Last week, the public CDNs announced earnings, and the overall market reaction was brutal. Although some exceeded expectations, the gloomy economy was to blame.
External forces like inflation, fears of a recession, war, and supply chain issues impacted the industry. So let’s sort through the economic noise and list the key takeaways from last week’s earnings call. In doing so, are there predictors for the rest of 2022?
- CEO Joshua Bixby is stepping down. That’s unfortunate. He’s one of the visionaries in our industry. It will be interesting to see who is selected to fill his shoes. We predict it will be someone from Akamai, Microsoft, or AWS.
- In a shareholder letter dated Nov 3, 2021, Fastly announced two interesting goals: 1) $1B in revenue by 2025 and 2) Increasing the security business by ten times by 2025. The incoming CEO has a big job ahead of him.
- Q1 revenue was ~$100M. Can we expect Fastly to reach $400M+ revenue in 2022 and $500M+ in 2023? Hitting the half a billion mark is a significant milestone for any CDN.
- Signal Sciences generated 12% of revenue. Doing the math, $12M x 4 quarters equals $48M for the year. Before the SigSci acquisition, they were generating $28M annually.
- They reported that internet traffic is moderating, and as a result, they lowered expectations for the year.
- Dollar strengthening will impact 2022 revenue by $100M
- Q1 2022 revenue was $904M.
- 1% of revenue comes from Russian companies and delivering content into the country. As a result of war and termination of business relationships, that revenue will hit rock bottom.
- Security revenue run rate is $1B and growing at 20%. Kona (WAF) and Bot Manager are significant contributors to security revenue.
- Compute business is $400M and growing at 60%
- Guardicore revenue was $19M. In Q4 2021, Akamai predicted 2022 revenue of $30M – $35M. But if they perform, there is a chance of $100M this year. Wowzers.
- EdgeCast acquisition is closing in 30 – 60 days.
- Limelight and EdgeCast will begin working on the “bottom-up forecast” for 2022, and once completed, they will report it.
- Edgio (LLNW + EC) will generate $500M+ in annual revenue and deliver 200Tbps across 300+ PoPs.
- Synergies will be $50M.
- Q1 revenue is $212M, an increase of 54% YoY.
- Added 14k new paying customers, total customer count is 154k+.
- Added 121 large customers who spent $100k ARR; total customer count is 1,537.
- Twelve customers are paying $5M+ annually. Wowzers.
- Gross Margin for the quarter was 78.7%.
- Area 1 (acquisition) has enabled the Cloudflare sales team to win numerous new accounts.
- The zero-trust security (including email security) has enabled Cloudflare to compete with traditional security companies like Palo Alto and Zscaler.
- AWS told a gaming client to “just use Cloudflare” because they could not keep them online and protect them from attacks.
- R2 beta is coming soon, which will allow clients to save on AWS egress fees.