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Cloudflare — INVESTOR DAY 2023 - INVESTOR SESSION SLIDES Presentation deck (company IR deck)
Cloudflare (NET) · 0 slides · Filed Oct 21, 2026
Every slide of this earnings presentation, with the text as published. Open the original deck ↗ · All NET deck slides
Slide 1 — Investor Day
Investor Day 2023 May 4, 2023
Slide 2 — Safe Harbor
This presentation and the accompanying oral commentary have been prepared by Cloudflare, Inc. (“Cloudflare”) for informational purposes only and not for any other purpose. Nothing contained in this presentation is, or should be construed as, a recommendation, promise, or representation by the presenter or Cloudflare or any officer, director, employee, agent, or advisor of Cloudflare. This presentation does not purport to be all-inclusive or to contain all of the information you may desire. Information provided in this presentation and the accompanying oral commentary speak only as of the date set forth on the cover page of this presentation. This presentation and the accompanying oral commentary contain express and implied “forward-looking” statements within the meaning of the federal securities laws, and these statements involve substantial risks, assumptions, and uncertainties. All statements other than statements of historical fact could be deemed forward-looking, including, but not limited to, the current and planned development and functionality of our products, our ability to effectively sell our existing and new products, expectations of future operating results or financial performance, business strategy and plans, adverse macroeconomic conditions, such as inflation, changes in interest rates, actual or potential bank failures and recessionary concerns, the impact of the Russia-Ukraine conflict and other areas of geopolitical tension, and the resulting impact on our business, our customers, vendors and partners and the impact on global and regional economies, financial markets, and economic activity generally, market volatility, size and growth opportunities, the calculation of certain of our key financial and operating metrics, capital expenditures, plans for future operations, competitive position, technological capabilities, and strategic relationships, as well as assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “would,” “continue,” “ongoing” or the negative of these terms or other comparable terminology. You should not put undue reliance on any forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. Actual results could differ materially from our current expectations as a result of many factors, including those identified in the “Risk Factors” section of our filings made with the Securities and Exchange Commission ("SEC"). You can locate these reports on our investor relations website (https://cloudflare.NET) or on the SEC website (www.sec.gov). If the risks or uncertainties ever materialize or the assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements included in this presentation represent our views only as of the date of this presentation, and except as required by law, we assume no obligation and do not intend to update these forward-looking statements or to conform these statements to actual results or to changes in our expectations. In addition to our results determined in accordance with generally accepted accounting principles (“GAAP”), this presentation includes certain non-GAAP financial measures. These non-GAAP financial measures are in addition to, and not as a substitute for or superior to measures of financial performance prepared in accordance with U.S. GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. See the appendix for a reconciliation of those measures to the most directly comparable GAAP measures. This presentation and the accompanying oral commentary may contain statistical data, estimates, and forecasts that are based on independent industry publications or other publicly available information, as well as other information based on our internal sources. This information involves many assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or completeness of the data contained in these industry publications and other publicly available information. Accordingly, we make no representations as to the accuracy or completeness of that data nor do we undertake to update such data after the date of this presentation. By attending or receiving this presentation you acknowledge that you will be solely responsible for your own assessment of the market and our market position and products and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of our business and products. The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of the network and products of Cloudflare. Safe Harbor
Slide 3 — Welcome
Welcome Phil Winslow Vice President of Strategic Finance, Treasury, & Investor Relations
Slide 4 — Agenda
10:15 am - 10:20 am Welcome Phil Winslow VP of Strategic Finance, Treasury, & Investor Relations 10:20 am - 10:35 am Product: Application Services Patrick Donahue VP of Product - Application Security 10:35 am - 10:50 am Product: Network Services Rustam Lalkaka VP of Product - Network Services 10:50 am - 11:05 am Product: Zero Trust Services Annika Garbers Senior Product Manager - Cloudflare One 11:05 am - 11:20 am Product: Developer Services Aly Cabral VP of Product - Workers 11:20 am - 11:40 am Go-To-Market Marc Boroditsky President of Revenue 11:40 am - 12:00 pm Financials Thomas Seifert Chief Financial Officer 12:00 pm - 12:45 pm Q&A Matthew Prince Co-founder and Chief Executive Officer Michelle Zatlyn Co-founder and Chief Operating Officer Thomas Seifert Chief Financial Officer Agenda
Slide 5 — Product:
Product: Innovation is at the Heart of Cloudflare
Slide 6 — We are helping
Our Mission We are helping build a better Internet.
Slide 7 — — We help organizations of every size protect websites, people, and
— We help organizations of every size protect websites, people, and networks and build and accelerate applications… powered by one of the world’s largest cloud networks What We Do Zero Trust Network Access, Gateway, RBI, CASB, Cloud Email Security CDN, Smart Routing, Load Balancing WAF, DDoS, Bot Management, Page Shield Magic Transit, Magic Firewall Workers, R2, D1 Solution: Cloudflare Services include: Supercharge Application Performance Secure Hybrid Work Protect Customer-facing Apps Protect the Network Build Apps on Cloudflare CIO | CTO | CISO | CFO → → → → →
Slide 8 — What We Offer
What We Offer Workers Pages Durable Objects Stream Compliance/Privacy: FedRAMP, ISO, SOC, PCI, GDPR compliant, Logs & Analytics, Data Localization Suite Cloudflare Application Services Cloudflare Developer Services Cloudflare Global Network Cloudflare One Rate Limiting Load Balancing Bot Management / Fraud CDN and DNS L7 DDoS Protection WAF with API Protection Cloudflare Network Services Network Interconnect Smart Routing WAN-as-a-Service Firewall-as-a-Service L3 & L4 DDoS Protection IDS/IPS Cloudflare Platform R2 Workers KV Images Cloudflare Zero Trust Services Zero Trust Network Access Remote Browser Isolation Data Loss Prevention Secure Web Gateway Cloud Access Security Broker Cloud Email Security 1
Slide 9 — What Makes Us Different
What Makes Us Different NO TRADE OFFS NETWORK SCALE EASE OF USE SHARED INTELLIGENCE
Slide 10 — Act I:
Act I: Application Services Patrick Donahue VP Product - Application Security
Slide 11 — Apps Have Left the Corporate Data Center
Apps Have Left the Corporate Data Center Self-Hosted Apps User Internet Network rack Yesterday’s application delivery
Slide 12 — Apps Have Left the Corporate Data Center – Requiring New Solutions
Apps Have Left the Corporate Data Center – Requiring New Solutions Self-Hosted Apps User Internet Network rack Yesterday’s application delivery Today’s application delivery User Internet SaaS Apps Cloud-hosted Apps Minimal control Self-Hosted Apps Network rack Insufficient Capabilities
