Analytics for Finance

Welcome everyone. Welcome to the CFTV segment on analytics for finance. So this session is all about how business intelligence team collaborates with finance organization for some of their analysis. We will introduce both aspects of our team down the segment. So let's start with some round of introduction. Myself Apoorv. I am a data analyst at Cloudflare. I'm based out of Austin, Texas location and part of the business intelligence team. It's been two years since I joined Cloudflare and I have a master's in data analytics and data is something that fascinates me to come up with insights that can improve business processes and this is what I like to do. I'll pass it on to Heather. Hello, I'm Heather Orsi. I'm originally from the Chicago area. I attended Indiana University and majored in finance and accounting. I'm based out of our San Francisco location. I joined Cloudflare about a year and a half ago. Fun fact, I joined the day after we IPO'd. I joined Cloudflare as the first member of our strategic finance function, which rolls up under investor relations and I'll pass it to Priyanka. Hi everyone. I'm Priyanka Satish. I'm originally from Bangalore, India. Right now I'm in Bay Area, California. I graduated from Santa Clara University with a master's in computer science. I have been with Cloudflare from July, 2020. I work as a data engineer for the BI team, which is a part of the finance organization. All right. Thanks, Priyanka. Thanks a lot. Let's start off with our segment. Heather, we know what finance is in general, but can you shed some light on how finance are good responsibilities and what is your role in finance at Cloudflare? Sure. Absolutely. Why don't I start broad? The finance org at Cloudflare comprises a number of different teams. In addition to our two teams, the BI and investor relations team, we also have teams in FP&A, accounting, SEC reporting, tax, and internal audit. The finance org plays an important role in helping Cloudflare achieve and exceed its growth and profitability goals. We work with many facets of the business to provide visibility on all things financial to key stakeholders, as well as surface new insights and work to continually improve processes. With regards to my role specifically, I mentioned I'm on the investor relations team. I report to our head of investor relations. My role is fairly equally split between two functions. One is strategic finance and the other is investor relations. On the strategic finance side, there are a myriad of strategic projects and analyses that arise with regards to unit economics, KPIs, benchmarking, productivity, to name a few, as well as owning Cloudflare's long -term financial model. On the investor relations side, I oversee our quarterly earnings and investor day-related work streams, as well as any ad hoc projects, such as investor targeting or analyses that could arise from management, the board, investors, or analysts. Priyanka, can you tell us a little bit about the BI team in both of your roles? At BI team, we are responsible for the lifecycle of data. BI team is comprised of three functions, the data engineers, the analysts, and the data scientists. It starts off with the data engineers building pipelines to store clean data, usable data, which can be easily accessed by an analyst. Data analysts leverage this data to build reports and dashboards, and the data science team builds models for planning and forecasting. The data engineering team, the analyst team, the data science team, we work together to help cross -functional teams, like the finance group, to leverage insights to make decisions that are driven by data and to ensure success. Thanks, Priyanka. That's a wonderful explanation. Heather, with respect to your experience so far, what is something that you like about Cloudflare in comparison to your other roles in other companies? Sure, there are a few different areas I can touch on. So first and foremost, I love the teams that I work with. My role here is incredibly cross -functional, which allows me the privilege of working with several of the teams here at Cloudflare. And with my team being fairly small, I lean quite heavily on many of these other teams to help me out with the various workstreams that I lead. And I feel really fortunate to work among such smart and supportive co-workers. We have a lot of fun, which is really great. I also really enjoy my role and the value contribution that our small team is able to make. I really enjoy the public markets aspect of the role. So from understanding the key levers that move stock price and then getting the associated multiple pings from fellow employees, wondering what's moved our stock price up or down when it notably swings on a particular day, I think is fun. Lastly, Cloudflare has an amazing culture and mission. So Cloudflare puts their employees first, and I feel like they really invest in their professional growth, which means a lot to me, as well as has a meaningful mission to build a better Internet, which I'm really proud to be a part of. Apoorv, what would you say you like from your perspective? Yeah, I mean, like you said, it's the culture and the mission that really excites me as the most. And I think apart from that, it's the flexibility to work with cross-functional team in this role. I mean, you get to understand the holistic overview of our products and the pipelines. And that is really very important from an analyst point