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Comment by zaroth | Hacker News Reader

What the heck happened to their OpEx in 2018?!

They went from growing at 60% YoY in 2017 with an 8% Operating Loss, to growing 43% YoY with an Operating Loss of 44%.

To put it another way, in 2018 they grew their revenue 40% (+$58m) and grew expenses 100% (+$115m).

I mean, apparently they raised a huge round and felt the need to increase spending massively. And then saw slowing growth as a response?

Was there a massive boost in R&D output? Entering entirely new product lines? My uneducated impression is that they offer largely the same product this year as they did last year.

The only thing I can think of is that they went from “scrappy startup” to “bloated unicorn” status?

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They explain the huge changes in Operating Expenses here: https://wallmine.com/doc/edgar/0001477333/000119312519222176... It doesn't go into much detail but breaks them down nicely. Disclaimer: I added the next two highlights too

My guess: new development-intensive products like the 1.1.1 DNS, Wireguard, WAF etc plus general scaling and growth on one side, and increased competition from established cloud services on the other.

After all, if you are already on eg AWS, just using Cloudfront is temptingly easy. (even if bad from a redundancy perspective)

AWS also offers a managed WAF - https://aws.amazon.com/waf/

It's easy, but we're saving thousands of dollars a month using Cloudflare instead of our cloud service provider's CDN (~250TB/month), and that's without any kind of discounted egress agreement between our cloud service and Cloudflare (which is supposed to be in the works, but it's been literally years with no further word)

> just using Cloudfront is temptingly easy

IMO this is giving way too much credit to AWS

Assuming you’re already integrated on AWS, just using Cloudfront is a lot easier than Cloudflare. You’re likely already using S3, maybe use CloudFormation as well. Then it’s often much more straightforward to use AWS services rather than a third party provider.

You missed Magic Transit that was announced few days ago: https://blog.cloudflare.com/magic-transit/

Arguably a lot of that R&D should be capitalized and not be on the I/S. Investments like that shouldn’t impact net income. I’m more concerned with G&A going up 500%.

They are claiming the work needed to become IPO ready (accounting, legal, etc) spiked G&A. I see that a good a chunk of that was 1 time consulting but most was from additional staff.

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