CloudFlare Exit: Google, Amazon or Public

After years of hard work pounding the pavement, CloudFlare is likely to exit  in 2017 by going public, according to Matthew Prince. Whether they go public in the next 2-4 years or get acquired, the exit will surely be right on the money. Knowing everything we know about CloudFlare, if they were to get acquired, who would be the ideal fit. The first thing that comes to mind is CloudFlare is very unique, and not your typical CDN or DDoS Mitigation company. They’re like the Amazon of the CDN industry and deliver content for  with 2M web properties under management. According to the latest Netcraft July 2015 Web Survey, there are 849M sites, which means CloudFlare is delivering hosting a little over 2% of all sites.

With a $100M revenue run rate in 2015, they have a decent revenue stream. Now if put together 2%+ of the worlds sites + $100M revenue stream + delivery hosting of friendly and unfriendly sites, we narrow the field to two parties – Google and Netflix. There is no way that CloudFlare can be valued based on revenue and revenue growth alone. CloudFlare is like Facebook and Twitter in the early days, the revenue wasn’t really there, but in the end they found it. Thus, CloudFlare has the same thing going for it that WhatsApp had “incredible reach” even if its only CDN customers. Let’s dive into the numbers.

  • CloudFlare processes 4M log lines per second, which equates to 10 trillion log lines per month = 400TB per day = 12+/-PB per month = 146PB per year
  • If CloudFlare stored all those logs, it would cost something around $54M ($375k/PB x 146PB)

That is an incredible amount of raw log files for any size company. They don’t store it for very long, since it would be cost prohibitive. With that being said, who could benefit from ingesting, correlating, and monetizing this kind of traffic – Google and Amazon. First, they’re two of the very few companies that could store and crunch this amount of data in a meaningful way. Next, Google or Amazon could probably monetize this kind of data in ways no one ever thought possible. Finally, Google and Amazon can go after CloudFlare customers and pitch them their cloud services. Whatever the exit is, its going to be a huge payday for Matthew Prince & Company.

Disclaimer “I’m not a Financial Analyst, and I’m not qualified to give financial advice, so don’t consider these ramblings for investment purposes”.

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10 thoughts on “CloudFlare Exit: Google, Amazon or Public”

    • Thanks for the comment. No CDN in their right mind would publicize their actual revenues, let alone audited revenues. There is no value in doing so.

      Matthew said they are on a run rate of $100M this year (link below). Previously, he stated 5% were paying customers, so that’s 200,000 paying customers. I know for a fact, some of their customers are pushing a lot of traffic. What is a lot of traffic? $20k/mo to $100k/mo

      I wouldn’t put it that way “only about 4k sites in the Top 100k”. How about if the average spend for each of those sites is $5k/mo. If we do the math its 4,000 x $5,000 = $20M/mo = $240M per year.

      http://www.bloomberg.com/news/articles/2015-03-17/website-services-provider-cloudflare-plans-ipo-in-2017-ceo-says

      • 5% of paying customer maybe but a paying customer starts at $20 per month. They will need to get their book audited for the IPO so we will have more details.

        Would be interesting to know how much traffic is the 95% free customer pushing through Cloudflare.

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