of view, as it gives you a perspective to look at the bigger picture than in a particular segment. So it will help us to come up with meaningful insights and present our analysis in a more descriptive way. Priyanka, would you like to share something as well? Yeah. So I joined fairly recently. It's been nine months. So I really enjoyed the learning curve that you have when you start off your career. And in BI team, we have different opportunities and we wear different hats as a data engineer. The tech stack I work on constantly changes. The data is different each time. And the solution that we work on changes with the context of the data. I work on production support as well. So I get to learn in depth about different projects that the DE team owns. And also I get to work on updating our infrastructure with the latest tech. And that's extremely rewarding for me at the end of the day. And I enjoy that a lot. That's great. That's great. Apoorv, can you tell us when the BI team was formed at Cloudflare and how the team has grown since inception? Yeah, sure. I think the BI team came into existence with the appointment of our head of BI, Sarisha. And I think she joined around September of 2018. And I think since then, there was nobody else. And I think she started the old recruiting process for recruiting data engineers, data analysts, or data scientists. As a fun fact, I was the first data analyst on our business intelligence team. My manager and all even came after me. And I had the privilege to interview her in that moment. So I think that is something unique here that you get to chance and understand the whole business and contribute to Cloudflare's success as well. And I think since then till today, I think we are more than 25 people for now. So we have really grown a lot in these two years almost. And it's going great so far. And just pointing out to that, Heather, how do you see a team growth as one of our strategic stakeholders who has joined the Cloudflare since then? Yeah, absolutely. So from my perspective, there's been a notable increase both in the team size and capability since I joined, which was around the time of the IPO. Back when I joined, I could count the number of finance dashboards that existed on one hand. Whereas today, that number has increased what seems like 5 to 10 times, dashboards that I reference on a daily, monthly, quarterly basis. Also, when I started, I primarily worked with one, maybe two folks on the BI team. And today, I work with four, sometimes five folks on the BI team. The team has visibly added a lot of expertise across the various functions within BI. And the growth in the BI team's capabilities in such a short amount of time has been really impressive and invaluable, honestly, as a partner to finance from my perspective. Thank you so much for sharing this with us, Heather. We are really proud to partner with you. Can you give us an idea about how finance has been able to leverage BI for its various use cases? Yeah, absolutely. There have been a number of use cases where I've worked closely with the BI team. To start high level, the BI team is the gatekeeper and master source of truth for all things related to our key performance metrics. And KPIs are a key area of focus in my role in particular. So at the broadest level, I work very closely with the BI team on all things related to KPIs. To give some additional color, I work closely with the BI team each quarter as it relates to earnings. So in addition to the traditional KPIs that we share externally each quarter, there are times when we provide additional insight related to customers on the earnings call or in the Q &A on the earnings call. And I work really closely with the BI team for these additional insights. Another example, so in Q1 of 2020, we began disclosing our customers' exposure to macro sensitive industries due to COVID. And we've actually updated the stat on each earnings call since Q1. And the BI team provides me with this raw data each quarter, which then I use to update an analysis that we include in the earnings script. Around the same time in Q1 of 2020, I also worked really closely with the BI team in order to understand and quantify the downside risk of our 2020 forecast and the associated guidance that we share with the street. So the BI team ran a really sophisticated Monte Carlo analysis, which provided us the increased visibility that we needed to gain comfort into our forecast going into 2020. And then the coinciding guidance that we actually shared with the street, which was really helpful. Outside of earnings, I also work with the BI team on things like in investor days or in Q1 of 2020, we actually moved from billings-based KPIs to revenue-based KPIs. And the last thing I'll mention on the topic is an important aspect of my role is being able to anticipate and answer questions from investors and analysts, which has led me to reach out to the BI team on numerous occasions with ad hoc requests, whether it's to build a new financial dashboard, get data for a particular analysis, or just simply run things by the BI team as a general sounding board, which I found really helpful. So as you both can see, the BI team is incredibly important to a number of my personal work streams. But Apoorv, can you talk about some of the key priorities for the BI team over the next year or two? Yeah, sure. I think right now, the BI team is really growing and getting mature as day by day. And right