Comparing fast growers without EPS: Q2 UPDATE

Several weeks ago, I put together a matrix of metrics for fast growing companies without EPS. 
I did this because I was trying to evaluate them comparatively so that I can make better 
investing and allocation decisions regarding these growth companies.

Those metrics were based on data through calendar Q1 (usually 3/31/17). 
I have since updated the numbers since most have reported calendar Q2 results.

Note: I stopped updating BL, NEWR, MULE and HDP because for various reasons I decided that 
I did not want to invest in those companies. Also, SPLK has not yet reported calendar Q2. 
<b>Thus, the following update still uses calendar Q1 numbers for BL, NEWR, MULE, HDP, and 
SPLK. I have updated the numbers for SHOP, TLND, HUBS, TWLO, and WIX to reflect calendar Q2
updates.</b>

```
	TTM REV	MARK CAP  Cash	EV/S  REV GR REC REV GR	CFFO(Q)	CFFO(TTM)     Customers	Growth	Def Rev	Shares 	Price	SBC(TTM) Dil. Updated	Notes
SHOP	$509	$8,799	$932.4	15.5	80%	64%	-$8.9	$2.9		500000+	67%	33.9	94.291	$93.32	$31.5	0.4%	6/30/17	Cashflow will likely stay negative due to cash advances to merchants
TLND	$127	$1,115	$95.4	8.1	43%	43%	-$0.6	$4.6		291	57%	113.5	28.884	$38.61	$4.7	0.4%	6/30/17	Customer # is customers with >$100K subscr rev per year; have more than 1500 customers
HUBS	$318	$2,549	$245.5	7.2	42%	44%	$8.7	$35.4		26560	30%	98.77	36.7	$69.45	$40.3	1.6%	6/30/17	Deferred revenue on BS growing
HDP	$199	$902	$83.4	4.1	41%	53%	-$9.0	-$54.8				198.2	61.848	$14.58	$92.8	10.3%	3/31/17	Deferred revenue on BS growing
MULE	$235	$2,719	$337.1	10.1	60%	62%	-$0.2	$1.1		1170	23%	144.4	128.8	$21.11	$14.3	0.5%	6/30/17	
NEWR	$263	$2,423	$206.4	8.4	46%			$18.9		15216	13%	72.4	53	$45.72	$31.9	1.3%	3/31/17	
TWLO	$337	$2,857	$285.8	7.6	58%	65%	-$6.4	$0.9		43431	41%	12.6	90.873	$31.44	$38.0	1.3%	6/30/17	
SPLK	$1,192	$7,963	$987.6	5.8	38%	29%	$41.4	$207.5		13000+	17%	469.1	137.785	$57.79	$345.8	4.3%	4/30/17	Transitioning to Cloud from On-premises; revenue growth rates will likely increase
WIX	$356	$2,662	$185.2	7.0	48%	48%	$19.7	$66.3		2865000	35%	182.2	45.39	$58.65	$35.9	1.3%	6/30/17	Customer number is for premium subscribers
BL	$135	$1,540	$101.3	10.6	47%	47%	-$1.7	-$1.8		1850	31%	78.8	51.3	$30.02	$6.8	0.4%	3/31/17	

```

Some note regarding the above table:
1) Rev growth, Recurring rev growth, and customer growth are full 
year over full year.

2) Cash is net cash (cash + investments - long term debt).

3) EV/S is enterprise value (market cap less net cash) divided 
by TTM sales).

4) The 2 CFFO figures are for the most recent quarter and then for 
the most recent TTM.

5) Shares is the total diluted shares outstanding.

6) Price is the stock price as of approximately 11am EDT on 8/15/17.

7) Dilution is the TTM SBC divided by they market cap.

8) The updated date is the date of the end of the last
fiscal quarter that I used for the metrics.

Based on the updated metrics, other figures not shown above, and
certain qualitative factors, I made the following changes to my
portfolio:

Increased SHOP, TLND, WIX, TWLO.

Eliminated MULE and HDP.

Later reduced WIX to buy more NVDA.

I really like SQ too and have increased my position in it. I didn't
include SQ in the above table because I look at SQ as 2 businesses:
a fast growing recurring revenue business with high margins and a
fast growing payment processor with low margins. If I were to combine 
the financials of these 2 business then I think I would get an 
inaccurate reading for the basis of comparing SQ to the other companies
on the list above. I have not yet gone through the effort to separate
SQ's business so that I can better compare, but I know that both of
SQ's businesses are growing incredibly fast and SQ's recurring revenue
business will compare favorably in relation to most of the other 
companies.

Chris
47 Likes

SHOP pretty much blows ever other company on your list away.
It’s business is easy to understand and the underlying growth of e- commerce is highly likely to continue.
But I don’t have the guts to put my whole retirement in one stock.

1 Like

SHOP pretty much blows ever other company on your list away.
It’s business is easy to understand and the underlying growth of e- commerce is highly likely to continue.
But I don’t have the guts to put my whole retirement in one stock.

Mauser,

SHOP looks good to me. The valuation based on enterprise value over sales is 15.4 which is about 2x higher than TLND, WIX, TWLO, and HUBS so you are paying extra for that extra growth.
If you’re an old dude who doesn’t want to deal with the potential disaster of being a future Walmart greeter then not putting all your eggs in one basket is a good idea IMO.

Chris

8 Likes

Yay Chris!

That’s a great post. Lots of useful info.

I could only rec it once and that didn’t seem enough, so I thought I’d cheer for you here. :slight_smile:

I have two of those companies (plus SQ). After reviewing your post and reading a great post by another person on this board, I plan to add another. Not saying more, don’t want to run afoul of my TMF Fool Rules.

Rob
He is no fool who gives what he cannot keep to gain what he cannot lose.

1 Like

SHOP pretty much blows ever other company on your list away.
It’s business is easy to understand and the underlying growth of e- commerce is highly likely to continue.

But I don’t have the guts to put my whole retirement in one stock. – mauser

I partially solved that problem for myself with a do-it-yourself lobotomy. :wink: Now, I’m a retired and happy owner of SHOP with a 9.4% allocation.

That’s enough shares and options for now. I’ll revisit my allocation if it hits 15%-20%.

Rob
He is no fool who gives what he cannot keep to gain what he cannot lose.

Yay Chris!

That’s a great post. Lots of useful info.

I could only rec it once and that didn’t seem enough, so I thought I’d cheer for you here. :slight_smile:

I agree with Rob, so I gave HIS post a rec. :wink:

1 Like

I agree with Rob, so I gave HIS post a rec. :wink: – KJ

LOL. I returned the favor. :wink:

Rob
He is no fool who gives what he cannot keep to gain what he cannot lose.