Cloudflare, Inc. (NET.US) 2025年第三季度业绩电话会
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会议摘要
Cloudflare reports record revenue growth, increased large customer base, and a shift to enterprise sales. CFO details strong financials, including a 15.3% operating margin and $75M free cash flow. The company anticipates $3B annualized revenue by 2026, emphasizes AI's role in internet evolution, and announces strategic leadership changes.
会议速览
Cloudflare's Q3 2025 Earnings Call Highlights Revenue Growth and Operational SuccessCloudflare reported a strong Q3 2025 with $562 million in revenue, a 30.7% year-over-year increase, driven by innovation and effective execution. The company saw a 23% rise in large customers, contributing significantly to revenue growth. Gross margin remained stable within the target range, and the company achieved an operating profit of $85.9 million, with strong free cash flow of $75 million. Sales productivity and closed rates improved, and new pipeline attainment exceeded expectations, showcasing the company's successful go-to-market transformation.
Leadership Transition & Strategic Wins at CloudflareAn executive is departing to lead another company, highlighting Cloudflare's role in nurturing industry leaders. The dialogue also outlines several significant business expansions and partnerships, emphasizing Cloudflare's strategic position in AI-driven web solutions and its competitive edge in offering comprehensive services to global enterprises.
Cloudflare's Expanding Role in Modernizing Government and Corporate Networks Amid AI-Driven Internet TransformationCloudflare has secured multiple contracts with a US cabinet-level agency, a Fortune 100 financial services company, a global industrial firm, and a web infrastructure platform, showcasing its expanding role in modernizing digital infrastructures. These partnerships highlight the company's strategic importance in securing networks, reducing costs, and adapting to AI-driven shifts in information consumption. As AI reshapes internet business models, Cloudflare positions itself as a key player in shaping future internet protocols and ensuring fair competition among businesses.
Strong Q3 Results Highlight Growth, Innovation, and Operational ExcellenceThe company reported robust Q3 revenue growth, driven by US and APAC markets, with a focus on innovation, operational efficiency, and expanding customer base. Notable increases in large customer revenue, operational margins, and free cash flow were highlighted, along with guidance for Q4 and FY 2025.
Q3 Financials Highlight Growth Strategy SuccessDiscussed strong Q3 results, revenue growth acceleration, and strategy execution. Anticipated reaching $3B ARR by Q4 2026, aiming for $5B by Q4 2028. RPO growth driven by enterprise sales, customer quality, and platform expansion.
Pool of Funds Impact and Sales Productivity Gains in Revenue GenerationDiscussion focused on the impact of pool of funds contracts on financial metrics, showing balanced consumption leading to strong performance. Sales productivity gains are highlighted, with expectations for continued improvement, indicating strategic vendor trust and future growth potential.
Oracle OCI Integration with Cloudflare: Advantages and Capacity PlanningThe dialogue highlights the strategic partnership between Cloudflare and Oracle, emphasizing the benefits of integrating Cloudflare's services within Oracle's OCI platform. It discusses how this integration provides Oracle customers with access to Cloudflare's advanced tools, enhancing security and network performance across multiple cloud environments. Additionally, it addresses concerns about capacity constraints in Cloudflare's network, reassuring stakeholders that current investments and architectural choices are sufficient to support future growth and revenue potential, while also touching on the flexibility of workload distribution across different computing resources.
Optimizing Resource Utilization and Competing with Hyperscalers in the Cloudflare NetworkThe dialogue discusses Cloudflare's approach to optimizing resource utilization across its global network, enabling it to serve customers efficiently while competing with hyperscalers in enterprise solutions, particularly in AI and machine learning inference workloads, highlighting the importance of cost-effectiveness and performance.
Exploring Net Dollar and AI Gatekeeper: Advancements in Agent Commerce and Media CollaborationThe dialogue delves into the development of Net Dollar, a currency designed for agent-to-agent commerce, addressing regulatory challenges and highlighting partnerships with financial services. It also discusses AI Gatekeeper, emphasizing successful collaborations with media companies to innovate business models, fostering growth in AI-driven commerce.
