Cloudflare (NET) 7 Nov 242024 Q3 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to Cloudflare Q3 '24 Earnings Call. [Operator Instructions]

I would now like to turn the call over to our first speaker, Philip Winslow. Please go ahead.

Thanks for joining us today to discuss Cloudflare's financial results for the third quarter of 2024. call, Co-Founder, Matthew Thomas President the CEO; Co-Founder Seifert, on Zatlyn, Michelle and me we Prince, have and CFO. With COO; and announcement. everyone now, should access our By have earnings to financial This information Investor announcement website. as as our Relations may found on well be our supplemental

financial are our and and a and expectations forward-looking of during future products, our future and our product and performance including, anticipated and be financial today's statements beyond customers, vendors the our making to, is risks launches market those performance not control. regarding performance, limited our operating These we'll potential uncertainty, timing and reminder, discussion, As statements but conditions. and partners' future of which much are to future not macroeconomic subject and operations other of comments anticipated guarantees

them Our forward-looking this of actual of and not any those results call. apply from undertake statements in as no statements on to significantly representing may suggested should update today, after obligation projected in or these the future. differ as statements. you our We forward-looking views These our rely

see a filings as complete today's For be numbers we press risks other revenue, our an please today, future the than of and with operating release. will more on results the otherwise well condition, financial non-GAAP as could noted, all that SEC and uncertainties discussion in Unless impact earnings our basis. talk about adjusted

financial GAAP non-GAAP our of a measures are website. may You release reconciliation our to on included that find Investor Relations in earnings

also on and Summit be Markets the on that TMC few moments Capital the Global in reconciliation like be Fargo Annual would in a financial the to RBC TIMT supplemental information non-GAAP GAAP a Xth We you participating referenced XX X. Conference we to December inform periods, November Wells can historical For will ago. found

like I'd call over Matt. turn to to the Now

Phil. you, Thank

what I results in of revenue, free inflection critical flow believe for reaching point with operating go-to-market for quarter, is third our pleased cash organization. are while margin and our a also We the rebuild exceeding expectations our

of We we up us quarter, now those XX% record third per year-over-year. that million, customers, $XXX.X XXX achieved XX% $XXX,XXX large the X,XXX than up a and During year more revenue year-over-year. have new large pay customers, added

a from XX% quarter of the third contribution XX% We from the milestone, Cloudflare year. as customers consistent the new customers. achieved in paying also at XXX accounting large up XX%, Fortune quarter during remained last Revenue

quarter-over-quarter. Our retention points dollar-based X net XXX%, was down percentage

X% booked nearly changed shift our and more customer new of churn deals ACV low, on dollar-based our XX% funds short of While remains in pool term. downward ago, the which customers, quarter, to the of revenue up retention consistently recognition represented in with net has largest from put shape pressure year the a

business largest positive platform. the the Over are pool of as we however, customers term, long very broad funds a to they commitment for represent making our deals believe Cloudflare's overall

XX.X%. was XX% of in margin remaining profit gross representing XX% of an delivered operating an target same a our above the long-term of quarter year. XX.X%, operating million, from XX.X% and We $XX.X Our last up margin tad range to

remained our problems platform must-have, to advantage understand has have, of vendor, with and from every QX, peers. cash faster, isn't an multiple closely This continued us in allowed investing operating we nice quarters customers solve meaningful in in network efficiency productivity. as Moreover, spending strength something around and approach In for efficiency with $XX.X enhanced solution our relative at our from some IT of operational scrutinizing giving over to underscores It's a our and competitors. a ahead the us as a capable cost consistent not are expectations and to new. Free ROI. seeking flow our many Our emphasizing capabilities customers single benefit margin cautious we broad even prior of world. to the GPUs like commitment million, environment came more deal, point

slipped some in leadership in period out quarter that However, region. in deals transitional of new the what the larger under U.S. sales was particular, a during

and our are deals closed already active many pipeline with still quarter. this having in These

