More focused on user base growth than profit • The Register
If Cloudflare CFO Thomas Seifert’s view of where his company is headed is accurate, expect future strategy to focus on how it can use its slew of recently announced tools to make the biggest dent in existing markets. Profit motives lag far behind, at least for now.
Speaking at the Morgan Stanley Technology, Media and Telecom conference, Seifert told analyst Keith Weiss that 2022 will be about developing Cloudflare’s Zero Trust solution as well as Workers, its serverless code platform.
Even with these products, Seifert said, the security-focused content delivery network’s strategy isn’t about revenue — it’s about gaining users. “We’re thinking primarily about adoption in the developer community penetration and less about dollars and revenue at this point,” Siefert told the audience of investors and financial analysts.
It’s also not an outlier for Cloudflare, at least as Seifert puts it. He said the COVID-19 pandemic and Russia’s invasion of Ukraine were just two examples of incidents that led Cloudflare to offer its services (in this case, Cloudflare Teams) for free to affected businesses. by these events.
“When we launched Cloudflare for Teams in January, no one knew COVID was coming, but the most disruptive decision was to give it away for free and help businesses,” Seifert said. “We didn’t know when we gave this indication that Ukraine would be invaded. But giving these products away for free, I think, is the right decision to make.”
In addition to these new software products and their expansion, Seifert also commented on possible growth in the company’s core business of providing application services. In short, he is not afraid of reaching market saturation.
On-premises hardware, Seifert said, is no longer being upgraded: it’s being replaced by cloud services. This will trigger a huge shift in spending over time, which in turn will drive more customers to Cloudflare’s digital door.
Again, Seifert said, the strategy is focused on disruption. “It’s not just about new business and new facilities, it’s really disrupting the installed infrastructure and there is, in our view, an important lead still ahead of us,” he said.
Seifert also answered questions about Cloudflare’s Magic WAN product, a cloud-native replacement for legacy WAN hardware. In particular, Weiss was curious how Cloudflare got along with ISPs given that some of Magic WAN’s features are stepping on the toes of regional ISPs.
“The value we provide to local ISPs or regional ISPs is still the same. We help them save substantial costs,” Seifert said. Citing zero-trust technology as an example, Seifert said enterprises struggle to globally implement zero-trust due to differences between ISPs, and Magic WAN addresses these issues without directly impacting ISPs. “We make the internet faster, conversion rates higher. So this is a unique opportunity for them to increase their revenue,” Seifert said.
Additionally, Seifert discussed Cloudflare One, Cloudflare’s SASE platform, as well as Cloudflare R2 cloud storage, which he said are growing rapidly. At the end of it all, Seifert always came back to Cloudflare’s mission to create change before counting profits.
“When we talk about competition, it’s not like, let’s cut this product — we’ve got a percentage point margin left,” Seifert said.
“It’s like what’s the most disruptive move we can make in any given competitive situation? I think a lot of what drives [our] growth or has driven growth in the past is our ability to innovate and ensure that the total addressable market we disrupt continues to grow.” ®