Moritz’ Portfolio Summary - February 2023

Hey 👋!

The goal of this portfolio review is to help you understand how I think about investing, see what I’m doing, and help me learn. I hope this review is useful for you!

This review has 4 parts:

  1. How my investments did compared to the overall market
  2. How my money is invested and how strongly I believe in each investment
  3. The changes I made last month to invest in new opportunities or reduce risk
  4. Updates on the companies I invested in

Disclaimer: This portfolio summary is for informational purposes only and does not constitute investment advice. I am not a professional, please don’t follow me blindly and my perspectives could provide wrong conclusions.

1. How my investments did compared to the overall market

Timestamp: 2/28/2023

2. My Portfolio


Tier 1: Champions enjoy my highest conviction due to excellent company performance and execution. They usually have a 15+% allocation.
Tier 2: Contenders are either rising stars due to good performance, but they lack full confidence, or past champions due to declining performance. They are sized between 5 % and 15 %.
Tier 3: Bench – These positions are either new ones that I want to keep on my radar/get to know or fallen angels which I want to keep for some (bad) reason.

3. The changes I made last month

Trimmed: BILL

I lost some confidence since my last update. To recap, revenue fell from 94% year over year (YoY) in Q1 to 66% in Q2—a sharp slowdown. Further investigation revealed Bill seems to be a merger and acquisition (M&A)-Divvy story that is becoming too complicated for me.

Still, the >50% full-year (FY) guide gives me confidence. I might add back if the stock price keeps declining. I believe Bill is now at the lower end of valuation with a forward price-to-sales (P/S) ratio of 10.

Added: The Trade Desk

Although revenue growth is below 30%, The Trade Desk keeps gaining market share and is performing much stronger than peers. They increased their platform growth in 2022 by 32% versus 8% for the total sector. Their ability to deliver high margins (50% adjusted earnings before interest, taxes, depreciation, and amortization [EBITDA] margin and 25% free cash flow!) gives me confidence.

The large total addressable market (TAM) of almost $1 trillion versus $175 billion for traditional linear TV, the midterm elections, connected TV tailwinds, the opening of Netflix and the shopper market should support revenue reacceleration.

I added about 1% and plan to increase my position opportunistically over time to ~7%.

Added: Monday

Monday was one of the few reporting companies that surprised me positively. Many analysts congratulated them on the quarter. Sequential revenue growth stabilizes and the full-year guide looks decent considering adverse macro effects.

I’m closely watching customer growth, especially the $50,000+ cohort and the dollar-based net retention rate for the 10+ customers cohort. For both, I’d like to see a stabilizing or accelerating trend. Though, they expect further decline for dollar-based net retention rate by end-2023 due to macro headwinds.

I added a bit after earnings and may continue opportunistically.

Added: Snowflake

I allocated part of Bill proceeds to Snowflake before earnings to increase the position to ~20%.

Added: CrowdStrike

The remaining Bill proceeds went to CrowdStrike before earnings to increase the very small position. I believe fundamentals remain solid.

4. Company Reviews

Absolute numbers relate to last quarter’s earnings release.
Metrics are adjusted values (Non-GAAP).


What they do: Provides data storage, management, and sharing for the cloud
Confidence tier: Champion
Type of revenue: Consumption-based
Trend to profitability: Yes
Cash: $5.1B

Product revenue [unique metric]: $555.3M

YoY Q1 Q2 Q3 Q4
2022 110.0% 103.3% 110.4% 101.7%
2023 84.5% 83.1% 67.3% 54.4%
QoQ Q1 Q2 Q3 Q4
2022 19.9% 19.1% 22.7% 15.1%
2023 9.7% 18.2% 12.1% 6.2%

Remaining Performance Obligations: $3.7B

YoY Q1 Q2 Q3 Q4
2022 206.1% 122.2% 94.4% 98.5%
2023 82.3% 77.6% 66.5% 38.4%
QoQ Q1 Q2 Q3 Q4
2022 7.4% 6.8% 18.0% 46.7%
2023 -1.4% 4.1% 10.6% 21.9%

Free Cash Flow: $205M

2021 -7.2% -33.1% -23.2% 9.1%
2022 10.2% 1.0% 6.4% 26.6%
2023 42.9% 11.8% 11.7% 34.8%

Customers $1M+: 330

YoY Q1 Q2 Q3 Q4
2022 66.6% 60.3% 52.8% 44.1%
2023 39.7% 36.3% 34.3% 79.3%
QoQ Q1 Q2 Q3 Q4
2022 9.5% 10.2% 8.7% 9.9%
2023 6.2% 7.5% 7.1% 15%

Dollar-based net retention rate: 158%

2022 168% 169% 173% 178%
2023 174% 171% 165% 158%

Revenue & Guidance

  • Product revenue was $555.3M, up 54.4% year over year and 6.2% quarter over quarter. I had hoped for at least 7.4% sequential growth. → Like other businesses, especially consumption-based ones like DataDog, Snowflake is struggling in this cloudy environment. No bright spots yet.

  • They guided to $573M for next quarter, suggesting 6.3% quarter-over-quarter and 49.6% year-over-year growth if they typically meet or beat guidance like in the past. → I assume slight acceleration since I expect next quarter to show slight growth due to the macro environment starting to improve.

  • Full-year 2024 product revenue guide is $2,705M, up 40% year over year. As initial FY guidance is always most conservative, especially for consumption-based businesses now, I don’t focus on this number. My concern is the CFO’s preliminary FY24 guide of 47% (~$2,815M) in Q3 earnings call. No need to guide the following year at that time, but for some reason, they said that, backfiring. Analysts ignored this in Q4 call, still confused why.

  • Full-year 2024 operating income margin guide is 6%, representing $173M, up from $95.28M in 2023.

  • Full-year 2024 free cash flow margin guide is 25%, representing $722M, up from $510.31M in 2023.

  • Remaining performance obligations were $3,661M, up 21.9% sequentially. RPO still grows faster than revenue sequentially, showing customers commit more and value what they get. However, RPO growth slowed (>40% sequential growth norm for Q4) since customers now commit future spend only for coming quarters, not years like before. I expect RPO acceleration once businesses have more visibility from improving macro environment.

Cashflow & Profitability

  • Product gross margin was stable at 75%, in line with the previous quarters.

  • Operating income was $32.78 million, 5.6% of revenue, up from $18.06 million a year ago.

  • Net income was $48.41 million, 23.6% of revenue, up from $36.04 million.

  • Earnings per share was $0.14, up from $0.10.

  • Operating cash flow was $217.32 million, 36.9% of revenue (!!), up from $78.9 million.

  • Free cash flow was $205.26 million, 34.8% of revenue (!!), up from $102.1 million.

