Q4 earnings season for cloud businesses is now behind us. The 70 companies that I’ll discuss here (which is not an exhaustive list, but is still comprehensive) all reported quarterly earnings sometime between January 26 – March 31. In addition to the companies analyzed in the
I subscribed, which pretty much speaks to my strong approval of this forum. Also see that you have at least one very thoughtful subscriber in Eric P. and quality followers speak to the quality of your work.
This was great--and great confirmation bias as DDOG is my largest position :-). A few questions/ideas:
Questions:
1. Was stock price reaction weighted in your rankings or just for awareness?
2. Were these variables equally weighted? If I made this a science project, I would probably discount the weights for your profitability criteria, given the subjectivity companies have to classify expenses and SBC considerations (to your point). I might give a 50%% weighting each to CAC Payback, GM, and FCF--also much collinearity among those. I would also discount NRR (maybe 75% weight), only because of collinearity with sales Growth (keep 100% weight)
2. What is your thought process around using headline sales growth as opposed to organic growth? I'm wondering if your ranking around Bill may have changed had you factored in inorganic growth.
Ideas:
I realize this is a scorecard on Q4, rather than a ranking of forward-looking opportunities. However, I view these metrics in separate buckets:
Absolute Metrics (YoY Growth, FCF Margin, CAC Payback, Retention, etc.) - Numbers that aren't compared to expectations. Winners on these metrics would be "Top Performers."
Relative Metrics (Current Q Beat, Next Q Guide, Change in '23 Est.) - Numbers that are compared to expectations. Winners on these metrics would be "Top Surprisers."
I'd generally look at "Top Performers" for new investment dollars (valuation notwithstanding). If I take a quick shot at this, it would be something like (in order):
I'll probably take a position in GTLB as a result of this. I was sad to not see ZS or NET near the top of the lists, but then I realized the critical missing element which plays a big role in investment thesis is top line growth direction (either accelerating growth or high growth durability). These are factors not contemplated here (not a fault, at all), which are hugely influential in the minds of ZS, NET, and MDB holders.
Is there a way to get this info in a spreadsheet??
I subscribed, which pretty much speaks to my strong approval of this forum. Also see that you have at least one very thoughtful subscriber in Eric P. and quality followers speak to the quality of your work.
This is awesome thanks for sharing
This was great--and great confirmation bias as DDOG is my largest position :-). A few questions/ideas:
Questions:
1. Was stock price reaction weighted in your rankings or just for awareness?
2. Were these variables equally weighted? If I made this a science project, I would probably discount the weights for your profitability criteria, given the subjectivity companies have to classify expenses and SBC considerations (to your point). I might give a 50%% weighting each to CAC Payback, GM, and FCF--also much collinearity among those. I would also discount NRR (maybe 75% weight), only because of collinearity with sales Growth (keep 100% weight)
2. What is your thought process around using headline sales growth as opposed to organic growth? I'm wondering if your ranking around Bill may have changed had you factored in inorganic growth.
Ideas:
I realize this is a scorecard on Q4, rather than a ranking of forward-looking opportunities. However, I view these metrics in separate buckets:
Absolute Metrics (YoY Growth, FCF Margin, CAC Payback, Retention, etc.) - Numbers that aren't compared to expectations. Winners on these metrics would be "Top Performers."
Relative Metrics (Current Q Beat, Next Q Guide, Change in '23 Est.) - Numbers that are compared to expectations. Winners on these metrics would be "Top Surprisers."
I'd generally look at "Top Performers" for new investment dollars (valuation notwithstanding). If I take a quick shot at this, it would be something like (in order):
Top Performers - GTLB, DDOG, MNDY, SNOW, S, CRWD, ZI, ASAN, BILL, CFLT
Top Surprisers - BILL, SPLK, DDOG, GTLB, HASH
I'll probably take a position in GTLB as a result of this. I was sad to not see ZS or NET near the top of the lists, but then I realized the critical missing element which plays a big role in investment thesis is top line growth direction (either accelerating growth or high growth durability). These are factors not contemplated here (not a fault, at all), which are hugely influential in the minds of ZS, NET, and MDB holders.
Thanks so much. Subscribed.
Well done!
Hey Jamin, love your work. Can you please add Intapp into the fold or are there data limitations there?
Great work ! Thank for these useful information
Incredible information! I've learned a lot. Greatly appreciated!
Nice work here really appreciated the insights