FoolishJeff Nov 2023 Portfolio Update

2023 - up 26.9% (currently up 31.4% mid-day 12/1)
2022 - (-65%)
2021 – 21%
2020 - 140% (found Saul’s board in the summer of 2020)
2019 - 51%

Portfolio Breakdown

IOT - 14.6% (12.5%)
ELF - 14.5% (9.7%)
AXON - 14.4% (15.2%)
CELH - 11.2% (11.6%)
MNDY - 10.8% (10.6%)
TTD - 8.3% (9.6%)
NVDA - 6.5% (7.0%)
ZSCALER - 6.3% (7.1%)
TSLA - 3.0 (3.0%)
RELY - 3.8% (1.5%)

Watchlist - CRWD, SNOW

Summary: It ended up being a nice month. Fed looks like it is done raising rates and the inflation numbers continue to improve. I was happy with most of my company’s reports, except for Global-E, which I sold immediately after earnings.

IOT - 14.6% - Wow! Amazing report yesterday. Apparently the market agreed, stock up 20.7% today! Given the steep valuation, I was slightly nervous going into earnings, but they really knocked it out of the park. I really think it is the perfect company for the times. . .tough macro has made companies cautious and put them in cost cutting mode - Samsara delivers with a hard ROI that quickly pays for itself. The record “high spending customer” additions continue to impress and growth has a shot to stay above 35% for a while as the operating leverage kicks in - could be a beautiful FY25. The FY guide was raised by $26M, aided by an extra week due to an accounting quirk, but still impressive.

  • 1,663 customers with ARR over $100,000, up 49% year-over-year - net add of 148 new customers! Another new record! Showing continued momentum. Net adds were 124, 124, 138, and 140 the last four quarters.
  • $1M+ ARR Customers up 54% YoY

ELF - 14.5% - Great report all around! The revenue growth as well as margin expansion were on-point. I added to my position to bring it from 9.7% to 14.5%.

– Delivered 76% Net Sales Growth on Revenue of $215.5M, beats by $18.4M

– Gained 330 Basis Points of Color Cosmetics Category Share

-Gross Margin increased 570 basis points to 71%

-Adjusted EBITA up 122% or $60.4 million

-Naturium Acquisition closed 10/4

– Raises Fiscal 2024 Outlook from $802 million top line to $906 million! This means a raise from 39% top line to 57% top line YoY Growth, even if you exclude the 48m from the acquired Naturium, the FY guide is still for 48% revenue growth .

AXON - 14.4% - Another solid report for Axon.

  • Revenue of $413.6M (+32.6% Y/Y) beats by $22.47M.
  • Annual Recurring Revenue grows 54% year over year to $619 million
  • International revenue grows 52%, supported by growing pipeline
  • Net income of $59 million supports Adjusted EBITDA of $92 million
  • Raises full year revenue outlook to approximately $1.55 billion, or 30% annual growth; expects full year Adjusted EBITDA margin just above 20%
  • TASER 10 demand exceeding expectations
  • U.S. federal government momentum builds, and U.S. Department of Veterans Affairs is live on Axon Records

CELH - 11.2% - I liked the report and have been surprised by the collective shrug of the market.

  • Revenue Q3 up 104% YoY to 385m$ (North America up 107% to 371m$)
  • Revenue QoQ up +18%
  • Gross Margins up +860 BPS YoY from 41,8% to 50,4%
  • EPS from (2,46$) to 0,89$ YoY - up 136%

Also, the latest Nielsen Data impressed again with 149% year-over-year sales growth to jump to a market share position of 9.3%

MNDY - 10.8% - They reported a very nice quarter. Happy to see the continued operating leverage and strong customer growth.

Non-GAAP operating income was $24.1 million up from $2.2 million in the third quarter of 2022; non-GAAP operating margin was 13% compared to negative 2% in the third quarter of 2022.

  • Q3 Non-GAAP EPS of $0.64 beats by $0.43.

  • Revenue of $189.2M (+38.2% Y/Y) beats by $6.7M.

  • Net cash provided by operating activities was $66.6 million, with $64.9 million of free cash flow, compared to net cash provided by operating activities of $20.0 million and $14.0 million of free cash flow in the third quarter of 2022.

  • Net dollar retention rate for customers with more than $50,000 in annual recurring revenue was over 115%.

  • The number of paid customers with more than $50,000 in ARR was 2,077, up 57% from 1,323 as of September 30, 2022.