  • R&D expenses increased to $112.29M, 19.1% of revenue. → They continue to invest heavily in R&D, no slowdown here.

  • S&M expenses increased to $225.08M, 38.2% of revenue → No slowdown here, they continue to invest in capturing the market.

  • G&A expenses decreased to $1.04M, a reduction of about $3.5M compared to the Q4s of the last 2 years → For whatever reason they saved this tiny amount, it’s meaningless when looking at the big picture.


  • Added 520 total customers, reaching 7,828, up 31% year over year and 7.0% sequentially. → Customer growth continues slowing, though sequential growth seems stable for 4 quarters now. Snowflake said larger customer cohorts matter more.

  • Added 19 Forbes 2000 customers, reaching 573, up 17% YoY and 3.4% sequentially. → Their historical numbers change each quarter, puzzling me. Without the change, they added 30 net new customers; with it, only 19. Slowing growth worries me.

  • Added 43 $1M+ customers, reaching 330, up 79.3% YoY and 15% sequentially. → Luckily, the key large customer cohort keeps growing steadily (and reached a record high in net new).

  • Customers using Stable Edge (data sharing) rose to 1,800, up 68.3% YoY and 23.2% sequentially. → More Stable Edge customers boost Snowflake’s network effect and moat.

  • Dollar-based Net Retention Rate declined to 158%. → While still excellent, optimizations from customers are emerging and likely to further reduce this metric in coming quarters (as it reflects the last 24 months). Still, management expects it to stay well above 130% long-term.

Additional Insights

  • Newer customers are adopting Snowflake more slowly. Growth is slowing as the customer base expands. Customers still use Snowflake but spending is increasing at a lower rate.

  • Nothing significant happened over the holidays. President’s Day was slow but February improved.

  • Snowflake will benefit from analyzing unstructured data like chat logs and social media.

  • International markets are growing more slowly than the US. Customers there increase spending more gradually. Some US customers used their initial allocation and increased usage.

  • Telecom companies are Snowflake’s largest customers and biggest data users.

  • Growth is slowing as new customers increase spending at a lower rate and existing partners get better at migrations. Usage remains steady but the growth rate is slowing. Hiring issues in some international markets impact growth.

  • The net revenue retention rate remains 158%, the level when Snowflake went public. Usage is more efficient but spending is increasing at a lower rate.

  • The financial sector and media/tech/entertainment verticals are the largest. Newer tech sectors and VC-backed companies are slowing.

  • The top 15 system integrators generated $1.6B in bookings last year. The relationship between their spending and Snowflake’s revenue won’t be disclosed.

  • The relationship between operating margin and free cash flow will expand faster. The 6% free cash flow guidance will be updated.

  • 90% of the pipeline converted but fewer large customers increased spending than expected. The CEO focuses on revenue, not bookings. Customers increase spending more slowly to conserve resources.

  • Use cases remain unchanged. Early-stage customers are evaluating Snowpark but it’s too soon to determine adoption.

  • Revenue per customer will likely increase. Focus is on customer quality, not quantity.

  • Snowpark usage will likely significantly increase in the second half. Guidance doesn’t include a major impact. Long-term impact will be more significant.

  • Margins may increase if hiring slows. The new AWS agreement will help. Negotiations with Azure are ongoing. GCP usage is on track. Relationships with AWS and Azure will be strengthened, not just pricing.

  • Budget changes reflect lower expected growth vs the last two years. People are watching costs more closely, driving usage spikes. Partners are improving at migrations, slowing revenue growth.

  • The net revenue retention growth at higher numbers is more difficult but depends on new customers. Usage may slow but not decrease substantially. Some customers increase spending while others slow. The focus is on increasing customer spending.

  • Revenue guidance includes total customer adds and the ramp of large, well-funded companies, including pre-IPO unicorns. Exposure to VC-backed companies and their ramp rates are considered. Deal sizes haven’t changed. Revenue retention guidance isn’t provided.

  • Hardware and software improvements were a 5% growth factor. Most graviton upgrades were done in January. International underperformance was driven by more cautious, consumption-based buying in Japan and other Asian markets, which Snowflake doesn’t target.

  • Authorized a $2.0 billion stock repurchase program → I like this move to fight dilution due to stock-based compensation. Looks like they are drowning in cash and they put it to use: $5.1B cash in the bank. At the same time they are also investing in strategic acquisitions, which make sense to them, and invest in further headcount growth. Sounds like a healthy balance.

  • Snowflake launched Telecom Data Cloud to help telecom companies make more money from data and work more efficiently

    • They will work together more closely on sales, developing industry-specific solutions, and integrating their products.
    • This will allow customers to innovate faster and get more value from their data using Snowflake and AWS.
    • For example, they have created tailored offerings for industries like financial services, media, healthcare, retail, and telecom.
    • They are also improving how their products work together, including using AWS hardware that speeds up Snowflake’s performance.
    • Together, Snowflake and AWS help major companies like Goldman Sachs transform their businesses by making it easy to use data.
    • The expanded partnership will benefit customers by giving them more resources and tools to drive growth.
  • Snowflake and Amazon Web Services (AWS) announced plans to expand their partnership to serve customers better. They will work together more on:

    • TL;DR: They will develop industry-specific cloud services, integrate their products more, collaborate on sales and marketing, and invest heavily in the partnership. The goal is to provide customers the best experience and accelerate innovation. By partnering, Snowflake and AWS can reach more customers, especially large enterprises.

My Take

I didn’t like the CFO’s preliminary FY24 guide of 47% (~$2,815M) in their Q3 earnings call which they now had to revise to 40%. It still puzzles me. Besides that, here is my perspective on the business.

In my last portfolio update, I mentioned:

Due to the nature of the consumption model, quarter-over-quarter additions are not meaningful, since consumption is tied to what customers are doing at specific times in their business → Q4 has a seasonally higher number of holidays → People are off → 70% of revenue is tied to human interaction, 30% driven by scheduled jobs → to be aware of in their next earnings.

Now couple this with the optimization effects of customers getting their spend under control due to the ongoing macro environment. It’s all not as bad as it might seem!

Takeaway: Customers of consumption-based businesses can easily reduce spend, but this can snap back fast into the other direction as well. I believe, it will.

I still have a hard time seeing issues with Snowflake itself. Looking at it from a relative perspective (considering all other companies and the environment), I don’t see why the thesis on growth durability for FY2024 and beyond should be broken.

Despite reiterating to remain on track to achieve their fiscal 2029, $10 billion product revenue target, consider this: A business at this scale, generating half a billion in quarterly product revenue, producing over $205M in free cash flow, still growing almost 50% next quarter (with a realistic beat), while having cloudy days above (macro) and beyond (digital transformation tailwinds), I believe this question is justified: When was there ever a time like that?


