FinallyFoolin July 2022 Portfolio Review

Investment Analysis Clubs Saul’s Investing Discussions
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JULY was a VERY POSITIVE month!! First very solidly positive one in a long long time! While it ended more positive than many others, my overall portfolio has been yo-yoing in the same range for a couple months, it just so happened the end of the past few months were in the down part of the yo-yo. So while it LOOKS a lot better (and it feels better), my portfolio is still within the same range.

One interesting thing… the past couple earnings seasons, I was excited, thinking we’ll see a reversal… this report, I’m not excited about. We’ll see I guess. haha.

YTD -47%


	        July        June	May	April
Snowflake	25%         25%	        23%	19%
ZScaler	        21%         22%	        22%	20%
Data Dog	15%         16%	        20%	20%
MongoDB	        13%         13%	        11%	12%
Crowdstrike	11%         10%	        NEW	
Cloudflare	8%           8%	        10%	11%
SentinelOne	7%           6%	        13%	12%
Bill           <1%                      <1%      5%

Moves:
I didn’t make many moves this month. I did re-buy a tiny tiny tiny amount of BILL. I really like them long-term but am hesitant due to the macro and the fact that they’re so exposed to SME. I’m also a bit uncomfortable with them as its a bit more outside of my area of comfort (I’m a techie). So I’m much more comfortable with the likes of Snowflake & MongoDB.

FF Random Thoughts about what I’d like to see this month:
DDOG - I think they will decelerate, how much and how slowly are the big questions. They’re so down though that I don’t really see much downside. Leverage numbers look great and improving. I want to see solid revenue growth in addition to overall infrastructure monitoring % of revenue go down (currently around 62%). This will indicate good things in other modules. I also am curious to know if they’re still selling the security to current customers or if they have a GTM strategy and are closing deals based on the security module(s).

NET:
IIRC, this quarter we should start to see some $$ from R2. Someone correct me if I’m wrong. In addition to this, I want so hear about D1 & the preview progress of it. These are secondary though to wanting to learn about progress in Zero Trust security. Still waiting on FEDRamp? How much is the security area growing? Would like to hear if they are closing customers based solely on their Zero Trust.

BILL:
Really interested in hearing about the macro impact on SME. Also, how will the increased ORGANIC revenue impact things?

SNOW:
Interested to hear if they are seeing the expected additional workloads added as a result of cost savings from improvements. Seeing progress in some of the promised mega workloads moving over. Might the cost savings in Snowflake of those workloads be expedited by the Macro?

Also want to hear more supporting evidence of the mission critical nature of their business. I think a lot of investors don’t necesarially believe this yet and more proof will asuade a lot of folk.

They teased buying more companies…

CRWD:
I want to see evidence of continuing to have stabilized their growth.

They teased buying companies… We already heard about 1

MDB:
IMO, they guided the MOST conservative of our companies; providing a lot of detail in the last call on what they saw in Europe and what they expected to follow in the US. Interested in this overall. Interested in how they performed against this much lower expectation.
Expecting this impact to lower Atlas to 70s growth.

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Hi all. Sorry for the reply but I found an error in my calculations and don’t want to be misleading. Basically, over the past month, I’ve ported over my PortfolioManager from using Azure SQL Database Serverless on the backend to using Snowflake. I identified an error in my data that I forgot to remove after testing. The good news is it only affected 1 day (7/21), however it affected my YTD and Monthly performance numbers. I apologize for this error. After correcting this error, my performance YTD is -50% YTD, not -47%.

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Hi FF

Can you please elaborate on why you are expecting DDOG to slow down?

From my notes, they guided for about 63% growth YoY in Q2, which is definitely slower than last quarter’s 83% and previous year’s 67% Q2 growth. I was thinking this minor slowdown could be due to tougher comps against 2021. No other indications (as far as I can see) about a slowdown in business. RPO is very healthy.

Curious about your thoughts if you are seeing something different.

Thanks
Beachman

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Hi Beachman. Sorry for the delay as I was traveling yesterday afternoon and hadn’t seen this until this morning. Its mostly just math. I’ll explain how I come to my expectations.

I base my model on what to expect for the next Q on a company’s beat history and apply the min, avg and max to their high-end guidance. I only take the previous 4-5 quarters into account. Last quarter the upper guidance was 380. The min, avg & max beats were 7.08, 9.3 & 11.6% giving a range of revenue coming between 406.9 & 424.2 with the average being 415.3. The YoY for these corresponds to 74%, 78% & 82% YoY. What is more interesting to me in these numbers is what these projections are in a QoQ (I report as annualized QoQ). These corresponded to 58%, 71% & 87%. So even the average beat would replace a QoQ of 17.6 (91% annualized) with a 15 (71% annualized). This impacts the next 4 quarters YoY numbers.

Unfortunately, they reported slightly lower than my expected range and their implied guidance applied with the same method above indicates to me they are likely to slow within the next year to the high 50s, low 60s range. I also think that this is impacted by the macro as DDOG was the most impacted of these companies during COVID. Therefore, I would not be surprised if the following year, we see either another increase or at least a longer sustained timeframe in this range.

Applying lessons I learned from CRWD, I’m most definitely NOT selling out. DDOG is still VERY strong. I might lower my allocation another 2-3% or so and put that money into BILL (very nervous on them so likely to wait until after earnings).

Hope that helps. If anyone has any follow-up questions, feel free to hit me up on Twitter so as not to clog up the board. You can also see a dashboard I put together there that has all this stuff on it; well, not the description of how I get to the numbers, but the history of it all and this projected future for the next quarter.
@FinallyFoolin

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