Leandro's avatar
$131.5m follower assets
$ADBE + Figma from an Expert
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Recently read an expert call with a the former $ADBE VP of Business Development and Product Operations.

They think that the acquisition of Figma was 80% defensive. The high price tag might come from a bidding war with $CRM and Canva (merge):

The integration between Figma and $ADBE will probably be more significant than $CRM + Slack:

According to the expert, the Canva threat is more significant for $ADBE than Figma was, but instead of eliminating it with M&A, they are investing behind Express:

The battle between Express and Canva will not be about functionality (where $ADBE is expected to excel) but of usability (where there are challenges):
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$ADBE is smart, stopping disruption by buying out Figma for $20B.
Kinda sad that Figma sold. Buying out Disruption will work out great for $ADBE.

See many parallels to Slack x $CRM,$META x Instagram,$META x Whatsapp.

Its a smart acquisition; they probably had to make an offer Figma can't refuse

What do you think, $ADBE overpaid?
It feels like Adobe overpaid in the short and medium run, but in the long run I think this will look similar to Adobe's Macromedia acquisition in 2005. It was expensive in the short run.

They got Flash, Freehand, and Dreamweaver. They shut down Freehand (the closest competitor to Illustrator) in 2007. Flash lasted all the way to 2020. Dreamweaver is still around.

Like you said this is buying their disruptors, which in the long run helps them from getting displaced.
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I’ve started doing some research in this name again after some more talks with @strib. I like to talk things out a lot when I’m first researching a stock and Sam has been super helpful, me and him go back a while talking about this name probably to long lol. But it’s a name that’s always stayed in my mind as I think it’s obviously the #1 saas name with a very strong market share and what really sticks out to me is slack and their ability to grow that. That was such a good acquisition for them. It’s gonna make them a ton of money. What next oh the acquisition list for them lol. We know Marc likes to be active. They just did a stock buyback announced last earnings but next year they could have their eyes on a couple of these beaten down smaller software names.
Slack is definitely a great one but the Tableau acquisition they did is going to be another huge winner. It’s going to really enhance the user experience when it comes to reporting!
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Erick Mokaya's avatar
$102.4m follower assets
HubSpot taking on Salesforce: David vs Goliath?
Salesforce ($CRM) has been the singular fortress and gatekeeper of the Customer Relationship Management industry for over a decade. Through the years they've broadened their product portfolio with an ecosystem comprising every sales and marketing app and use case imaginable relating to software. M&A has pushed the business beyond its core competence to encompass apps like Slack (workflow communication) and Tableau (analytics and visualization).
There is however an argument to be made against the now $150B market cap giant. We've seen time and again that nimbler solutions that were designed from the ground up every few years provide a value proposition that can justify switching costs for even mid-large enterprises. It's hard to keep the innovation alive at scale and thus M&A helps entangle customers and build dependence when a company can't quite re-design its software as the latest best practices flourish.
HubSpot ($HUBS), by most market share metrics, is the #2 CRM Platform now and is doing extremely well. By the company's own metrics, a team of 50 may incur an estimated cost of $75,000 a year with Hubspot vs. an equivalent $236,800 from Salesforce for equivalent services. Take it with some salt, but when cost cutting is on the horizon, such a difference for enterprises not requiring advanced Salesforce functionality makes switching extremely attractive.

HubSpot began as a marketing automation platform and has since evolved by branching out into Sales and CRM use cases. With a "land and expand" model, they last recorded 41% YoY growth on a constant currency basis, growing their customer count by 25% YoY. Not hyper-growth by any means, but commendable business execution.
To add, they're scoring Free Cash Flow generation, which is a strategic advantage. When younger competitors in specific use-case domains have to fire off employees, while reducing their S&M spending, HubSpot doesn't have to do the same and can continue on its current trajectory. This theoretically, should leave financially unsound innovators in the dust amidst this tricky macro.
In summary, HubSpot appears to be at a fortunate size along its S-curve cycle. Innovative enough to drive serious growth through product expansion, and profitable enough to not be bothered by cash-flow consequences in a delirious macro environment. As a result, it's worth investigating further.
To contextualize:
  • Salesforce recorded $7.7B in sales last quarter with 22% YoY growth, and a 3.7% FCF Yield.
  • HubSpot recorded $420m in sales last quarter growing 36% (41% cc) YoY and has a 1.5% FCF Yield.
If one finds high-quality and best-of-breed solutions in Hubspot, there's a long runway to go with broad revenue drivers against a massive market opportunity in the $30B+ range. One will also have to pay a premium on EV/S valuations but that should be worth it considering the runway ahead.

At an NTM EV/S of 7.8x, HUBS is not priced like a value stock, nor should it be. But it is cheap enough for investors with a long-term horizon to dig in and consider it as a potential investment in the rather macro-resilient software space.
Under investigation for my portfolio. No position yet.
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Salesforce also notoriously expands their platform with patchwork acquisitions and bandaging things together to the point where integration requires a giant development team to get the most out of it. Hubspot is much more cohesive because it’s built on a single code base. Knowing people who have worked with Salesforce, I haven’t heard a single one say it’s easy to use (from more of a technical perspective). I’m sure there are some who will argue that it’s great blah blah but that’s really not the general consensus.

They’ll probably continue to do well with enterprise clients who can use their dev team to build out their required solution, but Hubspot is overwhelmingly better for companies who don’t have those resources. And really, Hubspot is enterprise grade as well. Only downside is that Salesforce does have more upside with the proper resources to extract the most value out of it.

I’m a Hubspot shareholder who may be a bit biased but I see it becoming a much more popular solution with clients of all sizes.

Great writeup by the way 👍
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Which dividend payer would you add?
I'm considering replacing $MMM in my 401k, which I've populated with stodgy, "boring," stable, (mostly) dividend paying companies. My current holdings are:

Traditional side of 401k - $CRM, $JPM, $MKL, $MPW, $SHW, $TROW, and $TYL
Roth side of 401k - $BIPC, $MCD, $MMM, $O, $PEP, $PLD and $WM

Just curious what the Commonstock crowd would choose to replace $MMM with.

Feel free to drop a suggestion in the comments though I've already whittled a list of ~twenty stocks down to these four. $HSY $UNP $UPS $CAT
Which would you replace 3M with?
25%The Hershey Company (HSY)
31%Union Pacific (UNP)
12%United Parcel Service (UPS)
31%Caterpillar (CAT)
16 VotesPoll ended on: 09/03/22
Performance 9/1/22
Down -3.24% for the day

$MDB brought down saas and $NVDA $AMD chip Brought down semi stocks

Also reorganized my growth portfolio into two sections

Compounders:

Hyper-growth:
I haven’t gone over the earning reports which I’ll do over the weekend. My instinct is to wait and see, cause $SNOW being up 20+ percent is as insane as $MDB being down 20+ percent. The volatility isn’t a great indicator. As for cybersecurity companies $CRWD $ZS $NET $S are all eating into each other business and I’m really not sure which comes on top so I’m probably build starter positions in all of them and spend more time researching.
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Erick Mokaya's avatar
$102.4m follower assets
In our newsletter this week:
🏦Takeaways from Jackson Hole symposium
💳Credit card delinquency rates up slightly
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