across force Although point changes cycles, That's like been hit has management of have and in being impacted showing of but stood He's go-to-market a third relentless world-class deal our rebuild fair to quarter the the stage the with discipline our Anderson appropriate numbers. the lived sales is what to may brought in that the and larger to organization, some our up cadence short-term out team. leader. me talent our team. we inflection Mark hired felt sales in performance go-to-market focus

with Our sales on to slugging sell percentage, the best higher levels shifting and Mark we around average, above there's is improve where productivity are focus the batting as has still XXXX. ability in significant enterprise bigger and not deals. of we but to sales now back we account saw quotas headroom on executives continued our believes to more

quarters. this As performance our up-leveling thing I'm watching. that the capacity said management biggest flat is ramped has we've the last through worked I for we've rep When X essentially an hit the been and team, inflection point,

of over shift Starting compared more with begin are who can in XX% it make more prior in in this of new enterprise XXXX, enterprise we will ramped with years. To expect sales the year number X average to real increase again, the a bring meaningfully towards hires nearly XX% on the but tangible, reps deals. sluggers segment

in made earlier recall As growth at solid capacity Day from a sales productivity. year, is momentum presentation you may productivity. product of ACV Investor in improvements Mark's this times We've

start to the of deliver transformation, these will out of side Now and we expect reaccelerate. momentum coming ACV quarters. the see initiatives other be force in to our we're I'm sales excited go-to-market our improving coming the capacity about to

I of something broken at shared years puck, about, always sliding I'm opportunity a would about I've there's to you, Michelle say, some an As or tended of think in worried shipping. picture last something the with points X X be like if Cloudflare, things: it or of that hockey XX that's as always stability triangle ice. etched It's improve. a sales, around in the to sort I

a get product, at no demanding whatever improving that customers to level be focus before That causes of buy stability. You it. acceptable, service on selling more longer so was good acceptable some you

and to products. you starts have in have to your demanding systems as ability the job my it is some live And better future. hamstring place customers to new level, stability, put and to processes ship in ensure At

worrying bring about on meaningfully ago. go-to-market So up-level I that we Mark Anderson ago, became started year going to demanding suffered the worry of today, clear and our even things incidents is were go-to-market, fixed broad we stability years focused We last About stability, we year. a stopped able products our it as world-class. X to more on and customers about I be Right and on queue, And team. that them. to with

start ahead is introduced was of got knows schedule, worrying to one gearing CJ to Officer. Engineering now how product Product about I I and our proven ship. up shipping of Desai, leaders to most engineering Chief who He the when So and

Stephanie our company So the leaders now challenges, worry that position strange I'm about new I for things Undoubtedly, find myself incredible term. look in we join other offers those to next team in Cloudflare's to and but heartened had have year. Anderson, iconic Desai, Cohen, build we'll technology given turn last in over all other find ambition, new of believed like to Mark the at be the CJ medium whom to the mission to having offers the CEOs of down incredible opportunity our organizations and

of the AI rapidly single optimization Workers to Workers They win turn for customer Key the platform application cherry a just this AI. "platform application able RX, for allow a customer is was for in growing the $XXX,XXX This run AI inference and Workers signed their strategic company as customer pay unlock Realizing manage now growing me dedicated for RX Xx viewed full company high model to also fees, value expanded contract A security. over funds of make AI. the egress Workers quickly rapidly a performance of quarter. infrastructure. and improvement unpredictable team improve need a wins per AI public beginning over a our inference, nearly let hyperscale A cost million concerns efficiency cloud. be tool Workers traditional moving for QX and Cloudflare all with that, with top. and benefits a $X.X for image security. to pool signed on to Cloudflare, cloud just platform. technology With for storage, and cost realize with paths the them this This is provider, the lock-in with contract a inference clouds contract million workloads and the were eliminate signing $X AI, to are of recognize in for some our their to and to Cloudflare vendor they their relationship With cloud to company their their spikes public X-year X.X-year

