8/23/23
And…today, of course I’m too early with customer adoption rate expectations for Snowflake (Q2 reported today). And with the after hour bumps provided by Nvidia >100% revenue growth YoY, I sold ~25% of what was my ~20% position in Snowflake and I sold ~10% of what was my ~20% position in Cloudflare for good measure.
Today, I re-read every thing I had accumulated about Samsara (re-reading Muji’s Deep Dive on Hhhypergrowth.com yesterday is what prompted me to do this) . So, when Snowflake reported today and I saw this opportunity of Snowflake along with many others increasing after hours share price on what I considered a fairly disappointing quarter for Snowflake.
There were bright spots in the numbers (eg Snowflake improving revenue growth QoQ from +6% last quarter to +8% this quarter); but, the reason for not selling more was Snowflake management giving a great Confernce Call.
I guess what I’m saying is that I now agree with some of the recent general arguments others here have made. For one, their will be a sizable lag in return to revenue growth for Software companies And two, there presently exists a need of Enterprises for the quick ROI offered by hardware upgrades, like Nvidia, Pure Storage and perhaps moreso by Samsara. The lag in software revenue growth re-acceleration and the need for hardware with a strong argument for ROI may coincide for at least the next couple quarters and could be much longer. Thus leading to my experiencing more than a year of disappointment, if I don’t adjust accordingly. Being kind to myself, I’ll just say that accounting for Customer Adoption Rate is near impossible when exponential technologies are multiplying, as they are now.
Last month I said I didn’t pull the trigger on my intended purchase of Samsara because I didn’t see any future catalysts for share price increase from here? Well, this piece of information was taken from their Q1 Conference Call when I re-read it today: 60% of Q1 net new ACV came from expansions to existing customers, our highest quarterly mix ever and up from 51% in Q1 last year.
That review of the Q1 got me back to reading Muji’s recent Deep Dive, Part one, for a third time. And his new addition, Samsara DD part 2, out yesterday. This time I was looking specifically into opportunities for Samsara expanding into their largest customer cohort. I believe further expansion (Customer Adoption Rate) is imminent. Like Snowflake, this too is likely a premature assumption, on my part, so I wish you well in timing this one; but,I’m now in the name for ~8%.
Best,
Jason