Slide 13 — Customer Problems in Act I
Customer Problems in Act I Problem Description Buyer Persona Legacy Bandaids Modern Competitors Application Performance and Network Reliability “My site, and the network on which it runs, is my business. I need it to be as fast, reliable, and available as possible.” Director of (Network) Infrastructure F5/NGINX, Akamai, Neustar, NetScout/Arbor, Imperva AWS, Azure, GCP Fastly, NS1 User Internet Cloud-hosted Apps Self-Hosted Apps Cloudflare Global Network Waiting Room Foundation DNS Load Balancing DDoS Protection
Slide 14 — Customer Problems in Act I
Customer Problems in Act I Problem Description Buyer Persona Legacy Bandaids Modern Competitors Application Performance and Network Reliability Application Cost Efficiency “Any content served by Cloudflare and not my origin saves me money.” Director of Web Infrastructure/ Engineering Edgio (Edgecast), Akamai, Stackpath AWS, Azure, GCP Fastly/Signal Sciences User Internet Cloud-hosted Apps Self-Hosted Apps Cloudflare Global Network Content Delivery Bot Protection Cache Reserve (R2) Images & Stream
Slide 15 — Customer Problems in Act I
Customer Problems in Act I User Internet Cloud-hosted Apps Self-Hosted Apps Cloudflare Global Network API Shield Web App Firewall Data Loss Prevention TLS/ SSL Problem Description Buyer Persona Legacy Bandaids Modern Competitors Application Performance and Network Reliability Application Cost Efficiency Application/API Management and Protection “If my applications are compromised, my customers’ data (and my reputation) is at risk.” Director of Web Infrastructure/ Engineering F5 (Shape), Imperva, Apigee, MuleSoft AWS, Azure, GCP, Akamai, Fastly, Kong
Slide 16 — Customer Problems in Act I
Customer Problems in Act I User Internet Cloud-hosted Apps Self-Hosted Apps Cloudflare Global Network API Shield Fraud Prevention Page Shield Bot Protection Problem Description Buyer Persona Legacy Bandaids Modern Competitors Application Performance and Network Reliability Application Cost Efficiency Application/API Management and Protection Application Fraud Prevention “If my applications are used fraudulently, or in a different manner than I permit, I am exposed to liability and financial loss.” Director of Security (and Engineering) F5 (Shape), Akamai, Imperva Salt Security, NoName, HUMAN (PerimeterX), ThreatMetrix, Google reCAPTCHA
Slide 17 — Customer Problems in Act I
Customer Problems in Act I Problem Description Buyer Persona Legacy Bandaids Modern Competitors Application Performance and Network Reliability Application Cost Efficiency Application/API Management and Protection Application Fraud Prevention Early Warning and Analysis of Threats “My security team needs a trusted partner to help us understand and prepare for the threats facing us.” Security Operations Center (Analysts) Proofpoint, Neustar, RecordedFuture CrowdStrike, Google/Mandiant, Microsoft/RiskIQ User Internet Self-Hosted Apps Cloudflare Global Network Cloudflare Security Center Cloudforce One Analysts Brand Protection Cloud-hosted Apps
Slide 18 — Customer Problems in Act I
Customer Problems in Act I Problem Description Buyer Persona Legacy Bandaids Modern Competitors Application Performance and Network Reliability Application Cost Efficiency Application/API Management and Protection Application Fraud Prevention Early Warning and Analysis of Threats Compliance & Data Localization “I have different global regulatory schemes to which I need to adhere.” Director of Web Infrastructure/ Engineering SolarWinds AWS User Internet Self-Hosted Apps Cloudflare Global Network Data Localization Spectrum L4 Proxy Geo Key Manager Cloud-hosted Apps
Slide 19 — Act I: Application Security & Performance as a Platform
Act I: Application Security & Performance as a Platform Problem Application Security Application Performance Application Performance and Network Reliability Application Cost Efficiency Application/API Management and Protection Application Fraud Prevention Early Warning and Analysis of Threats Compliance & Data Localization Application and Network DDoS Keep networks online and reliable. DNS Fast, secure and resilient DNS API Shield Protection against API threats WAF w/Advanced Rate Limiting Stop attacks, abuse and exploits Cloudforce One Access to threat intel experts Cloudflare Security Center Attack surface management Page Shield Stop client-side attacks Bot Management and Fraud Prevention Stop bad bots and prevent fraud TLS/SSL Data security CDN Ultra-fast content delivery Argo Smart Routing Accelerate traffic Load Balancing Dynamically distribute traffic Cloudflare Images Store, optimize, resize images Waiting Room Route excess users away Zaraz Load third-party tools Cloudflare Stream Live and on-demand streaming Data Localization Suite Adhere to regulatory schemes Bot Management and Fraud Prevention Protect against bots running up costs API Gateway Manage API endpoints at the edge Spectrum Proxy TCP/UDP apps Cache Reserve Eliminate egress fees Geo Key Manager Region-restricted encryption keys
Slide 20 — Only Cloudflare & Big 3 Clouds Address All of these Application Challenges…
Abuse/Fraud Prevention Performance/ Reliability Origin Resource Efficiency API Management Threat Intelligence Compliance/ Data Localization Only Cloudflare & Big 3 Clouds Address All of these Application Challenges… COMPETITIVE LANDSCAPE
Slide 21 — …But Only Cloudflare Excels across the Board — While Avoiding Lock-In
Abuse/Fraud Prevention Performance/Reliability Origin Resource Efficiency API Management Threat Intelligence Data Localization Avoids Cloud Vendor Lock-In? …But Only Cloudflare Excels across the Board — While Avoiding Lock-In COMPETITIVE LANDSCAPE Yes Strong No Weak Weak No No New Strong Strong Strong Moderate Moderate Strong Moderate Strong Moderate Strong Strong Moderate Moderate Moderate Moderate Strong Moderate Moderate Moderate Moderate
Slide 22 — Why We Win Today
Why We Win Today ACT I COMPETITIVE LANDSCAPE 1. Platform benefits, including ease of use and breadth of offering 2. Product velocity and buy-in to our vision 3. Affirmation from analysts and presence on “short lists” 4. “Value” / cost reduction 5. Accessibility of technical leadership (Product, Engineering) to customer 6. Hybrid-/multi-cloud and preservation of optionality
Slide 23 — Why We Will Win Tomorrow
Why We Will Win Tomorrow — Customers Will Consolidate to a Single Platform over Time ACT I COMPETITIVE LANDSCAPE Platforms provide inherent structural advantages for security, performance, and ease of use Point-cloud solutions lack our network and development velocity Hardware vendors are unable to compete on performance or scale with cloud-native platforms such as Cloudflare
Slide 24 — What Makes Us Different
What Makes Us Different 1. Single dashboard to control entire product suite. 2. Customers guided through adoption journey 3. Improved experience for customers based on PAYGO feedback and testing NO TRADE OFFS Security + Performance NETWORK SCALE EASE OF USE 1. Absorb the largest attacks, anywhere in the world 2. Customer density and diversity improves network performance 3. Cost efficiencies passed on to customers 1. Traditional security offerings increase latency; we do not—and often increase performance 2. Platform benefits vs. “best of breed” SHARED INTELLIGENCE 1. Every request improves app security products 2. Collective data powers threat intelligence offering 3. Application Services products complement each other (layers)
Slide 25 — Act II:
Act II: Network Services 25 Rustam Lalkaka VP Product - Network Services
Slide 26 — 285+ cities
Cloudflare’s Global Network 285+ cities in 100+ countries, including mainland China 230+ backbone links dedicated capacity circumnavigating the globe 197 Tbps of network edge capacity and growing the largest attack on record was 1.5Tbps 12,000+ networks directly connect to Cloudflare, including ISPs, cloud providers and large enterprises 95% within 50ms of the world’s population Note: Figures as of March 31, 2023.
