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Cloudflare Inc Earnings - Analysis & Highlights for Q4 2024
Overview
PositivesNegativesOutlook
- The company crossed 3 million active developers on its platform, including Cloudflare Workers and Workers AI, and saw record growth in its largest customers, those that spend over $1 million with Cloudflare per year.
- The company achieved revenue of $459.9 million, up 27% YoY.
- The company added a record number of new large customers, those that pay more than $100,000 per year, and now has 3,497 large customers, up 27% YoY.
- The company continues to aggressively hire in its sales organization with a focus on more stage-appropriate talent and onboarding enterprise account executives with proven track records. In Q4, nearly 80% of new sales hires were in the Enterprise segment. The absolute number of new enterprise AEs hired increased 84% YoY.
- The company's constraint is the capacity of its sales force, which will continue to be a concern for at least another quarter.
- There has been a lot of noise around DeepSeek, which came from a Chinese company, causing concern around national security issues and other things.
- Revenue for Q1 is expected to be in the range of $468 million to $469 million, representing an increase of 24% YoY.
Q&A Highlights from Cloudflare Inc Earnings Call Q4 2024
- Analyst asked about the impact of pool of fund deals on revenue in Q4 and the company's outlook for 2025.
- The impact of pool of fund deals on revenue in Q4 was around 9 percentage points, which is comparable to the previous quarter. The company is excited by this activity and sees it as an inflection point where things are lining up, with sales capacity, sales productivity, large deals with customers north of $1 million, and pool of funds deals. The company has put in place guardrails such as compensation and incentives to ensure success in turning these deals into revenue. The company is confident in its outlook for 2025, especially in the second half of the year, where it expects to recognize revenue from these contracts ratably.
- The impact of pool of fund deals on revenue in Q4 was around 9 percentage points, which is comparable to the previous quarter. The company is excited by this activity and sees it as an inflection point where things are lining up, with sales capacity, sales productivity, large deals with customers north of $1 million, and pool of funds deals. The company has put in place guardrails such as compensation and incentives to ensure success in turning these deals into revenue. The company is confident in its outlook for 2025, especially in the second half of the year, where it expects to recognize revenue from these contracts ratably.
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