Cloudflare Inc (NET) 2022 Q3 法說會逐字稿

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

大家好，歡迎參加 Cloudflare 2022 年第三季度財報電話會議。

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

在這個時候，我想把電話交給傑森諾蘭先生。請繼續，先生。

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.

感謝您與我們一起討論 Cloudflare 2022 年第三季度的財務業績。與我通話的還有聯合創始人兼首席執行官 Matthew Prince； Michelle Zatlyn，聯合創始人、總裁兼首席運營官；和首席財務官 Thomas Seifert。到目前為止，每個人都應該可以訪問我們的收益公告。本公告以及我們的補充財務信息可在我們的投資者關係網站上找到。

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.

提醒一下，我們將在今天的討論中做出前瞻性陳述，包括但不限於我們的客戶、供應商和合作夥伴的運營以及未來的財務業績；預期的產品發布以及這些產品的時間和市場潛力、公司的預期未來收入、財務業績、經營業績、非公認會計準則毛利率、非公認會計準則淨收入或虧損、非公認會計準則每股淨收入或虧損、股票未償的、非 GAAP 運營費用、自由現金流、非 GAAP 稅收費用、基於美元的淨保留率、付費客戶和大客戶。這些陳述和其他評論不是對未來業績的保證，而是受到風險和不確定性的影響，其中一些超出我們的控制範圍，包括但不限於具有挑戰性的一般經濟狀況，包括外匯、通貨膨脹、利率上升以及正在進行的 COVID-19 大流行和俄羅斯-烏克蘭衝突的其他影響。我們的實際結果可能與任何前瞻性陳述中預測或建議的結果大不相同。

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.

這些前瞻性陳述自今天起適用，您不應依賴它們來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聲明的義務。有關可能影響我們未來經營業績和財務狀況的風險和不確定性的更完整討論，請參閱我們提交給證券交易委員會的文件以及今天的收益新聞稿。

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，否則我們今天談論的所有數字（收入除外）都將基於調整後的非公認會計原則。討論的所有當前和前期財務狀況都反映在 ASC 606 中。您可以在我們的投資者關係網站上的收益發布中找到 GAAP 與非 GAAP 財務指標的對賬。對於歷史時期，可以在剛才引用的補充財務信息中找到 GAAP 與非 GAAP 對賬。

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.

我們還想通知您，我們將參加 11 月 16 日的 RBC 資本市場全球技術、互聯網、媒體和電信會議和 11 月 30 日的瑞士信貸第 26 屆年度技術會議。現在我想轉電話交給馬修。

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，傑森。儘管經濟環境繼續充滿挑戰，但我們的季度表現強勁。我們創造了 2.54 億美元的收入，同比增長 47%。不出所料，我們在最近兩次財報電話會議上討論的經濟放緩開始出現在我們的營收數據中。即使有這些經濟逆風，本季度對我們來說還是一個里程碑，年收入超過 10 億美元。只有 6% 的公共軟件公司實現了這一里程碑，所以我們很自豪能夠跨越它，但離完成還差得很遠。

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.

我們增加了 4,197 名付費客戶，總計 156,000 名付費客戶。對於每年向我們支付超過 100,000 美元的大客戶，我們增加了 159 個新的大客戶，總計 1,908 個，同比增長 51%。大客戶現在佔收入的 61%。我們的大客戶不斷擴大。年支出超過 500,000 美元的客戶數量同比增長 88%，超過 100 萬美元的客戶數量同比增長 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.

即使通貨膨脹打擊了我們的部分成本，我們的毛利率仍保持在 78.1% 的強勁水平，仍高於我們 75% 至 77% 的目標毛利率範圍。我們實現了創紀錄的 1480 萬美元的營業利潤，營業利潤率為 5.8%。我們相信，隨著時間的推移，我們可以提供有意義的營業利潤率，但只要我們能夠實現出色的收入增長，我們就會繼續計劃將其保持在接近盈虧平衡的位置。

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.

我們本季度以美元為基礎的淨留存率為 124%，與去年同期持平，低於上一季度的 126%。雖然根據合同續籤的時間，這個數字存在一些噪音，但我們將繼續不滿意，直到超過 130%，我們相信隨著我們添加席位和基於存儲的產品，如零信任和 R2，它仍然是非常可實現的。

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.

我們為年收入突破 10 億美元而感到自豪，但這讓我們開始思考下一個里程碑。雖然短期內每家企業都面臨經濟挑戰，但我們知道 Cloudflare 的長期機遇是巨大的。即使我們達到了 10 億美元，對於我們今天已經可用的產品，我們已經滲透到我們確定的市場的不到 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.

這就是我們有信心的原因。我們正在努力在未來 5 年內有機地實現 50 億美元的年收入。不到 1% 的上市軟件公司達到了 50 億美元的里程碑。雖然今天的全球經濟將在未來幾個季度繼續呈現逆風，但隨著我們進一步展望，我們相信我們已經擁有市場上的產品可以幫助我們實現目標。

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 億美元的里程碑也是反思我們團隊的機會。在公司生命的不同階段擁有不同的領導者是很自然的正常過程。今年早些時候，負責我們銷售團隊的克里斯·梅里特聯繫了我和米歇爾說，雖然他並不著急，但他認為讓其他人帶我們達到超過 10 億美元的下一個里程碑是有道理的.

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.

克里斯本人是獨角獸。大約 10 年前，他作為我們的第一個銷售人員加入 Cloudflare。我們的收入從 0 美元增長到 10 億美元。我試圖計算完成這一目標的銷售領導者的數量，並且在整個軟件歷史上提出的銷售領導者不到 10 人。我想讓 Chris 有片刻時間來認識他以及他所取得的成就並幫助我們在 Cloudflare 建立。

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，馬修。我記得在 2013 年與 Michelle 會面，當時 Cloudflare 正在尋找人選來建立其銷售組織。從第一次會議上就清楚地表明，Cloudflare 擁有的機會是難以置信的。

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.