Navigating AI's Impact on Business Models and Ensuring Fair Participation in New ParadigmsDiscusses the transformative impact of AI on various industries, emphasizing the importance of securing AI queries and positioning at the network edge for latency-sensitive applications. Highlights Cloudflare's role in providing a global network for AI inference, ensuring fair access to new technologies, and addressing concerns about concentration risks in AI-native ecosystems.
Cloudflare's Quantum-Safe Security Upgrade: Preparing for the Future of CryptographyThe discussion focuses on Cloudflare's initiative to enhance security by adopting quantum-resistant cryptography. The approach emphasizes collaboration with industry leaders like Google to standardize future-proof protocols. This effort is seen as both a long-term strategy and a medium-term necessity, addressing the evolving challenges of quantum computing while ensuring widespread accessibility to advanced security measures.
Post-Quantum Cryptography and Egress Fee Elimination: Building a Better InternetThe dialogue emphasizes the importance of post-quantum cryptography to secure data against future quantum computing threats and the elimination of egress fees to enhance data mobility and cost-effectiveness, advocating for a multi-cloud environment and a more interconnected internet.
Ensuring Continuity After a Key Departure in a Tech CompanyA leader discusses the impact of a valued team member's departure, emphasizing the strong foundation left behind and the company's commitment to maintaining a customer-focused approach. The dialogue reassures stakeholders about the team's stability and future opportunities, highlighting the excitement of contributing to the future of internet business models.
Cloudflare's Transition to Enterprise Sales and SASI Market TrendsThe dialogue highlights Cloudflare's shift from a product-led growth model to enterprise sales, emphasizing the importance of the fourth quarter and pipeline buildup. It also discusses the SASI market's competitive landscape, noting strong product performance and the strategic focus on partnerships for enhanced sales. High-margin SASI products are deemed crucial for balancing growth and optimizing profitability.
要点回答
Q：What were the financial results for Cloudflare's Q3 2025?
A：Cloudflare's Q3 2025 financial results included revenue of $562 million, up 30.7% year over year, with 4,009 large customers contributing to a revenue increase. Gross margin remained within the long-term target range of 40% to 45%, an operating profit of $85.9 million and an operating margin of 15.3%, and strong free cash flow of $75 million during the quarter.
Q：What is the change in the number of large customers for Cloudflare from the previous year?
A：The number of large customers for Cloudflare increased by 23% year over year.
Q：What does the growth in net capacity of the sales force and sales productivity signify for Cloudflare?
A：The growth in net capacity of the sales force and sales productivity, which increased year over year for the seventh consecutive quarter, indicates that Cloudflare's go-to-market transformation is progressing successfully, with notable improvements in sales effectiveness and a stronger pipeline of potential deals.
Q：Who is departing from Cloudflare and what is his reason for leaving?
A：CJ Disci is departing from Cloudflare to become the CEO of a C of exception technology, a position he has aspired to since his first job in technology over 10 years ago. He aims to lead his own company and pursue new challenges as a public company CEO.
Q：What are some examples of customer wins that Cloudflare announced?
A：Cloudflare announced several customer wins, including a three-year, $22.8 million contract from a global 2000 digital media platform for application services and workers; a five-year, $34.3 million contract from a leading European technology company; a three-year, $15 million contract from a rapidly growing media platform; a two-year, $16.1 million contract from a Fortune 500 financial technology company; and a three-year, $12.4 million contract from a global pharmaceutical company, among others.
Q：How is AI expected to impact media companies according to Cloudflare?
A：Cloudflare views AI as a strategic partner for media companies, helping them adapt to the new business model of the internet shaped by AI. AI is seen as a significant shift in information consumption platforms, similar to the transition from browser-based information consumption to social media and mobile applications. It is expected to change how and where information is consumed and interacted with.
Q：How does Cloudflare plan to influence the future of the internet?
A：Cloudflare plans to influence the future of the internet by setting protocol and business rules for the new AI-driven commerce environment, ensuring that tools are available to businesses of all sizes to participate in this future, and by continuing to foster a competitive and fair environment for all companies.
Q：What were the revenue growth and regional performance highlights in the third quarter?
A：In the third quarter, total revenue increased 31% year over year to $562 million, with the US region accounting for 50% of revenue and growing 31% year over year. APAC revenue grew 43% year over year and represented 15% of total revenue.
Q：How did Cloudflare's customer metrics perform in the third quarter?
