The Emergence Of Workflow Software (My Pick From $ASAN, $MNDY and $SMAR)
Over the past 3 years and through the pandemic, a handful of apps have achieved mass adoption and become synonymous with general work - Teams, Zoom, Slack. These have specifically tackled communication pain points, and by design and function, have improved the way in which we work.

One ought to ask, what is the next iteration or compliment of these apps? Where else can exceptional UX design solve a bunch of problems in workflow? Are their public market expressions of this?

It's looking like the next trend is about "Project Management" to me. Sure, let's call it PM-SaaS.

By and large, people tend to run into issues when teams grow larger, and projects get more complicated. Anyone who has worked in a team of 20 vs a team of 5 would have noticed the meaningful loss in efficiency that comes with scaling and slow down of execution. There are three public SaaS businesses (stocks below) that are pure plays in solving project management issues in particular. And they haven't yet seen the mass adoption of Teams or Zoom. Where Zoom does $4B in sales annually, these apps do about $300-500m. Prices are about the $8-$15 range per seat, so it's similar, and theoretically - any organization across any industry with more than some minor complexity could benefit from a streamlined Project Management SaaS tool. So there is big potential here. The case studies across any of the IR sites, and independent reviews, point to serious ROI. The best of those studies show game-changing, "oh-wow!" ROI. Increasingly obvious for years now, software continues to eat the world.

The three:
  • Asana ($ASAN) - LTM Sales at $422m, 57% YoY last recorded growth, -30%ish FCF margin
  • Monday(dot)com ($MNDY) - LTM Sales at $358m, 84% YoY last recorded growth, -5 to -10ish% FCF margin
  • Smartsheet ($SMAR) - LTM Sales at $551m, 44%YoY last recorded growth, 0-2%ish FCF margin

There seem to be some private market competitors here, too - notably "ClickUp", which raised $400m at a $4B val in Oct 21. I'll have a go and say that the VCs invested at a >12x CY22 sales round before the brunt of the tech carnage - that woke up everyone to the macro mess. I mention Clickup because that's still a lot of cash runway, which they'll probably be deploying fast now. So it's a competitive threat.

From the three existing public plays on this trend, I like $MNDY the most. It's a little smaller by sales volume, but the growth rates have been excellent while the stock maintains a mild Free Cash Flow burn on an $850m in cash & equivalents balance sheet. Perfectly acceptable to burn $150m this year if you ask me...

Now, I'd be lying if I say that Monday is definitively the better product from the category of businesses on hand. As far as I can tell, while the SaaS offerings are differentiated by design, there really is no clearly right answer for a software buyer to choose one of the three over the others. These three are the cream of the crop, though, going by alternative sources. All that said, I can say with some confidence that this rather brutal macro environment is going to separate the businesses that manage cash well from those that don't. The ability to spend on sales is still paramount to achieving widening moats + network effects. Thus the cash ammunition needed for market capture is extremely important. Asana has lesser balance sheet cash funds at $280m against deep burn, putting them at a strategic disadvantage. Smartsheet is perfectly fine ($400m and no burn) but doesn't have the hypergrowth sales + profit mix that Monday does. To add, when Smartsheet was doing $350m in sales a few quarters ago, they weren't growing as fast as Monday is now. Something about Monday is working extremely well, leading to rapid and perhaps network-effect driven adoption. Users certainly seem to love the software and may be championing it to others on Monday's behalf.

Part of the reason why Monday has such disciplined profit metrics is due to the fact that the company is based out of Israel, founded by an Israeli chap. Salaries for engineers that make up the bulk of expenses are lesser than in Silicon Valley - but the quality of engineering has seemingly still produced a class-leading product. Monday has a financial advantage by way of geography. With some luck, the timing of Monday's IPO was opportune enough to raise significant cash, and as for the 2021 quarters, they were actually FCF generative. The plan to engage in some burn for market capture is an intentional and well-reasoned one. Seemingly contrarian given macro, but smart in order to capitalize on their strategic advantages over competitors during a period where the others shall feel greater pain. Probabilistically, Monday seems well equipped to handle a recession should it come.

As for the valuation multiples:

Monday is the more expensive one on "next-twelve month" metrics at 8.3x EV/S, but I think the premium well justified given what I just talked about. I think it should be much higher.

At least for now, $MNDY seems like the way to go. I'm long Monday, with no positions on the other stocks mentioned.

Other Comments.
I wouldn't write off $SMAR as a more value-oriented play given the current price and yet large market opportunity at hand. If one would like to hedge the macro thoroughly, going partially short $ASAN would make for a very sensible hedge if you're extra bearish on the economy. I think software multiples have compressed more than enough, and a lot of these businesses are going to prove their resilience through this period.
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$MNDY is my favorite of these as well, but I actually own shares of this company because I feel it offers a fundamentally different product. Their WorkOS platform is so flexible that teams can just do more with it. And I think between these companies Monday has the best opportunity to become more than just a work management product.

Also Monday seems to be capturing the enterprise market better than Asana, which is definitely a growth catalyst.
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Alberto Wallis's avatar
$8.6m follower assets
Upcoming Earnings Calendar! (March 14th - 18th)
Earnings season is slowing down, but there are still several very interesting companies reporting next week.

