I can just go into this playground

and write JavaScript, which I totally know how to do.

And then it just works.

Our customers will be able to run 10x, 100x, the number of experiments.

And from our perspective, that ultimately means they'll get more value out of it.

And the business impact for our bottom line and our top line

will also start to mirror that as well.

You may look at Cloudflare's network spanning over 190 cities in more

than 90 countries and think, "that looks expensive."

But the reality is far different. We built our network and business

with efficiency at its core.

As a consequence, over the last three years, our revenue has increased

at a rate faster than our cost of revenue.

This is the secret sauce that makes Cloudflare's business so compelling.

And we believe this efficiency can scale alongside

Cloudflare's continued growth.

There are two interconnected flywheels that drive this efficiency and

they stem from Cloudflare's commitment to serving everyone.

In order to serve millions of customers in a cost-effective way, we

had to invent a new type of network architecture, which we refer to as serverless.

Rather than deploying different hardware and software for

each product we sell, we designed our network to allow every server in

every city to run every Cloudflare service.

Our servers are built with commodity hardware, and our proprietary

software allows us to intelligently optimize our network and utilize

idle capacity to create a free tier of service which introduces us to

millions of customers and generates substantial global scale.

This scale makes us an attractive partner to ISPs globally.

Deploying our equipment directly inside their networks helps drive down

their bandwidth costs and increase their performance, allowing us to

negotiate better colocation and bandwidth costs.

So the increased efficiency enabled by our intelligent serverless architecture helps us

better serve everyone and we drive the flywheel forward.

A flywheel also drives how we develop products.

Because we wanted to serve everyone, we had to design our platform to

be easy to use. This makes it easy for our customers to adopt our

platform, which has contributed to our global scale.

Our diverse global customer base generates data on everything from

traffic patterns to cyber attack signatures, creating a global sensor network,

which we automatically leverage with machine learning to improve our products.

In addition, many of our free customers volunteer

to test new features, which helps us quickly develop and validate new products.

The symbiotic relationship we have with ISPs, and the

efficiency of our serverless network architecture, allows us to

introduce these new products on our platform at low marginal costs.

In other words, because we serve everyone, we are able to serve everyone better.

We see our competition falling into three distinct buckets.

We continue to see on-premise hardware boxes being phased out

in the enterprise because of their complexity and price, along with

their incompatibility with cloud and SaaS solutions.

There are some point-cloud providers that offer a single solution like

VPN as a service, CDN, or DNS, but they lack the breadth of products

managed from a consistent, integrated dashboard.

Furthermore, each service that gets layered on adds additional latency,

cost, and overhead.

We believe that customers don't want to manage a portfolio of point-cloud providers,

but instead want an integrated solution that also

works well with other cloud services.

We expect public cloud providers will attempt to vertically integrate

and push customers to adopt their own products exclusively.

While we work with these providers today, we've heard from CTOs that

one of their rising concerns is public cloud vendor lock-in.

As a result, many enterprises are pursuing a multi-cloud strategy.

We believe Cloudflare's neutrality and the ability to sit in front of

any on-premise, hybrid or cloud service makes our platform uniquely

positioned to serve customers.

We've always believed strongly in the power of serving everyone.

Our products are designed from the ground up to be easy to use, which

has enabled millions of customers around the world to leverage our platform.

And we're incredibly fortunate that many of these customers

have become our greatest advocates.

In the fourth quarter of 2018, we achieved an average Net Promoter Score of 68

across our paying customers, rivaling some of the best consumer brands in the world.

We believe that we have been able to invert the go-to-market approach

used by most companies, yielding considerable savings and efficiency gains.

Instead of investing in marketing, and then a sales team, and

only then getting customers — we do it the other way around.

We start by investing in regions where we already see organic demand

from customers. After we've seen a significant number of customers

adopt our services within a given region, we start to invest in local

sales teams, followed by supporting marketing investments.

Instead of committing upfront sales and marketing resources to expand

into new markets and geographies, we're pulled up market and into new

regions by organic demand.

Cloudflare's global cloud platform provides a horizontal solution that

serves many diverse customers.

While we usually think of our customers as one continuum, it can be

helpful to think of them as three distinct segments.

First, we serve developers and small businesses.

These customers are coming to our website and independently signing up

for self-serve subscriptions, paying us month to month.

We have tens of thousands of these paying customers.

Next, we serve the mid-market. Many of these mid-market customers are

looking for more enterprise-grade security, performance, and reliability services.

They enter into longer-term contracts with us to access these features.

We have an inside sales team focused on serving these customers.

And finally, we serve the large enterprise market,

which includes approximately 10% of the Fortune 1,000.

We have a dedicated field sales team focused on these larger customers.