What they do: Provides cloud-based security for infrastructure exposed to the internet
Confidence tier: Contender
Type of revenue: Subscription-based
Trend to profitability: Yes
Cash: $1.65B

Revenue: $274.7M

YoY Q1 Q2 Q3 Q4
2021 51.3% 52.9% 51.0% 53.7%
2022 53.7% 53.9% 47.3% 41.9%
QoQ Q1 Q2 Q3 Q4
2021 9.6% 10.4% 13.1% 12.3%
2022 9.6% 10.5% 8.3% 8.2%

Free Cash Flow: $33.7M

FCF margin Q1 Q2 Q3 Q4
2021 -1.6% -6.4% -23.1% 4.5%
2022 -30.4% -1.9% -1.8% 12.3%

Customers $100K+: 2,042 (63% revenue from large customers)

YoY Q1 Q2 Q3 Q4
2020 70.0% 70.8% 71.2% 71.0%
2022 62.6% 60.8% 51.4% 44.2%
QoQ Q1 Q2 Q3 Q4
2021 14.1% 15.1% 15.8% 12.4%
2022 8.5% 13.8% 9.1% 7.0%

Customers $500K+: 222

YoY Q1 Q2 Q3 Q4
2019 88.9%
2020 39.2%
2020 70.4%
2022 83.5%

Dollar-based net retention rate: 122 %

2021 123% 124% 124% 125%
2022 127% 126% 124% 122%

Revenue & Guidance

  • Revenue was $274.7M, 41.9% Year-over-Year with their lowest beat of 0.1 %. That was less than I hoped for. Still, everything is tuned down due to macro - what can we do?

  • They guided to $291M. If they beat it by 1% they will come in at $294M, which translates to 38.7% YoY, and 7% QoQ. Which for me is still fine, especially when considering the first quarter is usually weaker due to seasonality.

  • Full Year 2023 revenue guide was $1342M, which, if they beat it by only 1% would result in 39% YoY. They mentioned several times, that they guided very conservatively, “we have not factored in any improvement in the macroeconomic environment or from our go-to-market initiatives.” Additionally, they assume the increase in sales cycles will persist, even though they exited the year with an improved pipeline compared to the first half of 2022. → That’s a strong sign and I doubt they set themself up for the first miss in Cloudflare’s history. Also, we should expect positive effects from the new leadership team focused on improving the go-to-market motion which should fuel growth and productivity.

  • Full Year 2023 operating income guide of $58M indicates further improvements in their profitability. Without any beat, operating income would grow 60% YoY.

  • Remaining Performance Obligations was $907M, 9.1% sequentially, down from sequentially 9.3% in Q3. → Relatively stable and growing faster than revenue growth, indicating customers are willing to spend in the long term.

Cashflow & Profitability

  • Gross margin was over 77% above their long-term target range of 75% to 77%.

  • Operating Income came in at $16.8M 6.1 % operating income margin, up from $2.26 a year ago.

  • Net Income came in at $21.6M, 7.9% net income margin, up from $0.13M a year ago.

  • Earnings per share was $0.06, up from $0.00 a year ago.

  • Operating Cash Flow was $78.1M, 28.4% operating cash flow margin (!), up from $40.62M a year ago.

  • Free Cash Flow was $33.7M, 12.3% free cash flow margin (!), up from $8.64M a year ago. → Even though Q4 is seasonally a strong quarter for cash flow, I was very happy to see this development.

  • They expect to be free cash flow positive beyond 2023, so there is a good chance, we will see them not burning cash ever again (on a yearly basis). That said, they expect near-term variability in their cash flow generation with the first half of 2023 to be breakeven. → Meaning, due to seasonality, we should expect cash flow to go down to $0 in Q1. But $0 is still better than their usual -30% FCF margin in the first quarter of a year.

  • Best of all, the positive development in profitability was not due to reduced expenses in Sales & Marketing or Research & Development. Both went up in absolute numbers and stayed in line with their previous trend. They saved around $2M in General & Administrative expenses, which would also be fine if they didn’t when looking at $33.7M free cash flow.


  • Added 6806 total customers, up 15.7% YoY, and 3.9% sequentially. → A bit light for Q4, but I am fine with it.

  • Added 134 $100K+ customers, up 44.2% YoY, and 7% sequentially. → Influenced by macro, still I would like to see an acceleration above 10% going forward.

  • Added 222 $500k+ customers, up 83.5% YoY (!) → Another quarterly highlight for me.

  • Added 85 $1M+ customers, up 51.8% YoY (!) → Another quarterly highlight for me.

  • Large customers now contribute 63% to total revenue. → Past quarters: 58%→60%→61%→63%. Clearly, they make strong progress in their large customer cohorts.

  • Dollar-based Net Retention Rate decreased to 122 % from 124 %. I am not too concerned here and believe the bullish management to achieve their long-term target of 130%+. Also, they addressed it in the call: “Gross renewal rates remain as high as ever, like others in the industry, we’re seeing customers take longer to sign new and expansion deals with us. […] We still see a clear path to dollar-based net retention over 130% as we ramp seat-based products, like Zero Trust and storage-based products like R2, and we won’t be satisfied until we get there. […] We’ve not experienced elevated churn.”

  • Conversely, our large customer net expansion was flat quarter-to-quarter and remains consistent with our average quarterly DNR for this customer segment since the end of 2019.” → Meaning, it should stabilize, since large customers gain a larger share of revenue over time.

  • Matthew Prince, Founder, and CEO, talked about an AI company that is using Cloudflare → Open AI (ChatGPT). → AI might become a tailwind for companies like Cloudflare in the next decade.

Additional insights

  • Due to their network, they had visibility into the overall Internet traffic and e-commerce trends and started to see a slowdown in the economy all the way back in December of 2021. Based on that, in Q1 2022 they began slowing the pace of hiring to ensure a healthy business.

  • Next innovation week is in March with security week, where they’ll be launching a number of new products and feature enhancements, especially around our Zero Trust products.

  • Their go-to-market organization hasn’t yet been fully optimized. Marc Boroditsky joined last quarter to lead their sales organization and brought in a proven go-to-market playbook to improve the sales motion which is already visible when looking at the pipeline in Q4 and January Q1, coming in ahead of targets. (which is not baked into their guidance).

  • Cloudflare officially received the FedRAMP certification. → They were awarded the $7.2 million, five-year deal to operate the .gov registry. → Every e-mail sent to the White House, every agency’s webpage, and most of the other ways the U.S. government connects to the Internet now depend on Cloudflare and its network. → Public sector space is only 3% of their revenue today, large runway ahead.

