Category: Uncategorized (Page 4 of 10)

A First Look at the Compliance Cloud

February 7, 2021 / poffringa

One of the more tedious aspects of e-commerce in the U.S. and globally can be dealing with tax collection and remittance. This is complicated by a web of regional regulations that must be addressed based on the location of each customer. Traditionally, sellers could ignore these requirements, as their business activities were largely confined to a local geography. However, the rise of online sales and new legislation have encouraged government organizations to become increasingly aggressive in ensuring they extract their due share of taxes. Further, as businesses of all sorts move online, other types of regulation and compliance enforcement is emerging. Left on their own, online sellers and service providers could expend significant resources keeping up with these requirements.

Fortunately, new technology providers have emerged that help companies navigate this situation. These services are often delivered through open APIs and integrated with popular e-commerce platforms. They handle the calculation of tax, filing and remittance to every required jurisdictional entity. In addition to sales tax handling, these services are branching out into other aspects of regulation compliance, including managing exemption certificates, business licenses and the bevy of new use taxes globally. One of the leading independent providers of these services is publicly-traded Avalara (AVLR).

As companies increasingly migrate offline business processes to new digital channels, consideration for tax payments and compliance must come along. This has created a large and growing opportunity for solution providers that make compliance management easy. With an increase in government activity to regulate tax collection, privacy, online behaviors and safety, we can expect compliance enforcement to increase. This blog post examines the history of taxation of e-commerce, along with future implications for additional oversight of emerging digital channels. Further, it reviews the leading providers of compliance automation services with a focused analysis of Avalara (AVLR), which is becoming the dominant player in the space. The goal is to provide investors with an avenue to capitalize on the growing demand for services that simplify regulatory overhead for online businesses.

Evolving Architectures for Transactional Data Storage

January 18, 2021 / poffringa

Much has been written about how enterprises are awash in data, generating new signals at an accelerating rate. A lot of this focus has been on the data analytics and machine learning space, where arguably a large opportunity lies. Businesses are struggling to process all their data in order to gain new customer insights and improve performance. Recent IPOs like Snowflake, C3.ai and Palantir have driven investor interest and delivered valuations that reflect the huge potential.

While these opportunities in big data convergence, AI and advanced analytics are exciting, an equally significant evolution is happening on the transactional side of data storage and distribution. Models for data storage have moved far beyond a single large relational database housed on premise. Application architectures are evolving rapidly, with the return of rich clients, disparate device channels, an ecosystem of APIs and breaking up monoliths into micro-services. Cloud hosting and serverless have provided new ways to manage the runtimes that execute code. Software engineering roles have been coalescing, highlighted by the ascendancy of the developer and a bias towards productivity.

These forces are creating opportunities for emerging technology providers to capture developer mindshare and power application workloads. Cloud-based services have lowered the barrier to entry for launching new transactional data storage solutions. In the same way that Snowflake created a robust offering separate from the hyperscalers, independent data storage companies are thriving on the transactional side. This blog post provides investors with some background on application data storage technologies and an examination of trends in modern software architectures. It concludes with a survey of companies (several that are publicly traded) which stand to benefit as application workloads explode.

DocuSign (DOCU) Q3 Recap

December 28, 2020 / poffringa

DocuSign announced Q3 FY2021 earnings on December 3rd. The results were strong, with large beats on both revenue and EPS. Additionally, they raised Q4 and full year estimates by a wide margin. Annualized revenue growth continued to accelerate past the 50% mark in Q3 and appears likely to repeat the same for Q4. DOCU stock popped over 5% following earnings, after increasing 6% in anticipation the day before.

On the earnings call, the leadership team spoke to the significant opportunity for DocuSign beyond eSignature, highlighting continued growth in international, renewed customer interest in the full suite of CLM services, new AI-driven offerings and the introduction of Notary. These factors should maintain momentum in 2021, as tailwinds mitigate from social distancing mandates. In this post, I review DocuSign’s Q3 earnings results, customer activity and other business updates. I also dig into product enhancements, fueled by internal development efforts and the integration of thoughtful acquisitions. Finally, I revisit the competitive landscape and DocuSign’s unique position as the dominant player in a large addressable market. For additional information on the DocuSign investment thesis, interested investors can read my past quarterly updates and original deep-dive.

