In the race to go public, who will go first – Cloudflare, Fastly or StackPath?
The CDN industry has been in a dry spell for 11 years and counting. Akamai went public in 1999, nearly 20 years ago. Their shares were priced at $26 but ended up closing at $145 due to high demand. And that’s impressive considering they only generated $1.2M in revenue in the previous 9 months. Eight years later in 2007, Limelight Networks went public and raised $240M. No other pure-play CDN has gone public in the US since. Then here we are, there are three companies about to go public soon: Cloudflare, Fastly and StackPath.
Two of these companies generated ~$100M in annual revenue in 2017, according to various reports. And StackPath reached an annual revenue run rate of $200M in Feb 2018. Being the first CDN to IPO is important, not only because they will be the first pure-play to do so in 11+ years, but they are likely to get the most buzz on the street, thus setting the stage for the other two. And if there is a lot of buzz on the street, that could translate into super high valuations: billions. If it were in the hundreds of millions, that would be a tragedy.
Number of Employees
• Cloudflare: 700+
• Fastly: 400+
• StackPath: 300+
Of the three, Cloudflare has the most hype surrounding it, whether it’s good or bad. But as they have proved numerous times, sometimes bad hype is better than no hype at all in the CDN industry. What good is it if you have a great product and team but no one knows who you are, and there is plenty of that going around in the industry. Therefore, if the unicorn Cloudflare goes public first, it’s a strong possibility they will be worth billions.
How many billions? Who knows. Whatever it is, it will be a game changer for the entire industry. With a high valuation, even if its $4B, they can go on the hunt and buy a bunch of innovative startups in the areas of AI, security, etc. to fill in the gaps in their product line. It might even be a good idea to acquire Limelight Networks. Not only will they be able to double their staff and increase their annual revenue a few-fold, they can explode their infrastructure capacity in one fell swoop. There is room for two billion-dollar CDNs in the market, but not 3. But the chances of Cloudflare gobbling up Limelight are close to nil.
The same is true for Fastly and StackPath. If they go public first, and they happen to be valued in the billions, that will also be a game changer. Thereafter, they can go on the hunt and buy startups, not only to fill in the gap in their product line, but also buy revenue and features. If there is one thing we can learn from Akamai being a public company, the street doesn’t play games, if you don’t perform, they will punish you. The good news, the street will give you some time to prove your business model, but after that, its no-holds-barred. If I was a betting man, I would say Cloudflare will go first.