Been a few months since I’ve posted a valuation update. Since my last update basically every stock in my portfolio has reached new EV/S highs. Many were due to incredible accelerating earnings reports, some were just pulled along with the crowd. I see more and more articles about how SaaS is the next big thing. We obviously have company.
A few notes:
I calculate my EV with shares outstanding so if you use a different share count then our results aren’t comparable.
Don’t use these numbers to compare which company is a better investment. I.e. ZS at ev/s of 30 is a worse investment than SMAR at 22. You need to look at so much more than EV/S
The EV/S numbers are useful to compare a company against itself assuming the story hasn’t changed too much. I.E Last quarter AYX got down to an EV/S of 17 which was a much better buy than AYX at an EV/S of 25.
THe Companies
GH - EV/S range 90-40. Now 60ish. I brought GH to the boards back in late Nov. The EV/S was around 40 at the time which I called out as being horribly speculative. Since then they road a wave of hype and popped up to an EV/S of 90!! I sold about 60% of GH when it reached an ev/s of 90. Just didn’t make sense to have money there when other companies were a much more sure bet. It is now down to 60ish. Since November they have made good progress on the stuff we layed out as being important. NILE data was good, Initial lunar research release and improving coverage of guardant 360. Hopefully, pan cancer FDA approval will happen in the next 6 months. GH has a lot of exciting things happening…i worry that they won’t be able to grow their revenue into this incredible valuation they have. My position is small.
AYX - EV/s Range of 25-13. Now 23.5. I bought more when it’s ev/s briefly dropped below 20. AYX just keeps rolling in great quarters. From here on out I’m guessing quarters will get a little lumpier due to the switch to asc 606 which we shouldn’t interpret as the business faltering just a change in accounting. They recently made an interesting acquisition that appears to fit very well wel AYX. Unfortunately, every single link at clearstory data’s website just takes you to Alteryx’s website so it is hard to learn much. A year or two ago AYX had an interesting conference call where they said that there were lots of players in the data analytics market but nobody really has a full platform. They solve small niche issues or have interesting technology but would never be able to compete with the platform that is AYX. At the time they said they would happily snap up there companies for either the tech, team, or customers. Looks like they did just that.
OKTA- EV/S range of 25-16. Now 23.5. OKTA’s last quarter was a bit of a letdown for me. How often do you get to say that about 50% growth? FCF positive, plenty of cash. The conference call was amazing though. OKTA operates at the very heart of a enterprise, they have a very complete solution and continue to make themselves more valuable for businesses. As an impossible exercise, I sometimes wonder which of my companies could eventually get the largest. I think OKTA is a contender.
TWLO EV/S range of 26-12. Now 24. Huge last quarter, incredible acceleration. On the face of it their guidance seemed to be one of the most ridiculously low guidances I have ever seen. Maybe they know something we don’t. I’m excited about their Sendgrid acquisition. I don’t know twlo well enough to know how they do with acquisitions but this one seems to have lots of synergies by allowing companies to have a complete communications platform. I wonder if all the attention on robocalls will impact TWLO at all.
ZS EV/S range of 35-18. Now 30. Last quarter was a blow out. Positive FCF (lots of it) positive non-gaap earnings, accelerating revenue, really accelerating billings. In their CC they seemed to be trying to temper expectations a little bit. Regardless, I don’t think an earnings report gets any better than that one.
VCEL EV/S range of 8.5 - 5. Now 7.4 They had an incredible year and incredible quarter. No competition for MACI, now there is some slight competition for Epicel. I think Recell will be less competition for Epicel than people think but I’m sure it will have some impact. Ultimately VCEL is about what MACI will do though. Many question if it can grow its revenue past what carticel did. It already has and I think VCEL has some legs to run. Will probably be profitable this year and if they can grow MACI >30% this should be another good year.
SMAR EV/S range of 28- ? Now 22. I just posted on SMAR here, https://discussion.fool.com/call-with-smar-cfo-34174784.aspx . Lots of good posts recently. Growth has been slowing down a little bit from the mid 60s to 59%. Billings ticked up this quarter which should be a view of things to come. Pretty rare to see DRR accelerating in a company, now up to 134% which is a great sign of their stickiness. Recently FCF positive even though they are guiding for negative next year. They should do well.
ESTC EV/S range of 29-22 now 23. Amazing quarter and then amazon had to come a long a pull a seriously ahole move by trying to fork elasticsearch, the open source project. Some people seem to think this is an emergency level 10 on a 1-10 scale. Some think it is a 1. I think it is around a 6 if amazon is serious about the fork. If they aren’t bring their best then ESTC will do fine. Amazon does lots of things…ESTC does one thing…elastic search. I’m a buyer.
MDB EV/S Range of 29 - 15. Now 26. How often do you see a company accelerate revenue like MDB has been? MDB is rightly at the top of their range. Atlas has been an incredible success. Amazon recently moved into MDB’s territory but on a 1-10 scale of worry i think this one is a 2. One little tidbit of note is that MDB reduced their atlas price on azure. I wonder if this is to apply the screws a little bit to AWS and how it will affect revenue going forward. Anywho, all that is noise to a pretty incredible run that appears to have lots of space in front of it. This is one of my larger positions.
all the best,
Ethan
