Nine to Five Investing's Posts

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@ntfinvesting11/08/2022

$HUBS Earnings Review

Results:

Revenue: $440M (+31% YoY)
Non-GAAP Operating Margin: 9.2% (9.7% Q3 2021)
Non-GAAP Operating Income: $40.7M ($32.9M Q3 2021)
Non-GAAP EPS: $0.73 ($0.54 Q3 2021)
Net Revenue Retention: 109%
Average Subscription Revenue per Customer: $11,233 (+7% YoY)
Added 8,000 new customers (+24% YoY)

For the most part, the numbers look good, but the lower NRR and average subscription revenue per customer were negative surprises. On the other hand, the customer base grew by 8,000 to 158,905 (+24% YoY). Here's why:

For the first time I can remember, management specifically called out adoption of the CRM starter suite as a strong growth driver - this is the $45/month step above a free trial. Hubspot is big on land-and-expand, so the idea is to hook customers with starter packages. So they were able to acquire a lot of customers, but many are starting with extremely basic packages. On the other hand, management noted that fewer upgrades were the primary cause of the low NRR. With fewer upgrades, the average subscription revenue per customer figure came in fairly flat year over year. So while these metrics don't look great, much of this can be attributed to a difficult environment.

Management gave a bit of commentary on this difficult environment, noting that dealing with more decision-makers, longer product evaluations and tight budgets are the main contributors to longer deal cycles. Many software companies are experiencing this, but the Hubspot team believes their products are mission-critical for their customers, specifically the marketing and sales hubs. I agree that CRM is vital, especially when deals are difficult (and take longer) to close, but the lack of upgrades last quarter suggests that customers may be hesitant to spend on expanding right now.

Looking at the rest of the numbers, revenue growth was solid, net income continues to grow and their cash pile sits at a healthy $1.4 Billion. All things considered, this was another strong quarter for Hubspot. I'll add a bit in the coming days.

Todor Kostov

@kostofff11/08/2022

@ntfinvesting Thanks for the brief update!

+ 2 comments

Nine to Five Investing

$13.6MFollowers

@ntfinvesting11/07/2022

$HUBS Earnings Review

Results:

Revenue: $444M (+31% YoY)
Non-GAAP Operating Margin: 9.2% (9.7% Q3 2021)
Non-GAAP Operating Income: $40.7M (vs $32.9M Q3 2021)
Non-GAAP EPS: $0.73 ($0.54 Q3 2021)
Gross Margin: 82% (vs 80% Q3 2021)
FCF: $35.5M (vs $38.2M Q3 2021)
Average Subscription Revenue per Customer: $11,200 (+7% YoY)
NRR: 109%
8,000 new customers to 160,000 (+24% YoY)

31% revenue growth was solid, but net revenue retention fell quarter over quarter as a result of fewer upgrades - the 7% growth in average subscription revenue per customer reinforces this narrative. The positive is that Hubspot was still successful in growing the customer base 24% YoY.

One of the main drivers of the customer growth was adoption of the CRM starter suite, which is the $45/month package (step above a free trial). Hubspot utilizes a land-and-expand marketing strategy to attract customers, so the hope is that these CRM starter suite customers upgrade to the professional version and continue to add products. I don't recall management specifically calling out starter suite customers when discussing customer growth in the past, so this is likely a situation where tight budgets, longer product evaluations and dealing with more decision-makers are all factors in longer deal cycles and customers not pulling the trigger on the full Hubspot package.

Overall, it was another strong quarter. The financials look good and the only negative surprises were the lower NRR and average subscription revenue. Management explained why these numbers came in a bit low, so I'm satisfied. They're still growing the customer base, so I'll be watching both of these numbers in the coming quarter under the assumption that NRR and average subscription revenue will improve as customers upgrade packages and adopt new hubs.

Nine to Five Investing

$13.6MFollowers

@ntfinvesting11/03/2022

$PAYC Earnings

Results:

Revenue: $334M (+30% YoY)
Gross Margin: 83.9%
Net Income (GAAP): $52.2M (vs $30.4M Q3 2021)
Net Income (Non-GAAP): $73.4M (vs $53.6M Q3 2021)
EPS (GAAP): $0.90
EPS (Non-GAAP): $1.27
Adjusted EBITDA: $126M (vs $89.7M Q3 2021)
Cash & Cash Equivalents: $317M (vs $278M Q3 2021)
Raised Q4 and FY 2022 guidance

In going through the transcript, there is a heavy emphasis on self-service payroll and employee experience. This has been a theme since they released BETI, an employee self-service payroll system. Paycom's focus is to free up HR staff by empowering the employees to manage their own payroll. This attention to user experience and improving the efficiency of HR staff is going to be their path forward as they attempt to win customers from larger competitors.