快進到今天，我為我們建立的團隊感到自豪，他們將 Cloudflare 的產品推向市場，為我們的客戶解決實際問題。這是一個真正的世界級組織，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，我的表現非常出色，我認為 10 億美元大關是我過渡並為 Cloudflare 下一階段增長引入另一位領導者的合適時機。我與團隊密切合作，以幫助確定我們發現能夠做到這一點的偉大領導者，我將繼續參與，至少在今年年底之前幫助實現平穩過渡。

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

這是多麼棒的 10 年旅程，我將永遠相信 Cloudflare 橙色。回到你身邊，馬修。

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，克里斯。沒有你，我們不可能到達這裡。正如 Chris 所說，在過去的幾個月裡，他與我們密切合作，以確定合適的人選來領導我們的銷售團隊向前發展。我們找到的人很棒。他在 Oracle 擔任高級領導時就了解企業銷售，根據他在身份和訪問管理領域的經驗，可以幫助加速我們的零信任進入市場，在我們將工人轉變為龐大的業務，最近領導了另一家軟件即服務公司 Twilio 的銷售，在他任職期間，該公司的有機複合增長率超過 50%，達到 40 億美元的年化運行率。

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 具有獨特的資格將我們帶入下一個里程碑及更遠的地方。我想請他談談他加入 Cloudflare 的原因。

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，馬修。我現在已經在團隊中待了一個多星期，我非常激動。我非常有幸參加了 Cloudflare 最近在舊金山舉行的客戶日。在我參加類似活動的這些年裡，我從未見過更多的各類客戶渴望與我們作為戰略合作夥伴一起做更多的事情。

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.

讓我告訴您 Cloudflare 有什麼特別引人注目的地方，它是當今我們平台一部分的廣泛的解決方案。我們不需要出去收購公司。我們不需要發明新技術。我看到了一條在 5 年內達到 50 億美元的清晰道路，只需將我們已經擁有的東西賣給已經認識我們的客戶。這是一個難得的機會，也是促使我加入 Cloudflare 團隊的原因。回到你身邊，馬修。

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，馬克。我們很高興您能在 Chris 組建的優秀團隊的基礎上再接再厲，隨著我們向越來越大的客戶銷售更多產品，進一步完善我們的上市工作。有了這個設置，讓我告訴你上個季度的一些客戶勝利。

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 強科技金融服務公司簽訂了一份為期 1 年 280 萬美元的合同。他們面臨越來越多的複雜網絡攻擊。他們將我們與幾乎所有的競爭對手進行了比較。雖然競爭對手試圖提供更低的價格，但這並不重要。這家公司堅信我們是明確的技術領導者，因此他們為我們的服務支付了溢價。他們看到了我們集成方法的價值，現在也將我們評估為他們的零信任提供商。

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 強製藥公司擴大了與 Cloudflare 的關係。他們簽署了一份額外的 915,000 美元的 3 年合同，使他們在此期間與我們的總合同達到 740 萬美元。他們正在採用我們由 Cloudflare Workers 提供支持的數據本地化套件。該產品允許客戶在其客戶所在國家/地區本地處理數據。這些功能在 Cloudflare 的行業中是獨一無二的，並且對於像這樣一個高度監管的客戶來說越來越重要。

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 強的歐洲電信公司簽署了一份為期 3 年、價值 120 萬美元的交易。客戶正在將更多的安全服務從本地硬件轉移到雲端。雖然他們將我們的安全服務評估為同類最佳，但對他們來說最重要的是我們的數據本地化套件。他們考慮的其他供應商，包括超大規模公共雲，都沒有類似的解決方案。我們看到越來越多的歐盟公司採用 Cloudflare 以滿足該地區日益增長的數據本地化和數據駐留要求成為法律。

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 強零售商擴大了與 Cloudflare 的關係，簽署了一項價值 442,000 美元的交易，並使他們的年度承諾達到近 100 萬美元。他們正在使用 Workers 在其電子商務應用程序中構建高度可擴展的功能。他們還使用 Cloudflare 的網絡在他們使用的不同超大規模公共雲供應商之間路由流量。看到多雲是他們的首要任務，而 Cloudflare 是他們認為能夠幫助他們實現願景的唯一供應商。他們開始使用我們的對象存儲 R2 和我們的第一個數據庫 D1 進行實驗。雖然他們的支出仍然不大，但我們認為這是一個機會，他們表示有興趣讓我們成為他們未來的戰略供應商之一。

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 強生命科學企業集團簽署了 745,000 美元的 3 年期交易。他們使用我們的一系列產品（包括 Magic Transit）來更好地保護他們的本地數據中心。他們將流量直接傳送到我們的網絡，完全取代了他們的 ISP。我們已經與他們簽署了 MSA，並相信在他們的其他 20 家子公司中存在著擴展的重要機會。

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 強服裝公司簽署了一份為期 3 年 110 萬美元的交易。他們購買了我們的全套安全服務以及 Cloudflare Workers。一個有趣的事實是，我的聯合創始人 Michelle 在商學院之外有機會成為這家公司的 CEO 的參謀長。相反，她選擇創辦 Cloudflare，現在他們是客戶。

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 強消費品公司擴大了與我們的關係，額外簽署了 292,000 美元的 1 年期協議。這使他們每年與我們的總支出接近 100 萬美元。他們正在使用我們的零信任產品，我們與一家大型渠道合作夥伴合作，以客戶的身份贏得和服務他們。

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 強金融服務公司簽署了 236,000 美元的 1 年期交易。我們相信這將是另一個例子，說明我們如何使用一種產品登陸，簽署通用 MSA，然後隨著時間的推移進行擴展。

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.

