Cloudflare, Inc. (NET) 2022 Q3 法說會逐字稿

Good day, everyone, and welcome to the Cloudflare Q3 2022 Earnings Call.

各位大家好，歡迎參加 Cloudflare 2022 年第三季財報電話會議。

At this time, I would like to hand the call over to Mr. Jayson Noland. Please go ahead, sir.

此刻，我想把電話交給 Jayson Noland 先生。先生，請開始。

Thank you for joining us to discuss Cloudflare's financial results for the third quarter 2022. With me on the call, we have Matthew Prince, Co-Founder and CEO; Michelle Zatlyn, Co-Founder, President and COO; and Thomas Seifert, CFO. By now, everyone should have access to our earnings announcement. This announcement, as well as our supplemental financial information, may be found on our Investor Relations website.

感謝各位加入我們，一同討論 Cloudflare 2022 年第三季的財務結果。與我一同出席電話會議的有共同創辦人兼執行長 Matthew Prince、共同創辦人兼總裁暨營運長 Michelle Zatlyn，以及財務長 Thomas Seifert。此時，各位應已可取得我們的財報公告。該公告以及我們的補充財務資訊，可於我們的投資人關係網站上查閱。

As a reminder, we'll be making forward-looking statements during today's discussion, including, but not limited to, our customers, vendors and partners operations and future financial performance; anticipated product launches and the timing and market potential of those products, the company's anticipated future revenue, financial performance, operating performance, non-GAAP gross margin, non-GAAP net income or loss, non-GAAP net income or loss per share, shares outstanding, non-GAAP operating expenses, free cash flow, non-GAAP tax expense, dollar-based net retention rate, paying customers and large customers. These statements and other comments are not guarantees of future performance, but rather are subject to risks and uncertainty, some of which are beyond our control, including, but not limited to, challenging general economic conditions, including foreign exchange, inflation, rising interest rates and other impacts of the ongoing COVID-19 pandemic and Russia-Ukraine conflict. Our actual results may differ significantly from those projected or suggested in any forward-looking statements.

提醒各位，在今天的討論中，我們將作出前瞻性陳述，包括但不限於：我們客戶、供應商與合作夥伴的營運及未來財務表現；預期產品發表以及該等產品的時程與市場潛力；公司預期未來營收、財務表現、營運表現、非 GAAP 毛利率、非 GAAP 淨利或淨損、非 GAAP 每股淨利或淨損、流通在外股數、非 GAAP 營運費用、自由現金流、非 GAAP 所得稅費用、以美元計價的淨留存率、付費客戶與大型客戶。這些陳述及其他評論並非對未來表現的保證，而是受到風險與不確定性影響，其中部分超出我們的控制範圍，包括但不限於：具挑戰性的整體經濟情勢（包含外匯、通膨、利率上升），以及持續中的 COVID-19 疫情與俄烏衝突所帶來的其他影響。我們的實際結果可能與任何前瞻性陳述所預測或暗示者有重大差異。

These forward-looking statements apply as of today, and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call. For a more complete discussion of the risks and uncertainties that could impact our future operating results and financial condition, please see our filings with the Securities and Exchange Commission, as well as in today's earnings press release.

這些前瞻性陳述以今日為準，您不應將其視為代表我們未來的觀點。我們不承擔在本次電話會議後更新這些陳述的任何義務。關於可能影響我們未來營運結果與財務狀況之風險與不確定性的更完整討論，請參閱我們向美國證券交易委員會提交的文件，以及今日的財報新聞稿。

Unless otherwise noted, all numbers we talk about today, other than revenue, will be on an adjusted non-GAAP basis. All current and prior period financials discussed are reflected under ASC 606. You may find a reconciliation of GAAP to non-GAAP financial measures in our earnings release on our Investor Relations website. For historical periods, a GAAP to non-GAAP reconciliation can be found in the supplemental financial information referenced a few moments ago.

除非另有說明，今天我們討論的所有數字（營收除外）將以調整後的非 GAAP 基礎呈現。所討論之本期與前期財務數據皆依 ASC 606 反映。您可在我們投資人關係網站上的財報新聞稿中，找到 GAAP 與非 GAAP 財務衡量指標的調節表。就歷史期間而言，GAAP 與非 GAAP 的調節可在稍早提及的補充財務資訊中查閱。

We would also like to inform you that we will be participating in the RBC Capital Markets Global Technology, Internet, Media and Telecommunications Conference on November 16 and the Credit Suisse 26th Annual Technology Conference on November 30. Now I'd like to turn the call over to Matthew.

我們也想告知各位，我們將於 11 月 16 日參加 RBC Capital Markets 全球科技、網際網路、媒體與電信研討會，並於 11 月 30 日參加 Credit Suisse 第 26 屆年度科技研討會。現在我想把電話交給 Matthew。

Thank you, Jayson. We had a strong quarter, even as the economic environment has continued to be challenging. We generated $254 million in revenue, up 47% year-over-year. Unsurprisingly, the slowdown in the economy we discussed on the last 2 earnings calls is starting to show up on our top line revenue numbers. Even with those economic headwinds, this quarter marked a milestone for us, crossing through $1 billion in annualized revenue. Only 6% of public software companies achieved this milestone, so we're proud to have crossed it, but nowhere close to finished.

謝謝你，Jayson。即使經濟環境持續充滿挑戰，我們本季仍表現強勁。我們創造了 2.54 億美元營收，年增 47%。不意外地，我們在前兩次財報電話會議中談到的經濟放緩，開始反映在我們的營收成長數字上。即便面臨這些經濟逆風，本季對我們而言仍是里程碑：年化營收突破 10 億美元。只有 6% 的上市軟體公司達成此里程碑，我們很自豪能跨越它，但距離完成目標仍差得遠。

We added 4,197 paying customers for a total of 156,000 paying customers. For large customers, those that pay us more than $100,000 per year, we added 159 new large customers for a total of 1,908, up 51% year-over-year. Large customers now account for 61% of revenue. And our large customers keep getting larger. The number of customers over $500,000 in annual spend grew 88% year-over-year, and customers over $1 million grew 63% year-over-year.

我們新增 4,197 名付費客戶，使付費客戶總數達到 156,000 名。就大型客戶（每年付費超過 10 萬美元者）而言，我們新增 159 名大型客戶，使大型客戶總數達到 1,908 名，年增 51%。大型客戶目前占營收的 61%。而且我們的大型客戶持續變得更大：年支出超過 50 萬美元的客戶數年增 88%，年支出超過 100 萬美元的客戶數年增 63%。

Even with inflation hitting some of our costs, our gross margin held strong at 78.1%, still above our target gross margin range of 75% to 77%. We achieved a record operating profit of $14.8 million, representing an operating margin of 5.8%. We are confident we can deliver meaningful operating margins over time, but continue to plan to hold them near breakeven as long as we're able to deliver exceptional revenue growth.

即使通膨推升了我們部分成本，我們的毛利率仍維持強勁，達 78.1%，仍高於我們 75% 至 77% 的目標毛利率區間。我們達成創紀錄的 1,480 萬美元營業利益，營業利益率為 5.8%。我們有信心隨時間推進能交出具意義的營業利益率，但只要我們仍能帶來卓越的營收成長，我們仍計畫將營業利益率維持在接近損益兩平。

Our dollar-based net retention in the quarter was 124%, flat year-over-year and down from 126% last quarter. While there is some noise in that number based on when contracts renew, we will continue to be dissatisfied until it's over 130%, and we believe that it's still very achievable as we add seats and storage-based products like Zero Trust and R2.

本季我們以美元計價的淨留存率為 124%，與去年同期持平，較上季的 126% 下滑。雖然該數字會因合約續約時點而有些雜訊，我們會持續不滿意，直到它回到 130% 以上；我們也相信，隨著我們增加席位（seats）以及推出如 Zero Trust 與 R2 等以儲存用量為基礎的產品，這仍非常可達成。

We are proud to have crossed through $1 billion in annualized revenue, but it has us thinking about our next milestones. While there are economic challenges for every business in the near term, we know that the opportunity Cloudflare has ahead for the long term is massive. Even as we achieve $1 billion, we have penetrated less than 1% of our identified market for products we already have available today.

我們很自豪年化營收突破 10 億美元，但這也讓我們思考下一個里程碑。雖然短期內每家企業都面臨經濟挑戰，我們知道 Cloudflare 長期面前的機會非常龐大。即使我們已達到 10 億美元，我們在目前已上市可提供的產品所對應之已識別市場中，滲透率仍不到 1%。

That's why we're confident. We're on the path to organically achieve $5 billion in annualized revenue over the next 5 years. Less than 1% of all public software companies reach the $5 billion milestone. And while today's global economy will continue to present headwinds in the quarters ahead, as we look further out, we are confident we have the products already in market to get us there.

因此我們充滿信心。我們正走在未來 5 年以有機成長達成年化營收 50 億美元的道路上。所有上市軟體公司中，達到 50 億美元里程碑的不到 1%。儘管當前全球經濟在未來幾季仍將帶來逆風，但從更長期來看，我們有信心，憑藉已在市場上的產品就能帶我們達成該目標。

Crossing the $1 billion milestone is also an opportunity to reflect on our team. It's a natural normal process to have different leaders for different stages in the company's life. Earlier this year, Chris Merritt, who runs our sales team, reached out to me and Michelle to say that, while he wasn't in a hurry, he thought it made sense for someone else to take us to the next milestone past $1 billion.

跨越 10 億美元里程碑，也是一個回顧我們團隊的機會。在公司生命週期的不同階段，由不同領導者帶領是自然且正常的過程。今年稍早，負責我們銷售團隊的 Chris Merritt 聯繫我和 Michelle 表示，雖然他不急著離開，但他認為在突破 10 億美元之後，由其他人帶領我們邁向下一個里程碑是合理的。

Chris himself is a unicorn. He started at Cloudflare almost 10 years ago as our first sales hire. We grew our revenue from 0 to $1 billion. I've tried to count the number of sales leaders who have accomplished that, and have come up with fewer than 10 across all the history of software. I wanted to give Chris the floor for a second to recognize him and all he's accomplished and helped us build at Cloudflare.

Chris 本人就是獨角獸。他在將近 10 年前加入 Cloudflare，成為我們第一位銷售人員。我們把營收從 0 成長到 10 億美元。我試著去數有多少銷售領導者曾完成這件事，縱觀整個軟體史，我算出來不到 10 位。我想讓 Chris 先講幾句，表彰他以及他在 Cloudflare 所完成的一切與協助我們打造的成果。

Thanks, Matthew. I remember meeting with Michelle all the way back in 2013 as Cloudflare was looking for someone to build its sales organization. It was very clear from that very first meeting that the opportunity Cloudflare had was just incredible.

謝謝你，Matthew。我還記得早在 2013 年，我與 Michelle 會面，當時 Cloudflare 正在尋找能建立其銷售組織的人選。從第一次會面開始就非常清楚，Cloudflare 所擁有的機會實在令人難以置信。

Fast forward to present day, and I'm so proud of the team we've built that brings Cloudflare's products to market to solve real problems for our customers. It is a truly world-class organization doing amazing work.

快轉到今天，我為我們打造的團隊感到非常自豪；這個團隊將 Cloudflare 的產品推向市場，為客戶解決真實的問題。這是一個真正世界級的組織，正在做著令人驚嘆的工作。

And as Matthew said, I had a terrific run, and I decided the $1 billion mark was the right time for me to transition out and bring in another leader for the next phase of Cloudflare's growth. I worked closely with the team to help identify the great leader we found to do that, and I'll continue to be involved to help with a smooth transition through at least the end of the year.

