SaaS Companies - Infrastructure

By pjain      Published June 3, 2021, 8:26 p.m. in blog AI-Analytics-Data   

SaaS Trends, Market Structure, Size

--- Cloud OVERVIEW IN GENERAL Key Factors

  • Reinventing Cloud - IBM despo 4 rht
  • more complicated
  • Weaponized hacking state sponsored ussr,china

  • On Covid SaaS boost MORE on WFH, CHANGE TO PERSIST/ADVANCE ADOPTION

Market Share - WHO DOMINATES CLOUD?

  • Competition with IBM/HP in servers < networking - they can outdo it

TREND: Rapid Growth - EC, 5G, IoT, Industry Automation, Private->Public, WFH

OVERALL global data center market is expected to grow at a compound annual growth rate of over 2% from 2019 to 2025. According to a recent report from Research and Markets, in the U.S. market alone, the data center industry is expected to reach over $69 billion in revenues by 2024. This is due to the most prominent investment in colocation and hyperscale data centers wherein the use of cloud computing services and applications continues to improve rapidly in the U.S.

The data center industry is booming with the increasing popularity of the Internet of Things (IoT), 5g network, and industry 4.0.

The hyperscale market alone expects a compound annual growth rate of 21% from 2020 to 2024

Green data centers

Green data centers are gaining popularity as well for promoting sustainability for maximizing energy efficiency while minimizing the environmental effects of a traditional data center. FB for example reduced backup generators/diesel - using locally generated hydroelectricity on their site in Lulea, Sweden.

High Growth Areas

  • IDC, the public cloud market in the EMEA region is likely to expand 26% over the next four years. It also foresees the private cloud market to witness 18% growth during the same time frame.
  • Consolidation in Telecom and excess capacity overflow by increased utilization of existing colocation space could reduce the attractive expansion opportunities

Gartner predicts that public cloud services in the mature Asia Pacific market will witness year-over-year growth of 12.8% and reach to $8.11 billion in 2016 from the 2015 level of $7.19 billion. It projects the spending in the market to increase to $12.4 billion by 2019.

An increase in public cloud services would automatically boost data center demand. In the Gartner report, the mature Asia Pacific market covers Australia, New Zealand, Singapore and South Korea.

Expansions in important markets and consolidation of facilities in the existing ones have been part of Equinix’s core strategy. Citing predictions made by IDC, Equinix revealed that cloud computing will continue to grow at a solid pace across the European continent.

SaaS PICKS

  • Cramers' 17 Saas picks: Adobe Chegg Salesforce.com VMware Zoom Video Livongo Health Crowdstrike Veeva Systems Datadog ServiceNow Atlassian DocuSign Fastly Dynatrace Zscaler Dropbox Wix.com

Startups: System, Cloud

PT MCash Integrasi ($43 million) - ITsvcs

M Cash Integrasi is a IT service management company. Indonesia

Cogito ($37 million) B2B Saas

InnoVantage is a software and design startup based in Makati, Philippines.InnoVantage’s first product is Cogito, a cloud workflow solution. Philippines

HyperScale - True Cloud Infra Majors

AMZN AWS $35b

  • Emps 46k - or is all
  • Datacenters 175

Amazon Web Services is the third-largest data center company in the world. AWS is the most systematic and widely adopted cloud platform in the world, offering over 175 fully-featured data center services globally. AWS provides far more services and functionality within these services, from infrastructure technology such as processing, storage, and databases to emerging technologies such as machine learning and artificial intelligence, data lakes and analytics, and the Internet of Things, than any other cloud provider.

MSFT

Oct 27 - MSFT: Azure grew more than expected at 48% y/y vs 45% expectations and Commercial Cloud rose 31% y/y vs 22% consensus. Solid but high expectations.