Slide 27 — The Need for Speed
The Need for Speed WHY THE CLOUDFLARE NETWORK MATTERS Cloudflare is committed to being the fastest network in every country September 2021 100 Tbps Network capacity 25M req/s HTTP throughput
Slide 28 — The Need for Speed
The Need for Speed WHY THE CLOUDFLARE NETWORK MATTERS 100 Tbps Network capacity 28M req/s HTTP throughput Cloudflare is committed to being the fastest network in every country November 2021
Slide 29 — The Need for Speed
The Need for Speed WHY THE CLOUDFLARE NETWORK MATTERS 172 Tbps Network capacity 39M req/s HTTP throughput Cloudflare is committed to being the fastest network in every country November 2022
Slide 30 — The Need for Speed
The Need for Speed WHY THE CLOUDFLARE NETWORK MATTERS 197 Tbps Network capacity 46M req/s HTTP throughput Cloudflare is committed to being the fastest network in every country March 2023
Slide 31 — Act I: Protecting Public-Facing Infrastructure
Act I: Protecting Public-Facing Infrastructure Cloudflare Global Anycast Network Customer Websites & HTTP Applications Internet User Attacker More secure Faster More reliable
Slide 32 — Act I: Protecting Public-Facing Infrastructure at the Network Level
Act I: Protecting Public-Facing Infrastructure at the Network Level Customer Datacenter Cloudflare Global Anycast Network Internet User Attacker More secure Faster More reliable
Slide 33 — Cloudflare Protection at All Layers of the OSI Stack
Cloudflare Protection at All Layers of the OSI Stack 1 2 3 4 5 6 7 Physical Layer Datalink Layer Network Layer Transport Layer Session Layer Presentation Layer Application Layer L7 DDoS, WAF, Bot Management, API Security Spectrum Magic Transit, Magic Firewall Cloudflare Network Interconnect
Slide 34 — Magic Transit Solves the Problems of Legacy Competitors
L7 Services (WAF, CDN, etc) Added Latency Centralized DDoS Scrubbing Centers Magic Transit Solves the Problems of Legacy Competitors MAGIC TRANSIT Attack Traffic Legitimate Traffic Additional Network Hop Customer Data Center Specialized hardware expensive, capacity-limited, can’t keep up with changing attack landscape Software scrubbing centers introduce latency by backhauling traffic to centralized location ISP-provided protection specialized hardware at a dedicated scrubbing center without quality support Cloudflare Network Interconnect BGP Announcement Anycast GRE Tunnel DDoS Protection + Network Firewall Cloudflare Global Anycast Network Customer Data Center vs. Magic Transit No hardware No backhauling No performance tradeoffs Attack Traffic Legitimate Traffic
Slide 35 — Magic Firewall Provides Cloud-Native Security for Your Entire Network
Magic Firewall Provides Cloud-Native Security for Your Entire Network MAGIC FIREWALL Magic Firewall enforces consistent security policies across customers’ branch offices, data centers, cloud properties, and end-user devices. ● Consistent security policies — deployed globally in under 500ms ● No appliances to manage — automatically scale with business needs ● Eliminate unwanted traffic before it reaches your network ● Managed threat intelligence gleaned from the Cloudflare global network ● Optional upgrades to Secure Web Gateway, CASB, Zero Trust browsing Internet Apps SaaS Apps Self-Hosted Apps Branch Offices Data Centers Remote Users Magic Firewall Network firewall-as-a-service Consistent global security policies Enforced across Cloudflare’s 285+ city global network Industry-leading DDoS protection built-in Managed threat intelligence Secure web gateway, Zero Trust browsing, CASB, data protection
Slide 36 — Our customers’
What’s Next after Act I? Our customers’ public-facing networks are more secure, faster, and more reliable. We’re replacing legacy hardware boxes and band-aid point solutions.
Slide 37 — Act II: Enterprise Networks were Not Built for What They Have Become
Act II: Enterprise Networks were Not Built for What They Have Become Office users Remote users External users MPLS Legacy WAN FWaaS Direct Internet Access 4G/5G Broadband DMVPN SD-WAN AWS Transit Gateway Azure vWAN DNSF DLP DDoS ZTNA CASB SWG RBI Self-hosted public cloud SaaS apps and email Self-hosted private DC, colo and cloud SEG
Slide 38 — Cloudflare is Secure, Fast, Reliable, Any-to-Any & End-to-End, Composable
Office users Third parties Remote Users Private Cloud/DC/Colocation Public Cloud SaaS Apps and email SASE (Zero Trust & Network) Secured connectivity Application Secure, distribute & accelerate Developer Build serverless apps & websites PaaS IaaS SaaS Cloudflare Global Network 285+ cities (in 100+ countries, including mainland China) • ~50ms from 95% of Internet population 12,000+ interconnects • 197 Tbps of network capacity Cloudflare is Secure, Fast, Reliable, Any-to-Any & End-to-End, Composable Note: Figures as of March 31, 2023.
Slide 39 — Magic WAN Connects & Protects Private Infrastructure…
Magic WAN Connects & Protects Private Infrastructure… MAGIC WAN Cloudflare Global Anycast Network Internet (incl SaaS apps) Remote Employee Attacker Office Site (retail, mnfg, medical, utility, etc.) Data Center (Private services) (Multi) Cloud Site (retail, mnfg, medical, utility, etc.) More secure Faster More reliable Built-in, not bolt-on, security Get cloud-native DDoS protection, network firewalling, and zero trust functionality — all delivered as-a-service Operational agility up, costs down Reduce network TCO by minimizing branch footprint and shifting network functions to the cloud Central management and visibility Manage all network security and connectivity and get deep visibility into your network traffic — all from the same interface
Slide 40 — …with an Easy On-ramp for Physical Locations
…with an Easy On-ramp for Physical Locations MAGIC WAN CONNECTOR Anycast IPsec tunnels Cloudflare Global Anycast Network Magic WAN Connector ● Cloudflare software, partner hardware ● Zero-touch configuration ● Smart traffic steering ● End-to-end integration with Cloudflare One Remote Employee Office Site (retail, mnfg, medical, utility, etc.) Data Center (Private services) More secure Faster More reliable
Slide 41 — Cloudflare One is the Next Evolution in Network Design
Cloudflare One is the Next Evolution in Network Design CLOUDFLARE ONE Aspect Example MPLS SD-WAN Magic WAN Configuration New site setup and configuration Manual Simplified orchestration via SaaS portal Simplified orchestration via SaaS portal Last mile traffic control Traffic balancing, QoS, and failover MPLS SLAs Available via SD-WAN appliance software Available via hardware or software Magic WAN connector deployed on-prem Middle mile traffic control Traffic steering around middle mile congestion MPLS SLAs Not available via SD-WAN appliance Integrated traffic management & private backbone controls in a unified dashboard Security Filter outbound Internet traffic for malware Patchwork hardware controls Patchwork hardware and/or software controls Native integration with complete SSE/WAAP portfolio Cost Maximize ROI for network investments High cost for hardware and connectivity Decreased connectivity costs with higher hardware/software costs Decreased hardware and connectivity costs for maximized ROI Cloud integration Connectivity for cloud migration Manual IPsec tunnel configuration Available via vCPE deployment Native connectivity with Cloud Network Interconnect
Slide 42 — SASE Competitive Landscape
SASE Competitive Landscape CLOUDFLARE ONE Network SD-WAN SSE With addition of Magic WAN Connector
Slide 43 — We’re Laying the Foundation to be a Universal Network Fabric
for Service Providers Network services tailored toward ISP and telco use cases — both sell to and sell through motions for IoT for Hybrid- & Multi-Cloud We’re Laying the Foundation to be a Universal Network Fabric Connectivity and security for Zero Trust SIM and Internet of Things device management platform Fabric and orchestration to facilitate complex, secure, private multi-cloud deployments
Slide 44 — What Makes Us Different?
What Makes Us Different? 1. Filtering happens close to users, applications, and customer sites wherever they are in the world 2. Single-pass architecture works with our traffic acceleration features 1. Buy SASE in one place instead of cobbling together disparate network + security products 2. Unified policy engine for all traffic regardless of on-ramp 3. Single dashboard to control entire product suite NO TRADE OFFS Security + Performance NETWORK SCALE EASE OF USE SHARED INTELLIGENCE 1. Capacity to easily absorb the world’s largest attacks 2. Cost efficiencies passed on to the buyer 1. Unique view of Internet health allows us to see and route around problems, enabling migration away from MPLS without sacrificing reliability
Slide 45 — Act II:
Act II: Zero Trust Services 45 Annika Garbers Product Manager
Slide 46 — Apps Have Left the Corporate Data Center
Apps Have Left the Corporate Data Center Today’s Corporate Network: Brittle and Fractured Office Remote User Office Internet Apps Self-Hosted Apps SaaS Apps Data Center MPLS Data Center VPN MPLS MPLS MPLS MPLS Bottleneck MPLS
Slide 47 — Apps Have Left the Corporate Data Center, Requiring New Solutions
Apps Have Left the Corporate Data Center, Requiring New Solutions What’s Next: Optimized Security and Connectivity Today’s Corporate Network: Brittle and Fractured Offices Remote Users Data Centers Internet Apps Self-Hosted Apps SaaS Apps Full Mesh Direct Breakouts SASE Office Remote User Office Internet Apps Self-Hosted Apps SaaS Apps Data Center MPLS Data Center VPN MPLS MPLS MPLS MPLS Bottleneck MPLS
Slide 48 — What is SASE?
