From SMAR & PS to DOCU

Investment Analysis Clubs Saul’s Investing Discussions
1

Closed out PS and SMAR today, using proceeds to add to DOCU holdings. In opposite direction to Denny, haha.

DOCU P/S is nearly 12, and forward projections seem conservative. Although “technicals” show weakness, I am expecting this down movement to fill the gap.

Fundamentally, here’s DOCU with 2nd quarter and year-end projections added.

Revenue (millions USD)						
	Q1	Q2	Q3	Q4	Year	YOY
2018	113,498	125,543	130,589	148,874	518,504	
2019	155,808	167,044	178,385	199,732	700,969	35.19%
2020	213,962	220,000			919,500	31.18%
YOY	37.32%	31.70%			31.18%	

						
Adj Gross Profit (millions USD)						
	Q1	Q2	Q3	Q4	Year	YOY
2018	88,544	99,261	101,545	119,561	408,911	
2019	125,182	136,096	141,028	156,420	558,726	36.64%
2020	169,944	173,800			726,405	30.01%
YOY	35.76%	27.70%			30.01%	

						
Gross margin percent (Non-GAAP)						
	Q1	Q2	Q3	Q4	Year	
2018	78.01%	79.07%	77.76%	80.31%	78.86%	
2019	80.34%	81.47%	79.06%	78.31%	79.71%	
2020	79.43%	79.00%			79.00%	
						
						
Adj Operating Income(millions USD)						
	Q1	Q2	Q3	Q4	Year	YOY
2018	-8,321	-2,913	-3,042	2,413	-11,863	
2019	4,669	4,213	-1,012	7,312	15,182	-227.98%
2020	10,322				
						

Operating Income % of Revenue (Non-GAAP)						
	Q1	Q2	Q3	Q4	Year	
2018	-7.33%	-2.32%	-2.33%	1.62%	-1.69%	
2019	3.00%	2.52%	-0.57%	3.66%	1.65%	
2020	4.82%	
						
						
Adj Net Income (millions USD)						
	Q1	Q2	Q3	Q4	Year	YOY
2018	-8,439	-1,169	-5,204	2,326	-12,486	
2019	1,540	5,219	441	10,345	17,545	-240.52%
2020	13,491				13,491	
						
						
Net Income % of Revenue (Non-GAAP)						
	Q1	Q2	Q3	Q4	Year	
2018	-7.44%	-0.93%	-3.99%	1.56%	-1.78%	
2019	0.99%	3.12%	0.25%	5.18%	1.91%	
2020	6.31%				
						
						
Adj EPS (USD)						
	Q1	Q2	Q3	Q4	Year	YOY
2018	-0.30	-0.05	-0.17	0.01	-0.43	
2019	0.01	0.03	0.00	0.06	0.09	-120.93%
2020	0.07				
						
						
Free Cash Flow (millions USD)						
	Q1	Q2	Q3	Q4	Year	YOY
2018	-7,467	7,779	7,015	28,723	36,050	
2019	8,808	18,359	-4,315	22,820	45,673	26.69%
2020	30,418				
						
										
Total customers (thousands)						
	Q1	Q2	Q3	Q4	YOY	
2018				370		
2019	400	430	454	477	28.92%	
2020	508					
YOY	27.00%					
						

Enterprise Customers						
	Q1	Q2	Q3	Q4	YOY	
2018						
2019	45				
2020	60				
YOY	33.33%

🆁🅶🅱
wordlessly watching, he waits by the window and wonders…

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2

You know my opinion on making such a move so I will leave it unsaid.

Instead, if this keyboard will get back to working properly…there it goes, just a little tid bit on understanding what Smartsheet does:

https://m.youtube.com/watch?v=RToVjGXcqLA

It is 55 minutes of instructions from Stanford on how to use Smartsheets. If you got the time it is worth a view I would think to understand better what Smartsheet does. I have not watched it yet, but may out of curiosity. Can probably consume it in lieu of say Big Bang Theory while eating meals or such. Thereby no wasted time.

I do not own any SMAR shares, for some reasons put forward on this board…Saul’s (I believe) reasonings equated to mind when talking about the relative significance of say SMAR to the world vs. Mongo, but that is not always a dispositive indicator either way. Thus I will view this video to try to understand what SMAR does better. It is clearly a better way to deliver codeless automation in the business context than what Appian is offering.

But for what it is worth, for those interested. I have a general curiosity of the product itself if nothing else. I do not understand myself where SMAR fits in within the scheme of things other than its numbers indicate it is doing something very useful and fixing some pain point that needed fixing.

Tinker

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3

I do not own any SMAR shares, for some reasons put forward on this board…Saul’s (I believe) reasonings equated to mind when talking about the relative significance of say SMAR to the world vs. Mongo…

If I were to own only one stock it might well be MDB but…

Since SMAR’s IPO http://softwaretimes.com/pics/mdb-06-08-2019.gif

Crappy SMAR is up only 147% since IPO (CAGR 125%) :frowning:

Back to the “S” curve. I believe that SmartSheets are still very early in their Technology Adoption Life Cycle (TALC) and, if it is as useful as I believe it is and if their usage is basically familiar because of their spreadsheet origins, adoption can only accelerate.

One important lesson from The Gorilla Game is that complexity kills adoption. If SmartSheets is easy to use, it helps with adoption. DocuSign’s “elongated sales cycle” spells complexity.

Denny Schlesinger

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