2019 has turned out to be an epic year for the CDN industry. The top news, Cloudflare joins Akamai and Fastly as publicly-traded multi-billion dollar companies. In other news, some vendors are modernizing their tech stack, incorporating edge computing capabilities and AI. Here are the latest industry developments for Q4 starting with Cloudflare.
Cloudflare is now a +$5B publicly-traded company making it the most successful IPO in our industry in the last decade. With a fresh infusion of cash and high-value stock, we’re likely to see an acceleration in four areas: 1) new feature roll-outs 2) sales and marketing staff expansion 3) more sales resources dedicated to enterprise accounts and 4) acquisitions. As a private company, Cloudflare acquired four small startups but today they’re in a position to spend more on acquisitions. As to the type of candidates, our guess is AI and security startups.
CenturyLink CDN Edge Compute
CenturyLink CDN has embraced edge computing, beating out more nimble startups in making the transition. They join an exclusive club of edge computing vendors including Cloudflare, Fastly, Section, and StackPath.
Verizon Media (formerly VDMS and formerly EdgeCast) is officially a cloud security product innovator. To date, they have built a cloud-based WAF, an automated, software-defined DDoS protection service, and an AI-based threat management system using neural network technology – all from scratch.
Who is the next CDN to IPO?
There are three well-capitalized vendors left in our industry that could IPO if the stars align. StackPath and Instart have raised north of $100M and Yottaa raised $50M. All three generate <$100M in annual revenues according to industry pundits. StackPath is in the best position to IPO but at least 1.5 to 2 years away. They have one million customers so their revenue model would look similar to Cloudflare, in that their average enterprise customer spend (largest group of customers) is likely to be in the high-five to low six figures. We don’t see Instart or Yottaa going IPO anytime soon.
Surprisingly, the bot mitigation startup Shape Security is preparing for an IPO. They are currently valued at $1B. Although Shape Security is not a CDN, they compete with Akamai, Cloudflare, and other CDNs when it comes to security. Other bot mitigation startups include Distil Networks, which was acquired by Imperva, and PerimeterX. If Shape Security can IPO at $1B this year or next, that would be a significant accomplishment for a bot mitigation company and good news for PerimeterX.
CDNetworks, which was acquired by Shanghai-based Wangsu Technologies is the first CDN in China to support Kubernetes and containerized applications, which falls under edge computing. The parent Wangsu owns three CDNs: CDNetworks, ChinaNetCenter, and Quantil.
Akamai Acquires Exceda
Akamai has acquired its largest reseller in Brazil and Latin America, Exceda. Exceda sells Akamai exclusively, and it’s going to add $15M in revenue to Akamai’s coffers in 2020. Besides this transaction, it has been relatively quiet in the land of Akamai.
Instart Pivots to Cloud Security
Instart has pivoted its business model to cloud security. It’s been a long journey for the startup. They raised $140M in total, the last round was back in November 2017. Security is a great business model. Zscaler, Akamai, and Cloudflare are trading at lofty valuations due to their focus on security. Instart’s security products include WAF, bot mitigation, DDoS protection, and API security, all running over a global CDN. With a new executive team in place, we’re likely to see a culture focused on product-driven innovation in 2020. For starters, they have launched an application access product that replaces legacy VPN solutions, similar to what Akamai and Cloudflare offer.