And so I think that as you look out at the AI space and we try to survey what are the most common cloud platforms that are being used across the hottest AI start-ups and companies that are out there. Cloudflare is the most common to that. And I think that again accelerates the rate at which you’re able to get that adoption. And so if you look at things like NPM downloads of packages and you compare sort of the things that you would download to run on Cloudflare workers versus competitors like AWS’ serverless offering. It’s been pretty amazing that we’ve actually caught and now passed AWS by some measures in terms of the packages which are being downloaded that are out there. And again, we’re a much newer platform. And so I’m encouraged that we’ll be hopefully taking that average time for new developer platforms to get reach scale down because of some of the success we’ve seen and again I’m really proud of our team and how they’ve executed in delivering this.
Jonathan Ho: Excellent. Thank you.
Operator: Your next question comes from the line of Tim Horan with Oppenheimer. Your line is open.
Timothy Horan: Thank you. Related to the previous question. Can you maybe update us on your best guess on timing when the workers’ platform starts to drive some material revenue when it starts to move the needle in. And maybe the same thing for AI. I know you said kind of not this year. And what do you think for both these platforms, what does it mean for overall growth rates for the company? Thank you.
Matthew Prince: Yes. I think what has been interesting has been that workers is a big piece of a lot of the deals that we see. So it’s still in somewhere around 20% of the large deals that we closed, have some workers component to it. And that’s held actually fairly steady, but those deals have continued to go up and up. So it depends on how. We don’t break out the various pieces of Cloudflare because we think that the platform functions very well as one unified platform. And we close more deals because we have workers involved. But a lot of times, that includes our reverse proxy security services oftentimes includes our Zero Trust security services. And what we really want to be is not a one-trick pony for any one of our customers.
We want to actually have multiple different things that they rely on and be that strategic vendor that provides a broad set of solutions to them. So I think it’s already materially driving new business and large deals. But as the workers platform, I think the AI space, I think a lot of the money, which is being spent on AI right now, especially with some of the hyperscale public cloud. A lot of that is for training of models that is not — we are not the right place to actually do model training. But as that transitions over time and people start to figure out how can you take those — the models that you’ve built and turn them into real products. I think that’s where you’ll start to see a much more significant share of — you’ll start to see revenue that is showing up is meaningful to us in terms of delivering the value in the AI space.
But I think it’s — we’re still so early. And I think that the thing to track is less about us. It’s more about how long does it take product managers and engineers to really figure out how to harness these new tools into providing customer value. I think we’ve seen a ton of — I mean, the challenging thing with AI is it is really easy to make a demo, but it’s very hard to make a product. There’s a ton of value that will be created here, but I think it’s going to still take some time. And I think it’s going to be up to some things that are somewhat out of our control. But I can’t imagine being better positioned than we are.
Timothy Horan: Thank you.
Operator: Your next question comes from the line of Trevor Walsh with Citizens JMP Securities. Your line is open.
Trevor Walsh: Great. Hi, Team. Thanks for taking my question. Matthew, maybe for you, I wanted to just sort of round up all the different kind of themes and things that you’ve been talking about throughout. You’ve got a platform of platforms where you’re playing in AI, you’re playing with developers and workers and Zero Trust et cetera creates a big TAM, but then at the same time from a go-to-market perspective, you have a lot of different stakeholders and buyers within the organization that you have to try to round up and sell that vision. So where do you think you need to go from just a go-to-market perspective, especially with Mark coming on board now? In terms of whether it’s internal enablement, simplifying pricing and packaging like you talked about kind of how do you — how do you thread that needle, I guess, of all those different kind of people? And how do you see that kind of playing out kind of this coming year and beyond? Thanks.
