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Founded in 2020, with a $23B valuation, aiming for $1B ARR? CloudFlare is worth $26B and had ~$1.3B revenue last year. Something's fishy here.
by Centigonal 2y ago
Founded in 2020, with a $23B valuation, aiming for $1B ARR?
CloudFlare is worth $26B and had ~$1.3B revenue last year. Something's fishy here.
- oceanplexian 2y agoLook at their financials, CloudFlare might be popular among the HN crowd but the stock is massively overvalued. At the end of the day they are a commodity CDN that somehow can’t run a profitable business.
- ilrwbwrkhv 2y agoAnd now with their bad hiring practices and shady business deals they might not be popular among HN crowd for long too.
- jppope 2y agoYeah nah... they have great products and their primary business is allowing them to enter markets where other companies can't compete. The valuation is based on potential not the business as it stands today. And to your point they are popular with the HN crowd which is usually a strong indicator.
- deleted 2y ago[deleted]
- foolswisdom 2y agoI think GP's point is that wiz's valuation makes even less sense.
- dilyevsky 2y agoI did look at their financials - 77% gross margin with 30% revenue growth. Much higher than “commodity cdn” can command. If they cut marketing and r&d they’d be bagging half a b a year in profit but they are investing in growth as they should because it’s working
- J_Shelby_J 2y agoCloud flare will still be the internet in ten years, while Amazon will just be Walmart,
- walthamstow 2y agoAmazon is the internet too. The us-east-1 outage in 2023 took down a lot of stuff.
- oblio 2y agoAWS is making $100+bn per year and growing at about 20% per year. Good job, "Walmart"!
- vinay_ys 2y agoAnd, that's a dis, why?
- DowagerDave 2y agoWalMart has a market cap of almost 600 Billion dollars. Weird dis.
- lotsofpulp 2y agoIt’s even weirder since Amazon is at $2T, and has long been worth far more than Walmart.
- refulgentis 2y agoWell, not weird, you got it exactly! Thats the point :) It would be "just Walmart"
- WrongAssumption 2y agoStrange take on AWS.
- zild3d 2y agocloudflare is a commodity CDN, amazon is an ecommerce site
- is_true 2y agoThey have a lot of products.
- that_guy_iain 2y agoBecause they have so many using their cdn functionality they can upsell them on other products such as domain registration, video streaming, s3, etc
- miragecraft 2y agoCloudflare makes no money on domain registration.
- that_guy_iain 2y agoYet.
- paxys 2y agoSo they have similar valuation and ARR as Cloudflare. What is fishy?
- osrec 2y agoCloud flare has it, they are aiming for it. Definite income vs possible income cannot be priced in the same way, assuming the CF valuation is justified.
- alephnerd 2y agoCloudflare has a much smaller ACV than Wiz, as a CDN play is very different from a CNAPP play. Wiz also has amazing product market fit (almost everyone who's used it has raved about it). And in the hierarchy of needs, it's easier to place infra security over "yet another CDN"
- DowagerDave 2y agoWiz hit 100M in mid 2021 and 350M ARR last year; now they're going to automagically get that to a Billion in a much tougher climate?
- alephnerd 2y agoThey have amazing product market fit in the security industry and a lot of dry powder. They've already started developing an M&A strategy and are closely linked with Gil Ranan of Cyberstarts
- sailingparrot 2y agoValuations have always been more about potential than about current state in startup world. Wiz is 4 years old and already at $350M ARR, that's a meteoritic rise.
- 6th 2y agoMeteorites crash & burn, honestly, what is a "meteoritic rise"?
- toomuchtodo 2y agoFast enough to cash out at highly favorable and ambitious valuations while the ARR trajectory supports it. You’re selling potential, you don’t have to deliver; that’s the next team’s problem.
- ergocoder 2y agoWiz: Got to 350m ARR Hacker news: "you don't have to deliver. That's the next team's problem". Apparently 350m isn't enough to prove potential.
- toomuchtodo 2y agoIt's certainly not enough to justify a $23B valuation target, or even $12B assuming reasonable multiples in the space (average is ~15x in cyber tools and controls). Lacework went from an $8B valuation to $200M–$230M (first with Wiz attempting to acquire, and now Fortinet at the valuation I mentioned, roughly ~2x revenue, ~3x if we want to be generous). A case can be made that Wiz is a more mature platform and Lacework is a fire sale (which it is, but also not a great sign for the rest of the space), but I'll argue a lot of Wiz's revenue is likely premium pricing with current customers that can cram them down on at their next renewal cycle, and the TAM is simply only so big (with competitors being as, if not more, resourced to compete and stay ahead). You can't grow into something there isn't room to grow into. https://techcrunch.com/2024/04/18/wiz-is-in-talks-to-buy-lacework-for-150-200m-security-firm-was-last-valued-at-8-3b/ https://techcrunch.com/2024/04/18/wiz-is-in-talks-to-buy-lac... https://www.forrester.com/blogs/fortinet-acquires-lacework/ https://www.forrester.com/blogs/fortinet-acquires-lacework/
- jahewson 2y agoTheir last raise was two months ago at a valuation of $12bn. Google was offering a premium to take them off the market. https://techcrunch.com/2024/05/07/wiz-raises-1b-at-12b-valuation-expanding-through-acquisitions/ https://techcrunch.com/2024/05/07/wiz-raises-1b-at-12b-valua...
- underdeserver 2y agoLikely offering a very large premium to offset the risk of antitrust holding up the deal. The Activision-Blizzard sale was at a premium of around 60% from stock price ($56 per share trading the day before the announcement, compared to $95 per share offer). Wiz was offered a premium of almost 100% on latest valuation. Both Wiz and Google know that the FTC will hold up the deal, and in that time, Wiz has to convince customers not to jump ship (Google will likely not support AWS forever), and risk that the deal falls through - in which case they've gone a year without momentum. If they really believe they can make a strong IPO, and keep growing past IPO, their decision makes a lot of sense.
- throwaway2037 2y agoYou raise an important point. To me, pre-IPO "valuation" is mostly VC bullshit. Remember WeWork's pre-IPO valuations??? Jan 2019: 47B USD! What really matters: Post-IPO market cap, as long as there is significant float. (See VinFast IPO with a ridiculously small float.)