What is SASE? How do I connect my users, devices, and applications? ● User connectivity ● Network connectivity ● Traffic steering & acceleration How do I secure, manage, and filter my applications and data? ● Zero Trust Access Control ● DNS Filtering ● Secure Web Gateway ● Cloud Access Security Broker ● Network Firewall ● Remote Browser Isolation ● Data Loss Prevention ● Shadow IT Connectivity & Network Services Zero Trust Services Secure Access Service Edge (SASE)
Slide 49 — Cloudflare One is Our Unified SASE Platform
Cloudflare One is Our Unified SASE Platform
Slide 50 — Customer Problems in Act II
Customer Problems in Act II Problem Description Buyer Persona Legacy Bandaid Modern Competitor Site-to-Site Connectivity “I need to connect sites (offices, retail, mfg) to offices and data centers.” CIO MPLS links SD-WAN vendors (Viptela, Silver Peak)
Slide 51 — Customer Problems in Act II
Customer Problems in Act II Problem Description Buyer Persona Legacy Bandaid Modern Competitor Site-to-Site Connectivity “I need to connect sites (offices, retail, mfg) to offices and data centers.” CIO MPLS links SD-WAN vendors (Viptela, Silver Peak) Internal Connectivity & Access Control “I need team members to reach internal resources.” CIO with CSO requirements Cisco VPN Cloud-Based ZTNA (Palo Alto Networks, Zscaler, Netskope)
Slide 52 — Customer Problems in Act II
Customer Problems in Act II Problem Description Buyer Persona Legacy Bandaid Modern Competitor Site-to-Site Connectivity “I need to connect sites (offices, retail, mfg) to offices and data centers.” CIO MPLS links SD-WAN vendors (Viptela, Silver Peak) Internal Connectivity & Access Control “I need team members to reach internal resources.” CIO with CSO requirements Cisco VPN Cloud-Based ZTNA (Palo Alto Networks, Zscaler, Netskope) Outbound Filtering “My employees need to connect to the Internet without the risk of attack.” CSO, IT implements Self-managed appliances (Symantec [Blue Coat]) Cloud-Based SWG (Zscaler)
Slide 53 — Customer Problems in Act II
Customer Problems in Act II Problem Description Buyer Persona Legacy Bandaid Modern Competitor Site-to-Site Connectivity “I need to connect sites (offices, retail, mfg) to offices and data centers.” CIO MPLS links SD-WAN vendors (Viptela, Silver Peak) Internal Connectivity & Access Control “I need team members to reach internal resources.” CIO with CSO requirements Cisco VPN Cloud-Based ZTNA (Palo Alto Networks, Zscaler, Netskope) Outbound Filtering “My employees need to connect to the Internet without the risk of attack.” CSO, IT implements Self-managed appliances (Symantec [Blue Coat]) Cloud-Based SWG (Zscaler) SaaS App Control “I need to control how SaaS apps are used.” CSO, IT implements Manual configuration CASB vendors (Netskope)
Slide 54 — Customer Problems in Act II
Customer Problems in Act II Problem Description Buyer Persona Legacy Bandaid Modern Competitor Site-to-Site Connectivity “I need to connect sites (offices, retail, mfg) to offices and data centers.” CIO MPLS links SD-WAN vendors (Viptela, Silver Peak) Internal Connectivity & Access Control “I need team members to reach internal resources.” CIO with CSO requirements Cisco VPN Cloud-Based ZTNA (Palo Alto Networks, Zscaler, Netskope) Outbound Filtering “My employees need to connect to the Internet without the risk of attack.” CSO, IT implements Self-managed appliances (Symantec [Blue Coat]) Cloud-Based SWG (Zscaler) SaaS App Control “I need to control how SaaS apps are used.” CSO, IT implements Manual configuration CASB vendors (Netskope) Data Control “I need to control who has access to data and where it is stored or transmitted.” CSO, IT implements Self-managed appliances (Forcepoint, Digital Guardian) Cloud-Based DLP (Zscaler, Netskope)
Slide 55 — A Full-Stack SASE Platform (Zero Trust Services + Network Services)
Trusted Connectivity Cloudflare Network One Control Plane For Edge Services Cloudflare On-Ramps Clientless Access Device Client IP Tunnels (with SD-WAN partnerships) Direct Connection Cloudflare Security Services One Management Interface Cloud Access Security Broker Secure Web Gateway Firewall as a Service WAN as a Service Zero Trust Network Access Identity Proxy Device Posture Browser Isolation DLP Email Security DNS Filtering VPN Routing Load Balancing DDoS Protection Analytics Zero Trust services: ORANGE Network services: BLUE A Full-Stack SASE Platform (Zero Trust Services + Network Services) CLOUDFLARE ONE
Slide 56 — No Existing Vendor was Prepared to Solve the Full Stack of Problems…
COMPETITIVE LANDSCAPE ● Inflexible architecture combined with decisions to deploy dedicated or purpose-built hardware ● Avoid competing with revenue-generating partners ● Unwilling to divert attention from primary revenue drivers ● Lack of innovation Network SD-WAN SSE No Existing Vendor was Prepared to Solve the Full Stack of Problems… Why?
Slide 57 — As a Result…
As a Result… COMPETITIVE LANDSCAPE 1. SSE vendors are paired up with a connectivity vendor 2. Or, they cobble together point solutions through multiple acquisitions Why are these problematic for customers? ● A patchwork of multiple security vendors creates opportunities for blind spots and gaps ● Maintenance increases exponentially with every vendor added ● Added costs ● High visibility requires high effort Network SD-WAN SSE
Slide 58 — Cloudflare One is a Single, Comprehensive, SASE Solution that
Adjacent Problems ● Email Security ● DDoS Mitigation ● WAF ● IoT/Device Security Cloudflare One is a Single, Comprehensive, SASE Solution that also Addresses Adjacent Customer Problems COMPETITIVE LANDSCAPE Network SD-WAN SSE With addition of Magic WAN Connector
Slide 59 — Our Speed Advantage (or: Location, Location, Location + Backbone)
Our Speed Advantage (or: Location, Location, Location + Backbone) WHY THE CLOUDFLARE NETWORK MATTERS Zscaler Cloudflare Netskope Palo Alto Networks Backbone Note: The source of the data in these maps is https://sasecloudmap.com/.
Slide 60 — Our One Network Advantage
Our One Network Advantage WHY THE CLOUDFLARE NETWORK MATTERS Trusted connectivity within 50ms of 95% of the world’s population Consistently protect any source to any destination, from any location Every network location is available to every customer, and every service built to run in every network location Many fragmented clouds, Many control panels One cloud platform, one control plane Every service in every data center vs. Cloudflare
Slide 61 — Cloudflare’s Threat Intelligence Engine
1.1.1.1 app 1st-party sources of data Additional 3rd-party data Actionable threat intelligence 1.1.1.1 app Tens of millions of devices, 1+ trillion queries per day Email/phishing intel 9 billion preemptive campaign threat signals assessed daily Reverse proxy data 46M requests (peaking at 63M) analyzed per second DNS infrastructure 2.1+ trillion queries analyzed per day SSL/TLS cert. transparency monitor Hundreds of millions of certificates Cloudflare augmented vendor feeds Cloudflare open source feeds OSINT threat feeds Customer threat feeds Bring your own feed DGA, DNS tunneling, brand protection/computer vision, newly seen domains etc. Data models transform data to intel Advanced threat models and hunting Cloudflare’s Threat Intelligence Engine WHY THE CLOUDFLARE NETWORK MATTERS
Slide 62 — What Makes Us Different?