Another takeaway was the fact that Richison reiterated the company's market penetration (~5%), noting that they have 33,8000 clients compared to a combined 1.7 million for their top two competitors. I'm not a big TAM person, but it does demonstrate that there is a massive market opportunity if Paycom is able to continue to execute.

Paycom earnings calls have been generally uneventful, which makes owning this company much easier. Another solid quarter in the books.

Joshua Simka

@tomato11/04/2022

$PAYC grew super fast leading up to and right after its public market debut. They had an internal emphasis on selling, which they were successful at, but I think they never quite got the technology nut cracked. I'll me interested to see how customers like BETI.

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Nine to Five Investing

$13.6MFollowers

@ntfinvesting10/31/2022

$MNDY New North America Office

$MNDY is opening a new Chicago office, their second office in the U.S. This comes on the heels of the announcement of a new Tokyo team. Doesn't sound like this company is tapping the brakes at all.

This is probably one of the earnings reports I'm most excited for because with all the hiring freezes we've seen, I am very interested to see how it has impacted their growth because a) this is not necessarily a mission critical product and b) they are sensitive to employee head count. More importantly, I'll be even more fascinated if growth hasn't slowed down.

ir.monday.com

monday.com Continues North America Expansion, Opens Office in Chicago

monday.com’s latest office is in Chicago's historic Old Post Office monday.com Ltd. (NASDAQ: MNDY) (“monday.com”), a work operating system (Work OS) where organizations of any size can create the tools and processes they need to manage every aspect of their work, officially opened its latest North American office in Chicago. The team will have 6,100 square feet in Chicago’s historic Old Post Office at 433 West Van Buren Street, offering monday.com employees and Midwest customers an engaging and collaborative work space in one of the city’s premiere office spaces. “At monday.com, collaboration is a core foundation of our culture, from Tel Aviv to Tokyo, New York to Chicago,” said Mike Lamm, VP of People, North America, monday.com. “Having just celebrated the exciting milestone of opening our North American headquarters in New York City in September, it’s wonderful to see our Midwest colleagues grow that momentum into opening this exciting space. The common thread between all of us – no

Nine to Five Investing

$13.6MFollowers

@ntfinvesting10/26/2022

$GOOG Earnings Thoughts

6% revenue growth YoY. There was no way we were going to see a number anywhere close to 41% annual growth. That was an absurd comp to meet, so while it is lower than expected, Google brought in $69 Billion in a single quarter so I won't overthink this. YouTube was a bit weak, but we have been hearing about a slowdown in ad spend for basically the entire last year so I'm not really surprised at this.

Cloud growth continues to be strong, but it's still funded by the advertising business and the losses widened. The company continues to invest heavily here and the long-term opportunity should be the focus.

The most surprising piece from this report was the growth in number of employees (150k -> 187k). Management stated that they would slow hiring as they emphasize productivity and shift focus to certain product and business priorities. Operating income came in at 25% vs 32% the previous year, so the aggressive hiring seems to have been a little bit too enthusiastic.

Not a lot to be overly impressed about here, but I'm not really surprised by the results. Comps were very difficult and macro impacts are starting to show. The numbers are a little weak across the board relative to expectations, but nothing alarming. My biggest gripe with Google actually has nothing to do with their Q3 results, and everything to do with innovation.

Google Cloud will likely be the next cash cow, but they've been playing catchup with Amazon and Microsoft for years in the cloud space. The advertising business is obviously strong, but when are some of these other bets going to pay off? Google has launched countless products that haven't panned out, and very few that have become significant pieces of the business. Part of me views this as a positive, since the company is still bringing in $69 Billion in a single quarter in spite of this lack of innovation. I won't go so far as to suggest that Google is sort of stagnating, but it feels like we have been wondering when even a single one of these other bets will pay off for quite a long time.

Anyway, results seem so-so. Probably going to get a decent chance to add since this company is still a money printing machine.