  • Price increases were well received and they have not seen elevated churn as a result of that. It went about as smoothly as we could possibly have hoped. → It’s less of a tailwind for revenue, but more of a tailwind for free cash flow for this year, at least.

  • Interesting snippet from Jamin Ball, Clouded Judgments about why Cloudflare’s earnings were well received:

“I thought Cloudflare was a good representation of the type of earnings report that gets a positive reaction in this market. They reported Q4 ‘22 which came in almost exactly at consensus. Then they guided Q1 ‘23 to 0.5% below consensus. Just looking at those two figures, you’d think the stock would trade down. However, it was up >10% after hours on Thursday (I’m writing this Thursday night, so we’ll see how it trades Friday). The primary reason (I think)? They guided 2023 1% above consensus. As I described above, the fear coming into the year was that 2023 estimates were way too high. The market had priced in downward earnings revisions. But what a quarter like Cloudflare’s showed us is that if you guide in line with 2023 consensus, that’s a lot “better than feared” and shows the roof isn’t on fire. Those reports are getting bought, even though it’s pretty clear Q1 will be tough. Time will tell if the 2023 guide was optimistic.”

My Take

Just looking at growth, a roughly 20% position doesn’t seem justified. But there’s more to consider than high growth alone. For example, durable growth, capable management, and generating cash.

  • I believe in their 5-year goal of $5 billion in annual revenue—and profitably achieving it. → Durable growth.
  • This quarter, Cloudflare became cash flow positive. I’m pleasantly surprised by the strong growth in large customers despite facing this challenging environment. → Generating cash.
  • Cloudflare’s management hasn’t disappointed so far. They’ve never missed guidance. They seem focused on what they can control. → Capable management.

Still, I might trim my position slightly given its size, depending on what my other companies report.


What they do: Provides cloud-based infrastructure monitoring
Confidence tier: Contender
Type of revenue: Consumption-based
Trend to profitability: Yes
Cash: $1.9B

Revenue: $469.4M

YoY Q1 Q2 Q3 Q4
2021 51,3% 66,8% 74,9% 83,7%
2022 82,8% 73,9% 61,6% 43.9%
QoQ Q1 Q2 Q3 Q4
2021 11,8% 17,6% 15,8% 20,6%
2022 11,3% 11,9% 7,6% 7.4%

Free Cash Flow: $96.35M

FCF margin Q1 Q2 Q3 Q4
2021 22,4% 18,2% 21,1% 32,7%
2021 35,8% 14,8% 15,4% 20.5%

Customers $100k+: 2,780 (85% of total ARR)

YoY Q1 Q2 Q3 Q4
2021 50,7% 59,6% 66,4% 63,7%
2022 60,0% 54,1% 44,4% 38.3%
QoQ Q1 Q2 Q3 Q4
2021 14,5% 11,7% 14,6% 11,7%
2022 11,9% 7,6% 7,4% 6.9%

Dollar-based net retention rate: 130 %

2021 130%+ 130%+ 130%+ 130%+
2022 130%+ 130%+ 130%+ 130%+

Revenue and Guidance

  • Revenue was $469.4M, up 43.9% year over year and 7.4% quarter over quarter. I had hoped for at least 9% quarterly growth. As they noted in the call, the usual seasonal slowdown in December was more pronounced than in previous years.

  • They guided to $470M in Q1, which suggests 5% sequential growth if they typically beat guidance. I think this is fine given the overall economy and usual seasonality. I assume they will beat guidance by a bit more this quarter since companies can’t delay spending indefinitely.

  • The full-year 2023 revenue guide is $2,090M, up 25% year over year. The guidance seems confusing. Taken at face value, it makes me question my original analysis. But of course, I don’t think the guidance tells the whole story. I’ll explain more in the “My take” section.

  • The full-year 2023 operating income guide is $320M, which I believe they will significantly exceed. Last year, they beat operating income guidance by over 80%.

  • Remaining performance obligations were $1,060M, up 12.6% sequentially, faster than 6.8% growth last quarter. RPO is growing faster than revenue quarter over quarter, indicating customers commit to more spending and value what they get.

Cash Flow and Profitability

  • The gross margin increased slightly from 80.3% to 80.6% year over year.

  • Operating income rose 17.7% year over year to $83.09 million, 17.7% of revenue, up from $70.62 million.

  • Net income increased 27.4% year over year to $89.53 million, 19.1% of revenue, up from $70.17 million.

  • Earnings per share rose 30% year over year to $0.26, up from $0.20.

  • Operating cash flow decreased 1.3% year over year to $114.44 million, 24.4% of revenue, down from $115.79 million.

  • Free cash flow decreased 9.1% year over year to $96.35 million, 20.5% of revenue, down from $106.68 million.

  • R&D expenses continued increasing to $142.4 million, 30.3% of revenue in line with the trend. The sequential increase of $4.13 million was the lowest in 10 quarters, likely due to slowing headcount growth.

  • S&M expenses grew to $125.31 million, 26.7% of revenue following the trend. The sequential increase of $17.79 million was the highest on record, indicating no slowdown in capturing market share.

  • G&A expenses remained in line with the trend.


  • Added 1,100 total customers, up 23.9% year over year (YoY) and 5.0% sequentially. → Customer growth continues at a steady pace. While new customer additions slowed slightly in Q3 (added 1,000), growth accelerated again this quarter.

  • Added 180 $100K+ customers, up 38.3% YoY and 6.9% sequentially. → Similar trend as total customers. Continued adding customers at the same rate as Q3.

  • Added 101 $1M+ customers (throughout the full year), up 46.8% YoY.

  • Large customers ($100K+) represent 85% of total annual recurring revenue (ARR), consistent with the past 4 quarters.

  • Dollar-based Net Retention Rate remained over 130%. They expect it may drop below 130% going forward due to customers’ reduced spending over the past few quarters. DataDog’s pricing is a mix of consumption-, host- and user/subscription-based, which means it could be more resilient versus a pure consumption-based model like Snowflake. Therefore there is less upside but also less downside to expect → Less volatility.

  • 81% of total customers use 2+ products, rebounding from slight drops in Q2 and Q3.

  • 42% of total customers use 4+ products, up from 35% → 37% → 40% in the past 3 quarters.

  • 18% of total customers use 6+ products, up from 12% → 14% → 16% in the past 3 quarters. → Customers clearly see the value in using more products, boosting confidence.

  • Overall, the company continues adding new customers and expanding existing customer relationships. While growth slowed temporarily, it has since picked up again. The increase in multi-product customers is especially encouraging, demonstrating the strength of the company’s value proposition.

Additional Insights

  • Datadog reported strong growth and retention in Q4.

  • Sales pipeline and new customers remain healthy.