A：Cloudflare's customer metrics showed a record net addition of nearly 15,000 paying customers in the third quarter, with an increase of 23% year over year in the number of large customers. The revenue contribution from large customers increased to 73% of total revenue, and the dollar base net retention rate accelerated.
Q：How is Cloudflare guiding for the fourth quarter and full year 2025?
A：Cloudflare's guidance for the fourth quarter includes revenue in the range of $588.5 to $589.5 million, an expectation of operating income in the range of $83 to $84 million, and an effective tax rate of 20%. For the full year 2025, Cloudflare expects revenue to be in the range of $2142 million to $2143 million, with operating income in the range of $297 to $298 million and an effective tax rate of 20%.
Q：What were the operating income and net income figures for the third quarter?
A：The operating income for the third quarter was $85.9 million, an increase of 35% year over year. The net income for the quarter was $102.6 million, or diluted net income per share of 27 cents.
Q：What are the specific contributing factors behind the strong RPO growth?
A：The specific contributing factors behind the strong RPO growth include exceptional strength with large customer cohorts spending more than $100 million or $5 million, record growth among these large customers, and increased consumption among the large pool of fund customers, demonstrating the strategic importance of Cloudflare's platform.
Q：What are the positive signs for Cloudflare's strategic relationship with large customers?
A：The positive signs for Cloudflare's strategic relationship with large customers include the strong performance in the quarter and the balanced consumption of contracts across the pool of funds, with an indication that customers are trusting Cloudflare as a strategic vendor and making larger bets on the company.
Q：Is Cloudflare seeing productivity gains in its sales team and how does it plan to continue improving?
A：Yes, Cloudflare has seen productivity gains in its sales team and believes there is still room for these gains to continue trending higher in coming quarters. The company credits the caliber of new team members, their ability to sell larger deals, and the ramped rep capacity for contributing to these gains.
Q：What benefits does the integration with Oracle OCI bring to Cloudflare and Oracle customers?
A：The integration of Cloudflare with Oracle's Cloud Infrastructure (OCI) allows Cloudflare to be natively available within OCI, providing access to a large pool of customers and enabling Oracle's customers to use Cloudflare's world-class tools. This integration is seen as beneficial for both Cloudflare and Oracle, as it aligns with a multiscroll future where customers leverage multiple cloud providers and need consistent security and network performance.
Q：Is Cloudflare capacity constrained and how does it manage its network and investments?
A：Cloudflare is not capacity constrained due to its architectural design and philosophy of making capital expenditures (CAPEX) and network investments based on demand. Cloudflare acts as a giant scheduler that can move workloads to wherever capacity exists worldwide, allowing it to utilize free capacity for smaller customers while reserving capacity for larger ones. This approach enables Cloudflare to invest behind demand and optimize utilization rates, especially with strategies for CPUs and GPUs.
Q：How does Cloudflare's approach to utilizing CPU and GPU capacity differ from hyperscalers?
A：Unlike hyperscalers, whose primary business is to rent server capacity and maximize the cost recovery of the server, Cloudflare focuses on delivering work for customers and aims to achieve high utilization rates and system efficiency. Cloudflare has been able to run its CPU capacity at 70% to 80% utilization and is now applying similar strategies to GPUs, targeting substantial utilization increases.
Q：What is the competitive landscape for Cloudflare in the enterprise segment and how sticky are its customers?
A：The primary competition for Cloudflare in the enterprise segment continues to be the hyperscalers. However, once customers learn of a better way to manage inference workloads with Cloudflare, the company finds that it becomes very sticky and retains those customers over the long term.
Q：What has changed with the reception and market positioning of Cloudflare's products like Cloudflare Connect and AI Gatekeeper?
A：The reception and market positioning of Cloudflare's products like Cloudflare Connect and AI Gatekeeper have evolved with initial activity and contract wins from both publishers and AI companies. Recent changes mentioned include the heightened focus on AI Gatekeeper and the emergence of similar offerings in the market, prompting discussions about competition and Cloudflare's continued innovation.
Q：What is the net dollar project and why is it being initiated?
A：The net dollar project is being started to create a currency for gente commerce, specifically designed for commerce between agents. It aims to facilitate payments in a world where commerce is increasingly designed for AI interaction and is intended to be compatible with regulatory regimes globally.
