MDB vs ESTC vs ZM

Investment Analysis Clubs Saul’s Investing Discussions
1

Bouncing back after my Nutanix experience, I thought I’d do a quick quarter compare of MDB and ESTC, since they’re such similar companies.

And threw in the Zoom (ZM) data as a comparison. I missed the conference call, so waiting for the transcript.

Zoom definitely stands out. Higher revenue. Faster growing yoy. Better gross margin. Lower R+D as % revenue. I think they’ve got a more focussed product, so their R+D spend is comparatively lower. Their low international % suggests that there might be significant international expansion to come. Obviously priced for awesomeness.

ESTC growth is lower than I would have expected which I guess is reflected in the EV/S.

Atlas growth is the highlight for MDB, although Atlas margins are lower than their subscription plans.

MDBs obvious question mark is their FY 2020 guidance, which is lower than Elastics, but up on their previous guidance. Either… lowballing? or ESTC is pretty optimistic for 2020. It’s a bit of a weird data point, given MDB is reporting Q1 2020, and ESTC is reporting Q4 2019.

But if your thesis on MDB relies on Atlas superb growth rate (+340%). ESTC is only up 76% constant currency.

But Zoom. Overall, wow. No position, but… wow.

cheers
Greg
Long ESTC > MDB no position in ZM


				MDB		ESTC		ZM
Revenue				$89.4m		$80.6m		$122m
YoY revenue increase		+78%		+68%		+103%
Operating profit		-$12.6m		-$17.5m		$8.2m
Customers			14200+		8100+		58500+
Customers >$100k		598+		440+		405+ (+120%)
NER				120%+		130%+		130%
International %			???		43%		20%
Subscriptions			82%		91%		100%? Assume so
SaaS				35%		17%		100%? Assume so
Gross margin			70%		73.8%		80.9%
R+D %				??		31%		10%
S+M %				??		50%		50%
Operating Income (non GAAP)	-$12.1m		-$17.5m		$8m
Cash				$477m		$298m		$737.2m
Next quarter guidance			
    Revenue			$90-92m		$82-84m		$129-130m
Full year			
    Revenue			$375m-$381	$397-403m	$535-$540m
EV/S				30		23		40+ (from Dreamer)
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Hi Sark, I think the current P/S ratio for zoom is 60. Significantly higher than MDB and ESTC.

Also, it is my understanding Zoom has capital and ongoing operating expense for bandwidth, network infrastructure, and computing resources to execute their services code.

In my humble opinion not as sticky as MBD and ESTC. competitors could leapfrog capabilities and there is not a big barrier to switching providers.

I am long MDB and ESTC , no position in ZM, too rich for my blood.

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Atlas growth is the highlight for MDB, although Atlas margins are lower than their subscription plans.

Fast growth is a more potent catalyst than high margins.

But if your thesis on MDB relies on Atlas superb growth rate (+340%). ESTC is only up 76% constant currency.

Mine most certainly is! As above, fast growth is the most potent catalyst.

Einstein on compound interest

Albert Einstein called compound interest the “eighth wonder of the world”, adding: “He who understands it earns it; he who doesn’t pays it.”

https://www.telegraph.co.uk/finance/personalfinance/investin…

Denny Schlesinger

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