Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! A Recession is Coming, Right? Last week I talked about earnings revisions and how I expect forward estimates (revenue) to be revised down for software in a recession / down market. I love the cloud and cloud software (and particularly cloud infra). The massive shift to the cloud is
Should the NTM multiples not be lower than the 2013 multiples assuming NTM revenues will be greater than 2023 revenues? I assume the NTM is from end June 2022 to end June 2023.
NTM multiples should be higher. The twelve months ending December ‘23 should have higher revenue than the twelve months ending June ‘23 (NTM). Unless you believe revenue is shrinking.
Sorry I was thinking 2022. Don't we need a 2022 estimated revenue column? 2023 is a bit distant. Would it not be more relevant to have a 2022 and NTM multiple?
I came to the same conclusion about the state of the current economy or consumer just form my day to day and other anecdotes. Although it's just a small sample it lines up with what the banks are saying in your post. To the point, people are still out driving around doing stuff and spending money. So still some time for all that to weaken, maybe after the summer vacations people will start to buckle down etc...
Another thought I have is always going back to how cloud companies performed at the beginning of covid like DDOG which showed some signs of slowed customer spend etc... But that is the only example we have to look at since cloud has become a force. Covid was a very different time and I don't have to remind people what it was like. Currently nobody is forcing business to shut down and the panic that was in the air during covid isn't nearly as intense as it is now. What I'm saying is I'm not convinced we will see the decrease in spend in cloud like we did at the beginning of covid. Sure some spend will be less but nothing like we saw in Q2 2020. But, who knows... Good luck to all!
Great piece as always.. can you please share UBS note (in full) you reference above.
Would appreciate the title of the UBS note as well!
Should the NTM multiples not be lower than the 2013 multiples assuming NTM revenues will be greater than 2023 revenues? I assume the NTM is from end June 2022 to end June 2023.
NTM multiples should be higher. The twelve months ending December ‘23 should have higher revenue than the twelve months ending June ‘23 (NTM). Unless you believe revenue is shrinking.
Sorry I was thinking 2022. Don't we need a 2022 estimated revenue column? 2023 is a bit distant. Would it not be more relevant to have a 2022 and NTM multiple?
I came to the same conclusion about the state of the current economy or consumer just form my day to day and other anecdotes. Although it's just a small sample it lines up with what the banks are saying in your post. To the point, people are still out driving around doing stuff and spending money. So still some time for all that to weaken, maybe after the summer vacations people will start to buckle down etc...
Another thought I have is always going back to how cloud companies performed at the beginning of covid like DDOG which showed some signs of slowed customer spend etc... But that is the only example we have to look at since cloud has become a force. Covid was a very different time and I don't have to remind people what it was like. Currently nobody is forcing business to shut down and the panic that was in the air during covid isn't nearly as intense as it is now. What I'm saying is I'm not convinced we will see the decrease in spend in cloud like we did at the beginning of covid. Sure some spend will be less but nothing like we saw in Q2 2020. But, who knows... Good luck to all!