正如 Matthew 所說，我有一段非常精彩的旅程，而我決定在達到 10 億美元這個關卡時進行交棒，為 Cloudflare 下一階段的成長引入另一位領導者。我與團隊密切合作，協助辨識我們找到的那位優秀領導者；我也將持續參與，至少到今年年底，協助確保交接順利。

What a great 10-year journey it's been, and I'll always believe the Cloudflare orange. Back to you, Matthew.

這是一段很棒的 10 年旅程，而我將永遠相信 Cloudflare 的橘色。交回給你，Matthew。

Thanks, Chris. We couldn't have gotten here without you. As Chris said, he worked closely with us over the last several months to identify the right person to lead our sales team going forward. The person we found is terrific. He understands enterprise sales from his time as a senior leader at Oracle, can help accelerate our Zero Trust go-to-market based on his experience in the identity and access management space, [rocks] the desire to developers as we turn workers into a massive business and recently led sales for Twilio, another Software-as-a-Service company, which grew more than 50% organically compounded during his tenure to a $4 billion annualized run rate.

謝謝你，Chris。沒有你，我們不可能走到今天。正如 Chris 所說，過去幾個月他與我們密切合作，為未來領導我們銷售團隊找到合適的人選。我們找到的這位人選非常出色。他曾在 Oracle 擔任資深領導職務，深諳企業銷售；也能憑藉他在身分與存取管理領域的經驗，協助加速我們 Zero Trust 的市場推進；[rocks] 對開發者的吸引力，因為我們正把 workers 打造成一個龐大的業務；並且最近也領導 Twilio（另一家軟體即服務公司）的銷售，在他任內該公司以有機成長方式複合成長超過 50%，年化營收規模達到 40 億美元。

Marc Boroditsky is uniquely qualified to take us to our next milestone and beyond. I wanted to give him the floor to talk a bit about why he joined Cloudflare.

Marc Boroditsky 具備獨特的資格，能帶領我們邁向下一個里程碑並更上一層樓。我想把時間交給他，談談他為何加入 Cloudflare。

Thank you, Matthew. I've been on the team now for a little over a week, and I couldn't be more thrilled. I was very fortunate to attend Cloudflare's recent Customer Day in San Francisco. In all my years at similar events, I've never seen more engaged customers of all types who are eager to do more with us as a strategic partner.

謝謝你，Matthew。我加入團隊至今大約一週多一點，我感到無比興奮。我很幸運能參加 Cloudflare 最近在舊金山舉辦的 Customer Day。在我多年參加類似活動的經驗中，我從未見過如此投入、各種類型的客戶，他們都渴望與我們作為策略夥伴進一步合作、做得更多。

Let me tell you what's especially compelling about Cloudflare, it's the breadth of solutions that are a part of our platform today. We don't need to go out and buy companies. We don't need to invent new technology. I see a clear path to $5 billion in 5 years simply by selling what we already have in the bag to the customers that already know us. That's an incredible opportunity and what compelled me to join the Cloudflare team. Back to you, Matthew.

讓我告訴你 Cloudflare 特別引人注目的地方：就是我們平台如今所涵蓋解決方案的廣度。我們不需要出去收購公司，也不需要發明新技術。我清楚看到一條在 5 年內達到 50 億美元的路徑——只要把我們已經「袋子裡」現成的產品，賣給那些已經認識我們的客戶即可。這是一個令人難以置信的機會，也是促使我加入 Cloudflare 團隊的原因。交還給你，Matthew。

Thanks, Marc. We are excited for you to build on the great team Chris has put in place and further mature our go-to-market efforts as we sell more products to larger and larger customers. With that set up, let me tell you about some customer wins last quarter.

謝謝你，Marc。我們很期待你在 Chris 已經建立的優秀團隊基礎上繼續發揮，並在我們向越來越大型的客戶銷售更多產品的同時，進一步成熟我們的 go-to-market（市場進入）工作。有了這個鋪陳，讓我跟大家分享上一季的一些客戶勝利。

A Fortune 500 technology financial services company signed a 1-year $2.8 million contract. They faced an increasing number of sophisticated cyber attacks. They compared us against nearly all of our competitors. While the competitors tried to offer lower pricing, it didn't matter. This company was so convinced that we were the clear technical leader that they paid a premium for our services. They see the value of our integrated approach, and are now evaluating us to be their Zero Trust provider as well.

一家《財富》500 大的科技金融服務公司簽下了一份為期 1 年、金額 280 萬美元的合約。他們面臨日益增加且更為精密的網路攻擊。他們幾乎把我們與所有競爭對手都做了比較。雖然競爭對手試圖提供更低的價格，但那並不重要。這家公司深信我們是明確的技術領導者，因此願意為我們的服務支付溢價。他們看見我們整合式方法的價值，現在也正在評估由我們擔任他們的 Zero Trust（零信任）供應商。

A Fortune 500 pharmaceutical company expanded their relationship with Cloudflare. They signed an additional $915,000 3-year deal, bringing their total contract over that period with us to $7.4 million. They're adopting our data localization suite, powered by Cloudflare Workers. This product allows customers to process data locally in the countries where their customers reside. These features are unique in the industry to Cloudflare and increasingly important to highly regulated customers like this one.

一家《財富》500 大的製藥公司擴大了與 Cloudflare 的合作關係。他們另外簽下了一份為期 3 年、金額 91.5 萬美元的合約，使其在該期間與我們的合約總額達到 740 萬美元。他們正在採用我們由 Cloudflare Workers 驅動的資料在地化（data localization）套件。這項產品讓客戶能在其客戶所在的國家/地區就地處理資料。這些功能在業界是 Cloudflare 獨有的，且對於像這家客戶這樣高度受監管的客戶而言，重要性正日益提升。

A Fortune 500 European telecom signed a 3-year $1.2 million deal. The customer was moving more of their security services from on-premise hardware to the cloud. While they evaluated our security services as best of breed, the show stopper for them again was our data localization suite. None of the other vendors they considered, including the hyperscale public cloud, had an equivalent solution. We're seeing more and more EU companies adopting Cloudflare in order to meet the increasing data localization and data residency requirements becoming law in the region.

一家《財富》500 大的歐洲電信公司簽下了一份為期 3 年、金額 120 萬美元的合約。該客戶正將更多安全服務從地端硬體移轉到雲端。雖然他們評估我們的安全服務屬於同級最佳（best of breed），但真正讓他們拍板的關鍵仍是我們的資料在地化套件。他們考量的其他供應商（包含超大規模公有雲）都沒有等同的解決方案。我們看到越來越多歐盟企業採用 Cloudflare，以符合該地區逐步入法的資料在地化與資料駐留（data residency）要求。

A Fortune 500 retailer expanded their relationship with Cloudflare, signing a $442,000 deal and bringing their annual commitment to nearly $1 million. They are using Workers to build highly scalable functions across their e-commerce application. They're also using Cloudflare's network to route traffic between different hyperscale public cloud vendors they use. Seeing multi-cloud is a priority for them, and Cloudflare is the only vendor they see it being able to help them achieve their vision. They started experiments with R2, our object store, and D1 our first database. While their spend is still modest, we think there's an opportunity, and they've expressed interest in making us one of their strategic vendors going forward.

一家《財富》500 大的零售商擴大了與 Cloudflare 的合作，簽下 44.2 萬美元的合約，並將其年度承諾金額提高到接近 100 萬美元。他們使用 Workers 在其電商應用上建置高度可擴展的功能。他們也使用 Cloudflare 的網路，在其採用的不同超大規模公有雲供應商之間進行流量路由。多雲（multi-cloud）是他們的優先事項，而 Cloudflare 是他們認為唯一能協助實現其願景的供應商。他們開始試用我們的物件儲存 R2，以及我們第一個資料庫 D1。雖然目前花費仍不高，但我們認為存在機會，而且他們也表達了希望未來把我們列為策略供應商之一的意願。

A Fortune 500 life sciences conglomerate signed a $745,000 3-year deal. They use a range of our products, including Magic Transit, to better protect their on-premise data centers. They're handing traffic directly to our network, completely replacing their ISP. We've signed an MSA with them, and believe there's a significant opportunity to expand across their other 20 subsidiaries.

一家《財富》500 大的生命科學集團簽下了一份為期 3 年、金額 74.5 萬美元的合約。他們使用我們一系列產品（包含 Magic Transit），以更好地保護其地端資料中心。他們將流量直接交由我們的網路承接，完全取代了他們的 ISP。我們已與他們簽署 MSA（主服務協議），並相信在其另外 20 家子公司中仍有顯著的擴張機會。

A Fortune 500 apparel company signed a 3-year $1.1 million deal. They bought our full set of security services, as well as Cloudflare Workers. A fun fact is that my cofounder, Michelle, had an opportunity to be this company's CEO's chief of staff out of business school. Instead, she chose to start Cloudflare, and now they're a customer.

一家《財富》500 大的服飾公司簽下了一份為期 3 年、金額 110 萬美元的合約。他們購買了我們全套的安全服務，以及 Cloudflare Workers。有個有趣的小故事：我的共同創辦人 Michelle 當年剛從商學院畢業時，曾有機會擔任這家公司 CEO 的幕僚長；但她選擇創辦 Cloudflare，而現在他們成了我們的客戶。

A Fortune 500 consumer product company expanded their relationship with us, signing an additional $292,000 1-year deal. That brings their total spend with us to nearly $1 million per year. They are using our Zero Trust product, and we worked with a large channel partner to win and service them as a customer.

一家《財富》500 大的消費品公司擴大了與我們的合作，另外簽下了一份為期 1 年、金額 29.2 萬美元的合約，使其每年在我們這裡的總支出接近 100 萬美元。他們正在使用我們的 Zero Trust 產品，我們也與一家大型通路夥伴合作，成功贏得並服務這位客戶。

A Fortune 500 financial services company signed a $236,000 1-year deal. We believe this will be another example of how we can land with one product, sign a general MSA and then expand over time.

一家《財富》500 大的金融服務公司簽下了一份為期 1 年、金額 23.6 萬美元的合約。我們相信這將是另一個例子，展現我們如何先以單一產品切入（land），簽署通用的 MSA，然後隨時間推進逐步擴張（expand）。

If you've been counting, that's a lot of Fortune 500 companies, and we're actually up to 32% of the Fortune 500 now using us. I see a clear path to nearly every Fortune 500 company using us for something in the next 5 years. And a big part of Marc and the team's job then is to expand those relationships and then get them to use us for everything.

如果你一直在算，這裡面有很多《財富》500 大公司；而實際上，目前《財富》500 大中已有 32% 在使用我們的服務。我清楚看到一條路徑：在未來 5 年內，幾乎每一家《財富》500 大公司都會在某些方面使用我們。而 Marc 與團隊屆時很重要的一部分工作，就是擴大這些合作關係，並讓他們在所有事情上都使用我們。

We aim to be the network for every Fortune 500 company. But not just the Fortune 500. In Q3, a large building materials manufacturer in Europe signed a $1.2 million 31-month expansion deal. They have broadly adopted our Zero Trust products across their 25,000 employees. They have been hit by a ransomware attack earlier this year that their existing e-mail security vendor failed to catch. We included our Area 1 Email Security product as part of their Zero Trust solution, something no other Zero Trust vendor provides as a native integration.

