Hi all. In a separate thread, Cloudflare’s CEO Matthew Prince talked about the importance of cash flow in uncertain times. I agree with him. I went back through my holdings and watch list data (largely companies discussed on this board) and compiled the following information regarding the reported operating cash flow for each company listed over the last 12 months. Quarterly cash flows from operations move around a lot, so I like the trailing twelve months numbers.
The results were interesting, and I hope, valuable to you. As this is a growth-driven board, I also include most recent quarter growth rate for reference (as reported, no corrections for acquisitions).
Mercado Libre (MELI): 1640M (Y/o/Y rev growth last Q 53%)
Crowdstrike (CRWD): 642M (Y/o/Y rev growth last Q 61%)
The Trade Desk (TTD): 531M (Y/o/Y rev growth last Q 35%)
Datadog (DDOG): 404M (Y/o/Y rev growth last Q 74%)
ZoomInfo (ZI): 329M (Y/o/Y rev growth last Q 54%)
Snowflake (SNOW): 273M (Y/o/Y rev growth last Q 85%)
ZScaler (ZS): 264M (Y/o/Y rev growth last Q 63%)
Cloudflare (NET): 36M (Y/o/Y rev growth last Q 54%)
Bill.com (BILL): 11M (Y/o/Y rev growth last Q 179%)
MongoDB (MDB): 8M (Y/o/Y rev growth last Q 57%)
Monday (MNDY): -10M (Y/o/Y rev growth last Q 75%)
I am impressed that CRWD, DDOG, ZI, SNOW, and ZS can grow so fast while generating so much cash.
MELI, and TTD are different beasts than the cloud companies, but each impressive in their own way and clearly able to grow significantly while generating cash. TTD is growing quite a bit slower than every company listed above. There has been much discussion around MELI, it has a lot of different risks. But man, what a monster it is.
NET seems to clearly require a lot of cash to grow (probably as a result of their business model), which I see as a disadvantage of that company.
BILL and MNDY are just earlier on in life and maybe are about to make the transition to big cash flow? I first wrote this message before MNDY reported, and they did take a step backwards this quarter in cash generation. If they join the others as “cash flow machines” and can continue to grow fast, they could be BIG winners in my opinion.
MDB – I just haven’t decided where they fall. I don’t see why they wouldn’t be generating more cash, but they have not been. I like Mongo, I’ve been in and out at different periods. This analysis made me more likely to want to reduce or exit. If I compare to ZS, which was about their revenue size 6 months ago, it was generating a lot of cash at that time.
All things considered, I’m working on maximizing my allocations around companies that grow the fastest and generate the most cash, or look to become large generators of cash.
Good luck to you all, and thank you all for this wonderful board…
Rob