Cloudflare Inc Q4 2024 Earnings Call Transcript

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

Question: Hamza Fodderwala - Morgan Stanley - Analyst : Great. Congrats on the strong finish to the year. Matthew, obviously, DeepSeek was a big story so far this year. I'm curious, as we see the rate of improvement and the efficiency of these models, whether you think more and more of these inference workloads start moving to the edge?

Question: Matthew Hedberg - RBC Capital Markets - Analyst : Great. My congrats as well. A lot of good stuff, good content today. I wanted to focus on the product side. CJ is well into his role. The product team is built out. Matthew, you just spent on talking about a ton of innovation around killer AI apps and inferencing. And there seems like there's a lot of really, really exciting developments there. If you could just step back and sort of reflect on what you're most excited about from a product innovation perspective this year? Are there things that we should be watching for inflection points this year?

Question: Matthew Hedberg - RBC Capital Markets - Analyst : Great examples, Matthew. And then maybe just a quick one for Thomas. You mentioned pool of funds in your prepared remarks. Is there any way that you could help us think about what the impact or quantify the impact of pool of fund deals in Q4? And when you think about its impact in 2025, how should we kind of think about guardrails for what seems like an increasing component of revenue?

Question: Adam Borg - Stifel - Analyst : Awesome. I just wanted to touch on the announcement this week on FedRAMP High. I was just really curious what this may mean from a network architecture perspective. And speaking with investors, does this mean anything around fragmenting your unique and homogeneous network? So long way of saying is, does FedRAMP High changed that? And then maybe if you could give an update on your government business more broadly, just both within the US and internationally. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 06, 2025 / 10:00PM, NET.N - Q4 2024 Cloudflare Inc Earnings Call

Question: Jonathan Ho - William Blair - Analyst : How do we think about the security performance this quarter? And were there any standout product categories that you're seeing? Congrats again on the strong quarter results.

Question: Fatima Boolani - Citigroup - Analyst : Matthew, I wanted to go back to your commentary and your very emboldened stance about the go-to-market organization just in terms of higher aggregate sales capacity and accelerating productivity momentum into this year. So the question for you is, this being year two with Mark at the helm of the whole organization and kind of doubling back to some of your comments in the prepared remarks, what changes might you be considering from a compensation or incentive perspective to maybe balance some of that really robust pool of funds momentum but also engender more of that mass market appeal for your growth [your racked], so namely the developer services and some of the Zero Trust services areas that could be a real tailwind for you?

Question: Gabriela Borges - Goldman Sachs - Analyst : Matthew, I wanted to ask you the go-to-market question in a slightly different way. I think about how consistently your market share for several of your products is higher at AI-native companies versus the rest, how do you navigate that conversation at the enterprise level where perhaps parts of the organization maybe pushing leading edge, but the rest of the organization may not be? And to what extent do you still get pushback on the depth of ecosystem on the Workers platform? And how do you address that?

Question: Trevor Walsh - JMP Securities - Analyst : Matthew, you've talked a lot about agents within the context of AI today, both in your remarks and kind of some of your responses to questions. Could you just expand maybe just giving a couple kind of what in your mind are the two differentiated pieces or product aspects of Workers that makes it well positioned for agents or why it's, I guess, easy to build those there on that part of the platform? And then you spoke additionally about great examples of more startup-type companies building agents to presumably go sell. But what about your larger customers kind of building agents internally, maybe for their own use? And is that something you're doing on Workers? Do you have any examples of that type of activity happening?

Question: Andrew Nowinski - Wells Fargo - Analyst : Congrats on very strong execution again. So I just want to maybe switch topics to your SASE solutions. I mean, there's no doubt that the network security market is transitioning to Zero Trust, but there are a number of vendors in the space. I'd imagine a lot of the bake-offs that you're in are very competitive. So I'm just trying to parse out maybe how much of your SASE wins are coming from the overall market inflecting higher with greenfield opportunities versus competitive displacements? And maybe if you can give some color on why you're winning there?