我們的目標是成為每一家《財富》500 大公司的網路。但不僅僅是《財富》500 大。在第三季，歐洲一家大型建材製造商簽下了一份為期 31 個月、金額 120 萬美元的擴約合約。他們已在 25,000 名員工中廣泛採用我們的 Zero Trust 產品。他們今年稍早遭遇一次勒索軟體攻擊，而其既有的電子郵件安全供應商未能攔截。我們將 Area 1 Email Security（電子郵件安全）產品納入其 Zero Trust 解決方案的一部分，這是其他任何 Zero Trust 供應商都無法提供的原生整合。

During our POC, we cut phishing messages that our other existing vendors miss. They went from POC to live in 2 days, and signed a deal a week later. They've been a small customer previously, but turned to us for an integrated solution the minute they had another network security need. And we delivered.

在我們的 POC（概念驗證）期間，我們攔截了其他既有供應商漏掉的網路釣魚訊息。他們從 POC 到正式上線只花了 2 天，並在一週後簽下合約。他們先前是小型客戶，但一旦出現新的網路安全需求，就立刻轉向我們尋求整合式解決方案——而我們做到了。

Finally, a large software monitoring company signed a $3.6 million expansion deal, bringing their annual spend to more than $5 million. They're a big user of Cloudflare Workers, processing 7 trillion requests just in September. They are migrating more and more of their applications from AWS to Cloudflare Workers for our performance and easy scalability.

最後，一家大型軟體監控公司簽下了一份金額 360 萬美元的擴約合約，使其年度支出提高到超過 500 萬美元。他們是 Cloudflare Workers 的重度使用者，僅在 9 月就處理了 7 兆次請求。他們正因為我們的效能與易於擴展性，將越來越多應用從 AWS 遷移到 Cloudflare Workers。

In a few weeks, we have our upcoming Developer Innovation Week, where we'll be announcing some incredible new Cloudflare Workers milestones, but I couldn't resist sharing a few here now. As of the end of Q3, we're up to 2.2 million unique applications running on Cloudflare Workers. Cloudflare Pages, which is a product within the Cloudflare Workers portfolio, is up to 367,000 projects and has doubled since May.

再過幾週，我們即將舉辦 Developer Innovation Week，屆時將宣布一些令人驚豔的 Cloudflare Workers 里程碑，但我忍不住先在這裡分享幾項。截至第三季末，在 Cloudflare Workers 上運行的獨特應用已達 220 萬個。Cloudflare Pages（屬於 Cloudflare Workers 產品組合中的一項產品）已達 367,000 個專案，且自 5 月以來已翻倍。

In September, we announced that R2 is now generally available, along with our other generally available storage products, Workers KV and Workers Durable Objects. We are now scoring over a petabyte of customer data. And before the end of the quarter, D1, our first database product, will be available in open beta.

在 9 月，我們宣布 R2 現已正式全面可用（generally available），同時我們其他已全面可用的儲存產品 Workers KV 與 Workers Durable Objects 也一併推出。我們目前正在儲存超過 1PB（拍位元組）的客戶資料。而在本季結束前，D1（我們第一個資料庫產品）將以公開 Beta 形式提供。

Increasingly, we're hearing about more and more start-up companies that are skipping the hyperscale public cloud and building exclusively on Workers. Reflecting that trend in September, we announced the Workers Launchpad Funding Program, in which 26 of the top venture capitalists collectively earmarked up to $1.25 billion in funding for innovative new start-ups building on Cloudflare Workers. The funding program came about because VCs kept coming to us to do due diligence on companies they were considering investing in when more and more of their tech stacks were powered exclusively by Cloudflare Workers. So from the Fortune 500 to the hottest new start-ups, increasingly, the future seems powered by Cloudflare Workers.

我們越來越常聽到更多新創公司跳過超大規模公有雲，改為完全建立在 Workers 之上。反映這個趨勢，我們在 9 月宣布了 Workers Launchpad Funding Program（Workers 發射台資助計畫）：由 26 位頂尖創投共同承諾，為在 Cloudflare Workers 上打造創新新創公司的團隊，預留最高達 12.5 億美元的資金。這個資助計畫之所以出現，是因為當越來越多被評估投資的公司其技術堆疊完全由 Cloudflare Workers 驅動時，創投不斷來找我們做盡職調查（due diligence）。因此，從《財富》500 大到最火熱的新創，未來似乎正越來越由 Cloudflare Workers 驅動。

I wanted to close by reminding everyone in the United States that we have an election next Tuesday. That makes this a time of heightened cybersecurity concerns for the country. Through Cloudflare's Athenian Project, we provide our services for free to any state and local officials who help oversee elections. Today, election authorities in more than half of U.S. states and most of the so-called battleground states are participants in the Athenian Project. We are proud that we helped cyberattacks not be part of the story in the 2020 elections, and we have had our team standing by, and they'll be available 24/7 over the next week to help ensure cyberattacks won't be part of the story for 2022 either.

最後我想提醒美國的各位：下週二將舉行選舉。這使得此刻成為全國網路安全疑慮升高的時期。透過 Cloudflare 的 Athenian Project（雅典計畫），我們免費向任何協助監督選舉的州與地方官員提供服務。今天，美國超過一半州的選務機關，以及大多數所謂的搖擺州，都是 Athenian Project 的參與者。我們很自豪在 2020 年選舉中協助讓網路攻擊不成為新聞焦點；而我們的團隊也已待命，並將在接下來一週提供 24/7 支援，以協助確保 2022 年也同樣不會讓網路攻擊成為焦點。

So we'll do the thing we're best at. You, don't forget to vote. With that, I'll turn it over to Thomas. Thomas, take it away.

所以我們會做我們最擅長的事。你也別忘了去投票。接下來我把時間交給 Thomas。Thomas，交給你了。

Thank you, Matthew, and thank you to everyone for joining us. As Matthew mentioned, we achieved an important milestone in the third quarter, surpassing $1 billion revenue run rate for the first time. This milestone is a testament to our enormous market opportunity, our ability to land and expand large enterprise customers and the durability of our subscription-based revenue model.

謝謝你，Matthew，也謝謝各位今天加入我們。如 Matthew 所提到的，我們在第三季達成了一個重要里程碑：首次突破 10 億美元的營收年化運行率（revenue run rate）。這個里程碑證明了我們龐大的市場機會、我們切入並擴張大型企業客戶的能力，以及我們以訂閱為基礎的營收模式的韌性。

Turning to revenue for the quarter. Total revenue for the third quarter increased 47% year-over-year to $253.9 million. Area 1, the e-mail security company we acquired in April, again contributed less than 1% of revenue this quarter. While we are seeing foreign exchange headwinds and global economic uncertainty impact the business, we continue that traction upmarket and believe we are very well positioned in this environment.

接著談本季營收。第三季總營收年增 47%，達 2.539 億美元。我們於 4 月收購的電子郵件安全公司 Area 1，本季再次貢獻不到 1% 的營收。儘管我們看到外匯逆風與全球經濟不確定性對業務造成影響，我們仍持續在中大型客戶市場（upmarket）取得進展，並相信在此環境下我們具備非常有利的定位。

From a geographic perspective, the U.S. represented 53% of revenue, and increased 49% year-over-year. EMEA represented 27% of revenue, and increased 51% year-over-year. APAC represented 13% of revenue, and increased 38% year-over-year. The APAC performance has improved meaningfully from last year, but we are seeing more price sensitivity and buying decision delays in the APAC region.

從地理區域來看，美國占營收 53%，年增 49%。EMEA 占營收 27%，年增 51%。APAC 占營收 13%，年增 38%。APAC 的表現相較去年有顯著改善，但我們也看到亞太地區對價格更敏感，且採購決策出現延遲。

Turning to our customer metrics. In the third quarter, we had 156,000 paying customers, representing an increase of 18% year-over-year. Similar to last quarter, we saw a higher level of churn in our pay-as-you-go customer base, primarily due to more customers shifting down to our free customer tier. We think this as a function of a more challenging macro environment. However, we are pleased to see these customers to remain on our platform.

接著談客戶指標。第三季我們有 156,000 名付費客戶，年增 18%。與上季類似，我們在隨用隨付（pay-as-you-go）客群中看到較高的流失率，主要因為更多客戶下調至我們的免費客戶層級。我們認為這是更具挑戰性的總體環境所致。不過，我們很高興看到這些客戶仍留在我們的平台上。

Turning to large customers. We ended the quarter with 1,908 large customers, representing an increase of 51% year-over-year and an addition of 159 large customers in the quarter. We were pleased to see large customer revenue contribution increase again sequentially.

接著談大型客戶。我們在季末共有 1,908 家大型客戶，年增 51%，本季新增 159 家大型客戶。我們很高興看到大型客戶的營收貢獻再次呈現季增。

We are also encouraged to see the quality of wins continue to increase across the Fortune 500 in a broad array of verticals, including consumer, retail, health care, life science, pharmaceutical, industrial, telco and financial services. While sales cycles at the high end of the business have elongated, we continue to see our $500,000-plus and $1 million plus cohort scoring faster than top line revenue. We also achieved a milestone of 75 customers larger than $1 million in the third quarter.

我們也很受鼓舞地看到，在《財富》500 強的多元產業中，我們的得標品質持續提升，涵蓋消費、零售、醫療保健、生命科學、製藥、工業、電信與金融服務等。雖然高端業務的銷售週期拉長，我們仍持續看到 50 萬美元以上與 100 萬美元以上的客群成長速度快於整體營收。我們也在第三季達成一項里程碑：年化合約金額超過 100 萬美元的客戶達 75 家。

Our dollar-based net retention was 124%, representing a decrease of 200 basis points sequentially and consistent year-over-year. The decline was primarily driven by less net expansion. We have not seen elevated churn.

我們以美元計價的淨留存率（DNR）為 124%，較上季下降 200 個基點，且與去年同期一致。下降主要由較少的淨擴張所驅動。我們未看到流失率升高。

As we mentioned previously, while we expect DNR to continue to trend upward over time, we expect some variability quarter-to-quarter. We continue to target 130%-plus dollar-based net retention rate given our momentum with large enterprise customers and the net expansion characteristics of seed-based solutions.

如先前所提，雖然我們預期 DNR 長期將持續走升，但季度之間仍可能有波動。鑑於我們在大型企業客戶上的動能，以及以用量為基礎（seed-based）解決方案的淨擴張特性，我們仍以 130% 以上的以美元計價淨留存率為目標。

Moving to gross margin. Third quarter gross margin was 78.1%, representing a decrease of 80 basis points sequentially. Network CapEx represented 13% of revenue in the third quarter. We expect fiscal 2022 network CapEx to come in at the lower end of the 12% to 14% range due to the timing of purchases and inherent efficiencies in the network.

接著談毛利率。第三季毛利率為 78.1%，較上季下降 80 個基點。第三季網路資本支出（Network CapEx）占營收 13%。我們預期 2022 會計年度的網路資本支出將落在 12% 至 14% 區間的低端，原因在於採購時點以及網路本身的效率。

Turning to operating expenses. Third quarter operating expenses as a percentage of revenue decreased 7% sequentially and 6% year-over-year to 72%. Our total number of employees increased 42% year-over-year, bringing our total number of employees to approximately 3,180 at the end of the quarter. We will continue to invest in the business. So as we mentioned last quarter, we continue to pace hiring based on current market conditions.

接著談營業費用。第三季營業費用占營收比重較上季下降 7%，較去年同期下降 6%，至 72%。員工總數年增 42%，使我們在季末的員工總數約為 3,180 人。我們將持續投資於業務。因此，如同上季所提，我們仍會依據目前市場狀況來調整招募節奏。

Sales and marketing expenses were $103.5 million for the quarter. Sales and marketing as a percentage of revenue decreased 3% sequentially, and decreased to 41% from 45% in the same quarter last year.

