Breakdown:
Datadog 18.3%
Bill 16.3%
Sentinel 15.1%
Snowflake 14.3%
Zscaler 13.5%
Cloudflare 12.9%
Crowdstrike 9.7%
Mongo 6.5%
Monday 1.9%
Bill
Growing like mad.
Made great acquisitions which have been jet propelling it.
80% gross margins
Not profitable but just below breakeven and spending more to get more customers
FCF positive $23 million, FCF margin was 14%
Down 64% from its high of approx $350
NRR was 125% at Jun 2021 fiscal year
Strong guidance and very enthusiastic
Alliance with CPA.com and with Bank of America, and with 85% of top 100 CPA firms
It seems like an excellent company, and I was thinking of just holding as is, but it’s not pure SaaS, and may be hit more in a recession, so I trimmed my 17.3% position down to 16.3% .
Cloudflare
Solid company growing at 54%.
79% gross margins
Not really profitable or desiring to be but right above breakeven. Idealistic about saving the cloud.
FCF quite negative last quarter but they say it was largely because of a unique tax payment
Down 73% from its high of approx $222, but still not cheap. However, to put it in perspective, a return to that high (which will probably eventually happen) will quadruple your money.
Higher capex than others because it has to build and service all its world-wide endpoints, etc
Putting out new products like mad
Moving rapidly into security and competing with ZS and PaloAlto
Moving rapidly into data storage, processing, and distribution (I don’t understand the tech).
Net Retention Rate (NRR) 127% and rising
Big acquisition for email security
Very enthusiastic, and doing what it does very, very, well
So it’s a very mixed picture: growing slower than others but very steady, high valuation, higher capex than others, no desire to be profitable any time soon, negative FCF, Net Retention Rate steadily rising, moving into new fields with new products, etc, etc.
It’s a 13% position and I could trim just a little to add to smaller positions, but I have no current plans to do so.
Crowdstrike
Growing at 63% and probably slowing but dominant in its field and quite profitable.
Down only 45% from its high of approx $301, but that’s partly because it didn’t go up like the others in 2021.
Op cash flow margin is 37%
Free cash flow margin is 29%
Net profit margin is positive 16%
They are thus VERY profitable, and increasingly so.
New products for new fields.
Got German Federal Office for Information Security Approval
Enthusiastic
It’s grown to a 9.7% position. Hold. Don’t add more.
Datadog
Grew at 84% and 83% the last two quarters
Gross margins 80%
Very profitable: trailing EPS is 66 cents, with 24 cents last quarter.
Adj Op margin was 23%!
Op Cash Flow Margin was 40%!
FCF Margin was 33% and 36%! last two quarters
Dominant in its field
Down 49% from its Nov high of approx $200
NRR over 130
Moving into security in a big way and succesfully
Analysts called results stupendus, terrific. CEO very enthused.
An 18.3% position and at first I thought I should reduce it, but after this review I decided I’ll hold.
Monday
Another mixed picture.
Down about 74% from high of approx $450, but that was a one-day spike. Really more like down 70%, which is still a lot.
Enormous revenue growth rate of 91% was up from 85% growth a year ago, but actually down from 95% yoy growth in the previous quarter.
Sequential revenue growth of 14% was excellent for the first quarter, which seems to be seasonally low for all our companies.
London/European office, just opened in November, is now moved to a much larger office to accommodate rapidly increasing business.
They are spending to get every customer they can, and they thus still have negative operating income and net income.
Net Retention Rate is fine at 135% for companies with over 10 seats, and 150% for companies with spend of over $50k. (Monday often lands with just one or two teams in a customer and expand from there).
Growing number of customers over $50k very rapidly (by 200% yoy)!
Op cash flow and FCF both turned positive last quarter.
Expectations are low because they seem less mission critical than our other companies in a recession.
They have a lower valuation than our other companies, but they do have lots of competitors, and the other companies in the field have never succeeded in turning sales into profitability.
My position is just 1.9% and I’m slowly adding to it.
Mongo
Growing revenue at 55% and accelerating every quarter because of Atlas growing much faster and now almost 60% of revenue
Gross margins were 74%
Had been “open source, “ which I considered a negative as an investor, but is less open source now that it had to patent/copyright to stop AWS from copying it, and now that Atlas is growing so fast
Almost profitable with Adj Net Inc -2% up from -12%
Op Cash Flow of $22 million
FCF of $17 million, up from a loss of $21 million a year ago. Only 6% FCF margin but on its way!
Dominant in their field.
Down 58% from its November high of approx $592.
I don’t have their NRR but Atlas NRR is probably very high (150 or so)
It’s a 6.5% position and I should hold it as is.
Sentinel
Mixed picture:
ARR up 123% yoy
Growing revenue at about 120%… BUT
Gross margins are lower than our other companies at just 63% and
Op margins are very negative at -66% last quarter (improved from -104%, but still).
FCF margins improved to -11% from -84% a year ago, but could be just because big customers are paying in advance
NRR of 129%, improved from 117% a year ago.
Stock is down 66% from its high of approx $79.
New alliances and acquisitions
Growing customers over $100k by roughly 140% yoy, and total customers by 70% (really growing fast)
Great tailwind of worries about breaches with the Ukraine war
Enthusiastic guidance.
It’s a 15.1% position, but it maybe shouldn’t be that large with such a mixed picture. I may trim it but I have no current plans to do so.
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