  • 37% of Fortune 500 companies now use Datadog, up from 30% last year.

  • Customer retention remains over 95%. Datadog is critical for customers.

  • Released a new product, Universal Service Monitoring. Now have 17 products, up from 13.

  • Have over 600 integrations with cloud platforms.

  • Signed multi-million dollar deals with insurance company and financial firm. Estimated over 100% ROI and faster issue resolution.

  • Although some customers are slowing cloud usage, long-term trends to cloud migration remain.

  • Usage growth slowed for some larger customers optimizing costs and in December. Smaller customers still growing.

  • Food delivery and ecommerce primarely responsible for decreasing usage growth.

  • Billings grew 31% year over year. Revenue is a better indicator than billings or RPO.

  • Still opportunities for new customers and growth. Products gaining more adopters.

  • Cloud migration tailwind may slow in coming quarters but will return. Focus on new logos, markets, and products.

  • Smaller customers also optimizing but still growing in cloud. Churn only for very small customers.

  • Net retention still over 130% for 22 quarters. High, steady gross retention shows importance to customers.

  • Guidance

    • Continued cloud migration and digital transformation driving growth, though at a slower rate due to cloud optimization. DataDog assumes this trend will continue but can’t predict when it will end.
    • Solid demand from new customers and workloads, with some growth rebound in January. However, DataDog remains cautious due to market volatility.
    • DataDog assumes the same trend of moderate customer growth as last year. They believe growth will reaccelerate but can’t predict when due to macro uncertainty and cloud providers’ uncertainty. Taking a prudent approach to guidance.

My Take

Overall, I thought this was a really solid quarter for the company. The only issue seems to be their guide for 25% growth next year, which does indicate growth will slow down sharply.

That said, I’m still feeling good about my position in DataDog: Even if their dollar-based net retention rate drops below 130%, what about all the new customers they’re adding?

Their guidance of 25% growth next year assumes their retention rate will drop AND their net new customers won’t contribute anything meaningful to revenue, but DataDog keeps adding customers at a steady rate. Their existing customers are using more of their services and committing to spend more with them in the future. And pretty much all their other metrics look good too.

They are basically saying: The cloud cost optimization by customers will never stop wink wink.

Do you really believe in that?

I really don’t think DataDog’s growth is going to slow down that much. They’re being super conservative and cautious in their guidance, not because of competition, market saturation, or declining digital trends. But because they just don’t have the visibility in the current environment and it’s the first FY guide, which is usually the most conservative one.

While 50% hyper-growth may not be realistic in the long run, I can see DataDog continuing strong growth beyond 2023 based on their new products and huge market opportunity.

I’m interested to see their Q1 results and will reevaluate from there and remain a bull dancing with the dog for now.

"So that’s where we’re going. I think you’re right, though, that the underlying wave that is – has been a tailwind throughout the of the company was cloud migration and digital transformation . I think that we might be a bit more of a headwind over the next few quarters . But we strongly believe that it will become a tailwind again in the future .We just can’t tell you when exactly. We’ve listened to the calls of the hyperscale’s, they can’t tell you when either. We’re in the same boat there. So, what we’re doing today is we’re focusing on the drivers of future success, which are covering more of the customer landscape sort of getting into more new logos, more geographies, more segments
and also developing our products and getting those products adopted and getting those products adopted by more of these customers, which is how we’re going to have accelerating growth in the future”. Olivier Pomel, CEO


Sentinel One

What they do: Cybersecurity firm catching up with CrowdStrike

Read my most recent Sentinel One review here

Also, Wells Fargo downgraded S on worries over ‘declining’ demand:

“Our checks with resellers down ticked in [fourth-quarter], with 43% of resellers reporting Below Plan results, and just 10% Above Plan (-33% net vs -13% net last quarter),” Nowinksi wrote in a note to clients. He added that the four largest resellers of SentinelOne (S) all had “relatively weak results” and three of the four had below-plan results.

Separately, Nowinksi noted that CrowdStrike had more positive checks and looks to have “better momentum in the market.”

Nowinksi also noted that channel partners said the departures of Daniel Bernard and Raj Rajamani to go to CrowdStrike is “concerning,” especially since both are “highly regarded” in the industry.

Sentinel One will report on 3/15.


What they do: Leading cybersecurity firm with a "mission to protect customers from breaches”

Read my most recent Crowdstrike review here

Noteworthy news in February

Crowdstrike will report on 3/7.


What they do: Cybersecurity firm that provides services secure user-to-app, app-to-app, and machine-to-machine communications over any network and any location

Read my most recent Zscaler review here

Zscaler will report on 3/2.


What they do: Simplifies, digitizes, and automates complex back-office financial operations
Confidence tier: Bench
Type of revenue: Transaction- and Subscription-based
Trend to profitability: Yes
Cash: $2.7B

Revenue: $260.0M

YoY Q1 Q2 Q3 Q4
2022 156.1% 189.5% 179.4% 155.8%
2023 94.3% 66.2%
QoQ Q1 Q2 Q3 Q4
2022 51.2% 32.2% 6.7% 20.0%
2023 14.8% 13.1%

Revenue (core): $231.1M

YoY Q1 Q2 Q3 Q4
2022 168.3% 197.1% 182.3% 151.3%
2023 82.6% 48.6%
QoQ Q1 Q2 Q3 Q4
2022 51.6% 32.3% 6.4% 17.7%
2023 10.2% 7.7%

Revenue (standalone): $133.1M

YoY Q1 Q2 Q3 Q4
2022 71.0%
2023 61.6% 37.1%
QoQ Q1 Q2 Q3 Q4
2022 15.6% 25.0% 5.1% 12.5%
2023 9.3% 6.0%

Customers Bill (standalone): 182.700

YoY Q1 Q2 Q3 Q4
2022 22.4% 23.6% 26.8% 30.2%
2023 35.6% 35.3%
QoQ Q1 Q2 Q3 Q4
2022 4.6% 6.5% 8.6% 7.6%
2023 9.0% 6.2%

Revenue per Transaction (standalone): $7.31

2021 Q1 Q2 Q3 Q4
2022 $4.97 $5.79 $6.20 $6.54
2023 $7.06 $7.31

Dollar-based Net Retention Rate: 131 %

2021 124%
2022 131%

Revenue & Guidance

  • Total revenue was $260M, an increase of 66.2% year-over-year and 13.1 % quarter-over-quarter. I hoped for a bit more, but I am happy with that sequential growth.

  • Float revenue was $28.9M, an increase of 2588% year-over-year and 92.7% quarter-over-quarter. Nice to see and certainly helping profitability. Still, I expect flat revenue to slow down, once interest rates stop rising. The decrease should then get offset by an increase in transaction revenue again. Therefore I almost tend to put Float Revenue into “further insights” instead of looking at it as a highlight. But as of now, it is.