now, I think down the pipeline, we are basically focusing on automating our pipelines using CI-CD processes. Now, I think the main challenge with us is like Cloudflare is growing day by day. And today, right now, we have 20 plus range of products. And basically, some of these products doesn't behave with each other. And maybe some of them are usage-based, some of our monthly subscriptions, or yearly, and so on. So we are trying to come up with data science model, machine learning modeling that we can incorporate all these factors into it. And we can predict our future more accurately. And that's what we are trying to focus upon down the line. And this gives us flexibility as well, because we are doing our data science pipeline as well. And it will definitely be productive for you guys, or maybe other teams at Cloudflare as well. Thanks, Apoorv. That's really interesting. Priyanka, can you also talk about some of the finance-related items that the BI team has in the pipeline? Yeah, absolutely. Like how Apoorv mentioned, we are continuously working to improve the accuracy with which we can predict Cloudflare's internal and external metrics for upcoming and future quarters. We partner with the data analysts and the data scientists for this project. With this information available early on in the quarter, it would help the customer success teams to focus on new avenues and new areas of opportunity. So this is something that we are continuously progressing on and continuously working to improve on. And changing gears here, Heather, I was just curious to know, how was your experience on representation in finance? And I ask this because Cloudflare participated in the Grace Hopper Conference, which brings the career and research of women in tech to the forefront. And that's how I got to know and that's how I got to interact with Cloudflare and got to know about its effort to encourage women in tech roles. Finance just like STEM doesn't have an equal ratio of women in leadership roles. How has your experience been? Like how has Cloudflare nurtured having diversity in this arena? Yeah, it's a good question. I was really surprised to learn when I joined that the GNA org at Cloudflare was actually comprised of over 50 percent of underrepresented gender identities, which is just great and very rare to see coming from the heavily male-dominated industries of investment banking and private equity, where I was actually the only female at both companies. It's been really refreshing to join a company and be here at Cloudflare and be surrounded by so many female co-workers. One of the first things I learned during training week is that one of Cloudflare's key capabilities is to embrace diversity to make Cloudflare better. And it's been apparent for me since I've been here that Cloudflare works really hard to understand the makeup of our teams and increase diversity at the company. There's just loads of resources available to employees from the employee resource groups that we have here, supporting a myriad of communities, to the educational workshops made available to employees on a regular basis. Our people team also does a really great job of tracking and reporting diversity on a quarterly basis and has prioritized the importance of diversity into the recruiting process, which as a manager who's currently hiring, I've personally found very helpful. No, that's good to hear, Heather. Just out of curiosity, and I think Priyanka would agree with me as well, BI team does provide some data points for some of the finance use cases. I was always curious to know what goes behind the scene within the finance org before these numbers are shared with street or the market outside. How does that process look like? Sure. A good place to start is understanding where this data from BI goes. And so the quarterly data received from BI feeds a couple of different things. The first is earnings -related materials, which would include things like our quarterly SEC filings, whether it's a 10Q or 10K, or our supplemental earnings documents. The second would be the management team's prepared remarks for the earnings call. And so in terms of the order of operations here, the BI team first shares the data with me. I then put on my external analyst and investor hat as I review the data and then revert back with questions or areas for the BI team to dig into so we can better understand a particular area that could raise questions externally. Once this additional color is received and we're all on the same page, the drafting of the materials begins. And then the next layer of review would be with management during that drafting stage. And then as the documents become more baked, we share the materials with additional teams within Cloudflare and with external auditors. And so those teams would be our SEC reporting team and our legal team. And the SEC legal and audit teams are there to validate all of the figures disclosed in the documents and the earnings script in that final layer of review before things go public and our numbers are shared each quarter. Yeah. I mean, that's a really good, great explanation, Priyanka. Priyanka, from a DE perspective, I mean, can you share the same light, like what goes behind the scene before we make out these numbers? Yeah, just like Heather mentioned, I put on my engineering hat and I start with ingesting raw revenue data into our BI data lake. Our pipelines take care of transforming this data and building