Cloudflare CFO Discusses Growth, AI Strategy, and Monetization Initiatives at GS Communacopia + Tech Conf. 2025

Key Takeaways

TL;DR: Cloudflare (NET) is seeing multi-vector, accel. growth—driven by strong perf. in $1mn+ and $5mn+ ACV cohorts, broad product uptake, and new high-value AI/enterprise use cases. Product innovation (notably Act 4 “pay to crawl” and Workers AI) is expanding TAM and deepening differentiation vs. hyperscalers. Mgmt. highlighted robust margin stability, strong op. leverage, and disciplined CapEx (12–14% of rev.). Pipeline for large, multi-yr deals and workflow AI is expanding. Act 4 is gaining traction w/ content creators, potentially shifting online content monetization. Key investor signals: strong enterprise momentum, sustainable margin profile, significant new rev. optionality (esp. AI/content), and improving sales productivity/capacity.

Growth Acceleration & Customer Segmentation

• Large Account Strength:
  • “Extraordinary strength in our largest customer cohort. Customers north of $1mn and $5mn ACV are growing fastest.”
  • Growth from both productivity and net sales capacity.
  • Uptake is broad—“across pretty much the complete product portfolio.”
• Enterprise & Non-Digital Native Penetration:
  • “Reemergence… of Act 1, mainly driven by… Act 4 or pay to crawl.”
  • Accelerating adoption among traditional enterprises, incl. non-digital-native/industrial customers building “agentic AI workflow on Cloudflare.”
• Vertical Successes:
  • “Significant traction in financial svc. vertical over last two Qs,” driven by product completeness and exec. hires (notably CJ).

Product Innovation & Competitive Moat

• Workers AI Platform:
  • “Basis of everything Cloudflare is built on”—now supports CPUs, GPUs, DBs, and 3mn+ devs, w/ growing non-digital native adoption.
  • “Latency and perf. differential” is attracting traditional industries.
• Speedboat Team & Large Deal Pipeline:
  • “Speedboat”—dedicated team targeting large cloud migration/inference use cases: “best way to win that $100mn customer is to help save $100mn” vs. hyperscaler spend, w/ “significant GP.”
  • Notable: $100mn commit deal in Q1, showing ability to win major app migration deals.
  • “Making good progress” but “not… a nine-figure deal every Q.”
• Global Network as Differentiator:
  • “True competitive moat… off-the-shelf HW and SW stack allows every product on every server/location… more distributed than anybody else,” key as low latency/perf. becomes critical—advantage vs. hyperscalers on proximity to end-users.
• CapEx & Infra Discipline:
  • CapEx remains “12–14% of rev.,” enabled by HW-agnostic arch. and efficient GPU/CPU utilization (“north of 80% CPU utilization” w/ “tens of %p room to improve”).
  • Outsourcing excess GPU capacity manages spikes w/o overcommitting.
• Margin Structure:
  • “Every $ in Zero Trust is at margins north of 90% for us, and comes at zero CapEx.”
  • GP margin stable “within 2–3%p over last nine yrs.”

Act 4 “Pay to Crawl” & Changing Internet Economics

• Rapid Market Adoption:
  • “All major publishers globally are signing up for it or have signed up.” Act 4 lets content creators monetize web crawling, shifting economics from “free” to paid by AI/LLM trainers.
• Discussions With Both Sides:
  • “In parallel… discussions w/ AI cos… They understand their ability to train depends on high value content.”
  • Expects industry-wide move to paid access for training data—creating new multi-B rev. opp.
  • “This biz model will have legs... a lot of momentum.”
• High TAM Potential:
  • “US digital ad vol. $300bn/yr... free web $30–$50bn in US… big opp.” Implications for content monetization and Cloudflare’s role as intermediary.

Op. Leverage, Margin, & Sales Productivity