Cloudflare and customer working application This was With with operator of funds constellation FedRAMP product team large on million satellite around signed of of products. pool Workers their their is one this closely platform, new down full to A application performance on a rapidly contract our AI. X-year and by all developments X.Xx Internet growing services, our some global able a exciting RX customer $X increase suite TCO. Workers drive also for

to sovereignty XXX was more data Cloudflare routed resiliency, not industry, design A this capabilities. become of network through to signed sought resiliency a gain that and importance which hyperscaler. $X.X help able This term. strategic also long robust quickly better realize security, but the in their and could they dynamic million customer to Cloudflare, and X-year technology only Given most greater a company them a previously security customer looked and partner only performance traffic, this operationalize critical contract. their build performance centralized on were With Fortune

emerge enabling as to theme, inside key a to alongside providers. resiliency accounts incumbent continue beachhead large We see a enterprise establish Cloudflare

XXXX Firewall architecture offices. multi-vendor signing security than Magic a first-generation competitor Global to a provide expanded to with incumbent relationship of Cloudflare, a vendors manufacturing and with WAN gaps more visibility. company Magic lack secure along and on-premise Trust for seats led $X.X XX,XXX access and with Zero A contract X-year Trustees million in Zero their XXX Their other to

A application Cloudflare, million with many of solutions gateway, superior consolidating loss with a so In After things. data SASE large do than more remote Europe vendors, use evaluating security prevention, along technology point in their onto isolation, expanded the customer, Cloudflare workers a XXX unified solution and knight. for platform. technical in our demonstrated addition $X.X the browser and seats% Swiss is words multiple can security. company increasing signing XX,XXX access, X-year for a posture to relationship We their Cloudflare Army contract cases several of their

onto something consolidate our differentiator. also looking company Zero so words platform, We build security was one only the engineering-driven With to but of a enhance are not an modern, tech, In map we "We of customer, want most key road and our its effective secure. the innovative posture company. Trust the

Finally, candidates even than more else. system. were project, of red, officials half built Vice Both I where for We XXXX With to rely election of proud of congratulate they're political over cyberattacks take proud Cloudflare it his them lots Thomas. or victory the any presidential to the whether a And states I'm months Cloudflare cyberattacks, Cloudflare customers. for we without most targeted we to President election, thank Trump More wanted election defend that, aid call to away. to any team on U.S. of President free both the on by process. officials a but trust have stable is in making purple last were be states. will provide without states democratic who've Thomas, administering and Athenian and won't turn Harris also come our so-called elections, and part were functioning be and blue proud that on campaign. the of the several a able I'm There couldn't is to few and recognize of something hard-fought need. I'm reason they've I'll sure wanted Both incidents. meaningful service campaigns a the Cloudflare's from had whenever can you that key especially the over to I and it last part of why. that battleground that to been weeks them, of stories

on We're you, Thank us. execution and we joining transformation, the pleased improvement delivering for in as everyone progress thank during quarter sales further our with Matthew, productivity. double-digit year-over-year third to go-to-market you made our another

cycles U.S. sales some the However, and out during quarter slipped larger lengthened of quarter deals particular. in in the the

deals. active are these still Importantly,

in point our particular Similar bottomed. proven go-to-market sales a account earlier, Matthew key a last our in quarter, marked continue having onboarding records. As increase enterprise third focus mentioned hiring we sales organization the on capacity to inflection transformation quarter with with with net track executives to

of executives throughout enterprise the in expect number particularly accelerate to the We account case this and the U.S. and exiting is XXXX XXXX,

$XXX.X Turning Total for the to to third million. revenue year-over-year revenue. increased XX% quarter

The customers. of and year-over-year. with third the pool represented XX% From was fund year-over-year. in perspective, quarter our highlighted increased XX% contracts, ongoing U.S. prioritization and of Worker continued increased by of represented XX% strength by AI of and geographic revenue security high a XX% EMEA revenue momentum

year-over-year. APAC to and represented see uptick were We year-over-year XX% pleased growth XX% a in in APAC. of both revenue and again increased notable sequential