  • Core revenue was $231.1M, an increase of 48.6% year-over-year, and 7.7 % quarter-over-quarter. Looking at the trend, it continues to slow down. Core revenue consists of:

    • Subscription revenues (24% of total revenue) came in at $61.5M, 5.9% sequentially → In line with the past 3 quarters, even slightly higher than last quarter (5.3%). I don’t see issues here other than that subscription revenues are a small part of total revenue.
    • Transaction revenue (65% of total revenue) came in at $169.6M, 8.4% sequentially, a slowdown compared to the past 2 quarters (4Q22: 23.2%, 1Q23: 12.1%) → Not only that, usually we see >30% sequential growth in transaction revenue this quarter. → Total payment volume slowed to 3.7% sequentially (usually it is > 13% sequentially when looking at Q2s of the past few years). Clearly, the macroeconomic conditions put SMBs on “standby mode” influencing growth negatively.
  • Divvy revenue was $86.60, up 77.8% YoY, and 11% QoQ. → Great to see revenue from Divvy continuing to be strong.

  • The weak guidance to $248M in Q3 (meaning -5% sequentially) was obviously the primary driver of the stock price decline. But let’s not forget, Q3 is usually a seasonally weak quarter and I assume they are now guiding very conservatively until the macroeconomic situation fades = transaction volume is going to grow again (which might happen fast).

Cashflow & Profitability

  • Gross Margin was 86.7 %, up from 85.3 % a year ago.

  • Continuation of strong non-GAAP profitability, driven by opportunistic float revenue but also by operational excellence, since BILL’s operating expenses as a % of revenues stayed in line with the previous quarters (except for the R&D expenses, which were slightly decreased by 4 percentage points):

    • Operating Income was $30.8 or 11.8 % of revenues, up from $3.38M a year ago.
    • Net income was $49.5M or 19.0 % of revenues, up from -$0.22M a year ago.
    • Operating cash flow was $55.23M (!!) or 21.2 % of revenues, up from -$12.93M a year ago.
    • Free cash flow was $47.7M (!!) or 18.3 % of revenues, up from -$16.07M a year ago.
    • EPS $0.42 cents, up from -$16.07 a year ago.
    • $2.7B cash on hand while continuing to generate more should make it easy to get through the current environment.
    • Based on the guidance, we should expect even stronger profitability next quarter (EBIT margin guide: 12% vs this quarter’s 12% EBIT margin).


  • Added 10,700 customers to bill standalone, an increase of 6.2 % quarter-over-quarter, in line with every Q2 in the past 4 years. → Looks strong, **but is inflated by the increase of customers added to the Financial Institution segment. Without those FI customers, the actual QoQ customer growth was at 2.8%, down from 4+% in the previous quarters (**4.9% → 4.2% → 4.2% → 2.8%). Unfortunatelly the total transactions of the FI segment is not growing much for a year now (quarterly FI transactions in millions: 0.8 → 0.8 → 0.9 → 0.9 → 1.0), while the number of FI customers more than doubled by 121.6% YoY to 52.3M. Why is this segment not gaining traction?

  • Revenue per Transaction from all customers was $7.31, a sequential increase of 3.5%. It’s good to see revenue per transaction increase in that environment, indicating customers continue to use their platform. Though it’s obviously slowing down due to macroeconomic conditions.

  • Added 1.900 customers to Divvy, up 59.4% YoY, 8.3% QoQ, now representing 24.700 Divvy customers. → Great to see still strong customer growth for Divvy, although it seems to decelerate since 4 quarters now (16.8% → 14.4% → 10.1% → 8.3%). This is most likely influenced by macro, but the key metric I am going to watch since BILL is a Divvy-story, see more below.

  • Revenue per Transaction from Divvy customers was $9.21, in line with last year and up 1.9% QoQ → Divvy customers deliver the highest revenue per transaction. Since Bill seems to be a Divvy-story it’s good to see that the average transaction delivers the highest value for that segment.

  • Total transactions for Divvy was 9.4M, up 77.4% YoY, 10.6% QoQ → In contrast to FI customers, the Divvy customers seem to correlate directly to transactions which I like to see.

Additional insights

  • Completed the acquisition of Finmark, financial planning, and cash flow
    an insights software company.

  • Accounted a $300M buyback program → Looking at how profitable they suddenly became, I hesitate to see this move negatively. If they keep also investing in growth initiatives, I am fine with it.

  • Launched SMB-focused solution with new bank partner BMO - Bill’s white label solution will offer a variety of payment solutions, including virtual cards to BMO’s customers, giving them a broad range of payment capabilities within one solution that automates bill pay and digitizes invoicing to help manage cash flow

  • Financial institutions contribute 4% to 5% of revenue → Bill is expecting a much higher percentage over the long term.

  • As mentioned last time, a 12-month payback period, which is great to see. Usually, you want SaaS businesses with payback periods < 12 months.

My Take

I lost some of my confidence since my last update since Bill seems to be an M&A-Divvy story which slowly becomes too complicated for me:

  • Bill standalone is still growing, but one could expect more momentum with that smaller revenue base of $133.1M. Also, I don’t like to see organic revenue to be slowing down in general (now 37.1% YoY).

  • The divvy-number-of-transactions (11% QoQ) and the divvy revenue (11% QoQ) is still growing strong for Divvy, which gives me the confidence to hold.

  • Customer growth for divvy seems to decelerate (8.3% QoQ, 1.900 net adds), similar to all other customer segments (likely due to macro), but still acceptable, though the number to watch for me.

  • The revenue per transaction for Divvy is the highest at $9.21, followed by $8.04 for core customers (FI customers excluded).

  • FI customers are still growing the fastest (QoQ: 25.8% → 21.5% → 24.9% → 16%) but don’t contribute meaningfully. Although 6 of 10 top 10 banks in the U.S. are customers, the number of transactions is not moving the needle.: While FI customers more than doubled YoY (121.6%), the number of FI transactions increased by only 25%. → Does it take time to ramp FI customers up since FI customers have to take time to understand the value of Bill’s white-label offering through a bank? From the call: “We’ve proven through our direct business the ability to create value for buyers and suppliers that will play out in the financial institution channel as well.”

→ What we have now, is Divvy as the main contributor to future revenue growth. I assume it’s critical that divvy customer growth doesn’t slow down much further, but let’s not forget, it’s negatively influenced by macro and we have to see what other businesses are reporting. I assume customer growth won’t look great for them as well.

I believe it is important for us not to look at overall customer growth (because FI customers are diluting that and we don’t know if/how they will bring revenue in the future) but to focus on the development of Divvy metrics (customer growth, revenue).