Elastic (ESTC) Q2 Recap

December 13, 2020 / poffringa

Elastic announced Q2 FY2021 (Aug – Oct) earnings on December 2nd. The results were well ahead of expectations, with significant beats on both revenue and EPS. They also delivered a meaningful improvement to profitability measures, with non-GAAP gross margins ticking up 2.5% and operating margin almost at break-even. Next quarter and full year guidance were raised about 5-6% as well, but still reflect some conservatism due to the macro environment. The market reaction to the results was positive, with the stock spiking 12.6% on December 3rd and climbing another 6.1% the day after. On the earnings call, the leadership team provided updates on customer wins and their broader go-to-market strategy. Elastic’s rapid product development cadence continued with a major release in November, that included searchable snapshots, RUM, synthetics and Kibana Lens.

Additionally, Elastic held their annual user conference ElasticON in mid-October. The event was packed with over 300 sessions and 25,000 user registrations. Most interesting were the many customer presentations, revealing the depth and breadth of usage of Elastic solutions within large enterprises. This underscored Elastic’s product strategy of usage expansion across multiple solution categories from a single platform with a unified, resource-based pricing model. In this post, I review Elastic’s Q2 earnings and other business updates that occurred during the quarter. I also examine product enhancements and Elastic’s general competitive positioning. For additional background on the Elastic investment thesis, interested readers can review my past quarterly updates and original deep-dive.

Fastly (FSLY) Q3 Recap

November 22, 2020 / poffringa

Fastly had a dramatic quarter. After breaking $130 a share, in mid-October they pre-announced an expected miss for their Q3 revenue guidance, primarily attributable to revenue underperformance from their largest customer. This triggered a downward spiral for the stock to the $80’s prior to the actual earnings announcement on October 28th. The Q3 report largely met reduced expectations, but called into question the near term growth story as Q4 estimates appeared soft. The stock subsequently dropped into the $60 range, but has recovered since into the low $80’s as investors seem to maintain confidence in the long term story. Even with this volatility, the stock is up 286% in 2020.

Additionally, over the past several months, Fastly announced and completed the acquisition of Signal Sciences. Management highlighted the large opportunity for cross-sell to existing customers, adding rapid revenue growth and higher gross margin to the core business. They announced plans to combine product solutions for application and API security into a new offering called Secure@Edge. In mid-November, Fastly held their annual user conference, Altitude, which included a slew of product updates, customer talks and insights into next year’s roadmap.

In this blog post, I review the latest earnings report, the Signal Sciences acquisition and announcements from Altitude. I also revisit the competitive landscape and broader dynamics in the evolving edge compute, software-defined network and security markets. This information should help investors evaluate their own consideration for an investment in FSLY stock. At the end, I discuss application to my personal portfolio and investment plan going forward.

Twilio (TWLO) Q3 Recap

November 8, 2020 / poffringa

Twilio announced Q3 earnings on October 26th. The results were strong, beating estimates for both revenue and earnings by a large margin. Similarly, the company raised Q4 revenue estimates by about 6% of annualized growth at the midpoint. In spite of this, TWLO stock dropped 5% the following day. As investors will recall, Twilio conducted their Investor Day on October 1st. During that event, leadership announced that they would exceed their Q3 revenue estimates, as well as provided several other bullish long term performance expectations. Those updates drove the stock up about 13%. Twilio also conducted their annual user conference, Signal, in late September, which included several new product releases and large customer use cases. Finally, Twilio acquired leading Customer Data Platform (CDP) provider Segment in October.

Obviously, the past several months were packed with exciting updates to the Twilio story. In this blog post, I review Twilio’s Q3 earnings, Investor Day and the Segment acquisition. I also dig into product enhancements announced at Signal and revisit the competitive landscape. For a refresher of my prior coverage of Twilio, interested investors can read past quarterly updates and my original investment thesis.

