Ben’s Portfolio update end of January 2024

SlowAndFast · February 1, 2024, 4:33am

Ben’s Portfolio update end of January 2024

Returns and portfolio holdings:

	Portfolio	Notes
2020	63.6%	Since May 12, 2020, where 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%

These are my current positions:

	Jan 2024	Dec 2023	First buy*
Crowdstrike	17.4%	16.3%	5/13/2020
Datadog	16.3%	17.1%	5/13/2020
Snowflake	15.3%	16.8%	2/8/2021
Nvidia	14.2%	12.3%	5/13/2020
Zscaler	13.9%	14.0%	3/4/2021
Cloudflare	13.1%	14.9%	11/2/2020

Monday	6.2%	5.9%	9/13/2021

TradeDesk	1.5%	1.7%	5/13/2020
Samsara	1.4%	0%	1/8/2024
Enphase	0.7%	0.9%	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 Q4 2024 around 03/01/24.
Product revenue expectation: $747M (7.0% QoQ, 34.5% YoY), assuming a 4.0% beat.
Q1 new product revenue guide: $769M (3% QoQ, 30% YoY) which I would interpret as $799M (7% QoQ, 35% YoY) and conservatively expecting constant QoQ growth.
I would like to see a NRR around 130%.
I would like to see RPO greater or equal to $4.1b.
I would like to see total customer growth around 5.5% QoQ and $1M+ customer growth around 8% QoQ.
I would like to see market place listings growth around 8%.
I would like to see greater than one stable edge customer growth around 10%.
I would like to see an operating income margin around 8%, a net margin around 11% and a free cash flow margin around 30%.
Detailed thoughts: Ben’s Portfolio update end of December 2023

Datadog:

Reporting Fiscal Q4 2023 around 02/16/24 before the market opens.
Revenue expectation: $592M (8.2% QoQ, 26.1% YoY), assuming a similar beat as last Q (4.7% beat).
Q1 new revenue guide: $604M (2% QoQ, 25% YoY) which I would interpret as $622M (5% QoQ, 29% YoY) expecting a seasonal slow-down and 3% beat.
My Q4 revenue expectation implies about $45M raw sequential revenue increase.
I would like to see QoQ customer growth around 3.4% and for the $100k+ cohort, around 4%. Hard to say what we’ll get in the $1M+ cohort, but given the tough macro year maybe/hopefully more than 50 adds YoY?
I would like to see continued multi-product adoption progress.
I would like to see NRR again >120% after it dropped below 120% in Q3.
I would like to see stable profitability margins, similar to Q3.
I would like to see low double-digit RPO QoQ percentage growth.
Detailed thoughts: Ben’s Portfolio update end of November 2023

Zscaler:

Reporting Fiscal Q2 2024 around 02/23/24.
Revenue expectation: $531M (6.9% QoQ, 37% YoY), expectation from billings model and 4.9% beat.
Q3 new revenue guide: $545M (2.6% QoQ, 30% YoY) which I would interpret as $571M (7.6% QoQ, 36% YoY) as my expectation from billings model, assuming Q1 QoQ billings growth of 42% (seasonal!).
I would like to see Q2 billings of around $650M.
I would like to see RPO QoQ percentage growth in mid-single digits.
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 $100M.
Detailed thoughts: Ben’s Portfolio update end of December 2023

Crowdstrike:

Reporting Fiscal Q4 2024 around 03/08/24.
Revenue expectation: $848M (7.9% QoQ, 33% YoY), assuming a 1.2% beat this Q.
Q1 new revenue guide: $899M (6% QoQ, 30% YoY) which I would interpret as $912M (7.5% QoQ, 32% YoY), assuming QoQ growth will stay around 8%.
Net new ARR of around $250M would be great.
I would like to see more than $4b RPO.
I would like to see NRR close to their benchmark of 120%.
I would like to see about $190M operating income.
I would like to see about $200M net income.
I would like to see continued multi-product adoption success.
Detailed thoughts: Ben’s Portfolio update end of December 2023

Monday:

Reporting Fiscal Q4 2023 around 02/13/24 before the market open.
Revenue expectation: $205M (8.3% QoQ, 36.8% YoY), assuming same 4% beat as last Q.
Q1 new revenue guide: $213M (4% QoQ, 31% YoY) which I would interpret as $221M (8% QoQ, 36% YoY), assuming QoQ growth will stay around 8%.
I would like to see raw sequential revenue increase of greater than $15M and breaking out of their $13M range.
I would like to see a very strong quarter for profitability with operating margin around 15%, net margin around 20% and FCF margin around 35%.
I would like to see around 2200 customers in the $50k+ cohort and around 810 customers in the $100k+ cohort, based on their latest investor presentation.
I would like to see that NRRs continue stabilizing.
Detailed thoughts: Ben’s Portfolio update end of November 2023

Samsara:

Reporting Fiscal Q4 2024 around 02/03/24.
Revenue expectation: $273M (15% QoQ, 46.3% YoY), accounting for 7.7% longer quarter and assuming a 6% beat.
Q1 new revenue guide: $278M (2% QoQ, 36% YoY) which I would interpret as $295M (8% QoQ, 44% YoY), assuming QoQ growth will be around 8%.
I would like to see NRR greater than 115%.
I would like to see around 145 new $100k+ ARR customers.
I would like to see around $20M operating income.

Cloudflare:

Reporting Fiscal Q4 2023 around 02/08/24.
Revenue expectation: $360M (7.2% QoQ, 31.1% YoY), assuming a 2% beat.
Q1 new revenue guide: $378M (5% QoQ, 30% YoY) which I would interpret as $385M (7% QoQ, 33% YoY) expecting QoQ growth will stay around 7%.
I would like to see NRR around 117%, showing this metric bottomed out in Q3.
I would like to see total customer growth around 4.5% QoQ.
I would like to see large customer growth around 8% QoQ.
I would like to see RPO QoQ percentage growth around 5%.
I would like to see operating income greater or equal to $40M.
I would like to see an FCF margin greater than 12%
Detailed thoughts: Ben’s Portfolio update end of November 2023

Wrapping it up

Looking forward to earnings season! One very nice read to set the 2024 expectations and prospects is Peter Offringa’s most recent post, which I highly recommend as it touches on many companies in our portfolio: Data Infrastructure Opportunities in 2024 - Software Stack Investing

Thanks for reading and I wish you all a great February!

Ben

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