What Makes Us Different? 1. Same quality of service and security filtering anywhere on the globe 2. Network reach expands TAM; does not rely on public cloud footprint 3. Cost efficiencies passed on to the buyer 1. We improve speed by bringing security actions closer to the user 2. Single-pass architecture works with our traffic acceleration features 1. Enterprise buyers experiment on free plans and then purchase 2. Improved experience based on PAYGO feedback for enterprise customers NO TRADE OFFS Security + Performance NETWORK SCALE EASE OF USE SHARED INTELLIGENCE 1. Smarter blocks applied 2. Fewer false positives and reduced IT help desk burden
Slide 63 — Act III:
Act III: Developer Services Aly Cabral VP Product - Developer Platform
Slide 64 — After We Established Act I, We Needed to Iterate to Find our Next Act
After We Established Act I, We Needed to Iterate to Find our Next Act HOW DID WE GET INTO ACT III? Act I ? Application Services built on our global network We started building and deploying applications at the edge of our global network to find our next big product
Slide 65 — We Faced Many Problems that Came with Shipping at a Global Scale
We Faced Many Problems that Came with Shipping at a Global Scale HOW DID WE GET INTO ACT III? Geo-load balancing New regions to improve performance CDN & caching optimization Scaling and capacity management Load balancing to distribute load Data localization
Slide 66 — After We Established Act I, We Needed to Iterate to Find our Next Act
After We Established Act I, We Needed to Iterate to Find our Next Act HOW DID WE GET INTO ACT III? Act I ? Application Services built on our global network Simultaneously, customers asked us to deliver more features and configurations on our Act I products
Slide 67 — After We Established Act I, We Needed to Iterate to Find our Next Act
After We Established Act I, We Needed to Iterate to Find our Next Act HOW DID WE GET INTO ACT III? Act I ? Application Services built on our global network building and deploying applications at the edge of our global network Workers
Slide 68 — Our Customers Asked Us to Help Them Move Fast Too
Our Customers Asked Us to Help Them Move Fast Too HOW DID WE GET INTO ACT III? Act III Developer Services building and deploying applications at the edge of our global network Act I Application Services built on our global network Act II Zero Trust Services built on Workers built on our global network
Slide 69 — Developers Face Many Problems When Building Applications
Developers Face Many Problems When Building Applications WHY ACT III? Problem Description Production Readiness “I need to take an application that’s working locally and deploy it at scale” Pace of innovation “I need to move fast to keep up with competition” Vendor lock-in “I need to get value out of my data but can’t leave the ecosystem” Global audience “I need to consider users across the world” High user expectations “I need to deliver modern, performant web experiences” These problems are not new to us…
Slide 70 — We’ve Solved these Problems Before with Our Act I Products
We’ve Solved these Problems Before with Our Act I Products WHY ACT III? Problem Description Act I Highlights Production Readiness “I need to take an application that’s working locally and deploy it at scale” Load balancing, DDoS, Bots, Waiting Room Pace of innovation “I need to move fast to keep up with competition” Self serve experience Vendor lock-in “I need to get value out of my data but can’t leave the ecosystem” Cloudflare plans Global audience “I need to consider users across the world” Regional Services, CDN High user expectations “I need to deliver modern, performant web experiences” CDN Secure Scale Act I Help developers scale and secure their applications, after they’ve built and deployed them
Slide 71 — We Can Solve these Same Problems Again, Now Earlier in the Build Process
We Can Solve these Same Problems Again, Now Earlier in the Build Process WHY ACT III? Problem Description Act I Highlights Act III Highlights Production Readiness “I need to take an application that’s working locally and deploy it at scale” Load balancing, DDoS, Bots, Waiting Room Workers Pace of innovation “I need to move fast to keep up with competition” Self serve experience Pages, wrangler Vendor lock-in “I need to get value out of my data but can’t leave the ecosystem” Cloudflare plans R2 Global audience “I need to consider users across the world” Regional Services, CDN Workers KV, Workers High user expectations “I need to deliver modern, performant web experiences” CDN Workers Secure Scale Deploy Build Plan Help developers build and deploy their applications right from the start Act III Act I Help developers scale and secure their applications, after they’ve built and deployed them
Slide 72 — Act III Complements Act I with Storage, Compute, and Developer
Act III Complements Act I with Storage, Compute, and Developer Experience – Freeing Developers to Select the Best Solution for the Problem at Hand WHY ACT III? Act III The earlier we get involved in the development cycle, the greater the product stickiness and the larger the potential user base Act I Developers are usually locked in to their tools and ecosystems at this point, making it harder to look to services outside of their building platforms Build Deploy Scale Secure Plan
Slide 73 — Developers Need Various Building Blocks to Create a Full-Stack
Developers Need Various Building Blocks to Create a Full-Stack Application WHY IS CLOUDFLARE THE RIGHT COMPANY FOR THIS? Network Send information to/from different locations Storage Provide contextual information Developer Experience Allows for focus on application differentiation Application Developers choose these tools based on… Compute Power the logic of an application
Slide 74 — Platform Maturity Continues to Accelerate
Platform Maturity Continues to Accelerate WHY IS CLOUDFLARE THE RIGHT COMPANY FOR THIS? Fully programmable Cloudflare Developer Platform Compute Developer Products Workers Bundled Data Storage Developer Services Stream Workers Unbound Global Edge: 285+ cities, 95% of Internet users within 50ms, 12,000 interconnects, 197 Tbps capacity, China Network Building Blocks: SSL/TLS, mTLS, Authoritative/Recursive DNS, DNSSEC, DNS over HTTP, L4-7 over Wireguard Compliance/Privacy: ISO, SOC, PCI, GDPR-compliant Logs & Analytics, Data Localization Suite Platform Cron Triggers Pages Platforms Observability Tools Workers Analytics Engine R2 Blob Storage Third-party connectors Cache API Workers KV Durable Objects Cloudflare Network Infrastructure Images Magic NAT Pub Sub D1 Data Storage Note: Figures as of March 31, 2023.
Slide 75 — Cloudflare is the Only Holistic Developer
Storage Developer Experience Compute Cloudflare is the Only Holistic Developer Platform with All the Tools HOW WE COMPETE Cloudflare is uniquely positioned: ● Network infrastructure is already in-place and ready to handle scale ● Developers trust us from our Act I products ● More agile and innovative than the big three clouds ● More established than new challengers with stronger reach and presence Networking With addition of R2
Slide 76 — R2 Object Storage Benefits
R2 Object Storage Benefits HOW WE COMPETE Zero egress fees Lower, more predictable costs, without the data lock-in Worker integration Customize data processing and storage with code S3-compliant Easy migration from S3-compliant providers and no vendor lock-in Region: Automatic Performant and compliant data placement by default
Slide 77 — R2 Use Cases
R2 Use Cases HOW WE COMPETE Static assets Media files Data platform Logs
Slide 78 — Why Developers Choose Our Products
Why Developers Choose Our Products HOW WE COMPETE Network Send information to/from different locations Storage Provide contextual information Developer Experience Allows for focus on application differentiation Compute Power the logic of an application Wrangler Pages Workers CDN KV R2 Cloudflare takes care of the infrastructure management Production readiness baked in D1 No vendor lock-in Seamless data placement Developer velocity without compromise Built for the biggest and most critical workloads Global network with best in class performance Scalable and reliable without any additional config DNS Load Balancing
Slide 79 — How We Compare to Incumbent Cloud Providers
How We Compare to Incumbent Cloud Providers COMPETITIVE LANDSCAPE Compute Networking Storage Databases Developer Experience Data Localization Avoids Cloud Vendor Lock-In? Yes Strong No Strong New + Specific Cloud Infrastructure Specific Specific Strong Strong Moderate Moderate Strong Strong Moderate
Slide 80 — What Makes Us Different?
What Makes Us Different? NO TRADE OFFS Cost + Performance NETWORK SCALE EASE OF USE SHARED INTELLIGENCE 1. The network allows us to support the most critical workloads as opposed to a platform you have to graduate out of 1. We don’t force developers to tradeoff between cost and performance 1. Ease of use allows developers to focus on the differentiation of their application 1. Shared intelligence allows us to make the right decision on behalf of developers, saving them time
Slide 81 — Go-To-Market:
Go-To-Market: Becoming World Class Marc Boroditsky President of Revenue May 4, 2023
Slide 82 — Why are We Here?
Why are We Here?
Slide 83 — Why are We Here?
Why are We Here?
