2021 – 21.1%
2020 - 140% (found Saul’s board in the summer of 2020)
2019 - 51%
Portfolio Breakdown vs Last Month
DDOG – 19.5% (18.8%)
MNDY - 17.9% (13.2%)
ZS – 10.7% (10.1%)
UPST – 10.1% (15.0%)
ZI – 9.0% (6.7%)
NET – 8.2% (10.8%)
SNOW – 7.7% (NEW)
AMPL – 5.6% (5.4%)
CRWD – 5.2% (7.8%)
S – 3.1% (NEW)
BILL 3.0% (NEW)
SE – (SOLD) - losses too big for my taste and Garena is slowing
DOCN - (SOLD) - growth was too slow and Amazon deal didn’t seem to move the needle
Watchlist - Asana, Affirm
DDOG - 95%
MNDY - 73%
ZS - 64%
UPST - 244%
ZI - 41%
NET - 152%
CRWD - 2%
SNOW – 22%
AMPL – (3)%
S – 19%
BILL – 81%
Summary: It was another rough month for my portfolio as well as growth stocks in general. It’s been rough watching my Portfolio fall from up over 70% in mid-October to now ending the year at 21%. My goal of a 50% return this year was missed but my CAGR is still intact and will rebound. Those are the breaks. In summary, I think I own a great group of stocks and they will see their day in the sun again soon. Shout out to Saul and all the great contributors on this board, it is truly a blessing to have discovered this gem! Here’s to a great and profitable 2022!
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%
-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
-They also launched 40 new products in Q3!
-Datadog management presented at the Barclays Global Technology, Media and Telecommunications Conference. https://seekingalpha.com/article/4474135-datadog-inc-ddog-ma…
-CFO Obstler said “Everything sort of went in the same direction, firing on all cylinders.” He also noted “In addition, we believe we’re very early innings. The amount of work loads in the cloud is still relatively small. And there are many enterprises and companies that have barely begun their journey. So, we see a very long and persistent growth market here for many years.” In his opinion, the opportunity ahead is truly Greenfield. That is what I call a Category Crusher.
MNDY (Monday.com) -
-Growth Rate = 95%, up 17% QoQ
-Gross Margin = 90%
-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%+.
-Besides the amazing numbers, I really love that Monday has a niche within the Work OS/Project Management space. 70% of its customer are non-tech, due to ease of use. Also, much of it’s innovation is fueled by the apps marketplace.
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%
-Zscaler is a highly valued stock but the company is accelerating growth and the pipeline for future growth looks very, very solid.
UPST (Upstart) - The selloff has been brutal and in my opinion overdone. I did cut my position on 12/1 from 15% down to 10%. It’s non-SaaS, so the future is very hard to gauge. However, I can’t argue against holding a company that is growing over 200% a year, is profitable, and expanding it’s TAM into Auto Lending. Moreover, I believe in the leadership. Lesson learned, don’t go too big on non-SaaS but also don’t overestimate Market Euphoria or Market Over-reaction. I think we’ve seen some both on this board and in the general market as well.
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
-They appear to be a category leader in their field, are reasonably valued, and are growing at 80% internationally.
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)
Free cash flow: -$9.8M
I cut the allocation from 11% to 8% in December. It’s a quality company but has become more about the “story” of cloud storage rather than accelerating growth. It may be hard to justify the valuation for the long run so I think I mid-sized position is more appropriate.
SNOW – I’m back into this one after an amazing Q3 report on 12/1.
-Q3 Revenue up 110%
-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
-Snowflake is another classic story of high growth that will likely last much longer than sell-side analysts believe
AMPL – (3)% -Nice Q3 was reported in November.
-Revenue growth: 72% yoy / 16% qoq
-Gross margin: 71%
-FCF margin: -35%
-Customer growth: 54% yoy / 11% qoq
-I’m being cautious with this one as it is newly public and it has a smaller market cap. However, I do
like the value proposition and growing TAM
CRWD (Crowdstrike)- They reported a solid quarter on 12/1.
-Overall growth slowed from 70% to 64%
-Sequential revenue growth accelerated from 11.5% to 12.6%…
-Sequential demand backlog growth accelerated from 14.1% to 27.7%.
-Sequential remaining performance obligation (RPO) growth accelerated from 13.6% to 16.2%.
-I cut my allocation from 8% to 5%
-Crowd is starting to look long in the tooth. However, there are indications that the pipeline is strong and the CC brought some excitement. We’ll see what next quarter brings.
“We are seeing an inflection in new products with growing demand for our identity protection and Zero Trust, Humio and Cloud Security modules.”
“This quarter our win rates increased across the board and we saw a record number of wins against both legacy and next-gen vendors with SMB, midmarket and large enterprise customers.”
“We also landed a record number of wins and displacements over a recently public next-gen vendor, SentinelOne. To be clear, we define a displacement as removing an incumbent product and replacing it with Falcon.”
" you have spoken in the past that cloud workloads maybe even 10 times greater than the number of traditional endpoints that you could protect" and related to that, cloud security is a “largely greenfield opportunity”.
S (Sentinel One) - Starter Position. I love the triple digit growth and smaller market cap. I think the key to their success is automation. They use less humans and less friction to solve security issues and their growth rate seems to show that. 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%
BILL (Bill.com) - Starter Position - Vision is to be the all-in-one financial operations platform for SMBs. Recently aquired Divvy and Invoice2go. Divvy - 187% growth, focuses on expense reporting and spend management. Invoice2gp is a mobile firstbiz for invoicing, expense tracking, & payments. Transactions are 69% of revenue, which are variable. Q3 revenue was up 152% (78% organic). Q4 outlooks is for 142% growth.
No update in March (I had the COVID)
No update in June (I was moving)