如果你一直在數，那是很多財富 500 強公司，實際上，我們現在有高達 32% 的財富 500 強公司在使用我們。我看到了一條清晰的道路，幾乎所有財富 500 強公司都在未來 5 年內使用我們。 Marc 和團隊的很大一部分工作就是擴大這些關係，然後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家財富 500 強公司的網絡。但不僅僅是財富 500 強。第三季度，歐洲一家大型建築材料製造商簽署了 120 萬美元、為期 31 個月的擴張協議。他們在 25,000 名員工中廣泛採用了我們的零信任產品。今年早些時候，他們遭受了勒索軟件攻擊，而他們現有的電子郵件安全供應商未能抓住。我們將我們的區域 1 電子郵件安全產品作為其零信任解決方案的一部分，這是其他零信任供應商無法提供的原生集成。

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 POC 期間，我們減少了其他現有供應商遺漏的網絡釣魚消息。他們從POC住了2天，一周後簽了協議。他們以前是一個小客戶，但在他們有另一個網絡安全需求的那一刻就向我們尋求集成解決方案。我們交付了。

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，一家大型軟件監控公司簽署了 360 萬美元的擴張協議，使其年支出超過 500 萬美元。他們是 Cloudflare Workers 的大用戶，僅在 9 月份就處理了 7 萬億個請求。他們正在將越來越多的應用程序從 AWS 遷移到 Cloudflare Workers，以獲得我們的性能和輕鬆的可擴展性。

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.

幾週後，我們將迎來即將到來的開發者創新周，屆時我們將宣布一些令人難以置信的新 Cloudflare Workers 里程碑，但我現在忍不住在這里分享一些。截至第三季度末，我們有多達 220 萬個獨特的應用程序在 Cloudflare Workers 上運行。 Cloudflare Pages 是 Cloudflare Workers 產品組合中的一個產品，擁有多達 367,000 個項目，自 5 月以來翻了一番。

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.

9 月，我們宣布 R2 現已普遍可用，以及我們其他普遍可用的存儲產品 Workers KV 和 Workers Durable Objects。我們現在正在對 PB 的客戶數據進行評分。在本季度末之前，我們的第一個數據庫產品 D1 將公開測試版。

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.

我們越來越多地聽到越來越多的初創公司正在跳過超大規模公共雲並完全建立在 Workers 之上。為反映這一趨勢，我們在 9 月宣布了 Workers Launchpad 資助計劃，其中 26 位頂級風險投資家共同指定高達 12.5 億美元的資金用於在 Cloudflare Workers 上建立的創新型新初創企業。當越來越多的技術堆棧完全由 Cloudflare Workers 提供支持時，風投們不斷來找我們，對他們正在考慮投資的公司進行盡職調查。因此，從財富 500 強到最熱門的新初創企業，未來似乎越來越多地由 Cloudflare Workers 提供支持。

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，我想提醒美國的每個人，我們下週二將舉行選舉。這使得這個國家對網絡安全的擔憂加劇。通過 Cloudflare 的雅典項目，我們免費向任何幫助監督選舉的州和地方官員提供服務。今天，美國一半以上的州和大多數所謂的戰場州的選舉當局都是雅典計劃的參與者。我們很自豪我們幫助網絡攻擊不成為 2020 年選舉的一部分，我們的團隊隨時待命，他們將在下週 24/7 全天候提供服務，以幫助確保網絡攻擊不會成為其中的一部分2022年的故事。

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情。你，別忘了投票。有了這個，我會把它交給托馬斯。托馬斯，把它拿走。

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，馬修，也感謝大家加入我們。正如馬修所說，我們在第三季度實現了一個重要的里程碑，收入運行率首次超過 10 億美元。這一里程碑證明了我們巨大的市場機會、我們吸引和擴大大型企業客戶的能力以及我們基於訂閱的收入模式的持久性。

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.

轉向本季度的收入。第三季度總收入同比增長 47% 至 2.539 億美元。我們在 4 月收購的電子郵件安全公司 Area 1 在本季度的收入中再次貢獻了不到 1% 的份額。雖然我們看到外匯逆風和全球經濟不確定性影響業務，但我們繼續在高端市場保持這種吸引力，並相信我們在這種環境中處於非常有利的位置。

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.

從地域角度來看，美國占收入的 53%，同比增長 49%。 EMEA 佔收入的 27%，同比增長 51%。亞太地區佔收入的 13%，同比增長 38%。與去年相比，亞太地區的表現有了顯著改善，但我們看到亞太地區的價格敏感性和購買決策延遲有所增加。

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.

轉向我們的客戶指標。第三季度，我們擁有 156,000 名付費客戶，同比增長 18%。與上個季度類似，我們看到現收現付客戶群的流失率更高，這主要是由於更多客戶轉向我們的免費客戶層。我們認為這是更具挑戰性的宏觀環境的一個功能。但是，我們很高興看到這些客戶留在我們的平台上。

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.

轉向大客戶。我們在本季度末擁有 1,908 家大客戶，同比增長 51%，本季度新增 159 家大客戶。我們很高興看到大客戶收入貢獻再次環比增長。

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.

我們也很高興看到財富 500 強企業在廣泛的垂直領域中獲勝的質量繼續提高，包括消費、零售、醫療保健、生命科學、製藥、工業、電信和金融服務。雖然高端業務的銷售週期已經拉長，但我們繼續看到我們 500,000 美元以上和 100 萬美元以上的同類群組的得分高於頂線收入。我們還在第三季度實現了 75 個超過 100 萬美元的客戶的里程碑。

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.

我們基於美元的淨留存率為 124%，比去年同期下降 200 個基點。下降的主要原因是淨擴張減少。我們沒有看到客戶流失率升高。

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.

正如我們之前提到的，雖然我們預計 DNR 將隨著時間的推移繼續呈上升趨勢，但我們預計季度間會有一些變化。鑑於我們與大型企業客戶的合作勢頭以及基於種子的解決方案的淨擴張特徵，我們繼續將基於美元的淨保留率目標定為 130% 以上。

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.

轉向毛利率。三季度毛利率為78.1%，環比下降80個基點。網絡資本支出佔第三季度收入的 13%。由於購買時間和網絡固有效率，我們預計 2022 財年網絡資本支出將處於 12% 至 14% 範圍的低端。

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.

轉向運營費用。第三季度運營費用佔收入的百分比環比下降 7%，同比下降 6% 至 72%。我們的員工總數同比增長 42%，使我們的員工總數在本季度末達到約 3,180 人。我們將繼續投資該業務。因此，正如我們上個季度提到的那樣，我們將繼續根據當前的市場狀況加快招聘步伐。

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.