本季銷售與行銷費用為 1.035 億美元。銷售與行銷費用占營收比重較上季下降 3%，並由去年同期的 45% 降至 41%。

Research and development expenses were $46.4 million in the quarter. R&D as a percentage of revenue decreased 2% sequentially and decreased to 18% from 19% in the same quarter last year.

本季研發費用為 4,640 萬美元。研發費用占營收比重較上季下降 2%，並由去年同期的 19% 降至 18%。

General and administrative expenses were $33.6 million for the quarter. G&A as a percentage of revenue decreased by 2% sequentially, and decreased to 13% from 14% in the same quarter last year.

本季一般及行政費用為 3,360 萬美元。一般及行政費用占營收比重較上季下降 2%，並由去年同期的 14% 降至 13%。

Operating income was $14.8 million compared to an operating income of $2.2 million in the same period last year. Third quarter operating margin was 5.8%, an increase of 450 basis points year-over-year. Overseas operating expenses benefited from the strengthening of the U.S. dollar, which contributed to the increase in operating profit.

營業利益為 1,480 萬美元，去年同期營業利益為 220 萬美元。第三季營業利益率為 5.8%，年增 450 個基點。海外營業費用受惠於美元走強，進而推升營業利益。

Turning to net income and the balance sheet. Our net income in the quarter was $19.1 million or net income per share of $0.06. Tax expenses for the quarter was $1.7 million. We ended the third quarter with $1.6 billion in cash, cash equivalents and available for sale securities. Free cash flow was negative $4.6 million in the third quarter or 2% of revenue, compared to negative $39.7 million or 23% of revenue in the same period last year.

接著談淨利與資產負債表。本季淨利為 1,910 萬美元，或每股淨利 0.06 美元。本季所得稅費用為 170 萬美元。第三季末我們持有 16 億美元的現金、約當現金及可供出售證券。第三季自由現金流為負 460 萬美元（占營收 2%），相較去年同期為負 3,970 萬美元（占營收 23%）。

Operating cash flow was $42.7 million in the third quarter or 17% of revenue, compared to $6.9 million or 4% of revenue in the same period last year. As stated previously, we continue to expect to be free cash flow positive in the second half of 2022.

第三季營業活動現金流為 4,270 萬美元（占營收 17%），相較去年同期為 690 萬美元（占營收 4%）。如先前所述，我們仍預期在 2022 年下半年轉為自由現金流為正。

Remaining performance obligations, or RPO, came in at $831 million, representing an increase of 9% sequentially and 32% year-over-year. Current RPO was 75% of total RPO.

剩餘履約義務（RPO）為 8.31 億美元，較上季增加 9%，較去年同期增加 32%。其中，當期 RPO 占總 RPO 的 75%。

Before moving to guidance for the fourth quarter and full year, I would like to reiterate our expectations in light of the uncertainty in the macroeconomic environment. While we saw a foreign exchange benefit to operating expenses, we also saw FX headwinds to revenue as we offer concessions to offset the strength of the U.S. dollar internationally.

在進入第四季與全年財測之前，我想在總體經濟環境不確定性下重申我們的預期。雖然我們看到外匯對營業費用帶來助益，但由於我們在國際市場提供讓利以抵銷美元走強，我們也看到外匯對營收造成逆風。

In the quarter, we observed an increase in our sales cycle and expect similar sales dynamics to continue, leading to longer lead time deal closures. We are cognizant of the increasingly cautious environment and have factored this into our outlook.

本季我們觀察到銷售週期拉長，並預期類似的銷售動態將持續，導致成交結案所需的前置時間更長。我們已意識到環境日益審慎，並已將此納入我們的展望。

Now turning to guidance. For the fourth quarter, we expect revenue in the range of $273.5 million to $274.5 million, representing an increase of 41% to 42% year-over-year. We expect operating income in the range of $12 million to $13 million, and we expect net income per share of $0.04 to $0.05, assuming approximately 343 million common shares outstanding. And we expect a tax expense of $1.9 million.

現在談財測。第四季我們預期營收介於 2.735 億至 2.745 億美元，年增 41% 至 42%。我們預期營業利益介於 1,200 萬至 1,300 萬美元，並預期每股淨利為 0.04 至 0.05 美元，假設流通在外普通股約 3.43 億股。我們預期所得稅費用為 190 萬美元。

For the full year 2022, we expect revenue in the range of $974 million to $975 million, representing an increase of 48% to 49% year-over-year. We expect operating income for the full year in the range of $31 million to $32 million, and we expect net income per share over that period in the range of $0.11 to $0.12, assuming approximately 342 million common shares outstanding. We expect a tax expense of $6.1 million. Although challenges remain in the current environment, we are confident in the continued growth of our business and the durability of our subscription model.

就 2022 全年而言，我們預期營收介於 9.74 億至 9.75 億美元，年增 48% 至 49%。我們預期全年營業利益介於 3,100 萬至 3,200 萬美元，並預期該期間每股淨利介於 0.11 至 0.12 美元，假設流通在外普通股約 3.42 億股。我們預期所得稅費用為 610 萬美元。儘管目前環境仍有挑戰，我們對業務持續成長以及訂閱模式的韌性仍具信心。

Before closing, I would like to let you know that Jayson Noland, our Head of Strategic Finance and Investor Relations, is leaving us. This is happy and sad news. Happy for him to pursue his first CFO opportunity at a pre-IPO software company, but sad to lose such an integral member of the team. I want to thank him personally for his leadership and partnership, and wish him great success in his next chapter.

在結束之前，我想告知各位，我們的策略財務與投資人關係主管 Jayson Noland 將離開公司。這是令人欣慰也令人不捨的消息。欣慰的是他將在一家 IPO 前（pre-IPO）的軟體公司追求他的第一個 CFO 機會；不捨的是我們將失去一位對團隊至關重要的成員。我想親自感謝他在領導與合作上的付出，並祝福他在下一段旅程一切順利。

In closing, I'd like to thank Cloudflare employees for their continued dedication in delivering exceptional service to our customers, partners and communities. And as Matthew mentioned, now that we have reached a $1 billion revenue run rate, we are setting our sights on the next milestones of $5 billion in 5 years.

最後，我要感謝 Cloudflare 員工持續投入，為我們的客戶、合作夥伴與社群提供卓越服務。正如 Matthew 所提，既然我們已達到 10 億美元的營收年化運行率（run rate），我們將目標鎖定在下一個里程碑：在 5 年內達到 50 億美元。

With that, I'd like to open it up for questions. Operator, please poll for questions.

接下來，我們開放提問。接線生，請開始收集問題。

(Operator Instructions) And we will go first to Phil Winslow, Credit Suisse.

（接線生指示）我們先請 Credit Suisse 的 Phil Winslow 提問。

One for Matthew and then a follow-up for Michelle and Thomas. Matthew, obviously, you've talked about the macro for a couple of quarters now. When you look across Cloudflare's portfolio, obviously, it's broad: Zero Trust services, network services, application services, developer platform. Where have you seen the most impact to the business? And then conversely, what has actually held up the most?

我先問 Matthew 一題，接著再追問 Michelle 和 Thomas。Matthew，你們顯然已經談了幾季的總體環境。當你檢視 Cloudflare 的產品組合時，顯然相當廣泛：Zero Trust 服務、網路服務、應用服務、開發者平台。你在哪些部分看到對業務的影響最大？反過來說，哪些部分其實最能挺住、表現最穩？

And then a follow-on for Thomas and Michelle. You talked about it being -- keeping your eye on hiring relative to revenue growth. What are the puts and takes that you're seeing there trying to balance, obviously, the long-term $5 billion target also to sort of the near-term realities?

接著再追問 Thomas 和 Michelle。你們談到——要把招募人力與營收成長相對照、持續關注。你們在這方面看到哪些取捨與拉鋸、在試著取得平衡？顯然一方面有長期 50 億美元的目標，另一方面也要面對短期的現實狀況？

Yes, Phil, I'll start, and then hand it off to Thomas and Michelle. So I think that what we have been seeing and I think we've been very transparent about talking about is that the velocity of sales at large companies, and especially in getting new logos, is slowing down. It feels like everyone right now is measuring twice to cut once. And I think we started to see that, as we've talked about on previous calls, in December of last year, and you're seeing some of that slowness in new business now flow through and hit our top line.

是的，Phil，我先開始，然後再交給 Thomas 和 Michelle。我認為我們所看到的、而且我想我們也一直很透明地在談的是：大型企業的銷售動能，特別是在拿下新客戶（new logos）方面，正在放緩。感覺現在每個人都在「量兩次再下刀」。我想我們從去年 12 月就開始看到這點——正如我們在先前的電話會議中提到的——而你現在看到的新業務放慢，也正逐步反映並影響到我們的營收表現。

What I think is continuing to hold up extremely well right now, and in fact, in some cases, we're seeing acceleration, is in the security portion of our business. While it is worrisome the global conflicts that we are all watching in multiple parts of the world, that is putting more pressure on companies to make sure that their security is in a good place. And so I think that while, as I said last quarter, the economy, the macro economy is challenging right now, and we have said that, I think, consistently for the last 3 calls, we do believe that we are very well positioned, and I continue to say that I wouldn't trade places with any other CEO at any other company.

我認為目前仍然表現得非常好、而且在某些情況下我們甚至看到加速的，是我們業務中的資安（security）部分。雖然我們都在關注世界多地的全球衝突，這確實令人擔憂，但這也讓企業承受更大壓力，必須確保其資安狀況到位。因此我認為，雖然如我上季所說，經濟、宏觀環境目前具有挑戰性——而且我想我們在過去 3 次電話會議中都一致這麼說——但我們確實相信自己處於非常有利的位置。我也持續強調：我不會想和任何其他公司、任何其他 CEO 交換位置。

Great. And then on...

很好。然後關於……

So you saw that our employee headcount grew 42% year-over-year in the quarter. I think we've been very restrained when it came to corporate functions and G&A expenses, but we have made sure that we hire core sales capacity in our go-to-market functions in a way that we are not hindering the potential and the opportunity that is in front of us. So we try to be very balanced where we slow down, and we have been very strategic where we added headcount in terms of numbers, but also in terms of footprint from a regional perspective.

你們也看到，本季我們的員工人數年增 42%。我認為在企業職能與一般及行政（G&A）費用方面，我們一直非常克制；但同時我們也確保在市場推進（go-to-market）職能中招募核心銷售產能，以免阻礙我們眼前的潛力與機會。因此我們努力在放慢的地方保持平衡；而在增加人力方面，我們一直非常有策略——不僅在數量上，也在區域布局（footprint）的角度上。

Our next question comes from Matt Hedberg, RBC Capital Markets.

下一題來自 RBC Capital Markets 的 Matt Hedberg。

Matthew, in your prepared remarks, you noted economic headwinds that you've been talking about the last couple of quarters have showed up here. I wonder if you or if Marc is in the room, too, can you talk a little bit about perhaps what your sales force can do to kind of navigate these headwinds? Is it a different sales motion? Is it a different way to engage with the customer? Just sort of curious on how sales organizations adapt to these headwinds.

Matthew，在你準備好的發言中，你提到過去幾季一直在談的經濟逆風已經在這裡顯現。我想請問你——或如果 Marc 也在現場——能否談談你們的銷售團隊可以如何因應這些逆風？會是不同的銷售打法（sales motion）嗎？或是與客戶互動的方式不同？我只是好奇，銷售組織通常如何適應這些逆風。

Yes. So first of all, I don't think there's anything that has dramatically changed this quarter and at this time versus what we were seeing earlier in the year. And so I think the adjustments that we made in terms of our go-to-market strategy are actually things that we've made previously and we've seen positive benefits from those changes. The nature of subscription businesses is that if you see slowdowns in the beginning of the year, they show up in your top line later in the year.

