There was a fascinating thread this week that has had me thinking about the market caps of our companies. One of my thoughts was that price to next year’s revenue is a more relevant metric than price to last year’s revenue. So I did some digging:
Mkt Cap (Price) TTM Revenue Next Year Revenue Guidance Zscaler 9 billion 243 million 375 million*** MongoDB 8 billion 267 million 371 million ElasticSearch 6 billion 241 million 375 million*** Alteryx 5 billion 254 million 350 million
***Next Year Revenue Guidance for ZS and ESTC were educated guesses for ~55% growth. They’ll probably grow more than that, but the others will likely smash their guidance too.
Takeaway #1: ESTC and especially AYX look incredibly attractive. The TTM revenue and Next Year guidance for all these companies looks very close…hard for me to justify the $9b and $8b valuations for MDB and ZScaler (esp ZS). The market seems to be pricing in continued acceleration from ZS and continued triple-digit Atlas growth for MDB. I’m not sure those things are such a foregone conclusion. What do you think?
Mkt Cap (Price) TTM Revenue Next Year Revenue Guidance Smartsheet 4 billion 178 million 257 million (310 million billings) Sailpoint 2.5 billion 251 million 299 million
Takeaway #2: Even with less revenue, SMAR looks good at a $4b price tag. Growth is great, and if you take their 4b price divided by 310 next year billings, the ratio is ~13.
Takeaway #3: Even with slower growth, SAIL looks like a steal at just $2.5b. Their “Next year P/S” is ~8.
Mkt Cap (Price) TTM Revenue Next Year Revenue Guidance Twilio 16 billion 650 million 1.08 billion
Takeaway #4: Twilio’s next year guidance is almost 1.1 billion (which they’ll smash), so roughly 3x or more that of any other company on this list. They practically seem like a bargain at a $16 billion market cap. I’ll predict they’ll actually hit at least 1.2b next year revenue, which makes their Next year P/S about 13.
Takeaway #5: For any of these companies to continue to be worth these ratios, they must continue to grow rapidly.