Slide 84 — Where We Excel
Where We Excel
Slide 85 — A Platform Constantly Delivering Innovation
Application Services Zero Trust Services Network Services Developer Platform Legend: Application Services Zero Trust Services Network Services Developer Services PAYGO Legend: A Platform Constantly Delivering Innovation
Slide 86 — Strength of Product
● 2023 GigaOM Radar for Application & API Security: LEADER ● 2022 Gartner Magic Quadrant for Web Application Firewall: LEADER ● 2022 Forrester Wave for Web Application Firewall: LEADER ● 2022 Gartner Peer Insights ‘Voice of the Customer’: WAAP: Customer’s Choice LEADER ● 2022 Gartner Critical Capabilities for Cloud Web Application Firewall: TOP 3 SHORT-LIST for ‘Core Security’ & ‘Web-Scale’ Business Applications ● 2023 GigaOM Radar for CDN: LEADER ● 2023 GigaOM Radar for DNS Security: LEADER ● 2022 IDC CDN MarketScape: LEADER ● 2022 Gartner Peer Insights ‘Voice of the Customer’: Global CDN: Customer’s Choice LEADER ● 2022 Frost & Sullivan Technology Innovation Leader: Global CDN: LEADER ● 2023 KuppingerCole Leadership Compass for SASE: LEADER ● 2022 KuppingerCole Leadership Compass for ZTNA: LEADER ● 2022 Gartner Peer Insights ‘Voice of the Customer’ | Security Services Edge: STRONG PERFORMER ● 2023 Gartner Magic Quadrant for Security Services Edge: NICHE PROVIDER ● 2022 Gartner Market Guide for Zero Trust Network Access: Representative Vendor ● 2021 Forrester New Wave for ZTNA: CONTENDER ● 2022 Forrester Wave for Bot Management: STRONG PERFORMER ● 2020 QKS Bot Management Market: TECHNOLOGY LEADER ● 2021 Forrester New Wave™ for Edge Development Platforms: LEADER ● 2020 Forrester New Wave for FaaS STRONG PERFORMER ● 2022 GigaOm Radar for DDoS Protection: LEADER ● 2021 Forrester Wave for DDoS Mitigation Solutions: LEADER ● 2020 Gartner Solution Comparison for DDoS Cloud Scrubbing Centers: Most number of ‘HIGH’ ratings ● 2019 IDC DDoS Prevention MarketScape: LEADER Strength of Product
Slide 87 — ~4x
Product Innovation That Translates into Pipeline Generation New Pipeline Generation ($M) in-quarter pipeline coverage ratio ~4x Annualized 55% CAGR
Slide 88 — Significant Growth in Large Customer Cohorts
Note: Large Customer data are as of year end. See the Appendix for how we define “Large Customers,” which are the same as $100K+ customers. $500K+ and $1M+ customers are defined in the same manner, except we use $500K+ and $1M+, respectively, of Annualized Revenue instead of $100K+. Significant Growth in Large Customer Cohorts 57% CAGR 2020 2021 2022 $100K+ Customers 2,042 1,416 828 $500K+ Customers $1M+ Customers 526 2019 2020 2021 2022 2019 2020 2021 2022 2019 222 121 71 51 85 56 32 17 71% CAGR 63% CAGR 83% Y/Y 52% Y/Y 44% Y/Y
Slide 89 — Top 15%
Average Quarterly Productivity of High Performing Account Executives (AE) Top Sellers Are Consistent High Performers Top 15% Achieved 129% of quota over the last four quarters -1.7% Approximately 27% started within the last 18 months Note: 2022 is representative of the four quarter average of the 2022 fiscal year.
Slide 90 — Where We
Where We Need Improvement
Slide 91 — We Are Not Limited by TAM, Opportunity, or Capacity…
Not Limited by Capacity Accelerating new pipeline generation Not Limited by TAM Not Limited by Opportunity Too many AEs not making their targets Total addressable market $146 billion in 2023 Performance Constrained Note: Total Addressable Market figures are Cloudflare estimates based on IDC market forecasts. Figures reflect the markets addressed by our current product offerings. For markets not profiled by IDC forecasts, such as threat intelligence software and anti-fraud software, Cloudflare’s estimates are based on Gartner, Inc., Forecast: Information Security and Risk Management, Worldwide, 2021-2027, 1Q23 Update, Shailendra Upadhyay, Rahul Yadav, et.al., 03/29/2023. We Are Not Limited by TAM, Opportunity, or Capacity…
Slide 92 — …We Are Performance Constrained
Example of Recent Distribution of Non-Ramping Account Executive (AE) Quota Attainment Note: The line is an approximate representation of quota attainment for Cloudflare AEs over the quarters ended June 30, 2022 and September 30, 2022. Indicates performance challenges Bimodal distribution of quota attainment Not capacity constrained …We Are Performance Constrained AEs well above quota
Slide 93 — …We Are Performance Constrained
Example of Recent Distribution of Non-Ramping Account Executive (AE) Quota Attainment Note: The line is an approximate representation of quota attainment for Cloudflare AEs over the quarters ended June 30, 2022 and September 30, 2022. Indicates performance challenges Bimodal distribution of quota attainment Not capacity constrained AEs well below quota …We Are Performance Constrained AEs well above quota
Slide 94 — …We Are Performance Constrained
Example of Recent Distribution of Non-Ramping Account Executive (AE) Quota Attainment Note: The line is an approximate representation of quota attainment for Cloudflare AEs over the quarters ended June 30, 2022 and September 30, 2022. Indicates performance challenges Bimodal distribution of quota attainment Not capacity constrained AEs well below quota …We Are Performance Constrained AEs well above quota
Slide 95 — Areas Identified for Improvement…
Areas Identified for Improvement… 05 03 04 02 01 Customer Journey Limited data and understanding of what drives customer to land, expand, and adoption of platform Metrics & Processes Limited unifying input/output metrics; inconsistent, conflicting, and undocumented guidelines and processes Coverage & Structure Inconsistent coverage model by geography, country, segment, and channel with multiple many-to-many mappings for supporting resources Territories & Accounts Inequitable territory and account allocation Pipeline Routing issues, attribution friction, not aligned on unified metrics 06 Talent Relaxed standards — hiring profile, enablement, and performance management
Slide 96 — …Compounded by Selling at Cloudflare being Very Complex
Make my Number Build Pipeline ACV Growth Co-term CF1 Zero Trust Bundles New Products All the Time Self Serve Partners Paygo POs Usage Caps Launch Developers Build Demos Ninja Panel R2 FX Margin Network Workers Privacy FedRamp Internal Processes Salesforce Zendesk Gainsight Tableau Outreach ZoomInfo LinkedIn Lighthouse Jira Confluence Showpad Annual Prepay Price Lists Boostup Customer 360 Anaplan Ironclad Catchpoint Lusha Intricately Pagerduty RFPIO Zoom Phone CIO CISO CPO CTO FREE Deal Desk Renewals …Compounded by Selling at Cloudflare being Very Complex
Slide 97 — 2023 Action Plan
2023 Action Plan
Slide 98 — If quota
Illustrative Example of a More Normalized Distribution of Non-Ramping Account Executive (AE) Quota Attainment 80% of AEs exceeding 80% of target 80% of AEs exceeding 80% of quota If quota attainment performance had a more normalized distribution, average AE productivity potentially would increase at least 20% Our Opportunity is Performance Improvement
Slide 99 — Upgrade Go-To-Market Talent
What are the Initiatives in 2023 to Improve Performance? Upgrade Go-To-Market Talent #2: Sell The Way The Customer Buys #3: Become Trusted Advisors for Customers #1: Build Regional Revenue Machines #5: Operate as One Revenue Team #4: Partner with Product
Slide 100 — Upgrade Go-To-Market Talent
Note: Both graphs utilize data from Q1 2023. We define low performance as having not achieved more than 50% quota attainment over the last five quarters. Average performance is calculated based on the average productivity of AEs, excluding low performance. Low Performance AEs ACV Contribution Productivity per AE — Low vs. Average vs. High Performance Low performance: 4% Upgrade Go-To-Market Talent WHAT ARE THE INITIATIVES IN 2023 TO IMPROVE PERFORMANCE?
