Cloudflare Earnings Takeaways: Zero Trust, Generative AI Security … – CRN

Zeroing In On Growth

Cloudflare’s push into the zero trust security space continues to gain traction even with the economic slowdown, co-founder and CEO Matthew Prince said Thursday. The continued momentum is thanks in no small part to the expansion of the company’s work with channel partners, which notably produced a large channel-driven deal with a Fortune 500 energy company during the fourth quarter, Prince said during Cloudflare’s quarterly call with analysts.

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For the fourth quarter, ended Dec. 31, Cloudflare beat the expectations of Wall Street on both revenue and profits — a feat that many other major tech companies have been unable to pull off lately. Another big customer deal during the quarter also helped to buoy the strong results, Prince said. The deal was with an unnamed customer in the generative AI space, which saw “unprecedented rates of adoption” for its browser-based service after debuting it in late November, Prince disclosed. That description, of course, matches OpenAI and its ChatGPT chatbot service, and it was already known that Cloudflare’s security service is indeed protecting the ChatGPT site.

Ultimately, the growth for Cloudflare goes back to its core advantage — its global network — which serves as a “fundamental barrier to entry” against anyone who would try to replicate what the company is doing, Prince said during the quarterly call. The company, he noted, has spent 12 years building this network (which now spans more than 100 countries and 275 cities in total, according to Cloudflare’s website). The Cloudflare network “is not something that you can just throw money at and buy your way into,” Prince said. “It’s not something that even some of the large, hyperscale public clouds have.” Cloudflare, he said, often hears “from companies like Microsoft” that the company’s network is “very different than anything else that that’s out there.”

“What’s different about us is we have relentlessly said that we would run one single network, and every single server across our entire network is capable of running and performing any of the functions that we may need it for,” Prince said. “And so that means that as we grow our services, it allows us to deliver them incredibly quickly, incredibly efficiently, and anywhere in the world. And that is paying off today by allowing us to continue to scale as efficiently as possible.”

All in all, “I think it would be very challenging today for somebody to replicate the network that we have,” he said. That network enables Cloudflare to continually deliver additional services, Prince said — from its traditional application services, to its zero trust services, to its newer services in compute and storage.

During the Cloudflare Q4 earnings call Thursday, Prince also discussed the challenge that the company sees ahead around raising customer awareness of its offerings beyond its well-known web performance and distributed denial-of-service (DDoS) mitigation services. Regardless, he said the company is on track to meet its growth goals over the longer term. “We continue to be committed to our goal of getting a $5 billion run rate in five years from last quarter,” Prince said. Cloudflare’s stock price rose 10 percent in after-hours trading Thursday to $64 a share.

What follows are five key takeaways from Cloudflare’s Q4 2022 earnings report and quarterly call.