是的。首先，我不認為本季、或在目前這個時間點，相較於今年稍早我們所看到的情況，有任何劇烈改變。因此，我認為我們在市場推進策略（go-to-market strategy）上所做的調整，其實是我們先前就已經做過、而且也從那些改變中看到正面效益的事情。訂閱型（subscription）業務的特性是：如果你在年初看到放緩，它會在年內稍晚反映到你的營收上。

But the thing that we did that I think have been successful and will continue to be successful is really focusing on how do we get to know the customers that already know us and trust us, how do we sell more to those customers from the broad portfolio of products that we have and how do we make sure that they are getting all of the value from Cloudflare.

但我認為我們做得成功、而且會持續成功的事情，是更聚焦於：我們如何更了解那些已經認識我們、信任我們的客戶；我們如何從我們廣泛的產品組合中，向這些客戶銷售更多；以及我們如何確保他們能從 Cloudflare 獲得全部的價值。

And one of the things that I think we're hearing over and over again is that as companies are thinking about how can they reduce their cloud spend, how can they rationalize it, how can they make sure that they are getting the most out of the IT dollars that they're deploying, over and over and over again, we are able to deliver services that help companies save money, get better performance, get higher reliability, get more variability in a multi-cloud environment and make sure that they are secure. And so as we look at our customers, they see us more and more as a strategic partner on making sure that they're getting the most out of every IT dollar they spend.

而我認為我們一再聽到的一點是：當企業在思考如何降低雲端支出、如何合理化（rationalize）這些支出、如何確保他們把投入的 IT 預算用到最有效率時，一次又一次，我們都能提供服務，幫助企業省錢、提升效能、提高可靠性、在多雲（multi-cloud）環境中獲得更高的可變性（variability），並確保安全。因此，從我們的客戶角度來看，他們越來越把我們視為策略夥伴，協助他們確保每一塊 IT 支出都能發揮最大效益。

I just want to put an additional comment on it. Just coming back from a customer trip in Europe, at the time were Matthew said, the security products are holding up nicely in light of all the security and threat concerns we see out there, leaning heavier on the intelligence we have. We just launched a threat intelligence product, Cloudforce, a couple of weeks ago, leading on this asset we have in terms of the intelligence and the insight we have is helping us, especially with opening up doors of new logos.

我想再補充一點。我剛從歐洲的客戶拜訪行程回來，呼應 Matthew 剛才提到的：在我們看到的各種資安與威脅疑慮下，資安產品的表現仍然很穩健，也更倚重我們所擁有的情報能力。我們在幾週前剛推出一個威脅情報產品 Cloudforce；以我們在情報與洞察方面的這項資產作為主軸，正在幫助我們，特別是在打開新客戶（new logos）大門方面。

That's super clear. And then maybe, Matthew, obviously, R2 is early, but it's great to hear the success already with a petabyte of storage. Can you talk about what sort of customers you're seeing leverage these? Are these some of your biggest strategic customers? Are they -- just maybe a little bit of color on where you're seeing that usage.

這非常清楚。接著也許再問一下，Matthew，顯然 R2 還在早期，但聽到你們已經有 1PB 的儲存量成果很棒。你能談談你們看到哪些類型的客戶在使用這些嗎？是你們一些最大的策略型客戶嗎？他們是——能否再多給一點你們看到使用情況的背景？

Yes. So in the quarter, the usage was mostly still during our beta period. And so the users of that product have primarily been developers that are using it to build new services or small teams within larger organizations. What I think that we'll see now that it is out of beta as of the very end of the quarter, is that you'll see much more large companies who are looking to figure out how they can reduce their cloud spend and make sure that they can have a multi-cloud presence adopt our R2 services.

是的。本季的使用量大多仍在我們的 beta 期間。因此，該產品的使用者主要是開發者，他們用它來建置新服務，或是大型組織內的小型團隊。我認為，現在在本季末尾它已經正式結束 beta 之後，你會看到更多大型企業採用我們的 R2 服務，因為他們正在思考如何降低雲端支出，並確保自己能有多雲布局。

And so we are talking to very large companies about moving more and more of their stored objects to where we can store that with R2. And one of the benefits is not only can we help them save money on the egress fees, but it allows them to then use those objects across any of the different cloud platforms they're using. So by being that neutral third party, we can let people adopt a little bit of Amazon, a little bit of Microsoft, a little bit of Google, a little bit of SaaS vendors and share that data across all of those different places. It actually is a use case that makes putting data in the network one of the things which is really valuable, and I think you'll -- in quarters to come, the larger and larger companies adopt that as the object store for their company.

因此，我們正在與非常大型的企業洽談，把越來越多的物件儲存（stored objects）移到我們這裡，透過 R2 來儲存。其中一個好處不只是我們能幫他們省下資料外傳（egress）費用，也讓他們能在所使用的任何不同雲端平台之間運用這些物件。作為中立的第三方，我們可以讓大家同時採用一點 Amazon、一點 Microsoft、一點 Google、一點 SaaS 供應商，並在所有這些不同地方之間共享資料。這其實是一個使用情境，讓「把資料放在網路上」成為非常有價值的一件事；我想你會看到在接下來幾季，越來越大型的公司會採用它，作為其公司的物件儲存（object store）。

Next up is Brent Thill, Jefferies.

下一位是 Jefferies 的 Brent Thill。

Matthew, one of the key themes we keep hearing is the theme of consolidation that you're used in a lot of pockets of organizations, and many are saying that they could consolidate. Do you feel, over the next year, you can use that to your advantage? Is there a sales motion or an opportunity you're starting to see where you're getting wider enterprise license agreements to take on more and more solutions?

Matthew，我們持續聽到的一個關鍵主題是「整併（consolidation）」：你們在許多組織的不同角落都被使用，而很多人說他們其實可以做整併。你覺得在未來一年，你們能把這點轉化為優勢嗎？是否有某種銷售打法或機會正在浮現，使你們能拿到更廣泛的企業授權合約（enterprise license agreements），承接越來越多的解決方案？

Yes, Brent. I think that we are extremely well positioned to help companies ferret out any type of savings that they can find across their organization. And the conversations that we're having are very much around how can companies consolidate their vendors into what are those critical vendors that provide services and how can they really save money in the process of doing that.

是的，Brent。我認為我們的定位非常好，能協助企業在整個組織中找出任何可能的節省空間。我們正在進行的對話，很大程度上就是圍繞：企業如何把供應商整併，聚焦於那些提供服務的關鍵供應商，以及他們如何在這個過程中真正省下成本。

The fact that we've got a broad portfolio of products as we do means that what we're seeing is more and more companies are adopting the complete Cloudflare network. And I think the way that, that shows up in the numbers is the fact that our customers that are over $500,000 a year of spend, over $1 million a year of spend are growing faster than our overall revenue growth rate and our overall customer growth rate. And so I think that's a good indication that the customers are doubling down and using more of our services. I think that's going to make it a more challenging environment for those point cloud solutions that are out there. And that we will increasingly take share and help be that strategic vendor to become the network for our customers.

我們擁有如同現在這樣廣泛的產品組合，意味著我們看到越來越多公司正在採用完整的 Cloudflare 網路。我認為這在數字上的呈現方式是：年支出超過 50 萬美元、以及年支出超過 100 萬美元的客戶，其成長速度都快於我們整體營收成長率與整體客戶成長率。因此我認為這是個很好的指標，顯示客戶正在加碼、使用更多我們的服務。我認為這會讓市場上那些點狀（point）雲端解決方案面臨更具挑戰的環境；而我們將會愈來愈多地取得市占，並協助成為客戶的策略型供應商，成為他們的網路。

And can I just quickly clarify with Thomas? With the slowdown that you're seeing, did you see that more pronounced in small and mid- versus large? Or do you see it against SMID and large?

我可以跟 Thomas 快速釐清一下嗎？就你們看到的放緩而言，是在小型與中型（small and mid-）相較於大型客戶更明顯？還是你在 SMID 和大型客戶都看到了？

I see, you see -- in each one of the segments you mentioned, you see some impact. We talked about pay-as-you-go down trading to free, staying at our customer, staying on the platform but downgrading. We see elongated sales cycles at the very high end in the very large customer cohorts. And we see the expansion in the mid-market segment slowed down a bit. Churn? They didn't churn off, but the expansion was a bit harder. So it really depends on what segment you look at.

我看到的是——你提到的每一個區隔都受到一些影響。我們談到按量計費（pay-as-you-go）用戶往下調整到免費方案：他們仍然是我們的客戶、仍留在平台上，但做了降級。我們在最高端、也就是非常大型客戶族群那邊，看到銷售週期拉長。我們也看到中型市場（mid-market）區隔的擴張放慢了一些。流失（churn）呢？他們沒有流失離開，但擴張變得比較困難。所以這真的取決於你看的是哪一個區隔。

Our next question today comes from James Fish, Piper Sandler.

我們今天的下一個問題來自 Piper Sandler 的 James Fish。

Matthew, you highlighted that Fortune 500 retail win with Cloudflare kind of that glue between the hyperscalers. And you also said you see Fortune 500 penetration getting to 100% over time. I guess how are you balancing that strategy of being that glue or fabric between the hyperscalers versus being that full infrastructure-as-a-service offering alternative to the hyperscalers? And how does that success of one or the other change your view or ability to hit that $5 billion goal 5 years from now?

Matthew，你提到與 Cloudflare 合作拿下那個《財富》500 大零售客戶的勝利，某種程度上扮演了超大規模雲服務商之間的黏著劑。你也說你看到《財富》500 大客戶的滲透率隨時間推進會達到 100%。我想問的是，你如何在「成為超大規模雲服務商之間的黏著劑或底層織網」這個策略，與「成為可替代超大規模雲服務商的完整 IaaS（基礎設施即服務）供應商」之間取得平衡？而其中一種或另一種策略的成功，會如何改變你對於在 5 年後達成 50 億美元目標的看法或能力？

I think that our approach is very different than the hyperscalers. The hyperscalers sort of start from the inside and work their way out, and we are starting from the outside and working our way in. And what I mean by that is, fundamentally, what Cloudflare is, is a network. And we want to be the best network to connect anything online, to connect cloud-to-cloud, cloud to home office, cloud to remote office, cloud to branch office. Anything that is having to be connected by a network, we want to be that network.

我認為我們的方法與超大規模雲服務商非常不同。超大規模雲服務商大致上是從內部開始再向外延伸，而我們是從外部開始再向內深入。我所謂的意思是，從根本上來說，Cloudflare 是一個網路。我們希望成為連接線上任何事物的最佳網路：連接雲到雲、雲到居家辦公室、雲到遠端辦公室、雲到分支機構。任何需要透過網路連接的事物，我們都希望由我們的網路來承載。

There are things that make a ton of sense to live in the network itself. So for instance, a shared object that you're going to use across Google and Microsoft and AWS. Storing that with R2 makes a ton of sense because we're not going to charge you the egress tax to be able to access that across all of those different platforms. You're also going to, for some applications, want to make some parts of the application as fast and as scalable and as reliable as possible.