XX% X,XXX with of of quarter. paying customers, the an customer our and XXX large ended to Turning in about addition record metrics. an increase XXX,XXX In representing customers customers, XX% year-over-year. We year-over-year increase quarter quarter, we of a the large had third the

during friction net driven retention in representing in customer reminder, as the payload Pro flow slower decline decrease recognition X XXX% the of our price increase contracts, adoption cohort the but dollar-based last platform as well funds deferred expansion points a of business reduce product percentage net third cooler which, revenue, CRPO our sequentially. by can form deals quarter, DNR to across to was revenue cash in Our the plans as impact our increased portfolio and shape The of was larger anniversary-ing year. and and a

contribute for expect next of overall new several mentioned to a the we our growth quarters. last As quarter, revenue percentage year-over-year higher we customers

to gross Moving margin.

quarter year-over-year. margin a basis and decrease an points points XX.X%, increase basis sequentially of Third was representing XX gross XX of

Network CapEx third represented quarter. the XX% of revenue in

from we contract. to in provision to as us investment demand buying During in continue well inference, to as the saw behavior our to higher-end XXXX. and GPU including our the of gives notable AI a greater AI training This quarter, Workers in capacity we conversations as shift first multimillion AI our customer breadth increase confidence GPUs dollar rollout support

reach As expect we to in a the year the continue to of XXXX. CapEx again XX% XX% to quarter result, increase to network revenue for full fourth

expenses. Turning to operating

to efficiency X% of as operating remain operations. Third percentage quarter decreased revenue as committed driving to we greater expenses our productivity year-over-year XX% a across higher by and

expenses the $XXX.X consistent Our R&D in Sales to to XX% quarter of Research were the $XX the number percentage expenses and and last last to end XX% year-over-year, bringing a revenue and Sales million from expenses $XX.X General XX% percentage administrative same year. total quarter and X,XXX our revenue a for as the employees development headcount million the quarter. were of million in total of quarter. XX% about marketing decreased compared increased as quarter. remained for the same at were the of at year. quarter. marketing

period the decreased year. increase last year. million to as to in G&A an revenue of quarter percentage XX% last million, a same same $XX.X XX% $XX.X in XX% compared year-over-year income of from the was nearly Operating

Third XXX becoming efficient continued excellence points long-term given of These more operational quarter year-over-year. our operating more a focus margin was advantage. on that basis productive XX.X%, results highlight and competitive an is increase

sheet. Turning net income to and balance the

at RPO or sequentially the came quarter representing an cash $XX.X the the was of of XX% stewards year-over-year. $X.XXX net with RPO. period equivalents of XX% or increase per ended billion acting RPO, Remaining million year. $XX.X of $X.XX. capital, strong the XX% obligations, $X.X in securities. being to total X% net of Maintaining or commitment million flow last in share available-for-sale and Current in of cash, Our $XX.X was income our XX% performance quarter billion, to cash or third good we revenue was fiscally compared diluted responsible Free as investors' quarter and income same revenue and million in in

Moving to guidance and for XXXX. the fourth quarter year full

prudent with during inflection the XXXX in a pleased remain key quarter, our as are execution our go-to-market for we third We we and point reach our outlook in transformation.

million the of midpoint. of an to year-over-year range the revenue the quarter, For we at in $XXX million, representing expect $XXX XX% fourth increase

and operating the million $XX an of tax to expect income in of $XX rate we XX%. We effective range expect million,

approximately of share outstanding. per assuming income net $X.XX, million diluted XXX shares expect We

For year $X.XXX increase of billion expect in the XXXX, of an full the range we billion, year-over-year. representing to revenue $X.XXX XX%

in of for expect and year rate effective the income range full of operating XXXX. expect million, we an to $XXX $XXX XX% the We tax million for

We share period expect net that assuming XXX over per income approximately diluted outstanding. shares be to $X.XX, million

As cash certain quarter, manage last current tax our mentioned planning continue analyze we to future implement to strategies in liabilities. ability order to and tax

update expectations an non-GAAP tax quarter. effective this the fourth review planning the our tax outcome impact provide is will Cloudflare's to We rate were completed for once for if