Slide 101 — Build Regional Revenue Machines
● Organize by global region, country, segment ● Standardize by segments and customer size breaks ● Standardize mapping to supporting teams, staff based on ratio-oriented model (ROM) ● Expanded specialized overlays for security (Cloudflare One), network (Magic Transit), and developer (R2/Workers) ● Staff support based on ticket volume and target mean time to resolution Build Regional Revenue Machines WHAT ARE THE INITIATIVES IN 2023 TO IMPROVE PERFORMANCE? Strategic Field Mid-Market SMB Enterprise Commercial Ratio-Oriented Model (AE:Role) x:1 x:1 x:1 x:1 x:1 x:1 x:1 BDR SE/SA CSM CAM Specialists ES/PS Customer Support AMER EMEA APJC UNIFYING METRIC: Sales Productivity
Slide 102 — Sell The Way The Customer Buys
Sell The Way The Customer Buys WHAT ARE THE INITIATIVES IN 2023 TO IMPROVE PERFORMANCE? ● Market-driven model (TAM/SAM by product, geography, and industry) to align coverage, resources, and priorities ● Map customer journey — free, PAYGO, trial, land, expand — to optimize adoption and customer experience and align demand generation, BDR, and AEs ● Position solutions relative to customer pain points: ○ “Secure Hybrid Work” = ZT, Access, Gateway, RBI, CASB, Email ○ “Supercharge App Performance” = Argo, Load Balancing ○ “Protect Customer Facing Apps” = WAF, DDoS, Bot Management, Page Shield ● Align categories to customers’ organizational charts: ○ Application & Network Services >> IT/CIO ○ Cloudflare One >> Security/CISO ○ Workers & R2 >> Dev/CPO ● Elevate our Partner Program with clear roles and ROE around customer requirements UNIFYING METRIC: Pipeline Coverage Corporate Narrative Personas Solutions Products A B C D A B C D
Slide 103 — Become Trusted Advisors for Our Customers
Become Trusted Advisors for Our Customers WHAT ARE THE INITIATIVES IN 2023 TO IMPROVE PERFORMANCE? ● Enable First Line Sales Managers (FLSM) as coaches that identify, develop, and retain great talent while driving higher levels of performance ● Expand enablement to accelerate ramp, improve how we drive adoption, and how we sell ● Shift from selling tactical point products to delivering strategic platforms and solutions that address customers’ real business requirements ● Provide a seamless customer experience from first touch through scaling platform adoption ● Build out implementation programs to support customers that lack technical capacity to implement or expand the use of our solutions UNIFYING METRIC: CSAT at Each Touch Gain Customer Commitment Meet Customer Needs Anticipate Customer Needs Exceed Customer Expectations Meet Customer Requirements Determine Customer Requirements and Expectations Identify Customer by Organization and by Key Contacts Offensive Strategy Defensive Strategy Loyalty Satisfaction Trusted Advisor Solution Provider Value-add Supplier Product Vendor
Slide 104 — Partner with Product
Partner with Product WHAT ARE THE INITIATIVES IN 2023 TO IMPROVE PERFORMANCE? Partner with Product to create Solution Leadership Teams with a shared ownership model Organize based on product roadmap, consistent release process, and support model for new products Provide consistent, reliable feedback to Product on solution gaps and customer needs UNIFYING METRIC: Revenue by Product
Slide 105 — Operate as One Revenue Team
Operate as One Revenue Team WHAT ARE THE INITIATIVES IN 2023 TO IMPROVE PERFORMANCE? ● Align with Finance and Product on targets based on opportunity, capacity, and productivity — making goals rational but challenging ● Roll down priorities with all leaders creating a set for their teams that align to top level ● Unify and orchestrate consistent communications with one voice, reliable paths, enablement, and regular cadence ● Create cross-functional segment, operational roles to represent the Revenue team to other teams UNIFYING METRIC: Engagement Customers Finance Sales Product
Slide 106 — Becoming World Class in Go-To-Market
Upgrade talent and invest in comprehensive training and ongoing enablement Emphasize consultative selling and prioritize customer success to drive repeat business, referrals, and upsell opportunities Increase sales team specialization, focusing on different customer segments, buyer personas, and industries Leverage data analytics to make informed decisions on resource allocation and prioritize high-value opportunities Closely partner with product development to better address customer needs and close deals more efficiently Becoming World Class in Go-To-Market Product Innovation Network Stability Go-To-Market
Slide 107 — Financials:
Financials: Profitable Growth At Scale Thomas Seifert Chief Financial Officer May 4, 2023
Slide 108 — Growth
Growth Profitability Where We Are Today
Slide 109 — $1.2B
Note: Total Addressable Market figures are Cloudflare estimates based on IDC market forecasts. Figures reflect the markets addressed by our current product offerings. For markets not profiled by IDC forecasts, such as threat intelligence software and anti-fraud software, Cloudflare’s estimates are based on Gartner, Inc., Forecast: Information Security and Risk Management, Worldwide, 2021-2027, 1Q23 Update, Shailendra Upadhyay, Rahul Yadav, et.al., 03/29/2023. Total addressable market at IPO represents 2018 expected spend from our analysis based on IDC data. Large Customers, Revenue Run Rate, GAAP Gross Margin, and Non-GAAP Op Profit Margin are as of the fiscal quarter ended March 31, 2023. Revenue Run Rate is defined as applicable quarterly revenue multiplied by 4. “From IPO” and “since IPO” refer to data as of the fiscal quarter ended June 30, 2019 (Cloudflare IPO occurred on Sept. 13, 2019). See the Appendix for how we define “Large Customers” and for GAAP to Non-GAAP reconciliation. Total Addressable Market in 2023 GAAP Gross Margin Large Customers Revenue Run Rate Non-GAAP Op Profit Margin $1.2B 76% 6.7% $146B 2,156 4.6x TAM since IPO ~460% increase from IPO +330% increase in revenue since IPO maintained >75% since IPO Key Financial Highlights record operating profit and margin
Slide 110 — Consistent & Deliberate TAM Expansion
● Application Delivery Controllers ● WAN ● CDN ● DDoS ● Intrusion Detection & Prevention ● Firewall ● Anti-Fraud ● Threat Intelligence ● VPN ● Content Filtering ● Remote Browser Isolation ● Data Loss Prevention ● Privileged Access Management ● Network Analytics ● Email Security ● CASB Consistent & Deliberate TAM Expansion Cloudflare Developer Services ● Application Platform ● Object Storage ● Carrier Services (MPLS & SD-WAN) 2018 2023 2024 $32B 2026 $204B $146B Cloudflare Application Services Cloudflare Zero Trust Services Cloudflare Network Services $164B Cloudflare One 2025 $183B Areas for Potential Incremental Growth AI Internet of Things 5G Cellular Database Network Services 1 Note: Total Addressable Market figures are Cloudflare estimates based on IDC market forecasts. Figures reflect the markets addressed by our current product offerings. For markets not profiled by IDC forecasts, such as threat intelligence software and anti-fraud software, Cloudflare’s estimates are based on Gartner, Inc., Forecast: Information Security and Risk Management, Worldwide, 2021-2027, 1Q23 Update, Shailendra Upadhyay, Rahul Yadav, et.al., 03/29/2023.
Slide 111 — Track Record of Delivering Revenue Growth
Investments in enterprise sales Large customer momentum Land and expand strategy drives growth across cohorts Increasing penetration across an expanding product portfolio Total Revenue ($M) 49% CAGR $135 $193 $287 2017 2018 2019 2020 $431 $656 2021 $975 2022 Track Record of Delivering Revenue Growth
Slide 112 — Negative Headlines…
Negative Headlines… WHAT’S CHANGED?
Slide 113 — Significantly longer
Significantly longer sales cycles in Q1’23 (~27% longer than last four quarter average) — most notably in large customer upsell deals New Pipeline Growth (% y/y) vs. Sales Cycles (Days) …Elongated Sales Cycles, Which Countered Improving New Pipeline Generation… WHAT’S CHANGED?