本季度的銷售和營銷費用為 1.035 億美元。銷售和營銷佔收入的百分比環比下降 3%，從去年同期的 45% 下降到 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.

本季度的研發費用為 4640 萬美元。研發佔收入的百分比環比下降 2%，從去年同期的 19% 下降至 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.

本季度的一般和行政費用為 3360 萬美元。 G&A佔收入的百分比環比下降2%，從去年同期的14%下降到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.

營業收入為 1480 萬美元，而去年同期的營業收入為 220 萬美元。第三季度營業利潤率為 5.8%，同比增長 450 個基點。海外營業費用受惠於美元走強，帶動營業利潤增加。

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.

轉向淨收入和資產負債表。我們本季度的淨收入為 1910 萬美元或每股淨收入 0.06 美元。本季度的稅收支出為 170 萬美元。我們在第三季度結束時擁有 16 億美元的現金、現金等價物和可供出售的證券。第三季度自由現金流為負 460 萬美元，佔收入的 2%，而去年同期為負 3970 萬美元，佔收入的 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.

第三季度的經營現金流為 4270 萬美元，佔收入的 17%，而去年同期為 690 萬美元，佔收入的 4%。如前所述，我們繼續預計 2022 年下半年的自由現金流為正。

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，環比增長 9%，同比增長 32%。當前的 RPO 是總 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.

在轉向第四季度和全年的指導之前，鑑於宏觀經濟環境的不確定性，我想重申我們的預期。雖然我們看到了運營費用的外匯收益，但我們也看到了外匯對收入的不利影響，因為我們提供讓步以抵消美元在國際上的強勢。

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.

在本季度，我們觀察到我們的銷售週期有所增加，並預計類似的銷售動態將持續下去，從而導致更長的交貨時間完成交易。我們認識到日益謹慎的環境，並將其納入我們的前景。

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.

現在轉向指導。對於第四季度，我們預計收入在 2.735 億美元至 2.745 億美元之間，同比增長 41% 至 42%。我們預計營業收入在 1200 萬美元至 1300 萬美元之間，我們預計每股淨收入為 0.04 美元至 0.05 美元，假設大約有 3.43 億股已發行普通股。我們預計稅費為 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.

對於 2022 年全年，我們預計收入在 9.74 億美元至 9.75 億美元之間，同比增長 48% 至 49%。我們預計全年的營業收入在 3100 萬美元至 3200 萬美元之間，我們預計在此期間每股淨收入在 0.11 美元至 0.12 美元之間，假設大約有 3.42 億股流通在外的普通股。我們預計稅費為 610 萬美元。儘管當前環境中仍然存在挑戰，但我們對業務的持續增長和訂閱模式的持久性充滿信心。

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，我想讓您知道，我們的戰略財務和投資者關係主管傑森·諾蘭 (Jayson Noland) 將離開我們。這是一個快樂和悲傷的消息。為他在一家上市前的軟件公司尋求第一個 CFO 機會感到高興，但為失去團隊中如此不可或缺的成員而感到難過。我要親自感謝他的領導和夥伴關係，並祝愿他在下一章取得圓滿成功。

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 員工在為我們的客戶、合作夥伴和社區提供卓越服務方面的持續奉獻。正如馬修所說，現在我們已經達到了 10 億美元的收入運行率，我們將目光投向了 5 年內達到 50 億美元的下一個里程碑。

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

有了這個，我想打開它來提問。接線員，請投票提問。

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

（操作員說明）我們將首先前往瑞士信貸的菲爾溫斯洛。

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?

一個給馬修，然後是米歇爾和托馬斯的後續。馬修，很明顯，你已經談論了幾個季度的宏觀。當您查看 Cloudflare 的產品組合時，顯然它很廣泛：零信任服務、網絡服務、應用程序服務、開發人員平台。您認為對業務影響最大的地方是什麼？然後反過來說，實際上最能支撐什麼？

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?

然後是托馬斯和米歇爾的後續。你談到它是——密切關注與收入增長相關的招聘。你在那裡看到的看跌期權是什麼？

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，菲爾，我先開始，然後交給托馬斯和米歇爾。所以我認為我們所看到的並且我認為我們一直非常透明地談論的是大公司的銷售速度，特別是在獲得新徽標方面，正在放緩。感覺現在每個人都在測量兩次以減少一次。我認為我們開始看到這一點，正如我們在去年 12 月之前的電話會議中所談到的那樣，你會看到新業務的一些放緩現在流過並達到了我們的收入。

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.

我認為現在繼續保持非常好，事實上，在某些情況下，我們看到加速，是在我們業務的安全部分。雖然我們都在世界多個地方看到的全球衝突令人擔憂，但這給公司帶來了更大的壓力，以確保他們的安全處於良好狀態。所以我認為，正如我上個季度所說，經濟，宏觀經濟現在充滿挑戰，我認為，我認為，在過去的 3 次電話會議中，我們確實認為我們處於非常有利的位置，我繼續說，我不會與任何其他公司的任何其他 CEO 交換職位。

Great. And then on...

偉大的。然後...

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.

所以你看到我們的員工人數在本季度同比增長了 42%。我認為我們在公司職能和 G&A 費用方面一直非常克制，但我們確保在我們的上市職能中聘用核心銷售能力，而不會阻礙潛力和機會那是在我們面前。因此，我們試圖在放慢速度的地方保持非常平衡，並且我們在增加員工人數方面非常具有戰略意義，而且從區域角度來看，在足跡方面也是如此。

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

我們的下一個問題來自 RBC 資本市場的 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.

