This month ended with a flurry!! Between the better-than-expected hyperscaler reports, AMZN then indicating issues towards the end of the quarter for AWS, NET really bad report due to GTM and Macro…
After months of talking about it, I finally opened a position in $MELI. To do this, I lowered my outsized Snowflake position. $SNOW is still my biggest position.
There are several reasons I did this move. First, I was looking to have another position in a non-SaaS company. Second, I’ve been in MELI before and really liked them in the past. I’ve been following, but not as closely as before. I really like a lot of things they have going on, AND, their growth is actually a whole lot higher than it appears. They have whethered the storm from competitors and have absolutely become the leaders in Brazil as well as other markets South of the United States.
Sold out of Cloudflare due to GTM issues. I posted my thoughts on this on Twitter. Here it is for convience.
Lots to like and lots of concern. While I love top notch products, it take much more than that to win. Look no further than Teams v Slack. Slack is a much better and easier to use tool but Teams is dominating that market. Unless the product sells itself, the GTM is very important.
This is where Cloudflare is now. It is very good that they have identified the issue and are taking steps to fix it. Can they fix it? I think so but not willing to wait until they show they can. I can always get back in later. See $ZS when they identified massive GTM issues. They fixed it.
Outside of that, everything else looks really good. Products gaining traction; I’m most interested in R2 and SASE. R2 in Q3 CC was mentioned as over a PB of customer data. This quarter they said 7 PB. They did say it was 25% QoQ. A PB is not a lot of data. For reference, over a decade ago, I worked for a company that had PBs of databases. It is a company that got bought by Salesforce; so just a smaller subsidiary of Salesforce. This to say that I really like R2 as a product, I’m not yet impressed by its traction.
Its interesting they said R2 is 25% QoQ and AI spend is up over 20% QoQ. This aligns with what I’ve been saying their biggest AI benefit is; its R2. We’ll get a better idea if this is the case next month at developer week.
For SASE, while they don’t break out its growth, I loosely track it with their Channel Partner revenue because they have called out their Channel Partners several times in regards to SASE and how the sales motion is different (top-down). They’ve even talked about using some of the ZS partners.
If this is accurate (big if), then its pretty good but not great. 68% YoY, 57% aQoQ but only 14% of total revenue. Up from 11.4% a year ago.
For now, in my non-capital gains accounts (IRAs), I put the money into $SNOW & $TSLA but will be looking for a better idea of where to deploy this money. I really hope to see GTM improvement because I love this company.
The more I think about Cloudflare, the more disappointed I get. A couple years ago, they were doing ok on sales and such running around 50% YoY for a long long time… In SaaS where getting every customer is very important because they stay customers. Now we find out that they weren’t diligent on their sales staff. Only top performers coming thru and a lot of the sales staff was mostly order takers, not go-getters.