Matthew Prince: Yeah, so I think our strategy remains our strategy, which is land with one product and then demonstrate, build trust, demonstrate value and then expand to help customers both create more value and save money across their overall all platform. And what we see over and over again is that the customer that just this last quarter signed a $60 million total contract value renewal. They started with one product and we’re a $60,000 customer a year when they first started. So that works. I think operationalizing that now is the thing which we’ve made huge strides on over the last 15 months and I think Mark Anderson will continue to help with that. What I think is really attractive about Mark Anderson is, yes, he knows the security space and the network security space from his time at Palo Alto Networks, but also from his time at Palo Alto Networks, they went from really a one product company to a platform company.
And that’s something which we really admire and think is rare when companies figure out that play. We’ve got that set of products. We’ve got a lot of customers. And now it’s how do we, again, continue to demonstrate value, I think, bringing on incredibly talented leaders like Mark Anderson, who are trusted and respected in the space who have run this play before and been successful with it, and it can now take the breadth of products that we have and the opportunity we have and build an iconic company and an iconic go-to-market organization. Again, I’m incredibly honored to have him on board, and his first day was today, and he’s already rolling up his sleeves and getting to work.
Trevor Walsh: Great. I appreciate it.
Operator: Your next question comes from the line of Joel Fishbein with Truist Securities. Your line is open.
Joel Fishbein: Thanks for taking the question. Matthew, just two quick ones. You mentioned in the prepared remarks about the public business just getting being fairly strong, and you mentioned the US Department of Commerce. Can you give us any color about on adoption in the public sector? And then just tied to that, you were very early and very right in talking about the macro becoming weak several years ago. And I’m just curious, I know I listened in your prepared remarks, I just wanted to take your temperature about how you’re just feeling in general about the way that the demand environment is currently? Thanks.
Matthew Prince: Yes, so sort of related questions, actually. I think that our federal business as well as our SLED business state, local education, and our global government business has all been real signs of strength. And I think that, in part, is because of the fact that the world is getting scarier and we’re seeing more attacks. In 2022, it was actually very quiet on the cyber front, whereas the back half of 2023 and especially after the Hamas invasion and kidnappings in Israel really took off in terms of cyber-attacks that were going on around the world. And I think governments recognize the importance of staying safe and secure. More than half of the world’s population will vote in 2023 in elections. And so I think the fact that we’ve been leaders in protecting elections and making sure that elections are run without cybersecurity being part of the story has gotten us in the conversation in a lot of places around the world.
And I think that we have a maturing set of just go-to-market motions and a really great leadership team around our state and local business or excuse me our federal and state business, which is showing real signs of promise. So I would expect that, that business continues to be strong throughout 2024. Your second question is kind of the flip side of that, which is I think that the macro continues to be challenging. There are two hot wars going on right now. I think we are not out of the woods economically in terms of getting totally ahead of inflation. Again, I think in the US that looks better than some of the other places in the world. There’s a lot of ways that you can imagine the world continues to get more complicated. And I think IT buyers continue to be skittish.
Q4 definitely felt like people were starting to make decisions, and they were starting to say that there are certain things that are must-have versus nice-to-have. And I think we continue to be sorted into the must-have bucket. But we continue to be very prudent and very thoughtful as we think about our business, we’re trying to scale behind the demand that we see, not get cocky about ramping anything too fast. But in a world that is increasingly difficult and increasingly complicated, I’m glad that we’re in the business of helping provide cybersecurity, and I’m incredibly proud of our team for living up to our mission of helping make sure the internet stays safe, secure and reliable.
Operator: That is all the time we have for questions today. I will turn the call back to Matthew Prince for closing remarks.
Matthew Prince: I just wanted to thank the entire Cloudflare team for just all the incredibly hard work over Q4 and into the beginning of 2024. And we were just so incredibly proud of the work that everyone is doing. I’m excited to add Mark Anderson to our team full time. He started actually today, as I said, and he’s already rolling up his sleeve. I want to thank Marc Boroditsky, who will continue to act as an Advisor to Cloudflare and help with the transition. He’s been nothing but a class act throughout this and we couldn’t have gotten here. Thanks to all of our customers, investors, we’ll see you back here in about three months. Thank you.
Operator: This concludes today’s conference call. We thank you for joining. You may now disconnect your lines.