馬修，在你準備好的講話中，你注意到過去幾個季度你一直在談論的經濟逆風已經出現在這裡。我想知道您或 Marc 是否也在房間裡，您能否談談您的銷售人員可以做些什麼來應對這些逆風？這是一個不同的銷售動議嗎？與客戶互動的方式不同嗎？只是有點好奇銷售組織如何適應這些逆風。

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。因此，首先，我認為本季度和此時與我們今年早些時候看到的情況相比，沒有任何重大變化。所以我認為我們在進入市場戰略方面所做的調整實際上是我們之前所做的事情，我們已經從這些變化中看到了積極的好處。訂閱業務的本質是，如果您在年初看到放緩，它們會在今年晚些時候出現在您的收入中。

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.

但是我認為我們所做的已經成功並將繼續成功的事情是真正關注我們如何了解已經了解我們並信任我們的客戶，我們如何從廣泛的產品組合中向這些客戶銷售更多產品我們擁有的產品數量以及我們如何確保它們從 Cloudflare 獲得所有價值。

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.

我認為我們一遍又一遍聽到的一件事是，當公司正在考慮如何減少他們的雲支出，他們如何合理化它，他們如何確保他們充分利用他們一次又一次地部署的 IT 資金，我們能夠提供幫助公司節省資金、獲得更好的性能、獲得更高的可靠性、在多雲環境中獲得更多可變性的服務，並確保他們是安全的。因此，當我們審視我們的客戶時，他們越來越多地將我們視為戰略合作夥伴，以確保他們從所花費的每一分錢中獲得最大收益。

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.

我只是想對此發表額外的評論。剛剛從歐洲的客戶旅行回來，當時馬修說，鑑於我們在那裡看到的所有安全和威脅問題，安全產品很好地支持了我們所擁有的情報。幾週前，我們剛剛推出了威脅情報產品 Cloudforce，在我們擁有的情報和洞察力方面領先於我們正在幫助我們的資產，尤其是在打開新徽標的大門方面。

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.

這超級清楚。然後也許，馬修，很明顯，R2 是早期的，但很高興聽到已經有了 PB 存儲的成功。你能談談你看到什麼樣的客戶利用這些？這些是您最大的戰略客戶嗎？它們是——只是在你看到這種用法的地方有點顏色。

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。因此，在本季度，使用量大部分仍處於我們的測試階段。因此，該產品的用戶主要是使用它來構建新服務或大型組織內的小型團隊的開發人員。我認為我們現在會看到它在本季度末已經結束測試，你會看到更多的大公司正在尋找如何減少他們的雲支出並確保他們可以擁有多雲存在採用我們的 R2 服務。

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，我們正在與非常大的公司討論將越來越多的存儲對象移動到我們可以使用 R2 存儲的地方。好處之一是我們不僅可以幫助他們節省出口費用，而且還允許他們在他們正在使用的任何不同的雲平台上使用這些對象。因此，作為中立的第三方，我們可以讓人們採用一點亞馬遜、一點微軟、一點谷歌、一點 SaaS 供應商，並在所有這些不同的地方共享這些數據。它實際上是一個用例，它使將數據放入網絡成為真正有價值的事情之一，我認為你會 - 在未來幾個季度，越來越大的公司將其用作他們公司的對象存儲。

Next up is Brent Thill, Jefferies.

接下來是 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?

馬修，我們不斷聽到的關鍵主題之一是整合主題，你在很多組織中都使用過，許多人說他們可以整合。你覺得，在接下來的一年裡，你可以利用它來發揮你的優勢嗎？您是否有銷售動議或機會開始看到您在哪裡獲得更廣泛的企業許可協議以採用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，布倫特。我認為我們非常有能力幫助公司找出他們可以在整個組織中找到的任何類型的節省。我們正在進行的對話主要圍繞公司如何將他們的供應商整合到提供服務的關鍵供應商中，以及他們如何在這樣做的過程中真正節省資金。

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.

我們擁有廣泛的產品組合這一事實意味著我們看到越來越多的公司正在採用完整的 Cloudflare 網絡。我認為，從數字上看出來的方式是，我們每年花費超過 500,000 美元、超過 100 萬美元的客戶的增長速度快於我們的整體收入增長率和我們的整體客戶增長率.所以我認為這是一個很好的跡象，表明客戶正在加倍下注並使用我們更多的服務。我認為對於那些現有的點雲解決方案來說，這將使它成為一個更具挑戰性的環境。而且我們將越來越多地分享並幫助成為戰略供應商，成為我們客戶的網絡。

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?

我能盡快和托馬斯澄清一下嗎？隨著您看到的放緩，您是否看到小型和中型與大型相比更明顯？或者你認為它是針對 SMID 和大的？

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.

我看到了，你看到了——在你提到的每個部分中，你都會看到一些影響。我們談到了隨用隨付，從交易到免費，留在我們的客戶那裡，留在平台上但降級。我們在非常大的客戶群中看到非常高端的銷售週期延長。我們看到中端市場的擴張有所放緩。攪動？他們沒有流失，但擴張有點困難。所以這真的取決於你看什麼部分。

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

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

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，您強調了財富 500 強零售企業憑藉 Cloudflare 贏得了超大規模企業之間的粘合劑。你還說你看到財富 500 強企業的滲透率隨著時間的推移達到 100%。我想您如何平衡作為超大規模企業之間的粘合劑或結構的策略與作為超大規模企業的完整基礎設施即服務提供替代品的策略？一個或另一個的成功如何改變你的觀點或在 5 年後實現 50 億美元目標的能力？

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器非常不同。超大規模的企業從內部開始並逐步退出，而我們則從外部開始並逐步進入。我的意思是，從根本上說，Cloudflare 是一個網絡。我們希望成為連接任何在線事物的最佳網絡，連接雲到雲、雲到家庭辦公室、雲到遠程辦公室、雲到分支機構。任何必須通過網絡連接的東西，我們都想成為那個網絡。

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.

有些事情對生活在網絡本身很有意義。例如，您將在 Google、Microsoft 和 AWS 中使用的共享對象。用 R2 存儲它很有意義，因為我們不會向您收取出口稅，以便能夠在所有這些不同的平台上訪問它。對於某些應用程序，您還將希望使應用程序的某些部分盡可能快速、可擴展且盡可能可靠。

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.