  • **Financial Outlook:**For the fourth quarter of fiscal year 2023, currently expects:

    • Total revenue of $196 million to $198 million, representing year-over-year growth of 31% to 32% vs. the consensus of $194.96M.
    • Non-GAAP operating income of $7 million to $9 million and operating margin of 4% to 5%.For the full year 2023, currently expects:
    • Total revenue of $723 million to $725 million, representing year-over-year growth of 39% to 40% vs. the consensus of $715.35M.
    • Non-GAAP operating income of $47 million to $49 million and operating margin of approximately 7%.

TTD - 8.3% - The report was disappointing, but I don’t think the thesis is broken. Bottom line is TTD continues to take market share and CY2024 should be strong, especially given it is a Presidential Election year.

  • Revenue of $493.26M (+24.9% Y/Y) beats by $6.02M.
    *$0.33 beats by $.04
  • Customer retention remained over 95% during the third quarter, as it has for the past nine consecutive years…
  • Fourth Quarter 2023 outlook summary:
    • Revenue at least $580 million vs $611.07M consensus
    • Adjusted EBITDA of approximately $270 million

-The weak guidance of $580 million or approx 18.2% rev growth next quarter was way below analyst’s expectations and the stock tanked pretty bad the next day but has gradually regained most of the loss. The weak guidance was especially disappointing as they are entering the busiest time of the year.

NVDA - 6.5% - They had what only can be called a Monster Quarter.

Revenue up 34% QoQ and 206% YoY
GAAP Gross Margin now at 74%, up 3.9 pts QoQ and up 20.4pts YoY
Non-GAAP Gross Margin now at 75%
GAAP EPS: $3.71, up 50% QoQ and up 1,274% YoY
Non-GAAP EPS: $4.02, up 49%QoQ and up 593% YoY

Compared to Expectations, Revenue was $18.12B versus $16.18B expected and EPS was expected to be $3.37 (came in at $4.02) per share.

Guidance - Nvidia is saying $20B for next Quarter, +/- 2%, which would be 231% growth YoY.

Gaming division was also strong.

It looks like NVDA will be able to work around the China restrictions over the next few quarters so I’m not overly concerned about the potential revenue lost. I think the stock is kind of cheap with a forward PE of 30. I don’t want to fight the law of large numbers too much and valuation is tricky but the next year or two should look outstanding.

ZSCALER - 6.3% - Report was ok, solid beat and raise but there was some weakness in the secondary metrics. Probably the most disappointing thing was that they didn’t raise the FY24 billing guide of $2.56B or 25.8% growth. 99 new $100K+ adds were weak sauce versus last year’s 128. Also, RPO was down sequentially as well. I’m happy to keep a smallish position here.

  • Q1 Non-GAAP EPS of $0.67 beats by $0.18.
  • Revenue of $496.7M (+39.7% Y/Y) beats by $23.27M.
  • Calculated billings grows 34% year-over-year to $456.6 million
  • Deferred revenue grows 39% year-over-year to $1,399.5 million
  • GAAP net loss of $33.5 million compared to GAAP net loss of $68.2 million on a year-over-year basis
  • Non-GAAP net income of $106.5 million compared to non-GAAP net income of $44.0 million on a year-over-year basis

RELY - 3.8% - Lots of good debate on the board about Remitly’s competition and MOAT. I like their execution and trust, large TAM, and cash-pickup network. I think they are not a direct competitor to Wise. However, they are a cash-burner and their MOAT may not be that wide. i’m going to keep this one small and hope for the best. If they can start to show more consistent operating leverage, the market will feel more comfortable and the stock price should follow. I had a 1.5% position going into earnings so I was able to bump it up to 3.8% after the post-earnings haircut.

TSLA - 3.0% - I watched the Cybertruck Delivery Event yesterday, it is a very impressive vehicle and a walking billboard for Telsa. If they can ramp up production next year and we get a concrete announcement on a 25K vehicle, the stock will go bananas. This company is essentially 12 startups. I feel it is a must own. I agree with Jason, there is an amazing amount of FUD about Tesla. The reality is the US Automakers are a joke when it comes to EV’s and even in China, where the competition is stiff, Tesla is doing very well. I’d be happy if Elon could get his foot out of his mouth for a while and wish he never bought Twitter (now X). All that said, as interest rates come down and new products ramp, I’m planning on increasing my allocation.

GLBE - SOLD - Another earnings miss made me lose all faith in management. On top of that, Europe appears to be in a shallow recession.