Thread by @InvestiAnalyst

Cloudflare $NET recently participated in JP Morgan's Tech conference.

The CEO @eastdakota used this opportunity to really highlight the TRUE identity of Cloudflare and discussed some of their profound competitive advantage.

Here are 8-important takeaways for Investors:

1/ $NET is purposely not a Usage-Based Business Model:

Only about 5% of $NET is usage-based bcos of the potential impact or harm to a customer if some emergency came up.

Over 90% of revenue is subscriptions which gives great revenue visibility & sustains revenue

I like this.

2/ $NET's business model & strategic focus (compared to $FSLY or $AKAM):

$NET has pivoting from becoming a "CDN provider that cares about speed of streaming event"

Into

More of a security company and network ecosystem that protects their customers entire network. This is key.

3/ Software Defined Network (SDN)

This is likely the biggest moat that many ignore! Well done @zatlyn & @eastdakota

$NET has an advanced SDN. It was built from Day-1 to make $NET extremely asset light requiring less servers & led to high margins

More on this in a future thread

4/ $NET benefits from Cybersecurity Tailwinds

It's not explicit below but due to $NET's Zero trust (ZT) security & their move into SASE networks, they stand to become one of the beneficiaries of the Biden security executive plan - Including attracting major enterprise customers.

5/ $NET's true identity:

They are a network company at heart - building security features to make a network reliable.

He noted, we shouldn't compare them to $FSLY (CDN), $CRWD (End-point protection) or $OKTA (identity access) due to their different approach. They're partners!

6/ Their biggest competitor-> $AMZN

$AMZN's Cloudfront is the CEO's biggest threat.

Why? - They have extensive resources than $NET could ever deploy.

However, most companies are using multi-cloud strategies and $NET is closer to developers - so this is how $NET stays relevant

7/ $NET's Edge Compute Platform:

Beyond cybersecurity, Workers is the most exciting product for investors.

The biggest value add of Edge besides speed, is that $NET can build organic products and ensure data regional compliance for businesses. There are even many more use-cases

8/ $NET's real advantage!

i) Low Unit Economics due to their SDN Tech -> leads to higher margins

ii) Brand leads to Low CAC: Due to their freemium model, they are closer to more developers and can use this advantage for testing new products

iii) Culture of Innovation machines!

9/Summary:

1⃣ Subscription based b-model has worked great
2⃣ $NET has pivoted from being CDN to a network cybersecurity provider
3⃣ SDN Technology architecture is a key moat behind everything
4⃣ Major beneficiary from Biden's security executive order due to their ZT security
..

10/ Summary (2):
5⃣ $NET's true identity is about creating partnerships.
6⃣ $AMZN is the biggest threat
7⃣ Edge Compute offers much more than speed
8⃣ $NET's moat is Low CAC, Asset light tech and the culture.

I'll be creating another thread to connect this! @InvestiAnalyst

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