  • $DLO - This company is really interesting. Growing quickly and profitably (28% net profit margin last quarter) while solving a real pain-point for companies.
  • $GTLB - Don't know much about this company, but I've seen a lot of people commenting on it lately so I'll keep an eye out.
  • $S - Extremely expensive cybersecurity stock.
  • $FDX - Not interested in investing in the business, but very interested in their outlook for the supply chain and the impact of higher energy costs.
  • $LEN - Homebuilder. Let's see what their comments are on the supply chain + demand for housing in the US.

What company are you interested in?

If you'd like an easier way to track earnings dates, you can automatically sync your portfolio's earning dates to your personal calendar with just a couple of clicks here.

MON:


TUE:


WED:


THU:


FRI:
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February earnings
I think upcoming earnings are going to be really important in this volatile market. Companies will likely get punished (further) on even slightly bad results or outlook, and I'm hopeful strong earnings like we saw with $TEAM or $AAPL will buoy the overall market or at least software sector that I'm playing close attention to.

Personally, I have a handful of companies on my buy list including $CRM, $COUP, $ESTC, $SMAR, $POSH, but will only do so once they make it past earnings either scathed (lower price) or unscathed (peace of mind) :)

So we've put together our most anticipated earnings for all of Feb!


Keep an eye out!
2: $FB $ABBV $TMO $NVS
3: $AMZN $LLY $MRK $TNX
21: $UIS
28: $JLL TGNA $LAZR $SAIL
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Upcoming Earnings Calendar (Nov. 29 - Dec. 3)
Happy Thanksgiving everyone!

This week was light on earnings reports, but next week is shaping up to be very interesting in the stock market. None of my holdings report, but I'm still interested in listening to the $CRM, $CRWD, $SNOW and $DOCU earnings calls.

I'm also hoping we get post-earnings commentary on $CRM from @gkotak, $DOCU from @invesquotes and $OKTA from @tolvkin so that I can learn more about these companies.

Remember, if you'd like an easier way to track earnings dates, you can automatically sync your portfolio's earning dates to your personal calendar with just a couple of clicks here.

Monday:

Tuesday:

Wednesday:

Thursday:

Friday:
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Next week's (Sep 7 - 11) featured earnings
Happy Labor day weekend. Here are some interesting earnings from the next 4-day week.

No companies in my portfolio, but I'll be closely watching $COUP (looking for bookings and RPO growth) $SMAR (will be comparing to the growth at $MNDY and $ASAN) $LULU (mirror sales and traction on male clothing) $AFRM (any more color on $AMZN deal)

Which companies are you excited to hear from and are you looking for anything specific from the call.

P.S. If you want an easy way to NEVER forget an earnings call, you can use the Fincredible service to automatically sync earning events to your personal calendar for the companies you follow here

TUE:

WED:

THUR:

FRI:BMO: $KR $SY $TIGR
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Don't own it but absolutely love $RH. Fairly similar target market to $LULU which also reports. Will be interesting to get more info on the Mirror acquisition by LULU, if any.
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Eric Pelnik's avatar
$273.9m follower assets
Earnings this week
📞Which calls are you most excited about?

Monday, May 31st
$AMSC American Semiconductor
$CBRL Cracker Barrel

Tuesday, June 1st
$ZM Zoom Video Communication
$CPB Campbell Soup
$CGC Canopy Growth
$MDLA Medallia

Wednesday, June 2nd
$AAP Advance Auto Parts
$CLDR Cloudera
$SJM JM Smucker
$DOCU DocuSign
$ESTC Elastic
$LE Lands' End
$SPLK Splunk
$SMAR Smartsheet
$RH Restoration Hardware

Thursday, June 3rd
$LULU Lululemon
$FIVE Five Below
$CRWD Crowdstrike
$AVGO Broadcom
$MDB MongoDB
$PD Pagerduty
$WORK Slack
$SUMO Sumo Logic

Friday, June 4th
None of interest

Sources: Business Insider, Google Finance, Yahoo Finance
Eric Pelnik's avatar
$273.9m follower assets
Earnings this week
Monday, Dec 7th
$COUP Coupa Software
$SMAR Smartsheet
$SFIX Stitch Fix
$SUMO Sumo Logic

Tuesday, Dec 8th
$CHWY Chewy
$AZO AutoZone
$MDB MongoDB
$HRB H&R Block

Wednesday, Dec 9th
$ADBE Adobe
$PTON Peloton
$PANW Palo Alto Networks
$CPB Campbell Soup
$ASAN Asana
$WORK Slack

Thursday, Dec 10th
$CSCO Cisco
$ORCL Oracle
$COST Costco
$LULU Lululemon
$MTN Vail Resorts
$PLAY Dave & Buster's

Friday, Dec 11th
None of interest

Sources: Business Insider, Google Finance, and Yahoo Finance
Eric Pelnik's avatar
$273.9m follower assets
Earnings this week
Monday, Aug 31st

$AMAT Applied Materials

$ZM Zoom

Tuesday, Sept 1st

$HRB H&R Block

$SCVL Shoe Carnival

Wednesday, Sept 2nd

$CRWD CrowdStrike

$MDB MongoDB

$SMAR Smartsheet

$CLDR Cloudera

$PD PagerDuty

$ZUO Zuora

Thursday, Sept 3rd

$MDLA Medallia

$DOMO Domo

$SWBIV Smith & Wesson Brands

$CPB Campbell Soup

$DOCU DocuSign

Friday, Sept 4th

none of interest

Note that this does not encompass all earnings this week

Sources include Business Insider and Yahoo Finance
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