所以這些部分可以存在於 Cloudflare 內部。但我們的策略並不是完全重現超大規模生產者所做的每一件事。我們希望成為那裡最好的網絡，並且我們絕對會在邊緣處與他們競爭。而且，我認為越來越多的公司能夠使用 Cloudflare 堆棧以更現代、更可靠的方式構建整個應用程序。但我們永遠不會成為您可以提升和轉變 SAP HANA 的地方。這不是我們正在構建的。相反，我們正在為那些出於性能、可靠性、合規性要求以及出於同樣原因而存在於網絡中的數據而需要存在於網絡內部的應用程序構建。我們希望成為能夠做到這一點的網絡。

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，我們從今天市場上的產品中看到了一條通往 50 億美元收入的明確途徑。這並不假設有任何併購。我們相信，通過有機——有機地，我們可以在未來 5 年內通過目前市場上的產品獲得 50 億美元的收入。所以我認為我們不必——超大規模企業不必失敗，我們也能成功。實際上，我們認為自己更像是它們之間的粘合劑。無論公司是否想成為多雲，他們都是。因此，膠水至關重要。再一次，我認為我們提供了唯一的解決方案，因為我們看到公司正在努力協調這個日益多雲的世界。

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?

還有托馬斯，也許適合你。有沒有什麼方法可以了解本季度對企業的月度到年度轉換的影響或採用情況？考慮到這種宏觀不確定性，客戶是否真的在尋找更短的停留時間？或者他們是否希望在基礎設施方面鎖定更長時間？

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，從按月計費和合同轉變為按年計費是我們實現自由現金流的最大槓桿。在一個匯率很高的世界裡，尤其是在北美以外的地區，客戶更不願意鎖定。正如你所知，我們不想為了在一個兌換困難的世界中鎖定較低的收入而打太多折扣率。因此，我認為，在這種環境下，我們對客戶和合作夥伴總體上更加[自信]，並且在這次過渡中沒有那麼努力地向前推進。但這仍然是我們擁有的最大槓桿，它是擺在我們面前的機會，它將在我們未來的自由現金流數字中實現。

Our next question will come from Shaul Eyal, Cowen.

我們的下一個問題將來自 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，在第 1 區，當您獲得它們時，我認為您已經表示它們可以幫助您將你們帶入更深入的雲社區。到目前為止情況如何？也許任何關於勝率與 Zscaler 的評論，甚至可能是你在最近幾個季度標記的 Palo Alto。

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.

是的，當然。所以Area 1團隊很棒。我認為他們給我們帶來了 3 個不同的東西。第一個是產品，我認為它是通向我們整體零信任解決方案的天然門戶。第二個是世界級的威脅情報團隊，我們現在正在將其轉變為一種產品，既可以出售給我們現有的客戶，也可以作為吸引新客戶和圍繞我們所做的威脅情報創建一些營銷的好方法。

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.

然後第三個是通過我們擁有的一些領導層對渠道的更深入和更成熟的理解 - 我們已經加入。再說一次，我認為這已經成熟 - 幫助我們成熟了我們的渠道戰略。

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.

我認為特別是在第一區，我們在亞洲看到了特別的優勢，實際上，圍繞第一區產品。我認為我們的銷售團隊，尤其是在日本的銷售團隊，在銷售 Area 1 產品方面做得很好。我們看到了很多。這就是直接的電子郵件安全產品。一旦我們有人使用電子郵件安全產品，他們就會很自然地轉向我們的零信任產品的其餘部分。

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，我認為，威脅情報團隊幫助我們贏得了越來越多的客戶，並且能夠幫助客戶了解是否發生了什麼事——在半夜顛簸，發生了什麼，再次成為區域 1 團隊的事情，確實幫助了我們。

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.

再說一次，渠道——我們的渠道戰略，你會看到我們越來越多的交易，特別是在零信任領域，來自我們的渠道。我們對 Zscaler 和 Palo Alto Networks 的勝率仍然很高。我們在該領域的產品與他們競爭得非常好。那就是 - 我認為我們正在繼續努力的挑戰和事情只是提高市場意識。這就是我們在考慮誰是 Chris 的合適替代者時，Marc 在 Oracle 和 Twilio 的身份和訪問管理方面的背景，他真正了解這個市場，我認為這將幫助我們提高意識那裡。

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.

但是，當客戶考慮開始他們的零信任之旅時，如果我們考慮到這一點，我們就會喜歡我們的贏率。因此，我們現在的工作只是提高我們的意識，並從人們可能已經知道我們做一件事的公司出發，現在是一個更複雜、更廣泛的產品組合。我很興奮它的增長。我認為零信任將成為未來幾年的故事。

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

我們將回答摩根士丹利的 Hamza Fodderwala 的下一個問題。

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.

馬修，也許還有托馬斯，我想在網絡擴展點附近挖掘一點。你已經談了一點。但為了更具體一點，我們從許多雲服務提供商那裡聽到了關於合理化的意見。馬修，你談到了那裡的成本太高了。

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?

但是，當它與 Cloudflare 相關時，您是否看到與您的使用和擴展相關的任何合理化？顯然，作為一家基於訂閱的公司，你有一個非常不同的定價模式，這就是 Thomas 的用武之地。你如何期望在接下來的幾個季度中機械地發揮作用，因為我們可能會看到這些擴張速度繼續受到影響？

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，我認為如果你是一個基於使用的，一個純粹基於使用的模型，它是一個人們正在尋找省錢的地方的地方。同樣，如果您是基於座位的模型，您會看到一些公司進行裁員，或者至少不擴大座位，這在當前環境中具有挑戰性。我認為我們很幸運，今天我們的大部分收入不是基於使用量，也不是基於座位。因此，雖然我們正在添加屬於這兩個類別的產品，並且我們認為隨著時間的推移，這將成為我們的擴張驅動力，但今天，我們沒有看到人們試圖合理化或整合的下行壓力他們的賬單。

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.

