To close the loop on this one seeing that I wrote them up.
I sold Pubmatic yesterday and used the proceeds to buy more SentinelOne.
Why?
- SaaS valuations have been pummelled and offer good, arguably great value and very high predictability, much more predictability than ad-tech.
- I know SaaS very well - much better than I will ever understand ad-tech (I’m part-owner of a small SaaS outfit), and given the current blood on the proverbial streets of my portfolio, I want to be invested in stuff I really understand.
- Pubmatic’s current hyper-growth is driven by very high NRR. Their new customer additions have not been a driver - very limited land, it’s all been expand - Q3 Revenue growth was 54% and NRR was 157%, meaning that contribution from new customers must have been negligible/negative. Also, NRR will drop off due to the company being seasonal. This is key and I did not see this until I critically reviewed all my holdings in light of the current carnage - a bit careless of me there…
- CTV will no doubt contribute nicely in future, but it is still very small and will take time so can’t be the main underpinning of the thesis.
- If I’m being honest, a key part of the thesis for owning PUBM for me was that I was hoping on a re-rating of Ad-tech generally, after a dismal year. In the current environment I don’t want to base anything on hope.
Thanks for your thoughts AIC123.
-WSM