For as long as investors believe there is potential growth that can be turned into a profit in future.

It’s clear people believe that CloudFlare have a good chance of seriously competing with the “big” players. AWS has quarterly revenue of about $140B, CloudFlare at about $0.2B has a lot of potential growth ahead.

Their strategy is clearly to expand into more of the cloud services industry. There are a few missing pieces currently (VPS, Containers, Database servers) but I’m confident they have plans in those areas.

The interesting thing is that they are approaching each area thy go into with new ideas. Although I wouldn’t be surprised if we see them make some acquisitions at some point.

If you listen to their earnings call, the CEO emphasizes that he wants Cloudflare to be positioned along side the Big Tech Cloud, not against. But, I think you're right. Cloudflare will slowly encroach into the space of Workers + Workers KV + Pages and double down on serverless + edge compute – chip away at Lambda/App-engine with a gateway type product to offer with it. Currently, they're mostly focused on CDN + ZeroTrust security.

Also they announced acquisition of Vetrix. I've never heard of it but seems interesting that they're venturing into app-level security market as well: https://cloudflare.net/news/news-details/2022/Cloudflare-Acq...

Cloudflare's genius is in offering free CDN service for most solo people. That seems to be like the way Photoshop allowed pirating of the software with little DRM control, get people to use the product first. I wish SalesForce did that, they have no free plan. For my scrappy company, we just use excel sheet for CRM.

Hubspot has a free tier.

Salesforce does offer 10 free licenses for nonprofits.

Does one count as a nonprofit if their company is losing money? :v

even if you had saleforce it will all end up in excel anyway...

I think you mean $14B not $140B

(And these days it's a tad over $16B)

Yep, typo. Thanks!

$140B would be insane.

Everything about Cloudflare reminds me of early Google. Loved by most, providing great services for free or very affordable, communicates both formally and informally via proxies/employees, seems to be providing only innovative and in-demand services, more reliable than any alternative, humble and honest when they fuck up, and increasing in market share.

I am very concerned about when that bubble bursts, considering the essentially MitM nature of many of CF's offerings.

"Too good to be true" is rarely wrong. TANSTAAFL.

Cloudflare is already more insidious to me than Google was at the point you mention. Cloudflare pretends they're not the hosting provider of their customers but a neutral ISP in between which is of course ridiculous because their customers pay them money to host content (even if temporary) on CF servers so it can be accessible online through CF IP ranges.

Where the ultimate source of content lies is an implementation detail and irrelevant for anyone looking to, for example, file DMCA claims.

As an example, my partner has written a free story and published it on one website, where it was then copied onto a different website by a third party where it's being sold, with much of the content already accessible. Filing DMCA claims is hopeless as Cloudflare will only (pretend to) forward the complaint to the "actual" owner and hoster of the website, with no guarantees about deliverability or anything. Here's the kicker! Even if you somehow manage to reach the "actual" hosting provider and they kick the offending party off their servers, that party can transparently migrate to another host and Cloudflare will even cache their pages for them until they are up again. See no evil, hear no evil, blatantly ignore established laws with weasel words indeed.

The fact that they are getting away with it is ridiculous. It would take an actual lawsuit with a huge investment in time and money to challenge the status quo. I know we could never bring meaningful legal action to them.

Not to mention Cloudflare seeing no moral issues with hosting sites such as KF who take joy in bullying people until suicide.

Hey eastdakota, jgrahamc, I'd love to see you actually respond to this in good faith.

I was thinking about the investor losses the value prop of those losses and the horizon to profitability.

In general as a user get in early on the free plans. Start decoupling when everyone else jumps aboard before the lock-in pain is too high

Sales and Marketing line item is over 50% of their Operating Expenses. $96.2mill last quarter.

Since it’s still in a growth phase with revenue, the losses can continue as a customer acquisition cost.

They can scale back at any time.

Churn is very low for CDNs, so the revenue they get lasts a long time but the sales cost is up front.

They need it to maintain growth, otherwise punished ruthlessly by market and lost access to credit. That's not an optional spend

> I'm curious how long these companies can have losses.

Parent didn't ask about access to credit or market capitalization rates, they asked how long they can burn for. If you no longer need credit because you're profitable, then keeping your asset value up is moot.

So yes it very much is an optional spend. I welcome you to listen to a podcast by the CFO of NetSuite:

https://a16z.com/2015/05/15/a16z-podcast-why-saas-revenue-is...

NetSuite's most profitable year was...2009. Yes that 2009. They basically turned off S&M when the economy crashed.

Indefinitely provided their revenue is growing 50% year over year.

Once upon a time similar criticism was leveled at Amazon and Salesforce.

+1. Why focus on earnings when revenue growth is high?? Obviously you don't want to go out of business and unit earnings need to be reasonable for when you shift from growth to extracting value but if people will fund it shoot for the moon. I'm a NET investor of course, big fan.

I certainly appreciate them dealing with ~250GB in bandwidth a day for me so that I don't have to pay for it.

Their cash or cash equivalents is $1,821.8 million. Net loss was $77.5 for the quarter. Without any changes, they could keep this up for about 6 years.

However, Cloudflare has 79.2% gross margin, indicating that delivering their services is highly profitable. If they ever needed more money, they could simply raise it or scale-back in other areas.

TLDR: They could go for a very long time.

> Their cash or cash equivalents is $1,821.8 million. Net loss was $77.5 for the quarter. Without any changes, they could keep this up for about 6 years.

That's incorrect. They didn't burn $77m in cash in the quarter, GAAP net loss is not equal to them losing cash from operations. The calculation doesn't lead out to six years accordingly. They're no longer burning cash (as they previously were):

"Net cash flow from operating activities was $40.6 million, compared to negative $8.8 million for the fourth quarter of 2020. Free cash flow was $8.6 million, or 4% of total revenue, compared to negative $23.5 million, or 19% of total revenue, in the fourth quarter of 2020."

That could still slip back occasionally into the red, of course. More likely it's going to be two steps forward and one step back, culminating soon in predictably cash flow positive operations.

They were cash flow positive in q4 and project positive cash flow into q1

I know nothing about finances, but it says they have access to 1.8billion in cash/equivalents/securities.