我認為托馬斯提到的一個地方，我們看到一些壓力實際上是新賬戶，因為我們全部以美元計費。這造成了一些壓力，尤其是在美國以外，我們正在做出讓步，以適應那裡的外匯壓力。不過，這與我們現有的客戶試圖弄清楚如何減少我們的使用量無關。事實上，如果有的話，我們看到他們試圖說，我們如何才能更多地使用你們，而不是使用其他一些基於消費的替代品。因此，我認為與現有的一些純消費服務相比，我們受到的下行壓力較小。

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

這是一個非常完整的答案。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?

那麼馬修，在考慮在增長到 50 億美元的背景下保持利潤率基本持平的門檻方面，您是否考慮過類似的門檻增長率？所以只要你超過 30% 或 35% 或 40%，你就會保持在那裡，否則，你會重新考慮哪種保證金情況？

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.

我不知道我們有具體的指導。我一直是個人的，托馬斯可能會因為我這麼說而扇我耳光，但我個人一直覺得 40 規則的想法非常引人注目。所以我認為我們喜歡這樣。而且我認為，如果我們的增長率超過 40%，那麼我認為，這表明我們可以繼續執行並把握我們面臨的巨大機遇。

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.

再說一次，我認為我們 - 我們想要 - 我們知道，當我們成為一家能夠提供非常可觀的運營利潤的企業的正確時機時，我們也擁有槓桿。但是，儘管我們看到了一個潛在的市場，但我們的滲透率只有不到 1%，但我們認為繼續投資該市場並繼續推動未來增長是有意義的。而今天，我們仍然生活在 50 條規則之上。所以我認為我們有一些時間來考慮這一點。

Our next question today comes from John DiFucci, Guggenheim.

我們今天的下一個問題來自古根海姆的 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?

我有一個問題要問馬修，然後快速跟進托馬斯。馬修，我只是想確保我理解您對加速您的業務安全部分的評論。無論如何，到目前為止，安全業務總體上都很好地抵禦了宏觀經濟放緩。鑑於您在那裡發表的評論，這聽起來對您來說仍在繼續，甚至變得更加強大。但我想確保宏觀背景確實在您的其他業務中更廣泛地體現出來。那是對的嗎？

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。所以首先，我沒有——我認為我們在過去三個季度一直在談論宏觀壓力。自從我們開始警告宏觀空間存在壓力以來，並沒有發生太大變化。

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，如果我們進一步深入研究安全業務，我認為尤其是在今年 2 月，當我們看到俄羅斯入侵烏克蘭時，很多安全公司都認為，這將是他們業務的順風車。我認為實際上最終發生的事情是，順風並沒有成為現實，而俄羅斯人即將到來的威脅並不是出現在烏克蘭戰區之外的東西。

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，尤其是在第三季度，我們開始看到來自俄羅斯和世界其他地區的網絡攻擊有所增加。這推動了 Cloudflare 等產品以非常、非常、非常高的速度被越來越多地採用。因此，我們將看到您通常可以以數小時或數天來衡量的收盤價。

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.

所以我認為，對烏克蘭戰爭和世界其他地區其他政治衝突導致更多安全業務的預期是我認為很多行業預期會在第一季度和第二季度出現的東西，實際上我們看到它在第三季度出現更多。

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.

但總的來說，根據我們所看到的情況，整個一年的整體宏觀環境並沒有發生重大變化。所以我想明確表示，我們並不是說我們看到了巨大的變化。我們已經看到自第一季度以來宏觀經濟出現疲軟，並且自第一季度以來我們一直在談論它。

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。你已經很清楚了，馬修。托馬斯，只是對馬修剛才所說的內容的快速跟進。您談到了何時給出展望，並談到了您對該展望的謹慎態度。我只是想確保我理解這種前景所暗示的內容。由於宏觀背景，您是否正在尋找類似的效果？還是您期待進一步惡化？

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.

我們談論的是基於訂閱的模型。因此，我們在第三季度和第四季度看到的很多事情都是我們開始談論宏觀氣候變化時的影響。因此，當我們 - 當您為第四季度提供指導時，它對業務的季度影響較小。這只是已經發生的事情的流轉。

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?

我明白那個。但是你——你是否——你是否期望看到宏觀背景，即使我們看不到它對你的業務的影響會進一步惡化，儘管我們認為我們無論如何都會嘗試？或者你是否希望它保持在你在過去幾個季度看到的柔軟度的位置，我猜？

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.

當然，我們肯定不會假設宏觀經濟環境會有所改善。從第四季度和第一季度的前景來看，沒有任何跡象表明它會很快好轉。

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

接下來，我們將回答富國銀行的 Andrew Nowinski 的問題。

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.

我只想快速跟進 John 的問題。我想知道您是否可以為第四季度的續訂管道提供任何顏色，因為我認為第四季度通常在續訂方面非常大。所以我想知道，鑑於您看到的銷售週期延長，您是否可能改變了限制這些續訂在第四季度結束的可能性的方式？然後我有一個跟進。

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 - 同樣，我們沒有看到整個業務的整體流失率上升。這繼續保持非常非常強勁。因此，我們沒有改變我們限制更新預測的方式。

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.

請記住，我們的大部分收入仍然是每月而不是每年建立的。所以我們在第四季度沒有這個大規模的更新季度，至少現在還沒有。

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.

知道了。好的。我只想更深入地了解安全性以及安全性需求如何保持。很明顯，在過去的幾天裡，我們聽到 Fortinet 談到他們如何從沒有訂購的客戶那裡看到更正常的消費模式——因為供應開始釋放，提前 12 個月下訂單購買防火牆向上。我想您可以將其視為整體安全支出環境的變化。但是您是否也認為這對 Cloudflare 有利，因為現在客戶在購買防火牆時不會做出某種非理性的購買決定，而現在他們實際上可以評估和部署像 Cloudflare One 這樣的更智能的解決方案？只是想知道您如何看待防火牆供應商正在談論的這種變化。

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.

我的意思是我認為有 - 我認為你已經從硬件領域獲得了一系列領先的股份很長一段時間可以追溯到特朗普的減稅政策，這推動了資本支出支出的許多激勵措施，COVID 的開始每個人都在爭先恐後地開著燈，然後是供應鏈危機，這再次使人們下訂單只是為了排隊購買他們可能最終甚至不想擁有的產品。

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.

