What a roller coaster two months! Hope everyone still hold on tight and stay healthy!
With current uncertainty caused by pandemic, we seem to be overwhelmed by all kinds of news and anecdotal. The ways I look at the impact of COVID-19 to our SAAS companies are two pronged. First prong is whether or not a company benefits from the pandemic, which is well discussed on the board. My second prong is to see this pandemic as a catalyst to force people/business to go online, go cloud, go e-everything. As such, one big point I use to evaluate stocks is to envision to what extent people/business will keep subscribing the service after the ease of the situation.
Taking OKTA for example, its service is very sticky already by making life easier for both employee and IT management. Any companies not subscribed before and was forced to use it because of WFH are unlikely to drop the service thereafter, because it will cause a lot of hassles. Similarly, any brokers who are still sorting contracts on shelve alphabetically, once they are forced to use Docusign, it is very painful for them and their clients to drop off everything and go back to unsightly, diagonally scanned copies. On the other hand, Zoom might not be so attractive to some current users after this pandemic. Schools need to resume class and people still prefer face to face contact. Besides the cost of switching teleconference software doesn’t seem to be so high? Don’t get me wrong, Zoom is my largest position currently and I believe that it has a long way to go. All I am saying is that the boosting coming from this pandemic might receive a deep discount soon after the ease of situation. For this reason, once I hear any consolidated good news, I will trim my position of ZM to a comfortable level while keep OKTA and DOCU untouched.
Any thoughts? I might be very wrong about this. Any feedback is welcome!
Long ZM, CRWD, OKTA, AYX, DOCU, FSLY, DDOG, LVGO
I have two takes on Zoom and their long term potential. First of all, I believe there will absolutely be a drop in usage once the lock down’s subside - but these will primarily be those using the free version of this tool, so no direct revenue hit. Contrast that with paying, enterprise customers, who are either using Zoom as their primary tool or are adding Zoom into the mix of tools, and will continue to do so as they have learned first hand how much work can actually be accomplished remotely. It’s the companies that are adding Zoom as a second option that have me most convinced of the long term potential - these are companies that have Skype, Webex, etc. as their primary options, but have found themselves adding Zoom anyway because it’s becoming the seemingly preferred way among external clients, partners, etc. and they need to adapt. I see this as a real network effect that bodes well for the long term future of Zoom.
Secondly there are the qualitative signs that Zoom is becoming THE way for virtual connections. It’s being used as a verb more and more, by professional users and casual users and that is rare.
So might there be a drop in users at some point? Most likely. Will there be a drop in the stock price? I hope so, because it will be a chance to add more shares.
If you are a company trying to attract a potential customer and they want to use Zoom to teleconference are you going to tell them no, they must use Skype? So I think knyc is right
I second this point about Zoom. I think we will see a lot of paying subscriptions continue on in to the future because it is a best-in-breed tool. My own company has already switched all cloud meetings as we work from home but as soon as we go back to work I’m sure all the meeting rooms will be switched over. We already have Lifesize hardware that can be reused. I suspect a lot of companies will do the same and that could actually cause a net gain post-return-to-work since those rooms require a license per suite ($49+ ea.?).
Furthermore, I believe that this most unlikely of situations - the forced move toward remote work or die - has also forced companies to open their eyes to the benefits of at least a partial remote workforce. Using my own company as an example again, we already have computing in remote data centers but it simply wasn’t a priority to make that available to homes. Instead, we were simultaneously spinning up new offices in remote cities and more buildings near our main one where I am. This sort of thing is complicated on many levels, from IT infrastructure up to software distribution and integration at multiple sites, user environments, etc, etc. We just didn’t have a work-from-home culture. A small group, including myself, had VPN access, but we tended to not use it unless it was an emergency or when semi-sick. I couldn’t just stay home without approval and even then I would feel awkward about doing it; thinking about my team who did not have the privilege. In less than 2 months this has totally changed. I’m now expecting there it be an ongoing remote-work culture. It just has too many advantages. Paying for a few things like a Zoom license and sending out some equipment is SO much cheaper than a seat in an office space! Doing this to flex the workforce when extra project-based contract workers are needed just makes so much more sense. It really is a cloud workforce.
Take the above points along with the fact that companies are sticky, and pay, while the individuals are largely not paying, and I think Zoom is going to do very well coming out of the pandemic.
…about Zoom. I think we will see a lot of paying subscriptions continue on in to the future because it is a best-in-breed tool.
I wonder if it will be related to machine-learning and Robotic Process Automation (RPA). (new category for Alteryx)
Thanks Rafe, those were two interesting and useful posts. It is great for un non-techies when we have people who work in tech give knowledgeable comments and opinions. Much appreciated!
AYX today unveiled its enhanced analytic process automation (APA) platform, which unifies analytics, data science and business process automation in one, end-to-end platform.
Press Release on the website from Alteryx.
Is this what AYX called in the CC - a new category of software which they want to own 85% market share?
Hi Saul, Oddly I can not find the thread where we were guessing at this. Did it get removed or is the search just that bad?