data sources based on a set of definitions to calculate metrics. And this data source is later used by the analytics team to build dashboards and reports. To ensure that the data is consistent, we have created several validation rules. We thoroughly analyze and validate data in multiple dimensions to ensure what we see in the data lake is homogeneous with the data that is supplied to the analysts. And I think from there, it goes on to you, Apoorv. Can you share what you do, like your perspective as a data analyst? How do you go about it? Sure. I think, like you said, our job mainly depends upon the data pipelines that you guys are building up. And our job mainly starts with engaging our stakeholders, understanding their use case, requirement gathering, and making sure that the required data for those analysis are up and there in our data pipelines. If not, we will collaborate with data engineering team here to get that data ingested. And we usually start with looking at that data and further slicing and dicing it as per the requirement from our stakeholders. We perform our analysis and we really spend some time to understand that outcome so that it can be presented in a way that our stakeholders can interpret it, understand it in a way they understand. So I think the most time-consuming part of our job is to really understand those analysis in a way that can be understood by our stakeholders. And that goes from there. Thank you for sharing that, Apoorv. It's certainly really valuable to have you on our team. And it's really fun to work with you during our quarterly reporting period. So my next question on to Heather. I just wanted to know, like after we went public in 2019, how has Cloudflare changed and how has it grown in terms of the company and the maturity? Yeah, it's a really good question. And quite hard to believe that our stock price has increased 300% since our IPO a year and a half ago. Kind of scary, makes me nervous, but it's OK. It's great. Since our IPO, we've experienced significant revenue growth, which has been driven by a number of factors. At our core, our mindset and culture hasn't changed. Cloudflare is driven by its culture of innovation, which is something we emphasized during our investor day a couple months ago, which is a key competitive advantage of ours and enables us to launch new products and features incredibly quickly. Looking at 2020 alone, we launched over 550 new products and features, which is pretty unbelievable. And this culture of innovation hasn't changed at Cloudflare since the IPO. Next, while COVID created inherent challenges more broadly in 2020, it also ignited significant digital transformation in businesses, where we saw businesses expedite lengthy digital transformation plans from year-long plans into months and weeks in some cases, which also created a strong tailwind. And looking more specifically at the CFO org since the IPO, I've watched us implement a number of tools, building sophistication and creating more efficient processes and enhancing automation and machine learning capabilities, which has been really great. That's awesome. Thank you so much, thank you for sharing this with us. And talking about investor day, as you mentioned, we recently had one and it was our first investor day. How did finance and BI work together? And how was the overall experience for both you and Apoorva? Just want to know your perspective. Sure, absolutely. So yes, we held our first investor day virtually on February 12th, which was the day after we reported our earnings. And to take a step back, the purpose of an investor day is to provide investors and analysts with a deep dive on our products and technology, as well as provide an update on our long-term financial model and key metrics. And one of the most exciting things about an investor day is that companies will typically disclose or provide an update on a subset of key metrics that aren't typically disclosed or updated with quarterly results. And so we actually disclosed a number of new data points in our investor day, where we double-clicked on customer data from customer diversity to growth in our large customer cohorts. And we also updated our total addressable market, which both of those things, we received great, great feedback externally that that was really helpful. We, of course, worked really closely with the BI team in order to pull together the various cuts of data. These are a lot of data points that we hadn't disclosed previously. And so there was a lot of back and forth to decide what to disclose and things like that. And so the BI team was incredibly helpful there. But all in all, the overall experience and feedback was overwhelmingly positive, both internally and externally, which was really great. Apoor, was there anything to add from your perspective with regards to experience or working together your first investor day? Yeah, it was definitely exciting, Heather. And like you said, it was the very next day for our quarterly reporting numbers. So we did have to manage our pipelines in a way that doesn't coincide or any, you know, affects our quarterly reporting numbers. And like you said, Cloudflare is very transparent in reporting some of our metrics, which may or may not be reported by our competitors. So it definitely burdens our architecture and our pipelines to work on those numbers and getting those metrics ready. And definitely, it was an exciting project to come up with those