Let me preface this with- this is my first post to this board and first attempt at an evaluation. I don’t know why but I just like the idea of this company- I see a large possible market but I haven’t quite convinced myself it’s worth opening a position so I’m turning to yall as I’m a relatively new investor. What are your thoughts?
SEND – SendGrid
A relatively new IPO (Nov 17) SaaS
What does it do?
From SendGrid Website ( https://investors.sendgrid.com/home/default.aspx )
Founded in 2009, after graduating from the TechStars program, SendGrid developed an industry-disrupting, cloud-based email service to solve the challenges of reliably delivering emails on behalf of growing companies. Today, SendGrid is a leading digital communication platform, enabling businesses to engage with their customers via email reliably, effectively and at scale. Our cloud-based platform allows for frictionless adoption and immediate value creation for businesses, providing their developers and marketers with the tools to seamlessly and effectively reach their customers using email. SendGrid is responsible for sending billions of emails for some of the best and brightest companies in the world and since our inception we have processed more than one trillion emails.
Leadership:
CEO Sameer Dholakia 99% approval on Glassdoor
Overall Company Glassdoor is 4.5/5
Great Place to Work® and FORTUNE Name SendGrid One of the Best Workplaces for Millennials for the Second Consecutive Year
( https://investors.sendgrid.com/press-releases/press-release-… )
Battery Ventures and Glassdoor Recognize SendGrid as One of the 25 Highest-Rated Public Cloud Computing Companies to Work For
( https://investors.sendgrid.com/press-releases/press-release-… )
Possible Detractors:
Competition is large but they hold a good foothold and have a good reputation.
Summary of Seeking Alpha Update on 5/2/18 ( https://seekingalpha.com/article/4168397-sendgrid-decelerati… )
SendGrid barely beat analysts’ consensus revenue expectations in Q1, and the bottom line missed EPS estimates.
Revenue growth in the quarter showed a concerning deceleration from 38% y/y growth in Q4 to 31% y/y growth this quarter.
In addition, the company’s positive cash flow has deteriorated into losses.
Shares look prohibitively expensive at 7x forward revenues for a company whose growth is quickly decelerating alongside a compression in cash flow margins.
Low Insider Ownership (1.5%, .76% is CEO)
High Institutional Ownership (68%-81.53% depending on which site you look at)
Numbers:
Current Price: $26.81
Market Cap 1.187B
52 Week Range 13.61 - 32.03
Gross Margin 73.70%
Addressable Market $11 Billion
69,000 customers – less than 3% penetrated among potential customers (according to SEND)
36% International Revenue
Many Large companies are customers (Twilio, spotify, Uber, Yelp, ebay, pandora, booking.com, USPS, hertz
Subscription Net Dollar Retention Rate Q1-2018 113% (slightly down from 117% in Q1-17)
Quarterly Revenue Growth (yoy) 31.20%
Debt / Eq .10 (168.6M / 17.36M)
Revenue 12/31/2017 12/31/2016 12/31/2015 12/31/2014
Total Revenue 111,888 79,929 58,476 42,776
Cost of Revenue 29,440 21,605 18,961 15,187
Gross Profit 82,448 58,324 39,515 27,589
Revenue 3/31/2018 12/31/2017 9/30/2017 6/30/2017
Total Revenue 32,569 31,729 28,316 27,012
Cost of Revenue 8,468 8,130 7,612 7,274
Gross Profit 24,101 23,599 20,704 19,738
Positive Free Cash Flow .4 Million in 2017