Nathan Worden

@nathanworden10/26/2022

Wow… they added 37,000 employees in one quarter? Am I reading that right?

+ 10 comments

Nine to Five Investing

$13.6MFollowers

@ntfinvesting10/18/2022

$ISRG Earnings

Preface - I do not listen to calls, so some of these questions may be answered when I read through the transcript.

Good:

20% procedure growth
11% revenue growth YoY
$1 Billion share buyback
Da Vinci SP cleared in Japan for a variety of procedures
15% instruments and accessories growth
$1.19 EPS

TBD:

-9% growth in placements: is this a chip issue? Cutbacks? Or decreasing demand? I'm thinking more of the first two.
Placement geography - is this mostly in the U.S? What did China numbers look like - China is the largest international market for this company.

This is sort of what we saw last quarter, but with some stronger all around numbers. Procedure demand is still clearly very high as the volume grew 20%. Share buyback is good for a mature company like Intuitive. SP clearing in Japan is obviously a positive development. I hope to get more clarity on the slowing placements. Fortunately, it really isn't a big deal for this company because they generate so much revenue from procedures (instruments + accessories). With that being said, I am curious if the slowdown contributing factors were the same that management highlighted a few months ago in their Q2 report.

$ISRG

Steve Matt

@interrobangbros10/18/2022

I can add that placements for Da Vinci's was 175 in the US (down 23% YoY) and 130 internationally (up 19% YoY).

I vaguely remember them talking about on a recent call that the newer machines are better and hospitals are using them for longer before upgrading. I also think it's a slight slowdown. I haven't seen the RPO in Q3 yet since the 10-Q isn't out but RPO has slowed YoY for basically 4 straight quarters. This is why the Ion system is so important in my opinion. Da Vinci usage won't abate and they'll keep bringing out newer, better versions and the recurring revenue from it will remain strong but bringing new systems to market, expanding their footprint, is vital.

In Q3, Ion placements cracked 50 for the first time and total installed came in at 254. I'll be perusing the transcript as well looking for Ion procedure count.

+ 3 comments

Nine to Five Investing

$13.6MFollowers

@ntfinvesting10/17/2022

$ABNB Shareholder Discussion

As an Airbnb shareholder, one of my biggest concerns has always been the ridiculous fees that are leading many to ditch Airbnb for hotels or other rental options. Combine that with countless posts of terrible experiences, unreachable hosts and in some cases dangerous situations, I’m feeling kind of hesitant about things.

Now when we consider the number of people buying properties exclusively to rent out, it’s easy to question the negative impact this is having on potential homeowners. As someone who recently purchased a house, I experienced first hand the number of properties listed as “new homes for rent”, which seemed to be on par or outpace the number of new homes for sale. Many of these properties are managed through tons of different rental agencies. Beyond saturating the market, this was frustrating for potential buyers.

Now I see this article which seems to suggest that some cities (in this case Atlanta) will be cracking down on the number of short term rentals a person can own. As a shareholder, I start to wonder when Airbnb will plateau. If hosts are seeing less bookings and less properties are coming into the ecosystem, where does the growth come from? Higher fees? Good luck with that.

Other $ABNB owners - what are your thoughts? My concerns with this company are starting to overtake my conviction.

11Alive.com

City of Atlanta cracking down on Airbnb, short term rentals

About 4,000 short-term rentals could soon no longer be allowed to operate in Atlanta because of a new ordinance cracking down on who’s able to rent out their home.

Valuabl

@valuabl10/17/2022

I would love to own AirBnb. I think it's a terrific business model. But there are deep problems the company hasn't addressed because they haven't had to. They benefitted from network effects and early mover advantage which covered up a myriad of problems. But they're losing their appeal with customers for the reasons you mention.

I don't own the stock as it's always been far too richly priced for my taste.

As a regular AirBnb user, I welcome to surge of new hosts and existing hosts struggling with low booking rates. It makes it much easier for me to extract big discounts.

I don't know where it all leads, but the Airbnbubble might turn to Airbnbust

+ 7 comments

Nine to Five Investing

$13.6MFollowers

@ntfinvesting10/16/2022

$CRWD Reposify Acquisition

This acquisition was announced a few weeks ago, but I wanted to break this down a bit.