I am getting a bit tired of businesses that are either in the Fintech space due to their volatility or rely on mergers and acquisitions. Bill seems to be both, plus only 24% of revenue is subscription-based, which makes Bill more volatile to revenue growth and therefore less predictable.

I won’t let go of Bill since especially the somewhat strong guide to >50% YoY revenue growth still gives me confidence. but I might adjust its position size to an appropriate allocation.

The Trade Desk

What they do: Provides a platform for Ad Buyers (Agencies, Brands, and other technology companies)
Confidence tier: Bench
Type of revenue: Long-term master service level agreements (similar to recurring)
Trend to profitability: Yes
Cash: $1.32B

Revenue: $491M

YoY Q1 Q2 Q3 Q4
2021 36.8% 100.9% 39.3% 23.7%
2022 43.5% 34.6% 31.2% 24.1%
QoQ Q1 Q2 Q3 Q4
2021 -31.3% 27.4% 7.5% 31.4%
2022 -20.3% 19.5% 4.8% 24.3%

Non-GAAP Net Income: $190.14M

% Revenue Q1 Q2 Q3 Q4
2021 31.8% 31.5% 29.6% 52.6%
2022 33.2% 26.2% 32.6% 38.7%

Operating Cash Flow: $173.48M

% Revenue Q1 Q2 Q3 Q4
2021 34.2% 3.7% 43.1% 41.3%
2022 46.4% 24.3% 34.8% 35.3%

Revenue & Guidance

  • Revenue was $491M, 24.1% Year-over-Year, 24.3% QoQ, → The market was happy with that growth, especially since its peers have mostly stopped growing. The Trade Desk continues to gain market share, driven by Connected-TV tailwinds.

  • Guided to $363M for Q1 → Which will result in 15% YoY growth. Certainly not high growth anymore, but it’s clear The Trade Desk is winning market share and growth should pick up again. Management called out, 6 weeks of Q1 2023 saw consistent demand acceleration throughout, which could mean more upside. Also, excluding the political election spend that TTD had in Q4 ‘22 that low single-digit percent share of political spend, the sequential seasonality is trending just slightly better than on average.

  • Guided to $78M adjusted EBITDA for Q1.

  • Operating expenses in 2023 will increase year-over-year due to a combination of the 2022 hiring flow-through, and return-to-office expenses, including travel and live events.

Cashflow & Profitability

  • Adjusted EBITDA was $245M, 49.9% of revenues (!), a record high
  • Net Income was $190.14M, 38.7% of revenues, down (due to tax rate differences) from $208.13M a year ago. → Although net income decreased YoY for Q4, for the full year it increased by 15%.
  • EPS was $0.38, down from $0.42 a year ago (see above).
  • Operating cash flow was $173.48M, 35.3% of revenues (!), up from $163.39M a year ago.
  • Free cash flow was $124M, 25.3% of revenues (!).


  • Customer retention was above 95% for the 9th consecutive year.

Additional Insights

  • 2022 gross spend of nearly $7.8 billion - a record high.

  • 95% of ad spend from stable master service agreements.

  • 20% take rate stayed consistent for the 9th consecutive year.

  • Share of spend:

    • By Channel Video 45%, Mobile 39%, Display 11%, Audio 5%
    • By region: North America 90%, International 10%.
    • By vertical:
      • Travel tripped in spend in Q4 compared with a year ago as the sector continues to recover from the impacts related to the pandemic.
      • Automotive was among the strongest verticals.
      • Political election spend doubled QoQ to low single digit percent of spend in Q4.
  • CTV continues to be the strongest growth driver - Content owners like Netflix moving beyond ad-free subscription models help.

  • Jeff Green, CEO, predicts that more walled gardens will begin to take down some of their barriers. → TTD might one day be able to participate from the walled gardens, like Google and Facebook.

  • Announced $700 Million Share Repurchase Program helping to offset dilution from employee stock issuances.

  • Unified ID 2.0

    • 75% of the third-party data ecosystem is estimated to be on UID2 in the first half of this year, up from 15% in the fourth quarter of last year. Companies like AWS, Snowflake, Salesforce, and Adobe already adopted UID2.
    • Leading advertisers running campaigns on Disney’s UID2-powered audience graph report results 12X more effective in reaching target audience.
    • Paramount Advertising announced its integration with UID2 to scale identity on its CTV inventory.
    • DRAKO, location-based marketing, and analytics services company, announced its support of UID2.
  • Launched Galileo - enables advertisers to onboard and activate their first-party data quickly and easily

My Take

The longer I hold The Trade Desk, the more I believe it is not a story stock anymore. The fact, they are outpacing their competition significantly (increased their platform growth in 2022 at 32% vs. 8% for the total sector), plus their constant ability to deliver high margins (50% adj. EBITDA margin and 25% free cash flow!) gives me a lot of confidence.

The large TAM of almost $1 trillion (!) vs $175b traditional linear TV, mid-term elections, connected TV tailwinds, the opening of Netflix, and the shopper market should support a reacceleration of revenue further. They don’t own content, so they can partner with anyone. Ad dollars spent per thousand impressions (CPM) is double as high as on linear TV since programmatic targeting is better on connected devices. And they are very profitable.

I added about 1% and plan to increase my position opportunistically over time with a target of ~7%.

We don’t think that we have to compete with anything other than a 1962 product. - Jeff Green about the upfront market.


What they do: Provides collaboration software based on low-code and no-code building blocks
Confidence tier: Bench
Type of revenue: Subscription-based (seats)
Trend to profitability: Yes
Cash: $886M

Revenue: $149.9M

YoY Q1 Q2 Q3 Q4
2021 84.7% 93.7% 94.9% 90.5%
2022 84.0% 75.2% 64.9% 56.9%
QoQ Q1 Q2 Q3 Q4
2021 17.6% 19.7% 17.6% 15.1%
2022 13.6% 14.0% 10.7% 9.5%

Free Cash Flow: $29.7M

FCF margin Q1 Q2 Q3 Q4
2021 -2.7% -2.1% 3.5% 10.6%
2022 -14.9% -15.6% 10.2% 19.8%

Customers $50k+: 1,474 (151 net new)

YoY Q1 Q2 Q3 Q4
2021 219.0% 226.4% 231.4% 200.4%
2022 186.6% 146.8% 115.8% 85.9%
QoQ Q1 Q2 Q3 Q4
2021 26.9% 40.3% 30.4% 29.4%
2022 21.1% 20.8% 14.1% 11.4%

Dollar-based net retention rate 10+ customers: 130+ %

2021 121% 125% 130%+ 135+%
2022 135+% 135+% 135+% 130+%

Revenue & Guidance

  • Revenue was $149.9M, 56.9% Year-over-Year, 60% FX-adjusted, 9.5% QoQ, → Beat my expectations slightly, revenue growth seems to settle around 9 to 10% QoQ.

