FoolishJeff January Portfolio Update

2022 - (-22.2% YTD)

Portfolio Breakdown vs Last Month

DDOG – 19.5% (19.5%)
MNDY - 16.8% (17.9%)
ZS – 12.0% (11.7%)
S – 11.9% (3.1%)
ZI – 11.1% (9.0%)
SNOW – 10.4% (7.7%)
NET – 8.8% (8.2%)
AMPL – 6.3% (5.6%)
UPST – 3.2% (10.1%)
CRWD – SOLD - no longer a category crusher and sales have drastically slowed
BILL - SOLD - the story is complicated and SMB’s are facing some headwinds so I decided I didn’t want to own a complicated story

Watchlist - BILL, CRWD

YTD Returns

DDOG - (-10%)
MNDY - (-28%)
ZS - (-14%)
ZI - (-12%)
S – (-2%)
NET - (-19%)
SNOW – (-15%)
AMPL – (-23%)
UPST - (-19%)

Summary: This massive downturn hasn’t been easy to swallow. On 1/27, my Portfolio hit a low of 52% below it’s all-time high in mid October. My lowest low’s in 2019, 2020, and 2021 were haircuts that were roughly in the 30-35% range so we’ll call this one a buzz cut. On the positive side, I have high conviction in my stocks and some of the other cloud providers have already reported outstanding numbers which portends well for our stocks. As the hedge funds and Algos look to create volatility to make money in the short-term, it only makes sense to follow the numbers and just wait for our time in the sun “again.”

“The real key to making money in stocks is not to get scared out of them.” - Peter Lynch

DDOG (Datadog) - Datadog continues to be my highest conviction stock after it reported a blowout quarter in November.
-Growth Rate = 75%, up 16% QoQ
-Gross Margin = 78%
-DBNRR 130%
-Billings (best indicator of Health) were up 98% yoy and 14% qoq (69% yoy in Q2)
-YoY Growth in $100K+ Customers (now a record 1,800): 51%, 60%, 66%
-Earnings call was highly optimistic about the future
-4th qtr expect 64% y/y revenue growth at the mid-point (290-292) million

-Datadog achieved FedRamp Authorization.…

-FedRAMP is a U.S. government program that provides a standardized approach to security and risk assessment of cloud services and technologies.
-FedRAMP enables the government to accelerate the adoption of cloud computing.
-At present, the FedRAMP marketplace lists 40 federal agencies that have granted Datadog authorization to operate.

MNDY ( -
-Growth Rate = 95%, up 17% QoQ
-Gross Margin = 90%
-DBNRR 115%
-Customer growth (>$50k ARR): 231% yoy! / 30% qoq
-Management guides for $88M in Q4 revenue (+75% YoY) while raising the full year figure to $301M (+87% YoY). A beat similar to this quarter (which doesn’t seem all that unreasonable) would push both figures closer to 90%+.

-The total addressable market is 200 times larger than the revenue. $56.1 billion TAM opportunity. If this company can perform, it might be the highest upside stock that I own.

ZS (Zscaler) -They reported a great Quarter on 11/30.

-Revenue grows 62% year-over-year to $230.5 million - biggest beat in 2 years.
-Calculated billings grows 71% year-over-year to $247.7 million
-Deferred revenue grows 74% year-over-year to $647.8 million Lots in the pipeline!
-GAAP net loss of $90.8 million compared to GAAP net loss of $55.0 million on a year-over-year basis
-Non-GAAP net income of $21.0 million compared to non-GAAP net income of $20.0 million on a year-over-year basis

-This was a huge beat. QoQ revenue was up 17%, which annualizes to around 85%
-DBNRR is over 125%
-87% YoY growth in customers over 1 million in ARR!
-Strong Guidance $240-242M w/ y/y revenue growth of over 54%

-CEO Jay Chaudhry Presented at 24th Annual Needham Growth Conference

“We are very excited about the acceleration of the growth that we are seeing out there, not only a large customer base, which we had dominated quite a bit, but coming down market to enterprise customers, global presence around the world, and we are not in very unique to have 50% business outside the U.S. for us. And our customer is being happy, our NPS score off the chart as compared to others. So, I think when I talk to my management team and figuring out what to do, I would say, I am less worried about external forces. We need to stay focused on execution, heads down, don’t be complacent, don’t be arrogant, keep on innovating and selling.”…

UPST (Upstart) - Due to all the uncertainty around the company (AI tweaks, Macro issues, Auto Industry concerns, etc), I cut my position in early January to 3%. The risks are there but so is the upside. Where else are you going to find a company selling at 7-10X sales that is growing over 200% with a large and expanding TAM? I think nowhere. This stock is annoying. To be frank, some of the chatter on board got annoying. The price action has been even more annoying. I almost sold out. However, I believe in the management, especially Paul Gu and Dave Girouard, so I’m holding on and hoping for the best at the earnings call.

