Ben’s Portfolio update end of April 2024
Returns and portfolio holdings:
Portfolio Notes 2020 63.6% Since May 12, 2020, when I started this portfolio with over 40 companies, mostly holding large cap tech & FAANG, but also some high-growth SaaS. 2021 13.1% Discovered Saul’s board in February 2021 and started concentrating to 16 companies through December 2021. 2022 -60.7% Concentrated a bit more through July 2022 from which point I started posting my monthly updates on Saul’s board, holding about 12 or fewer positions. 2023 77.8% 2024 YTD Month Jan 5.9% 5.9% Feb 17.5% 10.9% Mar 13.6% -3.3% Apr 6.4% -6.4%
These are my current positions:
Apr 2024 Mar 2024 First buy* Nvidia 18.3% 18.8% 5/13/2020 Crowdstrike 17.3% 18.1% 5/13/2020 Datadog 15.0% 14.5% 5/13/2020 Cloudflare 14.6% 15.5% 11/2/2020 Snowflake 12.9% 12.0% 2/8/2021 Zscaler 10.0% 10.5% 3/4/2021 Monday 5.1% 6.0% 9/13/2021 Samsara 3.3% 2.2% 1/8/2024 TradeDesk 1.7% 1.7% 5/13/2020 Axon 1.2% 0% 4/2/2024 Enphase 0.7% 0.7% 5/15/2020
*held through today
Expectations for upcoming earnings
In the following I summarize my expectations for the companies that are still due to report this earnings season. The goal of this exercise is to come up with reasonable earnings expectations. The goal here is not to be absolutely accurate, but to be able to identify when a company surprises in either a good or a bad way. That way it will be easier for me to identify if a change in conviction level is warranted. Also, just because a company exceeds or performs below my expectation with a single metric, that doesn’t necessarily mean my conviction has to change. Really, what this exercise does is it helps me to think about my companies holistically. Therefore, I think it is valuable to come up with these expectations before they report as it will help me to keep the companies (and myself) accountable and minimize any cognitive bias once the results are out.
Snowflake:
- Reporting Fiscal Q1 2025 around 05/22/24.
- Product revenue expectation: $775M (5.0% QoQ, 31.3% YoY), assuming a 3.5% beat.
- Q2 new product revenue guide: $806M (4% QoQ, 26% YoY) which I would interpret as $833M (7.5% QoQ, 30% YoY) and expecting re-accelerating QoQ growth.
- NRR around 129% would be fantastic and indicating bottom of this metric.
- I would like to see RPO greater or equal to $4.9b.
- I would like to see total customer growth around 4% QoQ and $1M+ customer growth around 4.5% QoQ.
- I would like to get some commentary on market place listings and stable edge customer growth and how to reconcile this with new AI related business.
- I would like to see an operating income margin around 10%, a net margin around 15% and a free cash flow margin around 45%.
- Detailed thoughts: Ben’s Portfolio update end of March 2024
Datadog:
- Reporting Fiscal Q1 2024 on 05/07/24 before the market opens.
- Revenue expectation: $613M (4% QoQ, 27.3% YoY), assuming a similar beat as last Q (4.1% beat).
- Q2 new revenue guide: $628M (2.5% QoQ, 23% YoY) which I would interpret as $653M (6.5% QoQ, 28% YoY) expecting QoQ growth will re-accelerate.
- My Q1 revenue expectation implies about $23M raw sequential revenue increase.
- I would like to see QoQ customer growth around 3% and for the $100k+ cohort, around 4%.
- I would like to see continued multi-product adoption progress.
- I would like to see NRR again around 120% after it dropped to mid-110% in Q4.
- I would like to see stable profitability margins, similar to Q4 with greater than 25% FCF margin.
- I would like to see RPO with around 6% QoQ growth.
- Detailed thoughts: Ben’s Portfolio update end of February 2024
Zscaler:
- Reporting Fiscal Q3 2024 around 06/01/24.
- Revenue expectation: $560M (6.6% QoQ, 33.7% YoY), expectation from billings model and 4.6% beat.
- Q4 new revenue guide: $568M (1.5% QoQ, 25% YoY) which I would interpret as $591M (5.5% QoQ, 30% YoY) as my expectation from billings model, assuming Q3 QoQ billings growth of -3% (seasonal!).
- I would like to see Q3 billings of around $609M.
- I would like to see RPO grow more than 7% QoQ.
- I would like to see >100k ARR customer growth around 4% QoQ.
- I would like to see >1M ARR customer growth around 6% QoQ.
- I would like to see an operating income around $118M.
- Detailed thoughts: Ben’s Portfolio update end of March 2024
Crowdstrike:
- Reporting Fiscal Q1 2025 around 05/31/24.
- Revenue expectation: $913M (8% QoQ, 31.8% YoY), assuming a 1.0% beat this Q.
- Q2 new revenue guide: $959M (5% QoQ, 31% YoY) which I would interpret as $968M (6% QoQ, 32% YoY), assuming QoQ growth will be around 2% less than in Q1 due to seasonality.