China Cloud Majors

  1. Alibaba
  2. TCEHY
  3. Kingsoft Cloud
  4. BIDU? - is it in cloud

  5. May 8, 2020 IPO - raised $500m at $17 jumped +40%

* About: Kingsoft Cloud

  • spun out of software company Kingsoft Corp
  • backed by Xiaomi, whose CEO Lei Jun is also the chairman of Kingsoft

Google Cloud

Oracle Cloud

IBM Cloud

Software: Infrastructure, Cloud Management, Performance

VMW X high PE

  • A very expensive proprietary virtualization platform. XEN is open source virtualization and GOOG/MSFT etc will hurt vmw - only growth from enterprises

  • cloud hurts vmw -as are not built with expensive servers at all. They're usually built with general-purpose computers, because a bunch of cheap machines can be harnessed for less than one expensive one can be bought.

Red Hat's integration of Gluster into its CloudShift offering. Once data storage and delivery costs are reduced, so that general purpose drives and drive networks can replace single-purpose systems, cloud economics get another gear.

AKAM

X PKJ > No growth EPS5y -15%, Sales5y 29% PE 32x Acquiring co to close down - Big cos like - Main use of backbone CDNs is for Video/Events - specialty cos undercut that biz + Dec'11 S&P Top Ten Portfolio is to outperform the S&P 500 balanced sectors

QRVO

NET cloudflare c56

Storage Systems and Infra

EMC X

  • Price of storage systems will fall with Cloud due to better capacity rampup instead of sitting there~

Database Systems and Infra

MDB Mongodb

Xx PS=39x

IT Consulting Companies -- xfr --

PRFT

Invest Feb2011

Proficient as a small cap information technology consulting company and -- the and the investment thesis is -- As a macro economic picture continues to improve the pent up demand for discretionary IT spending will be released. The company positions itself between the Big Five consulting firms and boutique consulting shops proficient typically sees 85% of its business come from existing customers. And heavy 65%. Competitive win rate. Once the company reaches the proposal stage of a bit of a bidding process. And that's against much larger competitors including a censure IBM (IBM) cognizant (CTSH) an emphasis. Proficient management have noted strengthen their bookings. And pointed out that on their most recent quarterly call 25%. Of project books from December 2010.

  • Through February 2011. We're -- new customers which illustrates the point that purse strings are being -- It's also important -- proficient starts out small with new customers and sees multiple times follow on revenue as a relationship bills. The company closed 2010 with 26 million in cash almost the dollar share and new debt. Proficient has lots of operating leverage and I think the stocks earnings now he's its revenue growth for the next couple of years. Profession trades -- fifteen times 2011 PE. While earnings are estimated to grow about 30% during 2011 and revenues are expected grow 20% over the same period. I think the stock has an excellent small cap -- re emergence -- consulting and believe the stock's going to work its way into the mid teens.

Security, Identity -- XFR --

FTNT r7

Nov'19 Fortinet is a software security company, and its shares are down 17% from its all-time highs reached in April 2019. The company's top line has delivered CAGR of 21.3% over the past three years, during which time its operating margin has widened from 3.7% to 14%. Fortinet's 39.2% ROE and 36.1% ROIC far outpace software industry averages, as well as S&P 500 averages, indicating a very efficient business model and execution.

The company's 34.8 EV/EBITDA and 12.0 price-to-book ratio are both substantially higher than industry averages, while the 2.1 PEG ratio and 18.7 price-to-free cash flow are both in line with industry averages. Altogether, these metrics suggest that Fortinet is aggressively priced, but the premium is appropriate, given the strong growth and operational potential.

--- Software Development Tools -- XFR

Asana

Floating on the same day as Palantir meant Asana got less attention on the day of its IPO, which may well suit its publicity-shy founder, Facebook cofounder Dustin Moskovitz.

Shares in the company opened at $27 each, up from a reference price of $21, representing a pop of around 30%. This valued the firm at more than $4 billion, more than double its last private valuation of $1.5 billion from 2018.

Asana offers a suite of cloud-based project management tools used by companies like NASA, Uber and Spotify. At a basic level, it allows teams to add tasks, assign them to team members, set due dates for completion, comment and share relevant documents. This has proved even more popular during the pandemic, where remote working is mandated.

