It appears that they are doing well, sadly most companies will never release the actual data, so we are guessing here, but as Invision, Xenoforo, vBullletin, and Woltlabs have all gone the cloud route, so it seems to be doing well. There is also a strong point that the two major players, Xenforo and IPS have pushed cloud hosting to all their premier marketing locations and pricing pages, so it is also safe to say that it is making money.
They are definitely marketed to businesses as the "hands off" cloud hosting is absolutely something that companies will pay money for (and this likely also explains why they are at the top of the pricing pages), but a lot of people are making the mistake that they are ONLY for businesses. People often look at IPS's cloud pricing and assume cloud hosting is out of their price range, but Woltlabs and vB are well within ranges of a higher quality self-hosting cost. (XF mostly sits in the middle here).
Overall, clouds offer a huge amount of perks as they allow admins to focus on community setups and content over server problems and hosting issues and that can be a major step in allowing a community to thrive. We have all seen successful communities drop off the grid as a server issue takes them offline for weeks as admins plead for help to get things fixed without the money to hire people to fix it.
Granted, that does not mean self-hosting is dead or a bad idea. Many admins have the server skills needed to keep things going without issue and can overcome problems. Admins of hobby forums may also enjoy the server side of things and want to work with the coding and databases. Cost is also a factor as there are a lot of ways to look at the cost of things (mostly once communities grow into thriving communities and can no longer survive on the budget servers), but their is no cheaper way to get started then on a shared host and cloud hosting does not allow price shopping.
Overall, your goal is a major factor here. If you want a hobby forum with no interest is making money off of it, cloud hosting is expensive, but it does allow you to completely focus on the frontend of your site instead of the backend. If you do want to run it as a business and make money or have money to invest, then cloud starts to make a lot more sense. Even a $2000/yr cloud hosting cost can be seen an acceptable cost for a hobby and it is far from a major expense if you are making a living off the forum, but it can also be an insanely high hobby cost and prevent an entire business model from being able to startup.
You need to weight the pro and cons and where your costs factor into the mix. At the same time, content is still king, and your hosting setup and/or software choice is not going to lead to success or failure on its own.