Category: Uncategorized (Page 5 of 10)

Fastly And Signal Sciences

September 2, 2020 / poffringa

On August 27, Fastly announced their intent to acquire Signal Sciences. An outcome of the acquisition will be to combine the security capabilities of both companies into a new product offering called Secure@Edge. This significantly bolsters Fastly’s existing security product line, providing an accretive blending of existing offerings with new ones provided by Signal Sciences into a comprehensive solution designed to protect modern web applications and APIs at scale. I don’t normally dedicate a blog post to every acquisition, but I think this one will deliver an oversized contribution to the trajectory for Fastly and provides more justification for bullishness going into 2021. In this post, I will dig into Signal Sciences, synergies with Fastly and how the combined company is positioned for rapid growth. Interested investors can review my prior coverage of Fastly for more detail on the investment thesis.

Twilio (TWLO) Q2 Recap

August 23, 2020 / poffringa

Twilio announced Q2 earnings on August 4th. The results were strong, beating estimates for both revenue and earnings by a large margin. Similarly, they raised Q3 revenue estimates by almost 10% of annualized growth at the top end. In spite of this, TWLO stock dropped a modest 2% the following day, as the stock had run up prior to earnings and market participants were likely expecting a bigger beat. On the earnings call, Twilio management highlighted several customers wins and momentum in telehealth. Subsequent to earnings, Twilio conducted a capital raise for another $1.25B, fueling speculation of an acquisition. In this blog post, I review Twilio’s Q2 earnings and other business updates that occurred during the quarter. I also dig into product enhancements 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.

Fastly (FSLY) Q2 Recap

August 14, 2020 / poffringa

Fastly (FSLY) reported Q2 earnings on August 5, 2020. On the surface, the performance was impressive, beating estimates on both the top and bottom line and raising Q3 and full year guidance. While Q2 revenue accelerated 24% sequentially over Q1, the market was looking for greater outperformance. This was evidenced by the stock’s nearly 18% drop the following day. After the 5x run-up in FSLY stock since the beginning of 2020, there was likely some profit taking as well. As part of the earnings release, Fastly management provided updates on the Compute@Edge beta and discussed a number of customer wins. In this post, I review Fastly’s Q2 earnings and other business updates that occurred during the quarter. I also dig into their evolving product offerings and revisit the competitive landscape. For a refresher on my prior coverage of Fastly, please see my original analysis, Compute@Edge deep dive and past quarterly updates.

Cloudflare Serverless Week Unpacked

July 31, 2020 / poffringa

Cloudflare (NET) kicked off Serverless Week with a blog post from their CEO on Sunday, July 26. The event ran this past week and highlighted a number of enhancements to Cloudflare’s serverless edge compute product. These included reduced cold start times, additional language support, improved developer tooling and lower price points. They also unveiled a new offering called Workers Unbound, which removes prior restrictions on CPU usage to allow for long running processes. These are all very exciting for serverless edge compute adoption and represent a step up in capabilities for Cloudflare. In this post, I will dig into the changes announced and what these imply for usage of Cloudflare’s Workers product. I will also try to draw parallels to Fastly’s Compute@Edge offering, based on what we can glean thus far (still in beta). At a high level, this progress from Cloudflare provides further momentum for the migration of application processing out of central data centers (whether cloud or private) to the network edge. This trend should benefit both FSLY and NET, as leading independent providers of serverless edge compute solutions.

Independent Software Providers and the Cloud Vendors

July 26, 2020 / poffringa

Early in the evolution of cloud computing infrastructure, the cloud providers were rapidly expanding their offerings. For a while, it seemed they would leave no room for independent providers in a land grab to address every segment of software infrastructure. As the landscape has matured and enterprises increasingly implement a multi-cloud strategy, it has become clear that independent providers can not only co-exist, but thrive, in this environment. Examples are Datadog for observability, Twilio for communications, MongoDB for databases and Fastly for CDN.

This blog post examines the history of cloud service providers and the evolution of their offerings. As cloud vendors have defined broad categories of software services, they have left openings for nimble, focused independent software vendors to leverage the same cloud infrastructure to deliver substantially better product offerings in some segments. From this, we can draw observations about why they are succeeding and what they need to continue doing. Investors occasionally raise competitive concerns for independent software providers that cloud vendors will choose at some point to crush them. I posit that threat has passed in many categories. This post seeks to help investors understand what has changed and how to reason about the risks going forward for their favorite independent software company investments.