TEAM

Altassian

FVVR

fiverr

Design, UX Software and Cloud

FIVN, $168.91 R8

The pandemic has accelerated the business push to allow workers to work from anywhere, a trend that’s expected to continue. Five9’s cloud-based contact center call software is a beneficiary of that trend, says Jim Callinan, manager of Osterweis Emerging Opportunity Fund. Five9’s technology is a “remote solution” that could displace existing on-premise systems, which is a $24 billion market, says Callinan. The company’s third-quarter revenue grew 34% year-over-year, “its highest growth rate ever,” Callinan said. A key to its contact center software is it “provides extensive monitoring and reporting capabilities,” which reduces the importance of having the worker at the same location as the boss.

AAPS

  • digital Turbine - high PEs - penny Exponential H2'20 - 5yr$ 38%

FoW, WFH ---- ADVANCES -- XFR --

r Telecommuting

Communications SaaS

PLT

Plantronics

The next name among these cheap tech stocks with big upside is Plantronics, which makes headphones, headsets, speaker phones and other audio products for conducting business. This is key for companies with remote employees who need to stay connected with one another as efficiently as possible. Plantronics should be enjoying a booming business during the pandemic, yet shares are down more than 50% in 2020 as investors worry about a production backlog hampering profitability, while sales slumped 20.5% year over year in the first quarter. JPMorgan analyst Paul Coster sees hope for Plantronics -- and he upgraded the company from "underweight" to "neutral" in mid-September, with a $19 price target, about 47% higher than current prices. Plantronics' decline has made the stock's valuation look tempting, though Coster has assumed a wait-and-see approach that investors would be smart to mimic.

ZM Zoom

  1. Massively powerful in CoV - It has gone from being a rapidly growing and successsful little niche company to most talked about! TMF/Saul think that perhaps Zoom could grow revenue 200% this year (triple it), or more. They were probably going to grow by about 80% without all this! Given that videoconferencing instead of travel and hotels will save enterprises gobs of money, as well as avoiding risk,

  2. Hacking reduced price > a sudden, very organized, hacker and short attack from mid-March through early Apriil, with a stream of attacks dealing with Zoom’s security (which was fine for enterprises who had IT departments, but which just wasn’t set up for having 200,000 downloads of new users a day, up 20x from the previous level of 10,000). The price tanked for a while in March down to $113, but it came back to make new all-time highs, on Thursday.

  3. BOUNCED BACK - Daily users increasing to 30x their pre-pandemic levels, by very prominent security people helping them with their security, by Ellison from Oracle saying that Zoom was essential for his company, and that it would continue to be so after the pandemic, and the CEO of Okta twitting about how his company depends on Zoom, and the British Parliament saying that their meetings would be on Zoom, with people signing in from home. And music videos on Zoom, and an opera on Zoom, and people getting married on Zoom, and a little boy getting adopted on Zoom, and courts holding hearings on Zoom. On Friday they were selected for the Nasdaq 100, as of the end of this month. And later on Friday, they were partly knocked back by Facebook saying that they were setting up a competing app. (Tell me if you can see any enterprise, at all, ever holding their meetings on Facebook!)

  4. Stock price: Up 191% in the past 12 months

  5. M $162b October > steep pullback > Q1'21 $100b

  6. FY'2022, which ends in January'22.

  7. Projects growth 40%

  8. FY 2021 forecast (fiscal 2022): $3.76 billion - $3.78 billion, up 42% - 43%

  9. NI guidance $671m up more than thirtyfold from the prior year.
  10. Q1'21 GROWTH rapid: customers >10emps +470% in a year to 467,100