Q：What are the unique aspects of the speaker's company's approach to the net dollar project?
A：The unique aspects of the speaker's company's approach include its commitment to support a diverse range of customers and businesses, large and small, across various platforms, as well as its belief in multi-cloud support and the facilitation of multiple payment methods and AI protocols.
Q：How does the speaker's company plan to support media companies in adapting to the future of commerce?
A：The speaker's company is developing a product called AI Gateway to help media companies transition to new business models suited for the future of commerce. This product is designed to improve the ability of media companies to engage with AI companies and has been well received, leading to praise and significant sign-ups.
Q：What is the speaker's company's stance on inclusivity and accessibility in the new AI-powered commerce platform?
A：The speaker's company is committed to ensuring that everyone, regardless of their size, has a fair shot at participating in the new commerce platform. They intend to make their tools available to all and have a history of doing so.
Q：What is the current level of AI native exposure in the speaker's business, and how is it managed?
A：AI native exposure in the speaker's business is currently relatively small but growing, and they do not see any current concentration risk. Security products are often the initial point of interest for AI native companies, with about 80% using the speaker's security solutions to prevent fraudulent queries. Efforts are being made to also introduce these companies to inference products.
Q：How does the speaker's company position itself in the face of ups and downs in the AI industry?
A：The speaker believes that despite fluctuations in the AI industry, there is a solid foundation for AI inference to run on devices like handsets and in the network. Cloudflare is well positioned to capitalize on this, as it is the only global network that can support this kind of workload, irrespective of the direction in which AI general developments go.
Q：What is Cloudflare's strategy for quantum-safe security, and how is it being implemented?
A：Cloudflare is upgrading its security to be quantum-safe to protect data in advance of quantum computing capabilities. The company is working with Google, contributing to the standardization of new protocols through the IETF and NIST, and has implemented post-quantum cryptography across its network to ensure that all customers, irrespective of their payments status, have access to the best security at no cost.
Q：What is the significance of preserving internet data for certain customers, and how is Cloudflare contributing to this?
A：Preserving internet data is significant for customers like a cabinet-level agency of the U.S. government because it is important for future reference and identity protection. Cloudflare is contributing by ensuring data preservation can be done quickly, without excessively burning battery life, and by partnering with organizations like Google to prove the feasibility and cost-effectiveness of such measures.
Q：What is Cloudflare's position on egress fees, and how does it benefit customers?
A：Cloudflare's position is that egress fees, which are costs charged by hyperscalers for data leaving their systems, should be eliminated. These fees are considered by Cloudflare to be an area of high leverage because bandwidth becomes inexpensive at scale and should be more cost-effective. Cloudflare believes in allowing customers to take their data wherever they need and is working to enable this through products like R, their object store, which allows customers to move and access their data across various clouds.
Q：How does Cloudflare ensure the continuity of its culture and mission after an executive departure?
A：After an executive departure, Cloudflare ensures continuity by focusing on the strength of its existing engineering and product leadership teams. It emphasizes that while the departure is bittersweet, the team has exceptional capabilities and has been infused with a customer-obsessed culture by executives like CJ. The company also plans to find a world-class replacement for the departing executive, continuing the legacy of emphasizing customer obsession within the organization.
Q：What is the impact of shifting from a product-led growth company to an enterprise company on Cloudflare's seasonal sales patterns?
A：Shifting to a more enterprise-focused company has influenced Cloudflare's seasonal sales patterns. The fourth quarter, traditionally stronger for Cloudflare, is now more crucial due to the transition towards enterprise sales. The company is optimistic about the quarter's performance, which is influenced not only by the sales pipeline but also by productivity indicators like net sales capacity and motion velocity.
Q：What updates can be shared about the performance and competitive position of Cloudflare's SaaS products?
A：Cloudflare's SaaS product is performing extremely well and the competitive landscape has not shown significant changes. The company has recognized that the majority of sales, similar to 95% observed in netscape-style, are through channels, leading to a focus on partner-led opportunities. Cloudflare is enhancing its partner-first strategy to increase the ease of doing business with partners, which is expected to be a significant growth driver. This strategy is bolstered by the high gross margins of SaaS products, which can balance out the business when paired with other offerings like workers, where gross margins are improving but not as optimized.
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