Smartsheet (SMAR) Stock Q1 FY2021 Earnings Results Review

July 16, 2020 / poffringa

Smartsheet (SMAR) released their Q1 (April end) FY2021 earnings report on June 3rd. They delivered a strong beat on revenue and EPS for the prior quarter. However, billings and forward revenue guidance were below expectations. The market responded by dropping the stock price by 23% the next day. This followed a strong run-up before earnings on expectations that SMAR would be a COVID-19 beneficiary. Smartsheet also released a number of product enhancements during the quarter, primarily focused on providing tools for organizations to manage their COVID-19 response. In this post, I review Smartsheet’s Q1 earnings results and other business updates. I then dig into the competitive landscape for collaborative work management, which has evolved significantly over the past year and attracted more entrants from adjacent categories. As a consequence, I have sidelined my personal investment in SMAR until Smartsheet’s competitive position in the expanded collaborative work management category becomes more clear.

Fastly Edge Compute Explained

July 2, 2020 / poffringa

Fastly (FSLY) has experienced an incredible run over the past several weeks. The share price has more than doubled since releasing Q1 earnings on May 6. This can be primarily attributed to the major increase in guidance for Q2 and the rest of the year. There have been other surprises as well, like the observation that Amazon.com has been using Fastly POPs for content delivery. A lot of investor excitement is also pinned on the upcoming release of Compute@Edge, which represents a significant extension of Fastly’s current CDN offerings. Since the product is in beta, it isn’t clear how sizable the revenue impact will be. Given this, I thought it would be worth spending some time examining how Fastly has approached building new technologies in the past and what this might mean for their future edge compute offering. I also wanted to share my understanding of the technical underpinnings of the platform and how these differ from other serverless offerings currently on the market. Whether Fastly’s surge represents a one-time COVID-19 driven bump or they will sustain long-term usage growth remains to be seen. With this information, investors can decide for themselves if the Fastly story is hype or their edge compute platform represents the beginning of something fundamentally disruptive.

MongoDB (MDB) Stock Q1 FY2021 Earnings Results Review

June 28, 2020 / poffringa

MongoDB (MDB) released their Q1 (April end) FY2021 earnings report on June 4. They reported a significant beat for Q1, exceeding revenue estimates by 12% and improving profitability metrics. Guidance for the remainder of the year was mixed, with revenue targets raised slightly and profitability mostly inline. Most impressive was growth in the cloud offering, Atlas, which now contributes 42% of total revenue. MongoDB also released a number of product enhancements just after the earnings report, coinciding with their annual user event. MongoDB is continuing to expand their reach beyond a core database solution into ancillary functions that enable easy application of data to common use cases, like mobile apps, analytics, data visualization and search. In this post, I review MongoDB’s earnings results and other business updates. I also dig into the product releases and competitive landscape. For a refresher on the MongoDB investment thesis, please see my full analysis published in November of last year.

DocuSign (DOCU) Stock Q1 FY2021 Earnings Results Review

June 19, 2020 / poffringa

DocuSign released their Q1 (April end) FY2021 earnings report on June 4. They delivered a strong beat and raise across all metrics. Following several software companies that moderated their full year revenue growth, it was encouraging to see DocuSign increase revenue targets for both the next quarter and full year. While much of this can be attributed to spend pull forward due to COVID-19 and associated remote work trends, in DocuSign’s case, it is hard to imagine these trends reversing. Companies will not go back to paper agreements once digitized. More compelling for the bull case is the emergence of the full lifecycle of agreement processing and programmatic integrations with systems of record and end-user applications. These use cases should continue to drive high demand for the DocuSign’s services into the future, particularly considering the TAM and largely greenfield opportunity. In this post, I review DocuSign’s earning results and other recent business updates. I also take a look at continued progress with agreement automation, the competitive market and future opportunities. For a detailed refresher on the DocuSign investment thesis, please see my full analysis published in April.

Elastic (ESTC) Stock Q4 FY2020 Earnings Results Review

June 12, 2020 / poffringa

Elastic released their Q4 FY2020 earnings report on June 3. They delivered a strong beat on growth metrics and demonstrated profitability improvements. If judged based on Q4 metrics alone, the results were outstanding. However, management set forward revenue guidance lower than expected – inline for Q2 and 8% less for the full year. This left investors and analysts confused, particularly as management asserted that all top-line metrics were steady in May. Management attributed the reduction to general conservatism around macro conditions and the start of their fiscal year. The markets reacted by pushing shares down 3.8% the next day, after a nice pre-earnings run up. Sell-side analysts uniformly raised price targets and almost all maintained buy equivalent ratings.

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