Cloudflare’s earnings last week revealed something more significant than just company optimism: a fundamental shift in software buyer confidence.

“However, as the quarter progressed, we saw encouraging signs that confidence is beginning to return, particularly in the U.S. Security, AI, modernization and efficiency form the word cloud we hear most often in these conversations. These themes play directly to Cloudflare’s strength.”

Sales cycles are accelerating.

“Beyond the qualitative, we saw measurable improvements in Q4. We saw a notable uptick in close rates. We saw an improvement in sales cycles. The majority of large customers I mentioned last quarter, those deals had slipped from Q3, reengaged and signed significant contracts in Q4. We crossed 3 million active developers on our platform, including Cloudflare Workers and Workers AI.”

Account executives are attaining & exceeding quota. As a side note, this is the first time I’ve read a transcript where there was a mention of quota performance by AEs. It’s wonderful to see it because it provides a deeper view into the performance of a company.

” We delivered a 10 percentage point increase in ramped AEs, achieving over 80% of quota compared with 2023, with most gains coming in the 125% or higher attainment cohorts.”

AI caching is a meaningful improvement in efficiency. If two users ask, “How do I say the word pickle in Dutch?” there’s no need for a computer program to ask an AI twice. It’s very unlikely that within the last day or so the answer has changed from augurk. Answer caching is yet another strategy for reducing overall inference costs in addition to the algorithmic advances and hardware improvements.

“Additionally, more and more developers are discovering AI Gateway, with some realizing more than 10x price performance improvement for their AI agents by serving requests directly from Cloudflare’s cache instead of the original model provider. ”

The surge in quota attainment and faster sales cycles suggests a broader trend than just Cloudflare’s success: enterprise buyers are ready to invest again. With AI workloads creating fresh tailwinds & customer confidence returning, we’re likely seeing the start of the next major wave of enterprise software spending.
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