Ben’s Portfolio update end of October 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% Aug 12.6% 5.3% Sep 13.0% 0.3% Oct 19.5% 5.7%
Time-stamp: 10/31/24 after market close
These are my current positions:
Oct 2024 Sep 2024 First buy* Nvidia 24.5% 23.7% 5/13/2020 Cloudflare 13.0% 12.7% 11/2/2020 Datadog 11.9% 11.5% 5/13/2020 Crowdstrike 9.5% 9.5% 5/13/2020 Snowflake 8.5% 9.0% 2/8/2021 Monday 8.2% 8.2% 9/13/2021 Axon 7.7% 7.7% 4/2/2024 Samsara 4.8% 5.1% 1/8/2024 TradeDesk 4.1% 3.9% 5/13/2020 Zscaler 4.0% 8.0% 3/4/2021 NuBank 2.2% 0% 10/14/2024 Transmedics 1.2% 0% 10/7/2024 Enphase 0.4% 0.6% 5/15/2020
*held through today
Time-stamp: 10/31/24 after market close
I took two new tryout positions this month: NuBank and Transmedics. I’ll likely sell the latter once I have cleared my wash sale window and I haven’t decided yet if I want to keep NuBank or not. They are up to report quarterly results on 11/13/24, so that’ll be telling.
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.
A practical way for me to come up with those numbers is by asking a couple questions. For example “what revenue growth rate would continue the trends the company is currently following?” (Looking at revenue growth trends AND other metrics.) And then when I have a number in mind, I ask myself “If the company reaches less than this number, would I be negatively surprised?“; “If the company reaches more than this number, would I be positively surprised?” If the answer is yes to both questions I write it down below. Same goes for all other quantitative metrics below.
Nvidia:
- Reporting Fiscal Q3 2025 on 11/20/24.
- Revenue expectation: $34456M (14.7% QoQ, 90% YoY), implying a 6% beat; they beat Q1 guide by 8.5%, Q2 guide by 7.3% and beat percentages have been trending down.
- Q4 new revenue guide: $37000M (7.4% QoQ, 67% YoY) which I would interpret as $39280M (14% QoQ, 78% YoY) roughly continuing the deceleration trend.
- I would like to see GAAP gross margin around 74.4%.
- I would like to see non-GAAP gross margin around 75%.
Snowflake:
- Reporting Fiscal Q3 2025 around 12/01/24.
- Product revenue expectation: $887M (6.9% QoQ, 27% YoY), implying a 4% beat; $57M net new revenue.
- Q4 new product revenue guide: $905M (2% QoQ, 23% YoY) which I would interpret as $931M (5% QoQ, 26% YoY) and assuming 3% beat and that revenue growth will seasonally decelerate QoQ.
- NRR around 126% would be great and continuing the trend of smaller getting deltas: In the last five quarters NRR dropped by 9% → 7% → 4% → 3% → 1%, to 127% in Q2.
- I would like to see RPO around $5.49b and cRPO around $2.69b.
- I would like to see total customer growth around 4.0% QoQ (~410 adds) and $1M+ customer growth around 5.5% QoQ (~28 adds).
- 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 of increased expenses for GPUs and newly acquired employees. Just throwing out some numbers I would expect an operating income margin around 7%, a net margin around 9% and a free cash flow margin around 10%.
- Detailed thoughts: Ben’s Portfolio update end of August 2024
Datadog:
- Reporting Fiscal Q3 2024 on 11/07/24 before the market opens.
- Revenue expectation: $686M (6.3% QoQ, 25.3% YoY), implying a 3.6% beat.
- Q4 new revenue guide: $710M (3.5% QoQ, 20% YoY) which I would interpret as $735M (7.1% QoQ, 25% YoY) expecting QoQ growth will accelerate.
- My Q3 revenue expectation implies about $40.6M raw sequential revenue increase.
- I would like to see QoQ customer growth around 2.5% (~718 new) and for the $100k+ cohort, greater or equal to 2.9% (>=100 new).
- I would like to see continued multi-product adoption progress.
- I would like to see NRR greater or equal to 115% and management commentary that NRR is going up.
- I would like to see slightly expanding profitability margins, with more than 25% FCF margin.
- I would like to see RPO with around 10% QoQ growth.
- Detailed thoughts: Ben’s Portfolio update end of August 2024
Zscaler:
- Reporting Fiscal Q1 2025 around 11/30/24.
- Revenue expectation: $635M (7.1% QoQ, 27.8% YoY), expectation from billings model and 4.9% beat.
- Q2 new revenue guide: $643M (1.3% QoQ, 22% YoY) which I would interpret as $669M (5.3% QoQ, 27% YoY) as my expectation from billings model, assuming Q1 QoQ billings decline of -37% (seasonal!).
- I would like to see Q1 billings of around $574M.
- I would like to see RPO decline by less than -2.6% QoQ ( to $4.3b).
