2022 - (-56.5% YTD)
2021 – 21%
2020 - 140% (found Saul’s board in the summer of 2020)
2019 - 51%
Portfolio Breakdown vs Last Month
DDOG – 21.5% (18.5%)
BILL - 14.9% (15.5%)
ZS – 14.0% (14.1%)
S – 13.6% (14.5%)
CRWD - 10.9% (New)
NET – 9.5% (11.7%)
MNDY - SOLD (10.2%)
SNOW – 8.1% (8.4%)
MDB - 7.4% (5.0%)
Watchlist - MNDY, UPST
DDOG - (-36%)
CRWD - (-18%)
ZS - (-48%)
S – (-50%)
NET - (-57%)
SNOW – (-47%)
BILL - (-46%)
MDB - (-44)
Summary: Another brutal month, on the flip side, our stocks performed well and I’m hopeful for an eventual rebound.
DDOG (Datadog) - Still my highest confidence position. I really liked the report. Rev up 83% (11% seq). 80% GM, 19 quarters of 130% DBNRR, 41% operating cash flow margin. Large customer adds look strong, 240 added. Solid Guidance of $380M on 63%. It’s slowing but should still hit at least 70% next quarter.
BILL(Bill.com) - Bill had a solid report with 74% organic growth and 11.6K new customers added. However, sequential growth was only 6.7% (4% organic), which is definitely something to watch. Seasonality, variability in transaction revenue, and the Divvy acquisition make it a bit of a complicated story. With possible macro headwinds coming, I may be inclined to trim a bit.
MNDY (Monday.com) - SOLD - I axed it in early May. It’s not mission critical, there’s a lot of competition and the losses only widened at the earnings report. The path to profitability is very murky at this point so I’m going to stay out of it.
ZS (Zscaler) - They had a good report. Rev up 63%, calculated billings up 54% (yellow flag, down from 71-59-54), deferred rev up 65%, Rule of 70, deferred revenue up 65%, Fcf was 43.7m or 15% of revenue, seeing increased interest from feds, highest fedramp certification. Guidance was solid at 306M at high end, 55% growth. I may cut a few % due to the slowing billings number. Fed $$ may be slow to ramp up.
NET(Cloudflare) - Another solid quarter. Revenue up 54%. Traffic up 88%, 71% increase in large customer growth, 5th straight year of 50% CAGR, 1st quarter of positive FCF, RPO up 63% YoY. I wish they were showing more operating leverage but I believe the long term thesis is still intact.
SNOW - Not a great report but the story still remains intact. Revenue slowed from 101% to 85% as expected due to the Optimization. RPO up 82%, FCF Margin of 41% (172 million). I really like the operating leverage they are showing. However, I’m keeping it small until they start to show the higher revenue from increased workloads in 6-9 months. The small increase in customer adds was also concerning (6.4% seq). It’s hard to judge the quality of the customer adds. The price is pretty nice but they still have a lot to prove. Forecast looked solid $440M top line, 73% growth.
S(Sentinel One) - I really liked this report and the tone of the conference call. Rev up 109%. ARR up 110%, Total customer count up 55%, customers over 100k up 113%, operating margin -73% vs -127% YoY. Margin expansion is really impressive - 63% to 68% QoQ. Closed acquisition of Attivo (cloud identity), “Demand has never been stronger, despite macro conditions.” “Our business has never been stronger”, they noted on the CC. FY25 could hit profitability and could hit FCF positive before that. Solid Guidance showing they are maintaining triple digit growth. $95-96 million (109%), non-gaap GM 69%, non-gaap op margin (-75%)-(-73%).
MDB (MongoDB) - Solid report. Rev up 57%, loss from operations 17.5M compared to 2.8M, net loss was 77.3, up from 64M YoY, FCF was 8.4M, same YoY, Atlas up 82% (60% of revenue). The strength of Atlas is promising. I will keep it smallish. I think revenue could slow if the economy does, much like during the pandemic, it’s not mission critical
CRWD (Crowdsrike) - I’m back in this one. I thought it had a solid report. Rev up 61% (13% QoQ), Sub Rev up 64%, ARR up 61%, GM of 77%. Customers: 17,945 (+57% YoY, 10% QoQ). FCF Margin at 32%, DBNRR 120%+. CrowdStrike’s subscription customers that have adopted four or more modules, five or more modules and six or more modules increased to 71%, 59%, and 35%, respectively. Additionally, CrowdStrike customers with seven or more modules reached 19%.
Previous Posts in 2022