Elastic (ESTC) Q1 Recap

October 19, 2020 / poffringa

Elastic announced Q1 FY2021 (May – July) earnings on August 26th. The results were favorable, with significant beats on both revenue and EPS. They also delivered a large increase in FCF margin to 17% as well as a 24% improvement in operating margin. Next quarter and full year guidance were raised slightly, reflecting ongoing concerns around COVID-19 headwinds. The market reaction was muted, with a slight decline in share price the next day. On the earnings call, the leadership team provided other updates on customer wins and their broader go-to-market strategy. During the four months before earnings, Elastic delivered three major point releases with meaningful product improvements across all solution categories. Highlights included the new Workplace Search product and a Unified Agent with malware protection.

Additionally, Elastic held an Analyst Meeting on October 14th, which included further updates to their broader strategy. While no new financial targets were revealed, leadership provided interesting insights into large customer growth and expansion across multiple solution categories. This customer motion highlights the potential for Elastic’s long term growth, as some enterprise customers value the breadth of Elastic’s solutions and their unified pricing model. In this post, I review Elastic’s Q1 earnings and other business updates that occurred during the quarter. I also examine product enhancements and Elastic’s general competitive positioning. For additional background on the Elastic investment thesis, interested readers can review my past quarterly updates and original deep-dive.

DocuSign (DOCU) Q2 Recap

October 4, 2020 / poffringa

DocuSign announced Q2 FY2021 earnings on September 3rd. The results were strong, with large beats on both revenue and EPS. Additionally, they raised Q3 and full year revenue estimates by a wide margin. In spite of this, DOCU stock dropped about 11% the next day, as the market was likely hoping for an even larger beat following a spectacular earnings report from ZM. On the earnings call, the leadership team spoke to the significant opportunity for DocuSign beyond eSignature, highlighting international business growth, future customer expansion into the full suite of contract lifecycle management products and the upcoming roll-out of notary services. In this blog post, I review DocuSign’s Q2 earnings, customer wins and other business updates that occurred during the quarter. I also analyze product enhancements, acquisition updates and the competitive landscape. For additional information on the DocuSign investment thesis, interested investors can read my past quarterly updates and original deep-dive.

Alteryx (AYX) – Q2 Recap

September 21, 2020 / poffringa

Alteryx announced Q2 earnings on August 6th. They delivered a slight beat to revenue estimates and a large beat on EPS. However, Q3 and full year revenue estimates came in below analyst targets. Currently, the full year revenue growth target sits at 11%, down from 65% in 2019. On the day following the Q2 report, the stock dropped by 28%. On the earnings call, the leadership team discussed a few challenges during the quarter, primarily attributable to the macro environment and the associated slowdown in enterprise spend. Over the course of the quarter, Alteryx launched several new product offerings. In this post, I review Alteryx’s Q2 earnings, customer adds and the expansion of the platform. I also take a look at the bigger picture in analytics and how Alteryx is positioned in the emerging competitive landscape. For more background on Alteryx, readers can review my prior coverage.

Datadog (DDOG) Q2 Recap

September 13, 2020 / poffringa

Datadog announced Q2 earnings on August 6th. The results topped expectations for both revenue and earnings. Additionally, they raised Q3 and full year revenue estimates, but not by as wide a margin as in past quarterly reports. The stock dropped by almost 20% the next day, after a nice run-up in advance. During the earnings call, the leadership team discussed a few adverse effects as large customers optimized their usage in reaction to the macro environment. On the flip side, customer adds and DBNER continued at a high rate, providing confidence that Datadog can sustain growth after the COVID-19 headwinds clear. In this post, I review Datadog’s Q2 earnings and dig into the many product updates that occurred over the last several months. I also revisit the competitive landscape and examine how Datadog’s extension into new categories further expands their addressable market. For more background on Datadog, readers can review my prior quarterly recaps and initial analysis.

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