- I would like to see >100k ARR customer growth around 3.2% QoQ (~100 net adds).
- I would like to see >1M ARR customer growth around 3.2% QoQ (~18 net adds).
- I would like to see an operating income around $138M (21.5% margin).
- Detailed thoughts: Ben’s Portfolio update end of September 2024
Crowdstrike:
- Reporting Fiscal Q3 2025 around 12/01/24.
- Revenue expectation: $992M (2.9% QoQ, 26.2% YoY), implying a 1.0% beat this Q.
- Q4 new revenue guide: $1032M (4% QoQ, 22% YoY) which I would interpret as $1042M (5% QoQ, 23% YoY), assuming QoQ growth will accelerate.
- Net new ARR of more than $160M (-25% QoQ and ARR +4.2% QoQ).
- I would like to see around $5.05b RPO; cRPO around 2.93b (58% of RPO).
- I would like to see NRR only slightly below their benchmark of 120%.
- I would like to see about $188M operating income.
- I would like to see about $222M net income.
- I would like to see no multi-product customer decline.
- I would like to see gross retention greater than 95%, hopefully close to 97%
- Detailed thoughts: Ben’s Portfolio update end of September 2024
Monday:
- Reporting Fiscal Q3 2024 on 11/11/24 before the market open.
- Revenue expectation: $254M (7.5% QoQ, 34.2% YoY), implying a 3.6% beat.
- Q4 new revenue guide: $263M (3.5% QoQ, 30% YoY) which I would interpret as $272M (7% QoQ, 34% YoY), expecting QoQ growth will slightly decelerate seasonally.
- I would like to see raw sequential revenue increase around $17.7M.
- I would like to see operating margin around 16%, net margin around 21% and FCF margin around 30%.
- I would like to see around 2900 customers in the $50k+ cohort and around 1084 customers in the $100k+ cohort.
- I would like to see CRM accounts growth around 17.5% QoQ.
- I would like to see Dev accounts growth around 23% QoQ.
- I would like to see that NRRs also in lower cohorts starting to improve again.
- Detailed thoughts: Ben’s Portfolio update end of August 2024
Samsara:
- Reporting Fiscal Q3 2025 around 11/30/24.
- Revenue expectation: $322M (7.4% QoQ, 35.6% YoY), implying a 4% beat.
- Q3 new revenue guide: $333M (3.5% QoQ, 21% YoY) which I would interpret as $346M (7.5% QoQ, 25% YoY; 35.1% adjusted 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 160 new $100k+ ARR customers and 10 new $1m+ ARR customers.
- I would like to see around $30M operating income, corresponding to a 9.3% operating margin.
- Detailed thoughts: Ben’s Portfolio update end of September 2024
Cloudflare:
- Reporting Fiscal Q3 2024 on 11/07/24.
- Revenue expectation: $431M (7.5% QoQ, 28.4% YoY), implying same 1.8% beat as last Q.
- Q4 new revenue guide: $453M (5.2% QoQ, 25% YoY) which I would interpret as $461M (7% QoQ, 27% YoY) expecting QoQ growth slightly decelerate.
- I would like to see NRR around 110%.
- I would like to see total customer growth around 4% QoQ (~8400 net adds).
- I would like to see large customer growth around 7% QoQ (~213 net adds).
- I would like to see RPO grow around 4.5% QoQ to $1.48b.
- I would like to see cRPO grow around 4.3% QoQ to $1.01b.
- I would like to see operating income around $66M.
- I would like to see a FCF margin around 10.5%.
- Detailed thoughts: Ben’s Portfolio update end of August 2024
Axon:
- Reporting Fiscal Q3 2024 on 11/07/24.
- Revenue expectation: $549M (9.0% QoQ, 32.7% YoY), implying similar QoQ growth as last Q.
- Q4 revenue expectation: $574M (4.5% QoQ, 33% YoY), assuming seasonal QoQ deceleration. Note: they don’t give quarterly guides.
- I would like to see around $85M net new ARR.
- I would like to see RPO around $7.9b.
- I would like to see NRR around 122%.
- I would like to see adjusted EBITDA around $135M.
- Detailed thoughts: Ben’s Portfolio update end of August 2024
The Trade Desk:
- Reporting Fiscal Q3 2024 on 11/07/24.
- Revenue expectation: $630M (7.8% QoQ, 27.7% YoY), implying a 2.0% beat.
- Q4 new revenue guide: $775M (23% QoQ, 28% YoY) which I would interpret as $788M (25% QoQ, 30% YoY) which is really just a guess given presidential campaign spending uncertainty.
- I would like to see a net margin of around 35% and $222M net income.
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!
Wishing you all a great November!
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
July 2024: Ben’s Portfolio update end of July 2024
August 2024: Ben’s Portfolio update end of August 2024
September 2024: Ben’s Portfolio update end of September 2024