numbers. And we had to make sure our pipelines, you know, take care of that. And they were extra set of validation because some of the numbers that we are reporting at that time was new. And so it goes with a lot of validation process internally before even we reported to finance. And that was definitely an exciting time. And because it was very first time, we were not sure how finance would like to consume those numbers, whether it be a dashboard or just numbers or in any other fashion. So we had to be prepared as well, that if, you know, any cross questions or changes comes, we should be prepared. And I think as we mature as a team, I think we are doing a great job. Like you said, from a billing point of view, when we changed to revenue metrics, there was some hiccups, there was a little bit of standing gaps or something. But I think we learn from those mistakes, we incorporate them, and we become better. And I think we are becoming better and better day by day. And we are able to perform any new analysis that may come in the future as well. So it was an exciting time. Yeah, that's great. Yeah. And I think as we have some moment, like, I just want to go as in like, like we talked about switching from our billings to revenue based KPIs. What was your experience at that moment? And especially when we hit COVID as well at that moment? Yeah, absolutely. It's a good question. So yeah, so just so the viewers know, so when we launched our IPO, we were in the middle of implementing our new revenue system. And so we actually launched with billings based KPIs, with the thought that it was a short term solution. And then we would end up reverting to revenue based KPIs a couple quarters later. And, and it was it was, you know, this was actually one of the first big projects that that I worked on at Cloudflare. And it was a lot of fun. It was very cross functional. So we, of course, worked really closely with the BI team, worked closely with the accounting team, you know, we got to revisit all of the definitions for those KPIs and make sure that, that, that everything made the most sense that that it should, which, which was really great. And, you know, some of the feedback we got in our first quarter as a public company is, you know, folks were asking, why were our KPIs billing, billings based when when we don't actually report billings externally. And so, you know, there, there was certainly a gap there. And so, you know, it was it was absolutely a priority area for us to kind of focus on that and then revert over to revenue based KPIs in Q1 of 2020. The the process itself was great. Honestly, you know, despite entering a huge global pandemic and all of that Cloudflare had the systems in place to be able to move to a fully remote workplace seamlessly, which which was really great. And, you know, I remember over Christmas being in Chicago with my parents and, you know, being on calls and working on these things. And I and I couldn't imagine, you know, working with better folks, you know, we had it, we had a really great time. And, and, you know, the the feedback that we received externally was was really positive, as as we moved from from billings to revenue based KPIs. So all around it was it was it was great, and certainly the right move to make. Thank you so much for that, Heather. So we have just about two and a half minutes. I just have one question. I haven't been physically present in in an office at Cloudflare except for my interview. So how do you folks see our future when we go back to office later down the road? Yeah, Apoorv, I can let I can let you take this one and I can chime in. I mean, yeah, I agree. Like a lot of people in our team as well as Cloudflare haven't had the opportunity to even, you know, met in person. So I think when I joined Cloudflare, the orientation was definitely one thing that we really enjoyed a lot. And I don't know if you guys know, like when I joined, I think Cloudflare used to bring anyone and everyone around the world to the SF office. And that's really exciting. I mean, a company going such a way long to bring all of their employees at one go. I mean, that's really incredible. They really invest on our employees. So that's really shows their value for their employees. That was a great experience. And definitely even I miss our office work culture, because things at home, you may not be that much productive, but I think everything went very well, especially at the time of that transition that Heather was mentioning, that belings to revenue -based KPI transition. I think we did hit COVID at that time. All of a sudden, everyone moved to home-based work environment, but I think it didn't stop us from any manner. And we were able to come up with our outcome deadlines in the timely manner. Heather, would you like to add something here? Yeah, I'm really looking forward to it. You know, we brought over a really great head of places a few months back, who's just doing really exciting things to reimagine what our future workplace will look like. And, you know, I've seen very preliminary mock-ups of what things will look like. And it's just, it's incredibly exciting, you know, emphasizing a collaborative workplace, lots of open space, lots of meeting rooms, so that remote first is, you know, remote is still always a priority. Yeah, I absolutely can't wait. I agree. So that ends up our session. Thank you guys for joining. Thank you so much. Thank you. Thank you, guys. Bye-bye.