有些東西非常適合直接存在於網路本身之中。舉例來說，一個你要在 Google、Microsoft 與 AWS 之間共用的物件，把它用 R2 來儲存就非常合理，因為我們不會向你收取出口（egress）稅，讓你能在所有這些不同平台之間存取它。對於某些應用程式，你也會希望把應用程式的某些部分做到盡可能快、可擴展且可靠。

And so those parts can live inside of Cloudflare. But our strategy is not to completely recreate every single thing that the hyperscalers do. We want to be the best network that is there, and there will be places at the margins where we absolutely will compete with them. And again, I think increasingly, we're seeing that companies are able to build entire applications using the Cloudflare stack in a way which is much more modern and much more reliable. But we'll never going to be the place that you can lift and shift SAP HANA. That's just not what we're building. Instead, what we're building is for those applications that need to live inside the network for either the performance, reliability, compliance requirements and the data that live inside the network for those same reasons. We want to be the network to be able to do that.

因此，這些部分可以放在 Cloudflare 之內。但我們的策略不是要完整重建超大規模雲服務商所做的每一件事。我們希望成為最好的網路，而在邊際上確實會有一些領域我們會與他們競爭。再者，我認為我們越來越看到企業能以更現代、更可靠的方式，使用 Cloudflare 的技術堆疊來建構完整的應用程式。但我們永遠不會是那個你可以把 SAP HANA 直接 lift-and-shift（原封不動搬移）過來的地方。那不是我們在打造的東西。相反地，我們打造的是：那些因效能、可靠性、合規要求而需要存在於網路之內的應用程式，以及同樣基於這些原因而需要存在於網路之內的資料。我們希望成為能夠做到這些的網路。

I think regardless, we see with the products that we have in market today a clear path to getting to $5 billion of revenue. And that doesn't assume any M&A. We believe that, that is through organic -- organically that we can get to $5 billion of revenue in the next 5 years with the products that are in market today. And so I think that we don't have to -- the hyperscalers don't have to fail for us to succeed. We actually see ourselves as much more of that glue between them. And whether companies want to be multi-cloud or not, they all are. And so that glue is critically important. And again, I think we provide the only solution as we see companies that are trying to struggle with reconciling that increasingly multi-cloud world.

我認為無論如何，以我們目前已在市場上的產品來看，我們看到一條清晰的路徑可以達到 50 億美元營收。而且這不假設任何併購（M&A）。我們相信，透過有機成長——也就是有機地——在未來 5 年內，僅靠目前已在市場上的產品就能達到 50 億美元營收。因此我認為，我們不需要——超大規模雲服務商也不需要失敗——我們才能成功。我們其實更像是他們之間的黏著劑。而不管企業是否想要多雲（multi-cloud），他們其實都已經是多雲了。所以這個黏著劑至關重要。再者，我認為當企業努力在這個日益多雲的世界中協調整合時，我們提供的是我們所見唯一的解決方案。

And Thomas, maybe for you. Is there any way to understand the impact or adoption of that monthly to annual conversion with enterprise specifically this quarter? Are customers actually looking for staying with shorter duration, just given this macro uncertainty? Or are they alternatively looking to lock in for longer on the infrastructure side?

Thomas，或許也請你回答。是否有任何方式可以理解本季在企業客戶（enterprise）中，月付轉年付（monthly to annual conversion）的影響或採用情況？在這種總體環境不確定性下，客戶是否真的更傾向維持較短的合約期間？或者相反地，他們是否在基礎設施端希望鎖定更長的期間？

Good question. As we said in the past, moving from monthly billing and contracts to annual is our biggest lever on our path to delivering free cash flow. In a world, especially outside of North America where exchange rates are high, customers are more resistant to lock in. And as you know, we don't want to discount too much in order to lock in lower revenue in a world of difficult exchange rates. So we have been more [confident], I think, to customers and partners in general in this environment and have not pushed as hard moving forward in this transition. But it is still the biggest lever we have, and it's an opportunity that is in front of us, and it will materialize in our free cash flow numbers moving forward.

好問題。正如我們過去所說，從月度計費與合約轉為年度，是我們在邁向產生自由現金流（free cash flow）的路徑上最大的槓桿。在一個——尤其是在北美以外、匯率波動較大——的世界裡，客戶更抗拒鎖定（lock in）。而且如你所知，我們也不希望為了鎖定而給出過多折扣，因為在匯率不利的環境下，那等於把較低的營收鎖死。因此在這個環境中，我們對客戶與合作夥伴整體而言，我想是更有信心的，並沒有像以前那樣強力推進這個轉換。但這仍然是我們最大的槓桿，也是擺在我們面前的機會，未來它會在我們的自由現金流數字上逐步體現出來。

Our next question will come from Shaul Eyal, Cowen.

我們的下一個問題來自 Cowen 的 Shaul Eyal。

Matthew, on Area 1, when you've acquired them, I think you've indicated they can assist you in taking you guys deeper into the cloud community. How is that coming along thus far? And maybe any commentary about win rates versus Zscaler, maybe even Palo Alto, that you flagged in recent quarters.

Matthew，關於 Area 1，在你們收購他們時，我記得你曾表示他們能協助你們更深入雲端社群。到目前為止進展如何？另外，能否評論一下你們相較於 Zscaler、甚至你在最近幾季提到的 Palo Alto 的贏單率（win rates）？

Yes, sure. So Area 1 team is amazing. And I think they brought to us 3 distinct things. The first is a product, which I think is a natural gateway to our overall Zero Trust solutions. The second is a world-class threat intelligence team, which we are now turning into a product both to sell to our existing customers and also as a great way to attract new customers and create some of the marketing around the threat intelligence that we do.

好的，當然。Area 1 團隊非常出色。我認為他們為我們帶來了三個明確的面向。第一是產品，我認為它是通往我們整體 Zero Trust（零信任）解決方案的自然入口。第二是一支世界級的威脅情報（threat intelligence）團隊，我們現在正把它產品化，一方面賣給既有客戶，另一方面也作為吸引新客戶、並圍繞我們所做的威脅情報進行行銷的絕佳方式。

And then the third is a really much deeper and more mature understanding of channel through some of their leadership that we have -- that we've brought on board. And again, I think that has matured -- helped us mature what our channel strategy has been.

第三則是透過他們部分領導層——我們已經把他們延攬加入——帶來對通路（channel）更深、更成熟的理解。再一次，我認為這也讓我們的通路策略更加成熟。

I think looking at Area 1 in particular, we're seeing particular strength in Asia, actually, around the Area 1 product. And I think our sales team, especially in Japan, has done a great job selling the Area 1 product. We're seeing a lot of it. And that's the straight e-mail security product. And once we have got someone using the e-mail security product, it's a very natural extension for them to turn to the rest of our Zero Trust product.

特別就 Area 1 而言，我們看到在亞洲其實有特別強勁的表現，圍繞 Area 1 產品。我認為我們的銷售團隊，尤其在日本，在銷售 Area 1 產品方面做得非常好。我們看到很多採用。那是一個純粹的電子郵件安全（e-mail security）產品。一旦有人開始使用電子郵件安全產品，接著延伸到我們其餘的 Zero Trust 產品就非常自然。

I think in addition, the threat intelligence team has helped us win larger and larger customers and being able to help customers understand if something goes -- bump in the middle of the night, what's going on, has been something the Area 1 team, again, has really helped us with.

此外，威脅情報團隊也幫助我們贏得越來越大型的客戶；能夠協助客戶理解如果半夜出現狀況（bump in the middle of the night）到底發生了什麼事，這一直是 Area 1 團隊再次為我們帶來很大幫助的地方。

And then again, the channel -- our channel strategy, you're seeing more and more of our deals, especially in the Zero Trust space, come through our channel. Our win rates against Zscaler and Palo Alto Networks continue to be very strong. Our product in that space competes extremely well with them. That is -- the challenge and the thing that I think we are continuing to work on is just increased awareness in the market. And that's something where, as we were thinking about who is the right replacement for Chris, Marc's background in identity and access management both at Oracle and at Twilio, he really understands that market, and I think is going to help us increase the awareness that's there.

再者，通路——我們的通路策略方面，你會看到越來越多的交易，尤其是在 Zero Trust 領域，是透過通路完成的。我們對上 Zscaler 與 Palo Alto Networks 的贏單率仍然非常強勁。我們在該領域的產品與他們競爭表現非常好。也就是說——挑戰以及我認為我們持續在努力的事情——是提升市場認知度。而這也是我們在思考誰是 Chris 的合適接替人選時的一個考量：Marc 在 Oracle 與 Twilio 都有身分與存取管理（identity and access management）的背景，他非常理解那個市場，我認為他將幫助我們提升既有的市場認知度。

But when a customer is considering going on their Zero Trust journey, if we're in that consideration, we love our win rates in that. And so our job is now just to increase our awareness and go from the company that people might have known us for doing one thing is today a much more sophisticated, much more broad portfolio. And I'm excited that grows. And I think that Zero Trust is very much going to be the story of the next few years to come.

但當客戶在考慮踏上他們的 Zero Trust 旅程時，只要我們能進入他們的評估名單，我們非常喜歡我們在其中的贏單率。因此我們現在的工作就是提升認知度，從過去大家可能只知道我們做某一件事的公司，轉變為今天擁有更精密、更廣泛產品組合的公司。我對這樣的成長感到興奮。我也認為 Zero Trust 將會是未來幾年的核心故事。

We will take the next question from Hamza Fodderwala, Morgan Stanley.

我們將接受下一個問題，來自 Morgan Stanley 的 Hamza Fodderwala。

Matthew, and perhaps Thomas as well, I wanted to dig in a little bit around the net expansion point. And you spoke a little bit about this already. But just to get more specific, we're hearing from a lot of cloud service providers around rationalization. Matthew, you spoke a little bit about how the costs there are getting too high.

Matthew，也可能請 Thomas 一起回答，我想更深入探討一下淨擴張（net expansion）這個點。你們其實已經稍微談到一些。但更具體地說，我們從許多雲端服務供應商那裡聽到「合理化／精簡（rationalization）」的趨勢。Matthew，你也提到那邊的成本正在變得太高。

But as it relates to Cloudflare, are you seeing any of that rationalization as it relates to your usage and expansion? And obviously, you have a very different pricing model as a subscription-based company, and this is kind of where Thomas comes in. How do you expect that to play out mechanically over the next few quarters as we likely see these expansion rates continue to be impacted?

但就 Cloudflare 而言，你們是否也看到任何與你們的使用量與擴張相關的合理化／精簡？而且很明顯你們作為訂閱制公司有非常不同的定價模式，這也牽涉到 Thomas 的部分。你們預期在接下來幾季，當我們可能看到這些擴張率持續受到影響時，這在機制上會如何演變？

Yes, I think that if you are a usage-based, a purely usage-based model, it is a place where people are looking for areas to save money. Similarly, if you are a seat-based model, as you're seeing some companies do layoffs or, at a minimum, not expand their seats, that is something that is challenging in the current environment. I think we are fortunate that today, most of our revenue is not usage-based and not seat-based. And so while we are adding products that are in both of those categories, and we think that over time that, that will be an expansion driver for us, that today, we're not seeing that downward pressure from people trying to rationalize or consolidate their bills.

是的，我認為如果你是以用量計費、純粹用量計費的模式，這會是一個人們正在尋找節省開支空間的領域。同樣地，如果你是以席位計費的模式，當你看到一些公司在裁員，或至少不再擴增席位時，這在目前環境下就會帶來挑戰。我認為我們很幸運的是，今天我們的大部分營收既不是用量計費，也不是席位計費。因此，雖然我們正在新增同時屬於這兩類的產品，而且我們認為隨著時間推移，這將成為我們的擴張驅動力，但就目前而言，我們並沒有看到來自人們試圖合理化或整併帳單所帶來的那種下行壓力。

I think the one place which Thomas referenced, where we are seeing some pressure is actually with new accounts because we bill all in U.S. dollars. That is putting some pressure, especially outside of the United States, and we are making concessions in order to accommodate what are the foreign exchange pressures that are there. Again, though, it's less about our existing customers trying to figure out how to use less of us. In fact, if anything, we're seeing that they are trying to say, how can we use more of you instead of using what are some of the other consumption-based alternatives which are out there. So I think we have been less exposed to that downward pressure than some of the pure consumption-based services that exist.

