How Cloudflare Makes Money

Table of Contents

Three Ways How Cloudflare Makes Money

Here’s a detailed explanation with screenshots of how Cloudflare makes money.

1. Cloudflare Paid Subscriptions

While Cloudflare’s free tier gives you a free CDN, firewall, page rules, and more, you can unlock additional functionality by purchasing a subscription. For example, I subscribe to the Cloudflare “Pro” plan. Here’s an invoice I got a few days back:

Here are some of the benefits I get from a paid Cloudflare Pro subscription:

1. Web Application Firewall (WAF)
2. More firewall rules
3. More page rules
4. Advanced bot mitigation

In addition to the above benefits, paying for Cloudflare also gives me increased limits for services like rate limiting rules, improved web analytics, and ticket-based support if something goes wrong. The most significant benefit is the WAF and firewall/page rules.

Cloudflare has three tiers of paid plans. I subscribe to the cheapest one – Pro. But it also has Business and Enterprise plans. Here are all the features you get with each Cloudflare pricing plan.

2. Cloudflare “Pay as you Go” Services

In addition to subscriptions, Cloudflare has several usage-based services. These often come with a generous free tier, but you must pay extra if you exceed those limits. Some of these services are:

1. Argo
2. Rate limiting rules
3. Image resizing requests
4. Workers

And more. Workers, in particular, are a top-rated Cloudflare usage-based service. They’re an efficient way to modify the server’s response using code that executes on the Cloudflare EDGE nodes. You can process many Cloudflare worker requests for free, but if it scales up, you need to pay money to Cloudflare.

3. Cloudflare Partnerships

While most of Cloudflare’s revenue comes from direct customers, a healthy percentage comes from partners. Channel partners, for example, onboard their clients using Cloudflare solutions, which indirectly earns income for Cloudflare.

Based on Cloudflare’s SEC filings, Cloudflare earned 88% of its revenue from direct customers and only 12% from its channel partners. However, on the earnings call for the quarter ending in August 2022, the CFO of Cloudflare, Thomas Josef Seifert, noted that the channel partners typically sold more complex Cloudflare products, which tended to be more profitable than the ones sold directly to customers.

A prime example of a complex product is Cloudflare’s Zero solution, which competes with providers like Zscaler and Cisco. These sophisticated integrations account for a more significant percentage of Cloudflare’s revenue and profits, which is why Cloudflare is pushing them so aggressively.

Cloudflare’s Country-Wise Revenue Breakdown

Over half of Cloudflare’s revenue comes from the United States, followed by Europe and Asia. Here’s the continental breakdown:

• United States – 53%
• Europe, Middle-East, and Africa – 26%
• Asia Pacific – 14%
• Others – 7%

These numbers are based on the billing address of the customers.

“Large Customers” Form the Bulk of Cloudflare’s Revenue

Most of Cloudflare’s revenue comes from customers who pay over $100,000 annually, and the list is growing fast. In one of its earnings calls, Cloudflare noted that 29% of the Fortune 1000 companies are already Cloudflare customers, and they’re adding more large customers who make up an ever more significant share of their revenue percentage.

These large customers are also a great hedge against economic downturns, as they’re unlikely to cut back on their cloud expenses because it relates to vital infrastructure.

Final Thoughts on How Cloudflare Makes Money

For a company most well-known for giving away its primary product for free, Cloudflare is doing very well for itself. Its revenue is growing by double digits, and it has a solid lock on many large enterprises. As more businesses offshore their private server infrastructure and embrace a “cloud” approach, Cloudflare will face no problems generating money!