Reposify is an external attack surface management (EASM) platform that provides an outside-in view of an organization's assets. Outside threats seek to exploit any potential vulnerability, and Reposify scans for exposed assets to help expand an organization's vulnerability inventory.

Crowdstrike will expand the scope of their platform with this acquisition by adding another layer of security intelligence - one that provides an adversarial view of a company's assets. This differs from asset discovery and asset management because these threat detection tools do not approach vulnerability management from the perspective of the attacker. Attack surface management provides more comprehensive security and an additional layer of protection because it seeks to identify unknown assets that may be vulnerabilities. It also eliminates threats such as weak passwords, unpatched software, etc.

I like this acquisition from Crowdstrike's perspective because it is strategic in nature and Reposify comes recognized by Gartner as an emerging vendor and seems to be held in regard by its customers. For Crowdstrike, it complements their offerings by providing another valuable service to help secure customer assets.

The terms of this acquisition weren't specified beyond the deal being predominately cash. Depending on their definition of predominately, I'll be happy with a cash deal so as to avoid any further dilution.

Nine to Five Investing

$13.6MFollowers

@ntfinvesting10/12/2022

Bought 6% more TTD

Trade Desk at $52.00

10/11/2022

Bought 21% more TTD

Trade Desk at $52.00

10/11/2022

Bought 26% more HUBS

HubSpot at $262.03

10/11/2022

Bought 14% more ABNB

Airbnb at $106.91

10/11/2022

Recent Trade Updates - $HUBS, $TTD, $ABNB

I wanted to post a few updates on some trades I made this week. I decided to deploy some cash as some of these companies have fallen quite a bit in the last month.

$ABNB - I love the new features they've added to the platform, specifically Categories, which improves the reach of the platform and has already demonstrated measurable increases in platform usage. This has also fallen into a good accumulation range.

$HUBS - I posted about this last week, but I feel that they offer one of the best CRM products on the market and offer a smooth, economical implementation that may be sought after in an economic decline. Not to say Salesforce won't continue to be the top dog here, but Hubspot has become a force in the SMB market.

$TTD - the price has fallen into more reasonable levels where I am happy to accumulate more shares. The business is booming and the growth runway is extremely long.

I'm in watch-and-see mode with all my holdings and won't hesitate to add to others as the prices continue to deflate.

Undefined

@eggplant10/13/2022

Love to see that some people are still buying here.

+ 3 comments

Nine to Five Investing

$13.6MFollowers

@ntfinvesting10/09/2022

$STEM InCharge Partnership

I'm a little late on this, but $STEM announced this partnership with InCharge a few weeks back. InCharge is a leader in fleet EV charging, and this partnership provides a combined offering of Stem's Athena AI and InCharge's InControl electrical vehicle management software. Stem piloted some EV charging programs, but this represents a stronger push into the space.

I like the direction this company is taking because they have made a strong push to make the Athena software the focal point of the business. Originally an extremely low margin business, the company has slowly experienced margin expansion in recent years as recurring software revenue has begun to grow.

My whole thesis on this company revolves around Stem becoming primarily a SaaS company. The clean energy / EV infrastructure industry is extremely crowded with very little separating many of the competitors, which is why I think the Athena AI software should be the company's focal point. Stem still sells battery storage systems, but partnerships like this help to provide more Athena implementation opportunities without the need to sell any hardware.

Full article

investors.stem.com

Stem Announces Joint Solar, Storage, and EV Charging Offering with InCharge Energy

Interoperable solutions to ease EV charging infrastructure deployment and management and help maximize asset value Stem (NYSE: STEM), a global leader in AI-driven clean energy solutions and services, today announced its partnership with InCharge Energy, a fleet electrification services leader, to equip businesses with a complete EV fleet infrastructure solution to maximize their charging assets. The offering combines Athena ® , Stem’s clean energy management platform, with InCharge Energy’s “In-Control” software platform, giving fleet owners the tools to manage EV charger loads with clean energy using solar and storage, optimize utility bills, build out EV charging in areas of the grid that are constrained, and monitor progress toward environmental, social and governance (ESG) goals. With a focus on EV fleet charging depots and high-power fast charging hubs, the offering will help businesses navigate the complicated and historically expensive EV market nuances and take advantage of

Steve Matt

@interrobangbros10/09/2022

As long as they continue to not make any hardware, I don’t have an issue with them selling it. Kind of like a one-stop shop.

+ 5 comments