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Here's the meat and potatoes: > We have experienced significant growth, with our revenue increasing from $84.8 million in 2016 to $134.9 million in 2017 and to

by koolba 7y ago

Here's the meat and potatoes: > We have experienced significant growth, with our revenue increasing from $84.8 million in 2016 to $134.9 million in 2017 and to $192.7 million in 2018, increases of 59% and 43%, respectively. As we continue to invest in our business, we have incurred net losses of $17.3 million, $10.7 million, and $87.2 million for 2016, 2017, and 2018, respectively. For the six months ended June 30, 2018 and 2019, our revenue increased from $87.1 million to $129.2 million, an increase of 48%, and we incurred net losses of $32.5 million and $36.8 million, respectively. Compared to the numbers we've seen for recent tech IPOs, being on track to lose about $72M for 2019 seems reasonable. Also, haven't read through it all but I'm curious how strong this clause will be for future control: > The dual-class structure of our common stock will have the effect of concentrating voting control with those stockholders who held our capital stock prior to the completion of this offering, and it may depress the trading price of our Class A common stock.

zaroth 7y ago
What the heck happened to their OpEx in 2018?! They went from growing at 60% YoY in 2017 with an 8% Operating Loss, to growing 43% YoY with an Operating Loss of 44%. To put it another way, in 2018 they grew their revenue 40% (+$58m) and grew expenses 100% (+$115m). I mean, apparently they raised a huge round and felt the need to increase spending massively. And then saw slowing growth as a response? Was there a massive boost in R&D output? Entering entirely new product lines? My uneducated impression is that they offer largely the same product this year as they did last year. The only thing I can think of is that they went from “scrappy startup” to “bloated unicorn” status?
- the_duke 7y ago
  My guess: new development-intensive products like the 1.1.1 DNS, Wireguard, WAF etc plus general scaling and growth on one side, and increased competition from established cloud services on the other. After all, if you are already on eg AWS, just using Cloudfront is temptingly easy. (even if bad from a redundancy perspective)
  - judge2020 7y ago
    AWS also offers a managed WAF - https://aws.amazon.com/waf/ https://aws.amazon.com/waf/
  - qes 7y ago
    It's easy, but we're saving thousands of dollars a month using Cloudflare instead of our cloud service provider's CDN (~250TB/month), and that's without any kind of discounted egress agreement between our cloud service and Cloudflare (which is supposed to be in the works, but it's been literally years with no further word)
  - zymhan 7y ago
    > just using Cloudfront is temptingly easy IMO this is giving way too much credit to AWS
    - stingraycharles 7y ago
      Assuming you’re already integrated on AWS, just using Cloudfront is a lot easier than Cloudflare. You’re likely already using S3, maybe use CloudFormation as well. Then it’s often much more straightforward to use AWS services rather than a third party provider.
  - jve 7y ago
    You missed Magic Transit that was announced few days ago: https://blog.cloudflare.com/magic-transit/ https://blog.cloudflare.com/magic-transit/
- ggg3 7y ago
  maybe those intel mitigations had a very heavy toll on ssl handshake perf? I can easily see a cdn having to spend enough to double server capacity almost overnight because of a software performance change that can't be delayed.
- formercoder 7y ago
  Arguably a lot of that R&D should be capitalized and not be on the I/S. Investments like that shouldn’t impact net income. I’m more concerned with G&A going up 500%.
  - carl_island 7y ago
    They are claiming the work needed to become IPO ready (accounting, legal, etc) spiked G&A. I see that a good a chunk of that was 1 time consulting but most was from additional staff.
- veronikakolejak 7y ago
  They explain the huge changes in Operating Expenses here: https://wallmine.com/doc/edgar/0001477333/000119312519222176/d735023ds1.htm?h=100280 https://wallmine.com/doc/edgar/0001477333/000119312519222176... It doesn't go into much detail but breaks them down nicely. Disclaimer: I added the next two highlights too

by koolba 7y ago

zaroth 7y ago

What the heck happened to their OpEx in 2018?! They went from growing at 60% YoY in 2017 with an 8% Operating Loss, to growing 43% YoY with an Operating Loss of 44%. To put it another way, in 2018 they grew their revenue 40% (+$58m) and grew expenses 100% (+$115m). I mean, apparently they raised a huge round and felt the need to increase spending massively. And then saw slowing growth as a response? Was there a massive boost in R&D output? Entering entirely new product lines? My uneducated impression is that they offer largely the same product this year as they did last year. The only thing I can think of is that they went from “scrappy startup” to “bloated unicorn” status?

the_duke 7y ago
My guess: new development-intensive products like the 1.1.1 DNS, Wireguard, WAF etc plus general scaling and growth on one side, and increased competition from established cloud services on the other. After all, if you are already on eg AWS, just using Cloudfront is temptingly easy. (even if bad from a redundancy perspective)
- judge2020 7y ago
  AWS also offers a managed WAF - https://aws.amazon.com/waf/ https://aws.amazon.com/waf/
- qes 7y ago
  It's easy, but we're saving thousands of dollars a month using Cloudflare instead of our cloud service provider's CDN (~250TB/month), and that's without any kind of discounted egress agreement between our cloud service and Cloudflare (which is supposed to be in the works, but it's been literally years with no further word)
- zymhan 7y ago
  > just using Cloudfront is temptingly easy IMO this is giving way too much credit to AWS
  - stingraycharles 7y ago
    Assuming you’re already integrated on AWS, just using Cloudfront is a lot easier than Cloudflare. You’re likely already using S3, maybe use CloudFormation as well. Then it’s often much more straightforward to use AWS services rather than a third party provider.
- jve 7y ago
  You missed Magic Transit that was announced few days ago: https://blog.cloudflare.com/magic-transit/ https://blog.cloudflare.com/magic-transit/
ggg3 7y ago
maybe those intel mitigations had a very heavy toll on ssl handshake perf? I can easily see a cdn having to spend enough to double server capacity almost overnight because of a software performance change that can't be delayed.
formercoder 7y ago
Arguably a lot of that R&D should be capitalized and not be on the I/S. Investments like that shouldn’t impact net income. I’m more concerned with G&A going up 500%.
- carl_island 7y ago
  They are claiming the work needed to become IPO ready (accounting, legal, etc) spiked G&A. I see that a good a chunk of that was 1 time consulting but most was from additional staff.
veronikakolejak 7y ago
They explain the huge changes in Operating Expenses here: https://wallmine.com/doc/edgar/0001477333/000119312519222176/d735023ds1.htm?h=100280 https://wallmine.com/doc/edgar/0001477333/000119312519222176... It doesn't go into much detail but breaks them down nicely. Disclaimer: I added the next two highlights too