- Net new ARR of around $195M.
- I would like to see around $4.6b RPO.
- I would like to see NRR close to their benchmark of 120%.
- I would like to see about $200M operating income.
- I would like to see about $245M net income.
- I would like to see continued multi-product adoption success.
- Detailed thoughts: Ben’s Portfolio update end of March 2024
Monday:
- Reporting Fiscal Q1 2024 on 05/15/24 before the market open.
- Revenue expectation: $215M (6.2% QoQ, 32.5% YoY), assuming same 3% beat as last Q.
- Q2 new revenue guide: $226M (5.3% QoQ, 29% YoY) which I would interpret as $233M (8.3% QoQ, 33% YoY), expecting QoQ growth will re-accelerate.
- I would like to see raw sequential revenue increase around $12.5M, still within their 10+ quarter $13M range. But I want the guide for Q2 indicate that they will clearly break out of that range, eventually delivering a new record sequential revenue increase (this would correspond to my narrative of them prioritizing again growth and accepting slower profitability metric growth; see below).
- I would like to see operating margin greater than 0%, net margin greater than 4% and FCF margin greater than 24%.
- I would like to see more than 2475 customers in the $50k+ cohort and more than 908 customers in the $100k+ cohort.
- I would like to see that NRRs continue stabilizing.
- Detailed thoughts: Ben’s Portfolio update end of February 2024
Samsara:
- Reporting Fiscal Q1 2025 around 06/01/24.
- Revenue expectation: $288M (4.4% QoQ, 12.4% adjusted QoQ, 41% YoY), assuming a 6% beat.
- Q2 new revenue guide: $294M (2% QoQ, 34% YoY) which I would interpret as $310M (7.5% QoQ, 41% YoY).
- I would like to see core customer NRR around 115%.
- I would like to see large customer NRR around 120%.
- I would like to see around 185 new $100k+ ARR customers.
- I would like to see around $5.5M operating loss, corresponding to a -2% operating margin.
- Detailed thoughts: Ben’s Portfolio update end of March 2024
Cloudflare expectations:
- Reporting Fiscal Q1 2024 on 05/02/24.
- Revenue expectation: $382M (5.5% QoQ, 31.6% YoY), assuming a 2.7% beat.
- Q2 new revenue guide: $401M (5% QoQ, 30% YoY) which I would interpret as $411M (7.7% QoQ, 33% YoY) expecting QoQ growth will re-accelerate.
- I would like to see NRR around 116%.
- I would like to see total customer growth greater than 4% QoQ.
- I would like to see large customer growth greater than 6% QoQ.
- I would like to see RPO grow more than 6% QoQ.
- I would like to see operating income around $45M.
- I would like to see a FCF margin greater than 7%
- Detailed thoughts: Ben’s Portfolio update end of February 2024
Axon expectations:
- Reporting Fiscal Q1 2024 on 05/06/24.
- Revenue expectation: $441M (2.1% QoQ, 28.6% YoY), assuming same QoQ growth as last Q1.
- Q2 revenue expectation: $411M (7.7% QoQ, 33% YoY), assuming same QoQ growth as last Q2.
- I would like to see around $50M net new ARR.
- I would like to see RPO around $7.3b.
- I would like to see NRR greater or equal to 122%.
Wrap up
I am eagerly awaiting for the majority of our portfolio to report in May. While I am pretty optimistic, given the relatively strong hyperscaler cloud revenue growth rates we saw this and last week, only time will tell. Until then …
Thanks for reading and I wish you all a great May!
Ben
Past recaps
July 2022: Ben’s Portfolio end of July 2022 - Saul’s Investing Discussions - Motley Fool Community
August 2022: Ben’s Portfolio end of August 2022 - Saul’s Investing Discussions - Motley Fool Community
September 2022: Ben’s Portfolio update end of September 2022
October 2022: Ben’s Portfolio update end of October 2022
November 2022: Ben’s Portfolio update end of November 2022
December 2022: Ben’s Portfolio update end of December 2022
January 2023: Ben’s Portfolio update end of January 2023
February 2023: Ben’s Portfolio update end of February 2023
March 2023: Ben’s Portfolio update end of March 2023
April 2023: Ben’s Portfolio update end of April 2023
May 2023: Ben’s Portfolio update end of May 2023
June 2023: Ben’s Portfolio update end of June 2023
July 2023: Ben’s Portfolio update end of July 2023
August 2023: Ben’s Portfolio update end of August 2023
September 2023: Ben’s Portfolio update end of September 2023
October 2023: Ben’s Portfolio update end of October 2023
November 2023: Ben’s Portfolio update end of November 2023
December 2023: Ben’s Portfolio update end of December 2023
January 2024: Ben’s Portfolio update end of January 2024
February 2024: Ben’s Portfolio update end of February 2024
March 2024: Ben’s Portfolio update end of March 2024