XX% a beginning expect of Regardless outcome, we of effective non-GAAP XXXX. rate XX% in the tax to

remind operating would we offset that credit loss carryforwards to I the taxes net future. everyone attributes significant still in tax available However, have cash and

employees expect with approximately XXXX. our cash transform as help to to consistent for like teams questions. operational I'd be open that, for mission In guidance and to and prior We ensuring I'd committed secure to them please delivering thank like for our to dedication million flow $XXX for long-term driving significant as customers the our value. of Operator, our free remain year their poll businesses. million growth their it $XXX for excellence, And trusting to shareholder questions. closing, us modernize, to our full well up with

comes question [Operator Instructions] Matthew the with Hedberg And Markets. RBC line from your first of Capital

even the slip the what the business you And you I quantity color bit could crystal a of the perhaps past, that you. I'm about maybe of telling results. And the it guess into give you sort ball is maybe nature when crystal about deals? Matthew, U.S.-based environment? the ball the then you've on now, wondering, with I'll talked -- start external In Congrats Cloudflare. on more of look

not about or think talking question. about out worsen. you thank of that I we first see am don't anything Matt, all, macro concerns what I the that are shy talking about for Yes. there. see that's we

environment maybe real but see there. think an I We is we strength know I a there see improved. the ever continue seen fact, that number we companies strength executed In same, saw other haven't of actually and to in so slightly Europe. well

North from Asia has crystal the we've seen And slightly America in performed actually, to -- well. improved. ball, is leveled very off has everything

nothing have we which to running consistent last I'm internal past news They Europe, looking smaller in in they've productivity in team it's macro. be productivity a faster the make the of where of optimistic over the where productivity that's bump able QX. increased any around are and with that where the worked. to to year. running It sales think now team, region improve changes, is has I Same own had thing ourselves a X the AE North it Asia, XX% that seen us highest quarters. do saw our America. is but with year-over-year forward productivity to they our we're playbook It's so the for in this And those has had good over room sales execution. X XX% quarters, by most the sales actually And

QX, out see to now you ramped market, dramatic And the team, very macro of think and in If the of a we're I today that largest think allows places already we've it's the the think I our of consistency a pause that confidence. that through our And confidence. So invest of gotten to that. I'm starting optimistic see me than the don't improving. we're the anything, seeing us before. lot increase number that about gives that anything us of also macro macro with -- benefits we improvement go-to-market rolling reps, our I the about where And is what there's more gives in and

I a Maybe Thomas. you follow-up quick us towards the we benefits it would know impact? pool of it's pressuring I it. revenue. you there for any seems Got way certainly that, of through give of relative guess, model, that even deals as especially sort have one, funds or The kind of CRPO like a Is us can the maybe thing, but XXXX? how in it's just on the short-term think a NRR, long-term think guidepost a impact and

of Yes. We couple that gave a the on call.

So creep moving customers in XX%, products result. deals out in short the process is a to for and you which the will the quarter takes said, I cooler of now our share It term, as but up friction our think forward. the services funds rightfully consuming pressure of it good

X So expand for we to going moving the the think quarters, that to customers forward. the expansion and is of an we decrease to be all provides freedom our with of this have from have upside us next but X

line Your the next question from of Andrew Fargo. comes with Nowinski Wells

on a start on to your with a I Congrats question AI. want nice quarter.

with a So inference, from think that AI and of number a this I to AI to you conversations mentioned large customers AI shift you workers began training quarter deal. signed

give on any AI more landscape the some color on the AI? Workers hearing feedback and of Just you're

thanks Andy, and the is how people for we it. launched Yes, off AI that question. amazed getting taking platform I'm real from quickly value at are how really the many

better mentioned, we they to million X-year to they on manage companies move clouds. as were it so that much $X ROI to made what performance was over seeing, they hyperscale significantly us AI able a And signed public to inference with our at run they the their contract saw that What trying themselves platform. being the a able were to while investment get of leading also through one higher

that story a is again. out over playing That's and over

survey to story made is accelerating. support to the order what only we've they're to I that, higher themselves clouds out to we're GPU increase our that that of deliver number, we we all that, the trying of also think to able close customers to think that deploying we inference the is nearly a rates power in it's earth What manage of anyone about able this But GPUs higher deployed of X% world. the We're actually the because around to And the utilization when deliver the those of point, buying. done investments through Cloudflare to resources the just are getting addition utilization we where get we've inference resources, that capabilities in across, are network. in sort see not the range unique but actually to public they're X that on same are where at is utilization. things. is I that incredibly One, is XX% hyperscale have this work much

