Cloudflare files S-1 for IPO with details about finances and 8chan risk

Cloudflare, the hot cloud networking platform, has filed to go public. The San Francisco-based startup plans to list on the New York Stock Exchange under the ticker 'NET.'

Cloudflare helps businesses enhance the way they deliver content, while defending their websites against cyberattacks.

The company acknowledged that it has been hurt by “negative publicity” related to the use of the network by the 8chan online forum, which is known to have inspired the mass shootings in El Paso, Texas and Christchurch, New Zealand.

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Cloudflare, the tech startup recently embroiled in the controversy over online hate speech on sites like 8chan, filed its paperwork for an IPO on Thursday.

The San Francisco cloud company, which speeds up content delivery and protects websites from cyberattacks, plans to list shares on the New York Stock Exchange under the ticker symbol “NET,” it said in its S-1 filing.

It's unclear how much money Cloudflare intends to raise in the offering, or how it will price its shares. The filing pegged the offering at $100 million, though that number is a placeholder that is likely to change. The company lost $87 million in 2018, on revenue of nearly $200 million, according to the filing.

Cloudflare is the latest in a string of tech startups heading to the public markets. On Wednesday, office sharing startup WeWork, valued at $47 billion by private investors,filed its public IPO prospectus. Startups in the enterprise tech sector that Cloudflare competes in, such as Crowdstrike and Zoom, have been among this year's most successful IPOs.

But while Cloudflare has emerged as a major cloud player for helping businesses enhance the way they deliver content, it has also faced criticism for its role providing service to online sites tied to hate groups and to the notorious 8chan online forum linked to recent mass shootings.

Cloudflare also acknowledged the “negative publicity” it received as a result.

Clouflare said that the network was used by The Daily Stormer, the neo-Nazi white supremacist website, which became infamous for its role in the 2017 protests in Charlottesville, Virginia. Cloudflare subsequently announced that it had terminated the group's account.

Cloudflare said its platform was also used by 8chan, the online forum which “served as an inspiration” for the deadline mass shootings in El Paso, Texas and Christchurch, New Zealand.

Cloudflare announced that 8chan was no longer a customer after the El Paso massacre, describing the forum as a “cesspool of hate.”

'We received significant adverse feedback'

Cloudflare noted in its IPO filing that ending its relationship with the two organizations sparked controversy.

“We received significant adverse feedback for these decisions from those concerned about our ability to pass judgment on our customers and the users of our platform, or to censor them by limiting their access to our products, and we are aware of potential customers who decided not to subscribe to our products because of this,” the company filing said.

The company also drew attention recently for causing a major outage that disrupted major websites across the internet. Cloudflare said the disruption was the result of a “bad software” deployment.

“We deployed an update to our web application firewall and certain aspects of the related software code resulted in excessive consumption of computing resources across our network, resulting in an outage on our network,” Cloudflare said in its IPO filing.

44 billion thwarted cyberthreats a day

The 10-year old company plays a particularly critical role in making sure websites are protected from cyberthreats, including denial- of-service attacks. In its filing with the Securities and Exchange Commission, Cloudflare said its platform blocks 44 billion cyberthreats a day. The company also said 10% of Fortune 1000 companies are paying Cloudflare customers.

Cloudflare said its filing for an IPO as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, which allows some companies planning to go public to keep some of it information confidential, until the deal gets closer to pricing. Business Insider first reported in July that the company was preparing for an imminent IPO.

Cloudflare reported a loss of $87 million on revenue of $192.7 million in 2018, compared with a loss of $10.7 million on revenue of $134.9 million the previous year.