CloudFlare has a lot going for it. Matthew Prince (Co-CEO) is the most famous CEO in the CDN Industry. In fact, he’s more popular around the world, than many Fortune 500 CEO’s. He’s the major driving force behind CloudFlare, similar to way Larry Ellison is with Oracle. I don’t know if he planned it that way, or if it happened by accident. Is CloudFlare worth $1B dollars? Looking at it from a CDN perspective, many would say no. Looking at it from an infrastructure perspective, maybe. Let’s do some quick analysis, and decide from there. CloudFlare is a major force in the CDN industry, and has accomplished much in a short time span.
CloudFlare Profile
- 2M total customers with 4%-5% paying customers
- Has grown 450% over the last three years
- 2014 revenue run rate of $40M
- Services: CDN, DDoS Mitigation, DNS Protection and WAF
- 28 POPs including Madrid, Milan, Sao Paulo, and Medellin Columbia
- Serves 9 billion queries per day
- 26.45% DNS Providers Market Share (SolveDNS)
Based on the above metrics, CloudFlare is successful. Although they are a CDN at its core, their also a hybrid security company that’s replacing the functionality of the old guard security appliance, like F5 Networks and Barracuda Networks. However, on a feature-by-feature comparison, CyberSecurity CDNs (Akamai, EdgeCast and Incapsula) are a little further ahead. If CloudFlare is able to grow revenues 450% in 2015 to $160M+, its definitely worth a billion dollars, and they would make CDN history by growing so fast.
In order to reach greatness as an infrastructure company, CloudFlare needs to do more than just add POPs, and incremental security features. They’ll need to build a security service from the ground up, leveraging their CDN infrastructure, to differentiate itself from the other CyberSecurity CDNs. The new service can be something similar to Arbor Networks, where they can package some new security services, and sell them large enterprises, Telecoms, and Service Providers. CloudFlare has the $1B market valuation potential, but it just has to make some additions to its product line.
 Infrastructure Acquisitions
- CDN: Akamai acquires Cotendo for $268M
- CDN: Verizon acquires EdgeCast for about $400M
- CDN: Verizon acquires Uplynk for reported $75M+
- Infrastructure: IBM acquires Softlayer for $2B
- Infrastructure: Verizon acquires Terremark for $1.4B
- Infrastructure: CenturyLink acquires Savvis for $2.5B