  11. FY 2020

  12. 2020 revenue (fiscal 2021): $2.65 billion, up 326%
  13. Zoom’s sales growth of 326% in 2020 far surpassed any of its U.S. tech peers.
  14. Q1'2020 - before REAL SIP Hit> “We delivered a unique combination of high total revenue growth of 78% at a scale of $188 million, adjusted operating income of $38 million, and operating cash flow of $37 million. Our execution also drove 61% growth in the number of customers with more than 10 employees, and 86% growth in the number of customers contributing over $100K of revenue.” Total revenue of $188 million, up 78% Adj operating income was $38 million, up 292% from $10 million a year ago. Adj operating margin was 20%. Adj net income was $43 million, up from $10 million. Adj EPS was 15 cents, up from 4 cents Cash was $855 million. Operating cash flow was $37 million up 129% from $16 million Free cash flow was $27 million up from $6 Customers with more than 10 employees was 81,900, up 61% Customers contributing more than $100,000 were 641, up 86%. Net dollar expansion rate in customers with more than 10 employees was over 130% for the 7th consecutive quarter. Remaining Performance Obligation (RPO) is $604 million, up 94% from $312 million [Saul here: That’s almost as much as the whole year’s revenue!!!]

    We closed Zoom Phone deals with 2,900 customers with more than 10 employees. We signed up Johnson and Johnson and VMWare. Okta highlighted Zoom as a preferred video application, and said Zoom had 876% growth in the Okta network over the past 3 years! In Gartner Peer Ratings, Zoom received the top overall rating in the “Voice of the Customer” category. Revenue exceeded the high-end of our guidance by $12 million Adj gross margin was 84%, up from 82% and from 83% sequentially. Due to the coronavirus, we have seen significant usage of our platform and we will expand our capacity to meet the increased demands of both paid and free users. Next quarter we believe our gross margins will thus be closer to 80%. In the quarter, we did not see any impact yet from coronavirus, but we have definitely seen an up tick in usage since. But a lot of that is on the free side. So it's too early to tell how much of that is going to convert long-term into paying customers. As we mentioned, we are seeing impact and we continue to build capacity to ensure that we can support this increased usage. So we are seeing impact on our gross margins, which is why we're guiding you towards the lower end of our range for next year.

  15. DO they have a moat? MSFT,Google,FB all entering this growing market! ? Zoom is simply better at video conferencing than anyone else.

RING

RingCentral

TWLO R9

Twilio stock has more tripled in 2020, and the reason is probably as close as what's in your hand right now. Your smartphone has become a new appendage, an indispensable tool to keep you connected, informed, and entertained throughout the day. Twilio is a star in your phone, even if most people have never heard of the company.

Twilio is the top dog when it comes to in-app communication tools. The next time you get a notification that your ridesharing driver has arrived, or you reset a streaming platform password without leaving the app, there's a good chance that Twilio is the one making the connection. Video communication solutions have become a shooting star for the company in 2020.

Revenue rose a better-than-expected 52% in its latest quarter. Analysts were only holding out for a 39% year-over-year increase, but that's just nonsense. Twilio's revenue has risen by 41% or better every single quarter since the company went public four years ago. Some winners just keep winning.

Software Packages --- xfr ---

ORCL R8 value? c26 y1% #RRR buy 20 !15

DanNiles> one of our Top5 Picks for 2021. I believe as the Oracle story transitions from a legacy no growth software vendor to cloud revenue driven contender, its valuation should expand from 14x CY21 PE to at least the S&P’s 23x.

  • Earnings warning - not just IT slowdown, but cloud cos eating into profits

  • Too options driven management - div is too low!

  • Dec'11 S&P Top Ten Portfolio is to outperform the S&P 500 balanced sectors

  • growth and benefits from Sun acquisition.

  • Dec'11 Cloud hits Oracle OLC revenue as cos. go to CRM/Workday to avoid 7-figure upgrades

  • H2'11 European & Americas slowdown hits oracle HARD - not really much traction in China & India

  • they've been winning the battles against SAP

  • New CEO Mark Hurd is strong asset for Oracle

  • -- ABOUT founded 1977 by Larry Ellison, Silicon Valley’s evil genius. He built Oracle in his own image, with an aggressive sales team and a ferocious competitive style

SAP


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