And pass in the process that savings our can effective of customers. we actually means that, on the that to

So their because with just manage they not save in the to only same containers, own machines can team and being having virtual GPU to these not that more maintain save are but they we deployed. resources also do

I'm level. is Workers And this models ways. sort global their powerful So AI most have we when shift a that, they actually to to people is inference at we're think -- which something that incredibly think excited they built them and tasks who to deploy customer-facing I do want have deliver in to starting be to the now I able of platform

just team as And That follow-up, guess helpful. built. was the ask I about then I really you've my to wanted

think industry I you've the hire done job the management the in building really nice of recent out and one including of teams CJ. best a

and direction wants with but quarter, us I'm a find if -- new in to give Cloudflare's seem new network of CJ your that you So to product any the use every development? a terms product to take wondering can color way you

stage is. next really Cloudflare bet future for caliber what the and vision the honored by on just the of of who career of and I'm their take to my have Michelle Yes. people chosen

enormous The down Mark then We're apply work the are me X.X on I the in was gives the remarkable. million Those but continue you of the of to that have top drive innovation getting Anderson, see And vision. term. the team, entire who our incredible Desai, of CJ orientation that remarkable that probably able of we're managers, we all And we contributors. pace Cohen, Cloudflare Cloudflare's of so it names And recognize. just that an Stephanie amount today, and will people that just and XXXX. caliber individual obviously But goes at betting also did is to of to top over all on over to an are session get applicants both be list across crop talent to hope cream people. long it

really CJ things. a number think different of brings I

is I of love One them his that enterprise. and on understanding really focus the

now in we was And very would out then so referenced team to that are my a customers. pressure very to is What deals building put prepared I remarks important that, sell able go-to-market our product as that sure they than to no those deliver is better in make to on delivered. team one and features the engineering there's team enterprise-class And at what CJ. sales who world could that our satisfy that large

there's And so The with we're because to is this him be honored to have think lot going be working exciting incredibly to team watch excited come. space I just on a board. And him. of development to

the with JPMorgan. from Murphy line next comes Mark question Our of

Andy think developers an capable the Matthew, it with my just CJ onto adding about of congrats, I believe, seems month, like I add is per agree I incredible that and platform. you're new I'll hire. XXX,XXX

you it. candidates or define viable there, for X there quick have stats X of I then crossed million you And how XXX Cloudflare? XX How you to you on you think many depending now a are over do think think The follow-up. I what out those many million time? is do million have developers hyperdrive, so there's have And attainable And million products. vectorized, you new are developers.

that application their is of I going make of mean any on are doesn't them That to mean we every to platform I And think sense want to viable Cloudflare. the support candidates Yes. make Cloudflare. needs. run for all

thing the we're disrupt If place absolutely do do building the that's that's right you're place you that. have that. a we're then legacy HANA, if application, to the if SAP HANA, you're run trying SAP But the company going to to to not

anywhere blank of cryptocurrency of in look some across in and that well north you is across look and slate, so rates start in of spaces if companies ecosystem, if we're to seeing well the able adoption where start-ups, are XX% across the cases, the XX% if north blockchain someone industry. top the And a with you ecosystem, sort of AI look you top those

it So palpable, taken around excitement what think platform much the has, off the is and we again, faster.