  • Guidance was $156M in Q1 → Slightly higher than my expectations as well**.** A similar beat next quarter will translate to $164M, 51% YoY, 9.4% QoQ → Happy with that. They also saw some optimism and momentum as they started the year.

  • Full Year 2023 revenue guide was $693M, a similar beat to last year, 9%, which would result in 45.5% YoY. → Happy with that.

  • Full Year 2023 operating loss guide of -$32M, compared to the FY 2022 operating loss guide of -$147M → I assume we will see positive operating income for the full year.

Cashflow & Profitability

  • Gross margin was 90%, best in class and holding steady.

  • Operating Income was $14.3M, 9.5% of revenues, up from -$9.93M a year ago.

  • Net Income was $22.2M, 14.3% of revenues, up from -$11.72M a year ago.

  • Earnings per share was $0.44, up from -$0.26 a year ago.

  • Operating cash flow was $34.1M, 22.7% of revenues (!), up from $13.52M a year ago.

  • Free cash flow was $29.7M, 19.8% % of revenues (!), up from $10.11M a year ago.

  • They anticipate being adjusted free cash flow positive in fiscal year 2023.

  • R&D expenses, 16.5% of revenues, went down by -5.9% sequentially, which saved around $3M to $4M due to the impact of currency exchange in Israel. The bulk majority of the hiring for 2023 is going to be focused on R&D resources. Monday DB will be a focus going forward.

  • S&M expenses, 54% of revenues, came down from 60% in Q3. I assume they have saved $7M to $9M. → Management mentioned the decrease in S&M expenses was due to competition pulling back ad spend on Google, Facebook, etc. → they’re getting more customers for less money since they have a way “BigBrain” to track the ROI for every dollar spent on sales and marketing.

  • If they hadn’t “saved” ~$10M (S&M, R&D), they would still have generated about $19M free cash flow, which I like.


  • Large customers $50K+ was 1474, 85.9% YoY, 11.4% sequentially, 151 net new. → I would like to see the growth of that cohort stabilize in the upcoming quarters.

  • Dollar-based Net Retention Rate for all customers remained at 120+ % from 125+ % in Q2, due to large customers’ (>$50K) slower seat expansion in the app market. DBNRR for that cohort declined to 130+ % from 135+ % in Q3.

  • Dollar-based Net Retention Rate declined for the cohort of 10+ Customers to 130% from 135% in Q3. → Still best in class, but I would like to see that cohort remaining stable.

  • ARR from 10+ users remains at 76% of total ARR, up from 72% a year ago.

Additional insights

  • In FY 2022, increased the number of marketplace apps to 217, including 61 monetized apps.

  • Announce a new partnership with Appfire, the world’s largest enterprise collaboration app provider with a track record of creating easy-to-use, powerful, and reliable apps for the world’s most reputable tech companies.

  • Total employee headcount was 1,549.

  • CRM

    • Added 2,458 new monday sales CRM accounts.
    • 12% of total new customers in FY 2022 were CRM customers.
    • 50% of new paying customers are CRM customers.
    • CRM offering only for new customers, existing customers will receive the offer mid-2023.
  • Monday was one of the fastest-growing new products on G2.

  • 70% of our customers are non-tech and 30% is tech. Softness in demand was mostly around tech. → Might be a reason why Monday holds relatively strong, especially since they have a seat-based subscription mode.

  • They still see greenfield, for the majority of the deals, they are not competing against any other competitor.

  • They Have already added many layers that enable anyone, including themselves, to build AI tools on top of Monday. Monday Docs is already using AI to generate automatic content and summarize content within boards.

My Take

Monday was one of the few reporting companies that surprised me positively. Many analysts congratulated them on the quarter. Sequential revenue growth stabilizes and the full-year guide looks decent to me when considering the adverse macro effects.

I am keeping a close eye on customer growth, especially the $50k+ cohort and the Dollar-based Net Retention Rate for the 10+ Customers cohort. For both, I would like to see a stabilizing trend, or, preferably acceleration. Though, they expect a further decline for DBNRR by the end of 2023 due to the macroeconomy headwind.

I added a bit after earnings.

Long Story Short

On February 25th, my portfolio’s year-to-date return reached 25%, followed by a sell-off resulting in an 11% year-to-date return by month’s end. So far, so good!

Bill, DataDog and Snowflake are three companies I find most puzzling at the moment. I feel okay with my current allocations and may even add more to Bill due to its decent fiscal year guidance. For now, I plan to keep my large position and looking forward to the upcoming quarters for more clues.

One note-worthy observation @LisaOnCloud9 and I discussed: Seat-based businesses have been weak last quarter but stabilized this quarter followed by weakness for consumption-based businesses this quarter. Does it mean, layoffs and hiring stops have stabilized? Are companies going to lose their budgets for other initiatives again soon?
Could make sense: First freeze everything and get headcount under control → once the panic is over, slowly ramp up again.

I was not suprised about this earnings season, since I got what i expected: A very bad quarter, because macro is real for all companies. Still, it won’t stay forever. Here’s a quick recap of my last portfolio summary:

I anticipate 7.5 (0.5 for Snowflake) more disappointing earnings reports overshadowed by the macro environment. Unless there are isolated issues with execution, we should be fine. Let’s not forget: This will end at some point. Time is on our side.

This is what happened (though Snowflake also disapointed contrary to my believe Snowflake should hold up better than the rest of the pack), and it’s important to remind ourselves why fundamentals are the way they are in this environment.

Companies are still cautious with their budgets and spending, but I assume they plan to revise that in the second half of 2023. I don’t have a crystal ball, but I believe we’ll see another weak quarter (Q2 for most reporting companies), then finally an improvement from Q3 onward.

That said, I expect the next quarter to provide slightly more clarity than we had for the last few quarters. If that’s true, we should have the worst behind us soon!


Earnings Calendar

Company Earnings release Time
Sentinel One 3/15/2023 Post-Market
Crowdstrike 3/7/2023 Post-Market
Zscaler 3/2/2023 Post-Market

My Watchlist

  • MongoDB - reporting on 3/8/2023
  • Okta - reported on 3/1/2023

My Previous Portfolio Summaries

Thank you for reading.

Happy Investing, everyone!

PS - I am planning to remove the tables of quarterly numbers in the Company Review section to keep the summary more compact. Please let me know via PM if you have objections because you find that helpful. My goal is to make my summaries as helpful as possible for you.


I had to split this post into two parts since the content didn’t fit into one post → Please scroll up, if you landed here after clicking into the thread :slight_smile: