Cloudflare Stock Pops in Market Debut

Cloudflare co-founder and COO Michelle Zatlyn
September 13, 2019

Cloudflare's stock soared in its market debut on Friday after shares opened at $18 a piece, a significant jump from its initial public offering price of $15 a share. The company's stock closed the day up 20 percent.

Cloudflare, which provides website infrastructure and security services, offered 35 million shares, raising $525 million in its IPO. The company initially set a price range of $10 to $12 per share, but adjusted that upward to $12-$14 earlier in the week.

"We're going to continue to invest in our business, so that we can continue to expand the customers that we service with a broader product portfolio." Michelle Zatlyn, the company's co-founder and COO, told Cheddar after shares began trading on the New York Stock Exchange under the ticker "NET".

Founded a decade ago in San Francisco, Cloudflare has grown to offer an array of cloud-based internet services, which range from website optimization tools to advanced DDoS protection. The company says it blocks an estimated 44 billion cyber threats a day.

Cloudflare's revenue was $192.7 million in 2018 — a 43 percent increase from the year prior — according to its filing with federal regulators. The company also said that it has a total of 74,873 paying customer in 2019 so far, which includes 10 percent of Fortune 1,000 businesses. Notable clients include IBM, Reuters, and the Library of Congress.

The company, however, reported $36.8 million in net losses in the first six months of 2019, which is an increase from the $32.5 million net loss posted in the same time period last year.

Cloudflare is making its market debut at a time when several newly-public technology services companies have struggled to gain a footing and market forecasts remain uncertain at best. Zatlyn said, nonetheless, that the company's main focus is "building a long-term business and delivering value to our shareholders and to our customers" and does not dwell on "the day-to-day movements of the market."

Cloudflare was most recently in the news after it decided to halt its security services to 8chan, the anonymous message board popular with far-right extremists and a variety of fringe groups. The decision, which effectively took 8chan offline, was made after it was revealed that the gunman that killed 22 people in a mass shooting in El Paso had published a racist, hate-filled manifesto on 8chan prior to the attack.

The white supremacist mass shooters who attacked a mosque in Christchurch, New Zealand in March and a synagogue in Poway, California in April also posted manifestos on 8chan.

"Unfortunately the action we take today won't fix hate online," Matthew Prince, Cloudflare's CEO, said in a statement in August. "It will almost certainly not even remove 8chan from the Internet. But it is the right thing to do. Hate online is a real issue."

Zatlyn added that Cloudflare — like society at large — continues to grapple with how to properly regulate hate speech online without infringing on freedom of speech. "Our team is incredibly engaged around the world on the topic," she said, adding, however, that lawmakers must step up and create a regulatory framework.

"It would be better if Congress passed a law to make it clear for everyone," Zatlyn said. "One that says 'this should be allowed and this should not be allowed' ... We would prefer for lawmakers to decide that."