我認為 Thomas 提到的一個地方，我們確實看到一些壓力，其實是在新客戶上，因為我們全部以美元計費。這帶來了一些壓力，尤其是在美國以外的地區，而我們也正在做出讓步，以因應當前的外匯壓力。不過，再次強調，這比較不是既有客戶在想辦法如何少用我們。事實上，如果有什麼趨勢的話，我們看到他們反而在想：我們如何能更多地使用你們，而不是使用市面上其他一些以用量為基礎的替代方案。因此我認為，相較於一些純粹的用量型服務，我們受到那種下行壓力的影響較小。

That was a very complete answer. I have nothing to add.

那是個非常完整的回答。我沒有什麼要補充的。

Next up is Sterling Auty, MoffettNathanson.

接下來是 Sterling Auty，MoffettNathanson。

So Matthew, in terms of thinking about the threshold of keeping the margins basically flat within that context of growing to $5 billion, is there kind of like a threshold growth rate that you think about? So as long as you're over 30%or 35% or 40%, you'll keep it there, otherwise, you would reconsider kind of the margin profile?

Matthew，關於在營收成長到 50 億美元的背景下，將利潤率基本維持持平的門檻，你們是否會思考某種門檻成長率？也就是說，只要成長率高於 30%、35% 或 40%，你們就會維持現狀；否則就會重新考量利潤率結構？

I don't know that we have a specific guidance. I've always personally, and Thomas will probably slap me for saying this, but I've always personally kind of found the sort of idea of the Rule of 40 to be pretty compelling. And so I think that we like that. And I think that, that would -- if we're growing north of 40%, then I think that, that's showing that we can continue to execute and deliver on the enormous opportunity that we have ahead.

我不確定我們是否有具體的指引。我個人一直以來——Thomas 可能會因為我這麼說而拍我一下——但我個人一直覺得「40 法則」（Rule of 40）這個概念相當有說服力。所以我認為我們喜歡這個框架。而且我認為，如果我們的成長率高於 40%，那就顯示我們能持續執行，並把握我們面前巨大的機會。

And so again, I think we're -- we want -- we know that we have the levers too when it's the right time for us to be a business that delivers very significant operating profits. But while we see a total addressable market ahead of us that we only have less than 1% penetration on, we think that it makes sense to continue to invest in that market and continue to drive growth going forward. And today, we're still living above the Rule of 50. So I think we've got some time to think about that.

因此再次強調，我們——我們想要——我們也知道在適當的時機，我們有槓桿可以讓公司成為能交出非常可觀營業利潤的企業。但當我們看到眼前的總可服務市場（TAM），我們的滲透率還不到 1%，我們認為持續投資這個市場、並持續推動未來成長是合理的。而且今天，我們仍然高於「50 法則」（Rule of 50）。所以我認為我們還有一些時間可以思考這件事。

Our next question today comes from John DiFucci, Guggenheim.

我們今天的下一個問題來自 Guggenheim 的 John DiFucci。

I have a question for Matthew and then a quick follow-up for Thomas. Matthew, I just want to make sure I understand your comments about acceleration in the security portion of your business. Security businesses have so far anyway generally held up well against the macro slowness. It sounds like that's continuing or even getting stronger for you given your comment there. But I wanted to make sure in that the macro backdrop is really manifesting itself more broadly in the rest of your business. Is that correct?

我有一個問題要問 Matthew，然後再對 Thomas 有個簡短追問。Matthew，我想確認我是否理解你對安全業務加速的評論。到目前為止，安全類業務通常在宏觀放緩下仍表現得相對穩健。聽起來依你剛才的說法，這個趨勢在你們這裡仍在延續，甚至更強。但我想確認的是：宏觀背景的影響其實更廣泛地體現在你們其他業務上。這樣理解正確嗎？

Yes. So first of all, I don't -- I think we have been consistent in talking about the macro pressures now for the last 3 quarters. And there isn't something that has dramatically changed since we started to warn that there were pressures in the macro space.

是的。首先，我不——我認為我們在過去 3 個季度一直一致地談到宏觀壓力。自從我們開始提醒宏觀層面存在壓力以來，並沒有什麼發生了劇烈變化。

What I think, if we dig down a little further into the security business, I think especially in February of this year, when we saw Russia invade Ukraine, a lot of security companies expect that, that would be a tailwind to their business. What I think actually ended up happening was that, that tailwind did not materialize, and that the threat that the Russians are coming turned out to not be something which showed up outside of the Ukrainian theater.

我認為，如果我們再更深入看安全業務，特別是在今年 2 月我們看到俄羅斯入侵烏克蘭時，許多安全公司預期這會成為其業務的順風。我認為實際發生的是，那股順風並沒有出現，而「俄羅斯人要來了」這種威脅，結果並沒有在烏克蘭戰場之外顯現。

However, in the last several months, and especially in Q3, we started to see an increase in cyberattacks coming out of both Russia and other parts of the world. That drives increasing adoption of products like Cloudflare's products at a very, very, very high velocity. So where we'll see close rates that you can often measure in hours or days.

然而，在過去幾個月，尤其是在第三季，我們開始看到來自俄羅斯以及世界其他地區的網路攻擊增加。這以非常、非常、非常高的速度推動像 Cloudflare 這類產品的採用。因此我們會看到成交速度，往往可以用幾小時或幾天來衡量。

And so I think that, that expectation of the war in Ukraine and other political conflicts around the rest of the world leading to more security business was something that I think a lot of the industry expected would show up in Q1 and Q2, and we actually saw it show up more in Q3.

因此我認為，業界原本預期烏克蘭戰爭以及全球其他政治衝突會帶來更多安全業務，很多人以為會在第一季和第二季出現，但我們實際上更多是在第三季看到它顯現。

But generally, the overall macro environment hasn't changed substantially throughout this entire year based on what we're seeing. And so I want to make it clear that we're not saying that we're seeing a big change. We have seen that there was softness in the macro economy since Q1, and we've been talking about it since Q1.

但整體而言，根據我們所看到的情況，今年以來整體宏觀環境並沒有實質改變。因此我想說清楚，我們不是在說我們看到了一個很大的變化。我們從第一季起就看到宏觀經濟有疲軟，並且從第一季起就一直在談這件事。

Yes. And you've been very clear on that, Matthew. Thomas, just a quick sort of a follow-up to what Matthew was just talking about. You talked about when you gave the outlook and you talked about your caution in that outlook. I just want to make sure I understand what's implied in that outlook. Are you looking at sort of similar effects due to the macro backdrop? Or are you expecting further deterioration?

是的。你在這點上一直講得很清楚，Matthew。Thomas，我想就 Matthew 剛才談的內容做個簡短追問。你在提供展望時談到你對該展望的謹慎。我想確認我理解這份展望所隱含的意思。你是在看宏觀背景帶來的類似影響？還是你預期會進一步惡化？

We are talking about a subscription-based model. So a lot of the things we see in the third quarter and we'll see in the fourth quarter are the impact of when we started to talk about the macro climate going to change. So when we -- when you give guidance for the fourth quarter, it's less the in-quarter impact of the business. It's just a flow-through of what already has happened.

我們談的是訂閱制模式。所以我們在第三季看到、以及在第四季會看到的很多事情，都是我們開始談到宏觀環境將改變時所帶來的影響。當你——當你給出第四季指引時，它比較不是當季內對業務的影響，而是既有已發生事項的延續反映。

I understand that. But do you -- are you -- do you expect to see the macro backdrop, the effects on your business show further deterioration even if we can't see it, although we kind of think we try to anyway? Or do you expect it to sort of stay about where it is in the softness you've seen over the last couple of quarters, I guess?

我理解。但你——你是否——你是否預期宏觀背景對你們業務的影響會進一步惡化，即使我們可能看不太出來，雖然我們也會試著去看？還是你預期它會大致維持在過去幾個季度你們所看到的那種疲軟程度？

We, of course, for sure not assumed an improving of the macroeconomic environment. And with an outlook in Q4 and Q1, there's nothing that signals that it's going to get better anytime soon.

我們當然沒有假設宏觀經濟環境會改善。而且從第四季與第一季的展望來看，沒有任何訊號顯示它會在短期內變好。

Next up, we'll take a question from Andrew Nowinski, Wells Fargo.

接下來我們將接聽 Wells Fargo 的 Andrew Nowinski 的提問。

I just want to start with a quick sort of follow-up to John's question. I was wondering if you could just provide any color around maybe your pipeline of renewals for Q4 because I assume Q4 is usually pretty big in terms of renewals. So I'm wondering if you perhaps changed how you're handicapping the likelihood of those renewals closing in Q4 given the lengthening sales cycles you're seeing? And then I have a follow-up.

我想先對 John 的問題做個簡短追問。我想知道你是否能就第四季的續約管線提供一些補充資訊，因為我假設第四季通常在續約方面會相當大。所以我想知道，鑑於你們看到銷售週期拉長，你們是否改變了對這些續約在第四季完成的可能性評估？然後我還有一個追問。

Yes. I don't think -- again, we have not seen an uptick in overall churn across the business. That has continued to hold very, very strong. And so we haven't changed how we've handicapped the renewal forecast.

是的。我不認為——再次強調，我們並沒有看到整體業務的流失率（churn）上升。它仍然維持得非常、非常強勁。因此我們沒有改變我們對續約預測的評估方式。

And keep in mind, most of our revenue still gets built monthly and not annually. So we don't have this massive renewal quarter in the fourth quarter, at least not yet.

另外請記住，我們的大部分營收仍是按月計費，而不是按年計費。所以我們在第四季並沒有那種巨大的續約季度，至少目前還沒有。

Got it. Okay. I just want to also just dive a little deeper on the security and how security demand is holding up. We heard, obviously, over the last few days, Fortinet talking about how they're seeing sort of more normal spending patterns from customers where they're not ordering -- placing orders for firewalls 12 months in advance because the supply is starting to free up. I suppose you could view that negatively as sort of a change in the overall security spending environment. But could you also view it as a positive for Cloudflare because now customers aren't making sort of irrational purchase decisions in buying firewalls, whereas now they can actually evaluate and deploy a smarter solution like Cloudflare One? Just wondering kind of how you view that change that the firewall vendors are talking about.

了解。好的。我也想更深入探討一下安全業務，以及安全需求的韌性。我們在過去幾天聽到 Fortinet 談到，他們看到客戶的支出模式回到比較正常的狀態，客戶不再因為供應問題而提前 12 個月下單防火牆，因為供應開始鬆動。我想你也可以把這解讀為整體安全支出環境的變化，偏負面。但你是否也可以把它視為對 Cloudflare 的正面因素，因為客戶不再做那種非理性的防火牆採購決策，而是能夠評估並部署像 Cloudflare One 這樣更聰明的解決方案？想請教你如何看待防火牆供應商所談到的這種變化。

I mean I think that there's -- I think that you've had a series of head stakes from the hardware space for quite some time going back to the Trump tax cuts that moved forward a lot of incentives on CapEx spending, the beginning of COVID where everyone was just scrambling to keep the lights on and then the supply chain crisis, which again made people place orders just to get in line for products that they may not eventually even want to have.

