Ben’s Portfolio update end of July 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% May 6.8% 0.4% Jun 21.0% 13.3% Jul 7.0% -11.6%
These are my current positions:
Jul 2024 Jun 2024 First buy* Nvidia 24.4% 22.4% 5/13/2020 Datadog 14.6% 14.0% 5/13/2020 Cloudflare 13.0% 11.9% 11/2/2020 Snowflake 10.9% 9.6% 2/8/2021 Zscaler 10.1% 9.6% 3/4/2021 Crowdstrike 9.6% 19.4% 5/13/2020 Monday 6.4% 5.5% 9/13/2021 Samsara 3.5% 2.7% 1/8/2024 Axon 3.5% 2.7% 4/2/2024 TradeDesk 3.4% 1.7% 5/13/2020 Enphase 0.7% 0.5% 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.
Nvidia:
- Reporting Fiscal Q2 2025 on 8/28/24.
- Revenue expectation: $29700M (14% QoQ, 120% YoY), assuming a 6% beat; they beat Q1 guide by 8.5% and beat percentages have been trending down.
- Q3 new revenue guide: $32000M (7.8% QoQ, 77% YoY) which I would interpret as $33250M (12% QoQ, 84% YoY) roughly continuing the deceleration trend.
- I would like to see GAAP gross margin in-between 76.3% and 77.3%.
- I would like to see non-GAAP gross margin in-between 76.5% and 77.5%.
- I’d be curious to hear from others on the board if they have another metric they are especially interested in for Nvidia (like gross margin might tell us something about competitive pressures).
Snowflake:
- Reporting Fiscal Q2 2025 around 08/28/24.
- Product revenue expectation: $840M (6.4% QoQ, 31.2% YoY), assuming a 4% beat.
- Q3 new product revenue guide: $878M (4.4% QoQ, 26% YoY) which I would interpret as $911M (8.5% QoQ, 30% YoY) and expecting re-accelerating QoQ growth.
- NRR around 126% would be great and continuing the trend of smaller getting deltas: In the last four quarters NRR dropped by 9% → 7% → 4% → 3%, to 128% in Q1.
- I would like to see RPO greater or equal to $5.18b.
- I would like to see total customer growth around 4.5% QoQ and $1M+ customer growth around 4% QoQ.
- I would like to see continued market place listings and stable edge customer growth strength.
- I don’t have a good idea what to expect for OM, NM and FCFM because they were talking about increased expenses for GPUs and newly acquired employees. If I had to through out some numbers I’d say I would expect 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 May 2024
Datadog:
- Reporting Fiscal Q2 2024 on 08/08/24 before the market opens.
- Revenue expectation: $647M (5.8% QoQ, 27.0% YoY), assuming a 4% beat.
- Q3 new revenue guide: $670M (3.5% QoQ, 22% YoY) which I would interpret as $696M (7.5% QoQ, 27% YoY) expecting QoQ growth will re-accelerate.
- My Q2 revenue expectation implies about $35.6M raw sequential revenue increase.
- I would like to see QoQ customer growth around 2.5% and for the $100k+ cohort, around 3%.
- I would like to see continued multi-product adoption progress.
- I would like to see NRR again around 115% which I would interpret as confirmation that this metric has bottomed as it would mark the third quarter in a row at mid-110%.
- I would like to see stable profitability margins, similar to Q1 with around 30% FCF margin.
- I would like to see RPO with around 10% QoQ growth.
- Detailed thoughts: Ben’s Portfolio update end of May 2024
Zscaler:
- Reporting Fiscal Q4 2024 around 09/03/24.
- Revenue expectation: $589M (6.4% QoQ, 29.5% YoY), expectation from billings model and 4.0% beat.
- Q1 new revenue guide: $618M (5% QoQ, 24% YoY) which I would interpret as $641M (8.9% QoQ, 29% YoY) as my expectation from billings model, assuming Q4 QoQ billings growth of 49% (seasonal!).
- I would like to see Q4 billings of around $935M.
- I would like to see RPO grow by around 14% QoQ.
- I would like to see >100k ARR customer growth around 6% QoQ.
- I would like to see >1M ARR customer growth around 10% QoQ.
- I would like to see an operating income around $130M.
- Detailed thoughts: Ben’s Portfolio update end of June 2024
Crowdstrike:
- Reporting Fiscal Q2 2025 around 9/4/24.
