Q1 earnings season for cloud businesses is now behind us. The 62 companies that I’ll discuss here (which is not an exhaustive list, but is still comprehensive) all reported quarterly earnings sometime between April 24th – June 10th. In this post, I’ll take a data-driven approach in evaluating the overall group’s performance, and highlight individual standouts along the way. As a venture capitalist, I naturally cater my analysis through the lens of a private investor. Over my years as a VC, I’ve had the opportunity to meet with hundreds of entrepreneurs who are all building special companies. Through these interactions, I’ve built up mental benchmarks for metrics on which I place extra emphasis. My hope is that this analysis can provide startup entrepreneurs with a framework for how to manage their businesses around SaaS metrics (e.g., net retention and CAC payback).
Jamin, thanks for all the work you put into this - these newsletters are both educational and useful. With AI being such a dominant topic to get a grasp on I wondered if stocks like Palantir should be included and whether there is any useful AI-related metric or even a way of capturing that. Cheers.
I really appreciate your comprehensive analysis and clear charts; they are very helpful. One small suggestion: not all companies' core metrics are Overall Revenue Growth. For example, some companies may focus more on ARR (Annual Recurring Revenue) or the performance of a specific segment. If you could specify the different key metrics for different companies in your analysis, I believe the results would be even more valuable.
Good job - thank you. You write: "The big caveat in FCF – it adds back the non-cash expense of SBC. This is controversial, as it harms shareholder returns by increasing the number of shares outstanding over time (dilution)." Well, is it really controversial? As a potential buyer of a stock I might decide that I don't want to pay more than e.g. 20x FCF. And I only want to pay the multiple on the part of the FCF which belongs to me as a shareholder. So I subtract SBC from the FCF, as SBC belong to management and employees. No? (Same thing if I want to pay a certain P/E. I deduct minorities from net income. They don't belong to me.)
Always love you stuff, top class!!!!
Jamin, thanks for all the work you put into this - these newsletters are both educational and useful. With AI being such a dominant topic to get a grasp on I wondered if stocks like Palantir should be included and whether there is any useful AI-related metric or even a way of capturing that. Cheers.
I really appreciate your comprehensive analysis and clear charts; they are very helpful. One small suggestion: not all companies' core metrics are Overall Revenue Growth. For example, some companies may focus more on ARR (Annual Recurring Revenue) or the performance of a specific segment. If you could specify the different key metrics for different companies in your analysis, I believe the results would be even more valuable.
Very educational and informative article. Thank you!
Fantastic work!
Good job - thank you. You write: "The big caveat in FCF – it adds back the non-cash expense of SBC. This is controversial, as it harms shareholder returns by increasing the number of shares outstanding over time (dilution)." Well, is it really controversial? As a potential buyer of a stock I might decide that I don't want to pay more than e.g. 20x FCF. And I only want to pay the multiple on the part of the FCF which belongs to me as a shareholder. So I subtract SBC from the FCF, as SBC belong to management and employees. No? (Same thing if I want to pay a certain P/E. I deduct minorities from net income. They don't belong to me.)