我的意思是，我認為——我認為硬體領域一段時間以來出現了一連串的「順風因素」，可以追溯到川普減稅，這提前推動了許多資本支出（CapEx）方面的誘因；接著是 COVID 一開始，大家只是手忙腳亂地想維持系統運作；然後是供應鏈危機，這又讓人們為了排隊拿到產品而下單，即便那些產品最後他們可能根本不一定想要。

So it is in the grand course of history, you can't solve the problems of a distributed workforce, you can't solve the problems in the cloud by shipping a box or a virtual box. It just doesn't work. And so I think that anything that gets the market back to being rational without any kind of sort of artificial incentives to continue to invest in hardware is definitely beneficial for Cloudflare and other cloud-based security solutions.

所以從宏觀的歷史進程來看，你無法透過寄送一個盒子或一個虛擬盒子來解決分散式勞動力的問題，也無法用這種方式解決雲端的問題。這根本行不通。因此我認為，任何能讓市場回歸理性、且不透過任何人為誘因去持續推動硬體投資的作法，對 Cloudflare 以及其他以雲端為基礎的資安解決方案而言，絕對是有利的。

Up next is Fatima Boolani, Citi.

接下來是花旗（Citi）的 Fatima Boolani。

Matthew, one for you, and then Thomas, one for you as well. Matthew, wanted to ask you about your pricing strategy, pricing philosophy question. So we heard a lot in your prepared commentary about the downshifting of customers or trade-down from customers to some of your free solutions, which, of course, have better TCO in this environment. I'm wondering what's the rationale for you to maybe not, I guess, raise the floor on that so you can hold on to these paying customers? I'm just curious about how you're sort of thinking about that. And then I have a follow-up for Thomas, please.

Matthew 有一題想請教你，另外 Thomas 也有一題。Matthew，我想問你關於定價策略、定價理念的問題。我們在你事先準備的評論中聽到很多關於客戶降檔、或從付費方案轉向你們部分免費解決方案的情況，而在目前環境下，這些方案當然有更好的總持有成本（TCO）。我想知道，你們為什麼不考慮（我猜）把免費方案的門檻提高一些，以便留住這些付費客戶？我只是好奇你們是怎麼思考這件事的。然後我還有一個問題要問 Thomas，謝謝。

So first of all, our pay-as-you-go business is a relatively small portion of our business. It's much less than 20% of revenue. And so I think that what we see as the value from that pay-as-you-go business is that those customers, whether they pay us something or not, end up being our biggest advocates and our biggest champions inside whatever large organization that they operate at.

首先，我們的隨用隨付（pay-as-you-go）業務在整體業務中占比相對小，營收占比遠低於 20%。因此我認為，我們從這個隨用隨付業務看到的價值在於：這些客戶不論是否付費，最終都會成為我們在其所屬大型組織內最重要的倡議者與最強力的支持者。

So if you look at who are our largest customers and you go down the top 10 customers, almost all of them came to us originally because some technical leader inside that organization used Cloudflare's pay-as-you-go services, fell in love with us, understood us and was able to adopt us as part of that. And so I think that, that benefit is so substantial to us that we always want to make sure that we're treating those customers well.

所以如果你看我們最大的客戶，往下看前 10 大客戶，幾乎全部最初都是因為該組織內某位技術領導者使用了 Cloudflare 的隨用隨付服務，進而愛上我們、理解我們，並能把我們納入其採用的一部分。基於這點，我認為這個效益對我們非常巨大，因此我們總是希望確保我們善待這些客戶。

And so as Thomas said, well, they may go from paying us $20 a month to not paying us something because gas prices went up, that isn't something that we're trying to optimize for. What we're trying to optimize for is that those customers love us, they understand us and they take us to work. And so as they do, that's how we've been able to close so much of the Fortune 500. Behind almost every one of those Fortune 500 wins is a pay-as-you-go customer who advocated for us internally, and that is our secret sales force.

因此如同 Thomas 所說，即便他們可能因為油價上漲而從每月付我們 20 美元變成不付費，這並不是我們想要去最佳化的目標。我們要最佳化的是：這些客戶喜歡我們、理解我們，並把我們帶進他們的工作場域。也正因如此，我們才能拿下這麼多《財富》500 強客戶。幾乎每一個《財富》500 強的勝利背後，都有一位隨用隨付客戶在內部為我們發聲，而那就是我們的秘密銷售部隊。

Fair enough. Appreciate you sticking to your ethos on that. Thomas, on the dollar net expansion rate discussion, I appreciate you kind of shared some of the granularity as to where some of the pressures are coming from there. But I'm curious from a product pillar perspective, if you can shed light on, are you seeing expansion levels moderate within the application services bucket or the network services bucket? Just kind of curious to get a sense of what future functionalities across your portfolio are more prone to that expansion velocity dynamic?

了解。也感謝你們在這點上堅持你們的理念。Thomas，關於美元淨擴張率（DNR）的討論，我很感謝你分享了一些壓力來源的細節。但我想從產品支柱的角度再請教一下：你們看到的擴張程度，是在應用服務（application services）這個類別內放緩，還是在網路服務（network services）這個類別內放緩？我想了解一下，在你們的產品組合中，哪些未來功能更容易出現那種擴張速度的動態？

I think the first statement to make is, for us, this is -- it's a very true number. It's an all-in number, covering our pay-as-you-go business, our mid-market and our enterprise. And as we just discussed over the last 50 minutes, different segments behave differently. We just spent talked about pay-as-you-go customers churning off and becoming free customers, that is something that hinders across the cohort expansion. We have seen exchange rate headwinds from a billing and contracting perspective in overseas accounts. So that is something that would be reflected in an expansion number.

我想先說的第一點是：對我們而言，這是一個——非常真實的數字。它是一個全口徑（all-in）的數字，涵蓋我們的隨用隨付業務、中型市場以及企業客戶。正如我們在過去 50 分鐘所討論的，不同客群的行為不同。我們剛才談到隨用隨付客戶流失並轉為免費客戶，這會抑制整體同群（cohort）的擴張。我們也看到在海外帳戶的計費與合約面，匯率帶來的逆風。因此這些都會反映在擴張率數字上。

And then we talked about prolongated sales cycles at the very high end in the very large cohorts. And that is if you go back to the KPIs we shared where a lot of growth dynamics are happening, those cohorts are growing, in general, significantly faster than our average growth rate. So any movement we have in terms of sales cycles in the very large cohorts is impacting DNR in the current quarter. But this does not take away from the opportunity that is in front of us, and it falls into the logic that we always had when we talked about DNR. We really see a path forward to get north of 130%, but there will be movement around that number. It will not be a straight line that gets us there.

接著我們也談到，在最高端、也就是非常大型同群（cohort）那一端，銷售週期被拉長。如果你回頭看我們分享的 KPI，很多成長動能都發生在那些同群，而整體而言，那些同群的成長速度顯著快於我們的平均成長率。因此，只要我們在非常大型同群的銷售週期上有任何變動，就會影響當季的 DNR。但這並不會削弱我們眼前的機會，也符合我們一直以來談 DNR 的邏輯。我們確實看到一條路徑可以回到 130% 以上，但這個數字會有波動，不會是一條直線一路走到那裡。

Operator, can we take a question from one last analyst, please?

主持人，我們可以再接最後一位分析師的提問嗎？

Absolutely. Our final question will come from James Breen, William Blair.

當然可以。我們最後一個問題將由 William Blair 的 James Breen 提出。

Can you just talk a little bit about the M&A environment? I know you talked about getting to $5 billion organically. But it seems with valuations coming down and given the cash you have, are there going to be opportunities out there to maybe add products or some scale in certain divisions around other companies?

你能否談談目前的併購（M&A）環境？我知道你們提到要以有機成長達到 50 億美元。但看起來估值正在下修，而且考量你們手上的現金，外部是否會出現一些機會，讓你們可能透過其他公司在某些部門增加產品、或擴大規模？

Yes, Jim. I think our -- different companies are built in different ways. And so if you look at Cisco, they were very much an M&A and acquisition machine, whereas if you look at an Apple, they do M&A, but it's usually for core technologies. It's not for products. I think we are much more like an Apple than we are like a Cisco. We've watched as some of the competitors in the space have really tied themselves up in knots, building what is effectively a Frankenstein-type solution through a series of M&A, and they don't get the same level of efficiency that we do.

是的，Jim。我認為——不同公司有不同的建構方式。若你看 Cisco，他們非常像是一台併購機器；而如果你看 Apple，他們也做併購，但通常是為了核心技術，而不是為了產品。我認為我們更像 Apple，而不是像 Cisco。我們看到一些同業在這個領域裡，透過一連串併購把自己搞得綁手綁腳，打造出某種本質上像「科學怪人」般拼湊的解決方案，而他們無法達到我們這樣的效率水準。

And so I think that we will always be biased against M&A, and we will always have a very high hurdle rate to do any sort of a transaction, which isn't to say we won't do transactions. When we find great technologies, great teams, great ways to integrate like we did with Area 1, we will jump on that. And as the valuations and multiples, especially in some of the private markets, continue to fall, we look at lots and lots of deals. But I don't think that, that has changed that relative to other companies, I think we're going to maintain a very high hurdle rate. We have very much optimized around internal development.

因此我認為，我們一向會對併購保持偏保守的立場，且對任何交易都會設定非常高的門檻；但這不代表我們不會做交易。當我們找到很棒的技術、很棒的團隊、以及很棒的整合方式（就像我們與 Area 1 的整合），我們就會果斷出手。隨著估值與倍數（尤其是在部分私募市場）持續下滑，我們也在看非常非常多的案子。但我不認為這點改變了我們相對於其他公司的做法；我認為我們會維持非常高的門檻。我們在很大程度上是以內部研發為核心來做最佳化。

And as Marc said in his responses, we believe we can get to $5 billion without having to build or buy any new products or companies that are out there. We think we've got the right products in the bag today. It's just a matter of us continuing to execute on the go-to-market side.

而且如同 Marc 在回覆中所說，我們相信不需要打造或收購任何新的產品或外部公司，也能達到 50 億美元。我們認為今天我們手上就已經有正確的產品組合；接下來只是持續在市場推進（go-to-market）面把執行做好。

And that does conclude our question-and-answer session. I'd like to hand things back to Mr. Matthew Prince for any additional or closing remarks.

以上即為我們的問答環節。接下來我想把時間交回給 Matthew Prince 先生，請他做任何補充或結語。

Just wanted to thank everyone on Cloudflare's team for delivering what has been, again, another strong quarter. We're proud of the fact that we're protecting the U.S. elections, and we're standing by to make sure that they go off smoothly.

我想感謝 Cloudflare 團隊的每一位，交出——再次——另一個強勁的季度。我們也以能夠保護美國選舉為榮，並隨時待命，確保選舉能順利進行。

I also want to specifically thank Chris for his nearly 10 years of service at Cloudflare, and appreciate all that he's doing to transition and get Marc on board. And to wish Jayson good luck in his new role as CFO, assigning all of those SEC statements, hopefully, won't keep him up too much at night. And I know that he's going to do an amazing job going forward.

我也想特別感謝 Chris 在 Cloudflare 近 10 年的服務，並感謝他在交接過程中所做的一切，協助 Marc 加入團隊。同時也祝 Jayson 在新任 CFO 的角色上一切順利；簽署那些 SEC 文件，希望不會讓他晚上太睡不著。我也相信他未來一定會做得非常出色。

Thank you all for being investors. Look forward to talking again next quarter.

感謝各位作為投資人。期待下個季度再與各位交流。

Ladies and gentlemen, that does conclude this conference. Thank you all for your participation.

各位女士、先生，本次會議到此結束。感謝各位的參與。