a lot a I everything that for our the a Cloudflare develop Cloudflare a the think think, same we lot things do our customer platform. And Cloudflare it is that turns been ourselves. other interest does. and way that's own secret of I want, in of is want at that And developers that zero of to driving, out If formula. that's lot excitement we build developers great

that. appreciate I

I the As so a actually fast now to been think AI every advancing the believe inference. X fast hard now pretty to starting and we're big they're looking inferencing up. to InfiniBand. doubling follow-up, advancing We're going be there are models have to which as and the a hear so using step of that have long-duration a multinodal comments the at they're is and months. It's couple is reasoning

into just maybe you I'm just so might as architecture curious see developing? that how demanding? so play more And your And models that much how these become

make distributed network. complicated hard figuring really think across tasks we're out to at I very that our how good

others some we could that network really an a possible. we level close higher often reliably, and the And we've across And than maybe to work task of was big take might different other might need meaning don't efficiently, anyone time. the Cloudflare, the we then of but can that in did machine much spread as that utilization. to machines user and far, what split the it, take we apart that there the get are ways been inference those It might than securely some in where cases hard to more is that data the the some task more core one we're very be how move as else. we earth the means might It maybe inference side be pull going that cases. so more even on we back. to are that then different out it more first run, cheaper answer oftentimes that where multiple that seeing And be faster, efficiently able do answer to than thing is be in that approaching built At engineering models a of

And much and much as with that the now with and the to so key what have as with done same play the that's squeeze running squeeze utilize with network CPUs, with entire ability to out we've storage, for us we're board been effectively that out network networking, memory, we and possible, efficiency utilization across GPUs. as and

want And even team to inference haven't hasn't the engineering going to found there is Cloudflare's continues we're we optimistic feel limits -- pretty so our you're hit do far, And have ways think that accelerate, been to -- I as that around. network. on that that place we AI not

next Thill comes question line Jefferies. with from Brent the of Your

we on the just Matthew, more see have hey, sales this pronounced you've some Was this of questions made terms side the in and the talk this pushouts? something on effect. There been this go-to-market is past quarters. pushouts, changes changes. about you're this quarter always the just you when just in commenting, natural Or seen is

that to Was push. magnitude what about seen curious the I that you've historically kind of quarters? think of equal kind past greater of or in was just

with I off finding had than going people finding we sure were we the also back our was little do to level. performance taken in think did to think this management expected. really to, think but And them held -- the work, saw great cut capacity and job and to I a especially continue in move snuff we hard team quarter and to the up a I they that care bit on as weren't that team. coming people started what make that different great be that think, and of, it And deeper that it some North America see we that was I initially at the Mark,

what change, those be for the think know of are tick get, right? big are. how plan, which that We up the we'll over assuming course the we the really and caliber continuing able XXXX. to capacity given in we that QX. to expect tick we is think the team. I we and tick up though, is And the people to continues be hire who point it, capacity. crossed that's see quality that really inflection builds. the know And are that, we're candidates up ramp The ramping, to going starting of on starts rates What that able to to And in QX the we know I we've just already They're the we're because

think future. something inflection in market, the think that the we regions, largest And which productivity the America. different. don't made point not-too-distant see I success we're gains to we was do there that other was again is that dramatically So is I in seen North bringing have we've that and our now what

Okay. for out the How the seeing seeing important shift this talking you've in coming Workers? platform are How And you we're you driver? called Are are and adoption this now adoption? guess big while at I for but to customers big you how this in would is Workers overall been a about this characterize you of add-on as things. as multiple a where you in

Yes.

have stacking we curves we different Cloudflare, think I -- think we're I another. S behind -- at always one that that

more are tail great have are we sort that. adopt curve. other And that of And best because then customers lot of often those. mature of in parts those we're from a products, those So and products of older their in that end the are deals markets. that of we S breed at win

hockey with and our stick we're think products, the off. -- zero in is seeing taking sort which right I of of lot we're our a where are growth, trust success

of say, not, think of there's imagined I But beginning optimizing I would S curve With of the that even we this Workers, steeper beginning lot is we're the revenue. most keep how for in I in the thinking growth. But -- and that much curve there. as we I S kind extract do before than the we are a are that's the

that much I what sign excited very entire they're adoption. deal around optimizing the for exactly of of actually still we're pool Workers how funds And Workers they think adopt going the delivers to a -- don't their it how much oftentimes want because people like what they I conversation know about to are developers we becomes is platform want because to use.

going entire the Workers then place. place is sure say, use They to this know want that. of I people that listen, oftentimes Workers part But in to overall make to a just I around then funds oftentimes, platform. we're want teams the oftentimes, building well up And excitement will And on of what's pool of their duration. use tools before driving new Workers. the customers is put their that is they're where contract that finding

we technical we on Otherwise, think ability to the do call have would. I people.