ZI (ZoomInfo) - They reported a good quarter in November
-Revenue growth: 60% yoy / 14% qoq
-Gross margin: 88%
-FCF margin: 37%
Customer growth (>$100k ARR): 74% yoy / 14% qoq
-ZoomInfo expanded London operations, with plans to relocate executives there and add personnel in sales and service.
-It also named London-based Simon McDougall as its first chief compliance officer.
-The company will move some senior execs there this year and will expand sales/service locally and regionally, saying that’s “instrumental” to the company’s continued growth in the UK and mainland Europe.
-“In Q3 2021, the international business at ZoomInfo grew over 80% year over year while our investment in our data assets outside of North America also nearly doubled throughout the year,” says ZoomInfo founder/CEO Henry Schuck.
-McDougall has most recently served as deputy commissioner for the UK’s Information Commissioner’s Office.

NET (Cloudflare) - They reported another solid quarter in November.
-Revenue of $172.3 million, representing an increase of 51% year-over-year
-Strong large customer growth, with a record addition of roughly 170 large customers in the quarter, bringing the total number of large customers to 1,260
-Delivered GAAP net loss of $107.3 million and non-GAAP net income of $1.4 million
-Gross margin: 78%
-Customers: 126,735 (up 32% sequentially last quarter)
Large (>100k spend) customers: 1088 (up 18% sequentially last quarter)
NRR: 124%
Free cash flow: -$9.8M

-I believe that with the haircut, the upside for Cloudflare is very strong, although it’s still pricey so I will keep it mid-sized for now.

SNOW – I’m back into this one after an amazing Q3 report on 12/1.
-Q3 Revenue up 110%
-GM 75%
-DBNRR 173%!
-Key Metric RPO is up 94%, Large customers up 128%, total customers up 52%, F500 customers up 30%
-Since Snow is technically not SaaS, it makes it a beat harder to follow. 93% of it’s revenue is consumption based.
-Strong Outlook, 96% on 350M in revenue

I just listened to the Interview with Frank Slootman that was posted on the board. I was so impressed. I love the influence based culture he is building at Snowflake, as opposed to a traditional vertical structure. He’s exactly the type of hard nose gunslinger that every company needs.

AMPL – (3)% -Nice Q3 was reported in November.
-Revenue growth: 72% yoy / 16% qoq
-Gross margin: 71%
-FCF margin: -35%
-NRR: 121%
-Customer growth: 54% yoy / 11% qoq

-This company has a lot to prove given it’s tiny market cap, I’m hoping for the best on 2/16

S (Sentinel One)

  • They reported a great quarter on 12/7.
    -Q3 revenue up 128%, up from 121%
    -GM 64%, up from 58%
    -ARR up 131%, customer count up 75%, ARR over 100K customers up 140%

-S1 announced they are partnering with Service Now

-CEO Tomer Wingarten also presented at Needham.…

“So first and foremost, I want to say that if you look at our business, the opportunity, or the two opportunities that we’re the most excited about are the cloud opportunity and the data analytics opportunities. Data analytics is a $40 billion TAM completely ripe for disruption and we got an exceptional offering there in the form of scalar and our XDR story, so there’s a lot to be had there. And then when we look at cloud, I don’t mean we just talked about it, just amazing traction that we’re seeing right now. So to us I mean we want to make sure that people understand we are a platform company, we play in many different TAMs at least four different TAMs, we aren’t just an endpoint company. And endpoint is a big TAM in itself. But the overall opportunity size for the company is so immense and that’s what’s really fueling our growth.”

-I added a lot to this position. They have all the makings of a winner if they can keep their losses under control and their growth in the triple digits.