And whether you're a developer or one of these Fortune 1,000 enterprises

everybody wants to be more secure online, more performant online,

and more reliable — and that's something that isn't going to change going forward.

I'm Chris Merritt and I'm the Chief Revenue Officer at Cloudflare.

Our sales cycles typically last less than a quarter,

and our sales reps have maintained high productivity levels as

we've expanded into larger enterprise customers.

We've hired veteran sales leaders from Cisco, Seagate, Dell, VMware,

Splunk, and other enterprise companies known for building great sales teams.

Our customers span nearly every industry in every geography, but

many of them do follow a similar path as they adopt our services.

They often come to Cloudflare to address an immediate need, whether

it's replacing hardware, stopping an acute security threat,

accelerating global network performance, or deploying a custom

application at the network edge. Our subscription plans are designed to

make it easy for a customer to adopt our platform and quickly see ROI

before going on to expand their adoption.

We follow a land and expand model.

Today, over 70% of our enterprise customers already leverage

four or more products of ours.

Often we'll see our larger customers begin using our self-service plans

before adopting our contractual plans.

That's what happened when this well-known global consumer packaged

goods customer, which signed up on a self-service plan in 2016.

Our systems surfaced that they would be better suited by adopting our

enterprise plan. So we reached out and they quickly became an

enterprise customer on an annual contract.

During 2017 and 2018, they continued to expand their usage, adding many

more Internet properties from their large portfolio of brands, and

adopting our VPN alternative product Cloudflare Access.

Now this customer has over a thousand Internet properties on our

network and has increased overall usage of our platform.

Next, let's look at an example of a large multimillion dollar account.

They chose Cloudflare because of a security and performance need.

During 2017 and 2018, this customer continued to add significantly more

Internet properties and expand their usage.

This customer's aggregate lifetime contracted spend is $15.3 million.

We are truly fortunate that our customers are often our greatest advocates.

Cloudflare helped us to improve the customer satisfaction.

It removed the friction with our customer engagement.

It's very low maintenance, and very cost effective, and very easy to deploy.

And it improves the customer experiences big time.

We ended up building our own fleet of HAProxy servers such that we could

easily lose one and then it wouldn't have a massive effect, but it was

very hard to manage because we kept adding more and more machines as we grew.

With Cloudflare we were able to just scrap all of that because

Cloudflare now sits in front and does all the work for us, and that

saves a lot of money. The other thing that's been phenomenal for us is

the latest release of Cloudflare Workers, which we've been able to

offload more work from our boxes we were running, to run code directly on Cloudflare's edge.

I'm Janet Van Huysse, Head of People at Cloudflare.

At Cloudflare, we have three guiding tenets for everything we do:

we are curious, we are transparent, and we are principled.

Through our initiative Project Galileo, we work to protect hundreds of

artistic, political, and humanitarian organizations at risk of being silenced.

Many of these groups are lifelines for the most vulnerable

voices on the Internet, for whom downtime can feel like extinguishing

their connection to the only people who understand them.

Meanwhile, through the Athenian Project, we provide state and local

governments the highest level of protection and reliability for free,

helping protect voter data and election integrity and ensuring these

sites stay up during the critical moments of an election.

All of these factors have contributed to a company culture that holds

itself to a higher standard, and we will not waver in that regard as we

open this next chapter of helping build a better Internet.

I'm Scott Tomtania, Head of Recruiting.

Helping build a better Internet goes beyond building products and services.

We pursue the latest research, are deeply engaged in helping

define the next generation of Internet standards, and we hold regular

public conversations with luminaries within the tech industry and beyond.

Everything we do stems from our mission, which helps us to

attract the best and brightest talent who want to solve the Internet's

biggest problems.

In fact, in the three months ended March 31, 2019 we made offers to

less than 1% of applicants and we had an offer acceptance rate of 90%.

Our retention rate is similarly exceptional.

Our employees are our greatest asset.

We are fortunate that the best and brightest want to work here.

Cloudflare launched nearly nine years ago.

Many great startups pivot over time — we have not.

We had a plan and have been purposeful in executing it since our

earliest days. While we are still in its early innings, that plan

remains clear: we’re helping build a better Internet.

Our business model is aligned with our customers and their customers.

We don't sell ads or user data.

We strive to be a neutral party, building our technology to work in

tandem with anything connected to the Internet.

And we are incentivized to keep making the Internet more secure,

faster, and more reliable to the benefit of everyone who uses it.

Not just because it's good for our business — but it's also the right thing to do.

We are the beneficiaries of broad industry trends that position

our global cloud platform to grow in lockstep with the Internet itself.

We believe there are vast opportunities ahead in helping organizations

better secure their networks, improve their performance and

reliability, and to empower them with a platform to unlock the next

generation of online innovation.

We're Cloudflare. We're helping build a better Internet.

And we’re just getting started.