[Technical Difficulty]

Sorry, everyone, and the for confusion delay.

Okay.

next Eyal For with we Shaul Cowen. TD the question, have

on you. performance. Congrats very a Thank everybody. afternoon, Good solid

probably what that to question, there's lines? on rise. X-digit are X-digit What's the Is larger no of activities. are the customers be Matthew, along something beginning it your number We've assisting seen some transactions customers to talk the financing-related here? or you Thomas current security-related would the approach and about some For companies, companies, with these thinking

saying guess stab more more. you're at saying you of you could I it, a and can exactly what a can about? -- take Or period thinking time? I Thomas And that about you have Shaul, then out like longer financing payments over spread are about they might so -- what say

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Thomas financing Yes. but can We I -- don't more, we don't add today. mean, do customer any

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Horan with Our next question comes from the Oppenheimer. line of Tim

with capacity about you can Or the you revenue And us the on moving to bottom? think Can a out? still timing quick of you what follow-up. the billion And more can quarters in had the it's do is this, pooling. the maybe quarter $X sales a you that few related when that revenue there productivity obviously, of and Do accelerate again. update the have? talk of parts, around I lot guide, a for fourth the There's timing think limited growth target product XX% you you think

for you question. the Thank Yes.

translates before, of ACV [indiscernible] the the then contract a making, this lifetime our As we productivity recognized prospects, the we headcount as is in and pipeline metric. a into capacities revenue and and subscription revenue. said have is is product business progress for lagging they turns of over amount Sales sales very us, ACV of much model, are the into

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which patent. heard important inflection reached in remarks that you Matthew's growth But have as the is have indicator point is, the we leading we capacity with part think net been this key prepared sales now,

and So over moving parts from transition forward it in the several world the last conversion is productivity And successfully. been you this up. already which in Europe, highest up we where in our this activity has Revenue region already the ACV happened XX% sales APAC, of those translating has there was on, expect and and was quarters. see going X% up

bottomed from we think capacity there. have perspective, from out forward sales a we net move So and

you be longer containers a have on And side, And just $X the improved year? on guess products? than do in to availability GA? general I hit what then billion little I you expected. this, going the process the with know target took product think may past, can And the related when it

would that say have than we Yes. I expected. taken say -- I wouldn't don't I things longer think

iterate for and accelerate. by then GA slowed we I then to it's when or in largest use can production, quickly do that immediate that's to feedback and signal understand early don't millions power that market we a to do product always with down the and be quickly that has and products play is that having time confidence used time they that be think strategy right think that, of get the have will test that to them products people into use as of been around the of I them of and customers customers, that. as put the products. our customers possible, let part and of And as millions our has the process them, get tens

I think of we've it's process been that the kind always through. gone

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Securities. Our of comes Fishbein Truist next Joel the from with line question

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Yes.

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with William Our Ho comes of Jonathan the question line Blair. from next

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Yes.

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now turn further closing Prince back no the remarks. to There's I at call Matthew Matthew? over will question this time. for

we'll of continues I without make into We've work so We a really after of together you. sure cyberattacks had over to big the especially want been quarter. I'm deck that quarters. a where the of do I you all the period not team to the over building the try Thank these the going pulling of appreciate number say just time. that these calls Thank everyone just a when on to of to And went hard That back much, thank course being all of were that for hours here just week, is hands ramping difficulties. but technical to see and up off course and next you last you now. went the take of execute. we've election But got U.S. and personally for incredible all team that this stock it work part the most again quarter, goes it. not we mute an

joining. This all call. you Thank today's for concludes

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