因此，在偉大的歷史進程中，您無法解決分佈式勞動力的問題，也無法通過運送盒子或虛擬盒子來解決雲中的問題。它只是行不通。因此，我認為，任何能讓市場恢復理性且無需任何人為激勵來繼續投資硬件的事情，對 Cloudflare 和其他基於雲的安全解決方案來說絕對是有利的。

Up next is Fatima Boolani, Citi.

接下來是花旗的法蒂瑪·博拉尼（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.

馬修，一個給你，然後托馬斯，一個也給你。馬修，想問你關於定價策略、定價理念的問題。因此，我們在您準備好的評論中聽到了很多關於客戶降級或從客戶降價到您的一些免費解決方案的評論，當然，在這種環境下，這些解決方案具有更好的 TCO。我想知道你有什麼理由不，我猜，提高底線，這樣你就可以留住這些付費客戶？我只是好奇你是怎麼想的。然後我有一個關於托馬斯的跟進，拜託。

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.

所以首先，我們的現收現付業務只是我們業務的一小部分。它遠低於收入的 20%。所以我認為，我們認為現收現付業務的價值在於，這些客戶，無論他們是否付給我們一些東西，最終都會成為我們最大的擁護者和我們最大的擁護者。操作於。

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.

所以如果你看看誰是我們最大的客戶，然後你去往前 10 名的客戶，幾乎所有的客戶都是最初來找我們的，因為該組織內部的一些技術負責人使用了 Cloudflare 的按需付費服務，愛上了我們，了解我們並能夠採用我們作為其中的一部分。所以我認為，這種好處對我們來說是如此巨大，以至於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.

正如托馬斯所說，好吧，他們可能會從每月支付 20 美元變成因為汽油價格上漲而不支付我們一些東西，這不是我們試圖優化的東西。我們試圖優化的是那些客戶愛我們，他們理解我們，他們帶我們去工作。正如他們所做的那樣，這就是我們能夠關閉這麼多財富 500 強企業的原因。在財富 500 強企業的幾乎每一場胜利背後，都有一位在內部支持我們的現收現付客戶，那就是我們的秘密銷售隊伍。

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?

很公平。感謝您堅持自己的精神。托馬斯，關於美元淨擴張率的討論，我很感激你分享了一些關於壓力來自哪裡的細節。但我很好奇，從產品支柱的角度來看，如果您能闡明一下，您是否看到應用服務桶或網絡服務桶內的擴展水平適中？只是想了解一下您的投資組合中的哪些未來功能更容易受到這種擴張速度動態的影響？

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.

我認為首先要聲明的是，對我們來說，這是一個非常真實的數字。這是一個綜合數字，涵蓋了我們的現收現付業務、我們的中端市場和我們的企業。正如我們剛剛在過去 50 分鐘中討論的那樣，不同的細分市場表現不同。我們剛剛談到了現收現付客戶大量流失並成為免費客戶，這阻礙了整個隊列擴展。我們從海外賬戶的計費和簽約角度看到了匯率逆風。因此，這將反映在擴展數中。

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.

然後我們談到了在非常大的群體中非常高端的延長銷售週期。也就是說，如果你回到我們分享的 KPI，其中發生了很多增長動態，這些群體的增長總體上比我們的平均增長率快得多。因此，我們在非常大的群體中的銷售週期方面的任何變動都會影響本季度的 DNR。但這並不能抹殺擺在我們面前的機會，它符合我們談論 DNR 時的邏輯。我們確實看到了 130% 以上的前進道路，但圍繞這個數字會有一些變化。將我們帶到那裡並不是一條直線。

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

接線員，我們可以請最後一位分析師提問嗎？

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

絕對地。我們的最後一個問題將來自 James Breen、William Blair。

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?

您能簡單談談併購環境嗎？我知道你談到有機地達到 50 億美元。但似乎隨著估值下降並且考慮到你擁有的現金，是否會有機會在其他公司周圍的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，吉姆。我認為我們——不同的公司是以不同的方式建立的。所以如果你看看思科，他們在很大程度上是一個併購和收購機器，而如果你看看蘋果，他們進行併購，但通常是針對核心技術。它不是為了產品。我認為我們更像蘋果而不是思科。我們已經看到該領域的一些競爭對手確實陷入了困境，通過一系列併購構建了一個有效的科學怪人類型的解決方案，但他們沒有獲得與我們相同的效率水平。

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.

所以我認為我們將永遠對併購有偏見，我們將永遠有一個非常高的門檻來進行任何類型的交易，這並不是說我們不會進行交易。當我們找到偉大的技術、偉大的團隊、偉大的整合方式時，就像我們在區域 1 中所做的那樣，我們將繼續前進。隨著估值和倍數，尤其是在一些私人市場中，繼續下跌，我們看到了很多很多的交易。但我認為，相對於其他公司，這並沒有改變這一點，我認為我們將保持非常高的門檻率。我們圍繞內部開發做了很多優化。

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.

正如馬克在他的回復中所說，我們相信我們可以達到 50 億美元，而無需建立或購買任何新產品或新公司。我們認為我們今天的產品是正確的。這只是我們繼續在進入市場方面執行的問題。

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.

這確實結束了我們的問答環節。我想把事情交還給馬修·普林斯先生，以獲得任何補充或結束語。

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.

只是想感謝 Cloudflare 團隊中的每個人再次交付了又一個強勁的季度。我們為保護美國大選而感到自豪，我們隨時待命以確保選舉順利進行。

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.

我還要特別感謝 Chris 在 Cloudflare 近 10 年的服務，並感謝他為過渡和讓 Marc 加入所做的一切。並祝傑森在擔任首席財務官的新角色中好運，希望分配所有這些 SEC 聲明不會讓他晚上睡得太多。而且我知道他會在未來做得非常出色。

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

感謝大家成為投資者。期待下個季度再談。

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

女士們，先生們，這確實結束了本次會議。謝謝大家的參與。