Cloudflare Inc at RBC Capital Markets Global Technology, Internet, Media and Telecommunications Conference (Virtual) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : Yes, this is going to be good. This is going to be good. All right. So we're going to touch on a lot of subjects here today, so we've got a lot of ground to cover. But maybe, Matthew, I'll start with you. For those less familiar with Cloudflare, and I think most people are aware of what you guys are doing these days, can you just start out with just -- what was your mission statement when, really, the 3 of you, there was a third co-founder here, founded the company? What were those observations that you saw back in 2009, when you saw the Internet as this disruptor that it has obviously become? Walk us through some of the early days. And Michelle, certainly feel free to jump in there as well, with some of your earlier observations. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 16, 2021 / 5:30PM, NET.N - Cloudflare Inc at RBC Capital Markets Global Technology, Internet, Media and Telecommunications Conference (Virtual)

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : Michelle, what were -- yes, just, I guess, a similar question to you. When this whole Cloudflare journey started in '09, what were some of your observations there? And I mentioned we're going to get into sort of the future tense, but it's always helpful, I think, for those maybe less familiar with sort of the early days of Cloudflare.

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : So Michelle and Matthew, we've talked about this in the past, but I've known these guys, I think, since about 2014 or 2015. And I -- literally the first picture that I have on my phone, and I don't know if people can see that, but it's the architectural design that literally was in the S-1. These guys saw how the network is evolving. And so to see that vision back then to where it is today has certainly been no small feat. So I want to get into a lot of different topics here. But I think one of the questions that we often get is what is the secret sauce at the heart of it? What makes Cloudflare so unique relative to whether we're talking, obviously, hardware vendors, that's clear, but even CDN vendors, or even AWS, right? Because I think we tend to believe that you guys are well positioned as that next kind of edge cloud, call it, the fourth cloud. What is that secret sauce that you guys developed that makes you so unique?

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : I mean to think -- I think at your Analyst Day last year, you talked about 25% of the Internet effectively flowing through your pipe at some point in the not-too-distant future is a remarkable statement. Because I think, if you look back 5 years ago, 10 years ago, you said it's preposterous relative to some of the big hyperscalers out there. But you've built this differentiated network with high barriers to entry, right? You can't buy your way into a lot of these ISPs. You have to prove out the ROI. And I think that is what's really stood out to us. Now Michelle, I wanted to pivot to you for a second. One of the sort of -- our bull thesis, one of the biggest, I guess, I'd say, across my universe, when I think about real bull cases here is Workers, right? And it's been something that you and I and Matthew have talked about for a long time, and it feels like it's just starting to kick in, this kind of this idea of the fourth cloud or an edge cloud. I remember we were together in Toronto before the pandemic, and you gave a lot of really interesting use cases. Now this is going on probably 2 years ago about how Workers, in its infancy, were starting to see some really unique things happening. For those that are less familiar, can you describe what Workers is? And can you give us some unique -- why is it different? And what are people doing on it, all the way from like maybe some bespoke IoT apps, all the way up to big banks leveraging it for running their applications?

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : Even hyperscale architecture, where you're not as close to that last mile to the end user, is really the unique factor.

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : Powerful comments. And now with the addition of Storage with R2, you've got compute, you've got storage, one would assume that perhaps a database could be a logical extension to kind of further build out that edge network. So I think we're all excited to track the progress of Workers, and it just feels like one of these kind of open-ended opportunities. I could talk about Workers for an hour, but I'm going to pivot for a couple of maybe non-Cloudflare things. Michelle, you're an extremely successful business person. What is Cloudflare doing to kind of help and promote women in tech these days?

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : That's super insightful, and I think we can all appreciate those comments. The other thing I want to ask you about is you're a proud Canadian. And there's obviously a lot of really interesting tech coming out of Canada these days. Is there anything that you've observed from the Canadian tech scene that people down here in the States may not be aware of? I think we're all aware of Shopify and the success they've had. But maybe talk a little bit about the Canadian tech scene.

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : You've never heard of it? Does -- why don't you look it up?

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : Well, hopefully, this whole next wave of entrepreneurs will architect on Cloudflare and drive a lot of innovation in that regard as well.

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : I 100% agree. I'm going to ask you about blockchain here in a second. But before we get into that, I want to know something fun and interesting about Matthew. And I'm going to ask you, Michelle, so -- to get your thought in mind. One fun fact about me, for those of you probably may know me, I love Pearl Jam. I'll see -- I'll travel literally around the globe to see them. It's been sort of my thing from high school until now. And so I'm a fanatic. But Matthew, what is it about -- outside of Cloudflare, what is it that we don't know about you that's really, really interesting?

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : That's great. You -- and then I'm going to come back to you in a second, Michelle. One of the things that obviously is you can't get by without reading an article, and you hear about blockchain, you hear about cryptocurrency. Just sort of given you guys possess an edgy network that theoretically could have a lot of blockchain usage as well, what is your sort of thought on blockchain and cryptocurrencies? And I would imagine that this is an area that could be in and around Cloudflare's domain.

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : Well, we're going to run out of time here. We haven't really talked about security. But I think one of the things that I've been hearing recently is that this whole -- it's easier for cybercriminals now to be in business, right, because of crypto, right, and it's funding this massive industry. And it feels like, to the extent that that's either a driver of security spend, but certainly, additional consumption of Cloudflare seems like an interesting tangent. Michelle, actually, we're going to run out of time. What -- tell us something about yourself that we don't know. Outside of work, what is it that we need to know about, Michelle? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 16, 2021 / 5:30PM, NET.N - Cloudflare Inc at RBC Capital Markets Global Technology, Internet, Media and Telecommunications Conference (Virtual)

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : I love it. I love it. I'll take you up on that. The other thing, before we run out of time. Michelle, ESG is incredibly important. And I think Cloudflare has been doing a lot to promote that. I think your whole -- you've got something called Cloudflare Impact, where you believe a better Internet is not only a force for good, but also an engine for global sustainability. You've talked about being, I believe, carbon-neutral or removing all the historic carbon emission by 2025. Talk to us about why this is important as the Internet scales and, really, as I think you could be an example for other companies out there?

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : And the sustainability is key. So yes, the sundial is now moving across my screen here. So I think that's probably the signal that we need to wrap it up. I could keep going for hours and hours with you guys. I think the level of innovation around Cloudflare Birthday Week and all of these announcements that you guys -- it just -- it speaks to the level of innovation, which is just -- it's hard to find an equivalent out there. So innovative. So creative. And it really starts with -- it starts with the people, and I think you alluded to that early on. And the people are making a better Internet here and a lot of these are Cloudflare people. So from all of us at RBC, we've known you guys for a long time. We appreciate your time, as always. Hopefully, folks who have listened on this that maybe didn't know a lot about Cloudflare will learn something. Maybe if you know a lot about it, are invigorated with the future. We certainly remain encouraged with this long-term opportunity in front of you guys. So really, from all of us, thank you for your time and your participation. And for anybody who has any follow-up questions, feel free to reach out to me. I'd be happy to put you in contact with Jayson in IR. But really, thanks from all of us at RBC.