- I came up with these expectations before the faulty update incident. I do expect the incident will hurt Crowdstrike’s business to some degree in the near term. To identify any impact on Q2 I’ll be looking at by how much these metrics are below my expectations. For example if they can get very close to these expectations or even meet these expectations I would say the immediate impact on the last 1.5 weeks since the incident and before they closed their books for Q2 was negligible. That might actually be a reasonable scenario as their customers had hardly time to change anything and this is a subscription business. So I’d expect a bigger impact on Q3, which is why the Q3 guide they’ll give might be very telling, but also much more uncertain, so maybe they’ll give more conservative guidance than usual.
- Revenue expectation: $974M (5.8% QoQ, 33.1% YoY), assuming a 1.5% beat this Q.
- Q3 new revenue guide: $1028M (5.5% QoQ, 31% YoY) which I would interpret as $1042M (7% QoQ, 33% YoY), assuming QoQ growth accelerate due to seasonality.
- Net new ARR of around $237M.
- I would like to see around $5.07b RPO.
- I would like to see NRR close to their benchmark of 120%.
- I would like to see about $231M operating income.
- I would like to see about $272M net income.
- I would like to see continued multi-product adoption success.
- Detailed thoughts (pre-incident): Ben’s Portfolio update end of June 2024
Monday:
- Reporting Fiscal Q2 2024 on 08/12/24 before the market open.
- Revenue expectation: $235M (8.3% QoQ, 33.7% YoY), assuming a 3% beat.
- Q3 new revenue guide: $246M (4.5% QoQ, 30% YoY) which I would interpret as $253M (7.5% QoQ, 34% YoY), expecting QoQ growth will decelerate seasonally.
- I would like to see raw sequential revenue increase around $17.9M.
- I would like to see operating margin around 15%, net margin around 19% and FCF margin around 40%.
- I would like to see around 2690 customers in the $50k+ cohort and around 1000 customers in the $100k+ cohort.
- I would like to see CRM accounts growth greater than 20% QoQ.
- I would like to see Dev accounts growth greater than 30% QoQ.
- I would like to see that NRRs continue stabilizing.
- Detailed thoughts: Ben’s Portfolio update end of May 2024
Samsara:
- Reporting Fiscal Q2 2025 around 08/29/24.
- Revenue expectation: $301M (7.1% QoQ, 37.3% YoY), assuming a 4% beat.
- Q3 new revenue guide: $313M (4% QoQ, 32% YoY) which I would interpret as $325M (8% QoQ, 37% 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 196 new $100k+ ARR customers.
- I would like to see around $14M operating income, corresponding to a 4.7% operating margin.
- Detailed thoughts: Ben’s Portfolio update end of June 2024
Cloudflare:
- Reporting Fiscal Q2 2024 on 08/01/24.
- Revenue expectation: $402M (6.1% QoQ, 30.3% YoY), assuming a 2.0% beat.
- Q3 new revenue guide: $424M (5.5% QoQ, 26% YoY) which I would interpret as $432M (7.5% QoQ, 29% 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 3% QoQ.
- I would like to see large customer growth greater than 7% QoQ.
- I would like to see RPO grow around 9% QoQ.
- I would like to see cRPO grow by more than 5.5% QoQ.
- I would like to see operating income around $45M.
- I would like to see a FCF margin around 10%.
- Detailed thoughts: Ben’s Portfolio update end of May 2024
Axon:
- Reporting Fiscal Q2 2024 on 08/06/24.
- Revenue expectation: $500M (8.5% QoQ, 33.5% YoY), assuming QoQ growth acceleration.
- Q3 revenue expectation: $548M (9.5% QoQ, 32% YoY), assuming further QoQ growth acceleration. Note: they don’t give quarterly guides.
- I would like to see around $58M net new ARR.
- I would like to see RPO around $7.6b.
- I would like to see NRR greater or equal to 122%.
- Detailed thoughts: Ben’s Portfolio update end of May 2024
The Trade Desk:
- Reporting Fiscal Q2 2024 on 08/08/24.
- Revenue expectation: $590M (20% QoQ, 27.1% YoY), assuming a 2.5% beat.
- Q3 new revenue guide: $640M (8.5% QoQ, 30% YoY) which I would interpret as $649M (10% QoQ, 32% YoY) which is really just a guess given presidential campaign spending uncertainty.
- I would like to see a net margin of around 28%.
Wrap up
I am looking forward to the incoming wave of earnings reports for our portfolio. Here is to hopefully a great earnings season for our companies and no more black swan events!
Thanks for reading and I wish you all a great August!
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
April 2024: Ben’s Portfolio update end of April 2024
May 2024: Ben’s Portfolio update end of May 2024
June 2024: Ben’s Portfolio update end of June 2024