Slide 114 — …Driving Our Expectation for Delayed ACV Bookings & Revenue Recognition
…Driving Our Expectation for Delayed ACV Bookings & Revenue Recognition WHAT’S CHANGED? Illustrative Example of Potential Impact to ACV & Revenue by Fiscal Year — Normal vs. Elongated Sales Cycles FY1 FY2 FY1 FY2 Annual Contract Value Revenue Note: The scenarios presented in both charts are illustrative examples of the potential impact of longer sales cycles, in which ACV bookings are shifted into future periods. Linearity is then applied each month and each quarter to derive recognized revenue via a waterfall. See the Appendix for how we define “Annual Contract Value” or “ACV.” FY3 Illustrative Example of Potential Cumulative Revenue over Two Fiscal Years — Normal vs. Elongated Sales Cycles FY1 FY2
Slide 115 — Elasticity of & Leverage in Our Operating Model
Non-GAAP Operating Expenses & Operating Margin (% of Revenue) Elasticity of & Leverage in Our Operating Model 27% 48% 22% 31% 27% 52% 22% 23% 21% 46% 22% 18% 20% 45% 21% 15% 19% 42% 22% 14% -30% -25% -8% -1% 4% 2018 S&M G&A R&D COGS Operating Margin 2019 2020 2021 2022 2023 (4/27 Guidance) 6% Note: 2023 Operating Margin is based on our guidance that was publicly disclosed on April 27, 2023. This forward looking guidance speaks only as of such date and the inclusion of such guidance in this presentation should not be interpreted as a confirmation or affirmation of such guidance as of any other date. Except as required by law, we assume no obligation and do not intend to update these forward-looking statements or to conform these statements to actual results or to changes in our expectations.
Slide 116 — A Platform That
A Platform That Constantly Delivers Innovation Compelling Unit Economics Driving Profitable Growth at Scale The Path to Our Goal of $5B of Revenue
Slide 117 — A Platform That Constantly Delivers Innovation
A Platform That Constantly Delivers Innovation Growing Large Customer Cohort Extending into Adjacent Markets Expanding Product Portfolio
Slide 118 — Rapid Enterprise Expansion
30% of Fortune 1,000 and 6 of the Top 10 are paying customers Large enterprise go-to-market additions Enterprise grade product portfolio $1M-$5M: 16x $500K-$1M: 14x $100K-$500K: 11x Note: Growth factors (e.g., 3x for <$100K) are calculated as Q4’22 revenue divided by Q1’18 revenue, except for $5M+, which compares Q4’22 to Q4’18. <$100K: 3x $5M+: 18x* Rapid Enterprise Expansion GROWING LARGE CUSTOMER COHORT Revenue ($M) by All Customers 2018 2019 2020 2021 2022
Slide 119 — Increasing Enterprise Volume + Scale
Note: Annual Recurring Revenue (ARR) is defined as the annualized value of our customer subscription contracts as of the measurement date, assuming any contract that expires during the next 12 months is renewed on its existing terms. ARR is calculated by multiplying the revenue in the fourth quarter of each respective year by four. 2022 2018 2020 Top 10 Customer Top 25 Customer Top 100 Customer $6.2M $2.2M $1.3M 2022 2018 2020 $2.6M $1.5M $599K 2022 2018 2020 $888K $413K $219K Minimum ARR Required to be a Top Account 4.9X 4-year Growth 4.4X 4-year Growth 4.0X 4-year Growth Increasing Enterprise Volume + Scale GROWING LARGE CUSTOMER COHORT
Slide 120 — Land and Expand Strategy Drives Growth
2021 2022 2020 27% Note: Attach rates for 2019, 2020, 2021, and 2022 are as of the fiscal year ended December 31. Product attach rates are calculated based on the total installed base of contracted customers. Product attach rates are defined as the percentage of total contracted customers that purchased 8 or more products, 9 or more products, etc. 8+ 9+ 10+ 16% 8% 44% 8+ 9+ 10+ 29% 18% 48% 8+ 9+ 10+ 34% 22% 2019 24% 8+ 9+ 10+ 13% 6% Land and Expand Strategy Drives Growth EXPANDING PRODUCT PORTFOLIO Product Attach Rates by Number of Products Purchased
Slide 121 — Increasing Product Adoption & Revenue Contribution
Increasing Product Adoption & Revenue Contribution EXPANDING PRODUCT PORTFOLIO Note: Growth factors on the Revenue Contribution chart (e.g., 15.0x for 10+ Products) are calculated as Q4’22 revenue divided by Q4’19 revenue contribution from the respective cohort. Growth factors are rounded to the nearest 0.5x. ‘22 vs. ’19 Revenue Contribution by Product Attach Rate Cohorts ($M) 15.0x 8.5x 13.0x 11.0x 7.0x
Slide 122 — A Multi-Act Play…
Note: Attach rates are calculated based on the total installed base of contracted customers. It is defined as the percentage of total contracted customers that purchased the product as of December 31, 2022. 90%+ of Contracted Customers 20%+ of Contracted Customers 20%+ of Contracted Customers 15%+ of Contracted Customers Zero Trust Services Application Services Network Services Developer Services Act I Act II Act III Product Attach Rates by Act in 2022 A Multi-Act Play… EXTENDING INTO ADJACENT MARKETS
Slide 123 — …That is Just Beginning
Annual Contract Value (ACV) by Act …That is Just Beginning EXTENDING INTO ADJACENT MARKETS Note: Contribution by Act is calculated based on the annual contract value of contracted customers during the respective fiscal years for the 12 months ended as of December 31. See the Appendix for how we define “Annual Contract Value” or “ACV.”
Slide 124 — Compelling Unit Economics Driving Profitable Growth at Scale
Compelling Unit Economics Driving Profitable Growth at Scale Unit Economics Long-term Operating Model
Slide 125 — Unit Economic Margin
Attrition What’s the expected lifetime revenue from $1 ARR? Lifetime Revenue (LTR) = $1 ARR / attrition rate Cost to Book (CTB) Cost to Serve (CTS) How much does it “cost to serve” the lifetime revenue? CTS = Delivery, R&D, Support & G&A cost as % of ARR Note: Unit economic margin in this and subsequent slides are calculations based on assumptions derived from Cloudflare’s historical operations regarding unit lifetime revenue and subscription economics, including cost to book, cost to serve, and attrition dynamics. Unit economic margin is not operating margin. The calculations charted are as of fourth quarter of the respective years. What does it “cost to book” $1 of incremental ARR? CTB = Sales & Marketing cost per dollar of incremental ARR Unit Economic Margin What is the economic margin created by $1 ARR? Unit Economic Margin = [LTR - CTB - (CTS * LTR) ] / LTR 42% Unit Economic Margin Unit Economic Margin by Component Unit Economic Margin
Slide 126 — Long-Term Operating Model
2020 2021 2022 Q1 2023 Long-Term Model Gross Margin 78 % 79 % 78 % 78 % Leverage efficiency and elasticity of our network and ingress/egress dynamics 75% - 77% Sales & Marketing (% of revenue) 46 % 45 % 42 % 42 % Scale go-to-market operations with a focus on improving productivity 27% - 29% Research & Development (% of revenue) 21 % 20 % 19 % 18 % Continue to prioritize product innovation 18% - 20% General & Administrative (% of revenue) 18 % 15 % 14 % 12 % Benefit from economies of scale and automation 8% - 10% Operating Margin (8)% (1)% 4% 7% 20%+ Free Cash Flow Margin (21)% (7)% (4)% 5% ~25%+ Note: Metrics shown are Non-GAAP. See Appendix for GAAP financial measures and GAAP to Non-GAAP reconciliation. Unit economics support 20%+ long-term operating margins. Long-Term Operating Model
Slide 127 — Why We Win
© Copyright Cloudflare, Inc. Highly efficient business model with attractive unit economics Why We Win Significant enterprise traction yields robust large customer growth Innovation drives a massive and growing total addressable market Summary Invest in go-to-market talent Multiple levers to scale free cash flow
Slide 128 — Q&A
Q&A Matthew Prince Co-founder and Chief Executive Officer Michelle Zatlyn Co-founder, President and Chief Operating Officer Thomas Seifert Chief Financial Officer