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No. of Recommendations: 75
YTD return -2.2%

Portfolio Breakdown

CRWD - 16.2%
NET - 11.0%
SE - 10.7%
UPST - 9.5% (NEW)
DDOG - 8.5%
ROKU - 8.0%
MELI - 6.3%
TWLO - 5.7%
FVRR - 5.6%
DOCU - 5.3%
ZI - 4.7%
SNOW - 3.5% (NEW)
FUBO - 3.3%
LMND - 1.7%


Sold Out: ETSY, TTD, MGNI, PINS, BAND, ACUIF

Summary: It was another rollercoaster of a month, thanks to Mr. Market. After being even a month ago, I dropped to a YTD low, down 21% on May 13th. I'm lucky to be back again close to even, thanks to growth stocks getting some love of late. The boost from Upstart also helped. I was able to pickup shares of Upstart between $106/share and $83/share (a 77% gain). It was also a month to clean up my portfolio as well as get rid of some old favorites. After holding Etsy for over 1.5yrs and earning a return of over 400% on my first lot of shares, I was forced to immediately sell out my entire stake due to extremely poor guidance and a major slowdown. It was a surprise but I try to invest on the numbers, not sentiment or emotion. Etsy was my #4 position. The Trade Desk (TTD) was another long held position (2+ years) that I sold out of completely. Their earnings report was poor in comparison to other major advertisers such as Google, Facebook, and Roku. I was happy in a way to see it go as ad tech is a complicated and frustrating sector to own. Magnite (MGNI) also had poor results with flat sequential growth so it had to go as well. Pinterest (PINS) was a new position in April. After the poor earnings report in terms of user growth, I still held my positon. However, a few days later I watched the Netflix movie "The Social Dilemma" and was convinced I didn't want to support social media. Bandwidth (BAND) didn't show the growth I was expecting either and it got tossed. ACUIF (Acuityads) got cut, I decided I didn't want to hold a small-cap. I am happy to be down to 14 stocks, from a high of 19 and to be rid of some of the complicated stories I was holding onto. 15 stocks is really my upper limit and I was getting a bit sloppy and frustrated. The tough market this year drove me to start too many small positions and I feel more cleansed and in control. I also sold ~1% of my Portfolio and bought Ether at $2,300 a piece, which I will not track here.

Brief Comments

CRWD (Crowdstrike) - The Colonial Pipeline attack by the ransomeware group DarkSide was just another public highlight of how important cybersecurity has become. DarkSide also posted to the dark web names of three new targets that have been cyberattacked.

In the wake of the attack, President Biden signed a new executive order to strengthen the countries cybersecurity. The order requires IT service providers to notify the federal government about breaches that could impact U.S. networks and removes the legal contractual blocks that could prevent companies from disclosing the breach. The federal government will increase its migration to secure cloud services and a more modern cybersecurity infrastructure. Government agencies will also get an endpoint detection and response system that spans the government and encourages communication. "Incremental improvements will not give us the security we need; instead, the Federal Government needs to make bold changes and significant investments in order to defend the vital institutions that underpin the American way of life. The Federal Government must bring to bear the full scope of its authorities and resources to protect and secure its computer systems, whether they are cloud-based, on-premises, or hybrid. The scope of protection and security must include systems that process data (information technology (IT)) and those that run the vital machinery that ensures our safety (operational technology (OT))."

The Biden administration also detailed the cybersecurity spending included in the $2.3 trillion American Jobs Plan, which includes $20 billion in energy infrastructure investments for state, local, and tribal governments that's contingent on cybersecurity modernization. "Specifically, these modernization block grants will be tied to the use of and compliance with 21st century energy, technology, and security standards. Eligibility for these grants will also be contingent on policies requiring installation of technology that detects and blocks malicious cyber activity on information and operational technology networks, consistent with privacy protections," says the White House.

All this focus on cybersecurity only sounds like good news for Crowdstrike and Cloudflare. Crowdstrike also announced a partnership with Ernst & Young, a leading organization in cyber risk consulting services. I can't wait for Crowd's earnings report this week!

NET (Cloudflare) - Cloudflare had a solid First quarter
-revenue totaled $138.1 million, representing an increase of 51% year-over-year
-Record dollar-based net retention of 123%, representing an increase of 600 basis points year-over-year
-Strong large customer growth, with a record addition of roughly 120 large customers in the quarter and large customers now representing greater than 50% of revenue

I was most excited to see large customer growth up 70% YoY, now representing over 50% of revenue. RPO was up 88% YoY. With all the major metrics looking good and the constant stream of new products, things continue to look good for Cloudflare.

SE (Sea Limited) - Sea destroyed their earnings for Q1 and the top line numbers speak for themselves.

-Revenue was up 147%
-Gross Profit was up 212%
-EBITDA was $88.1 million compared to -69.9 million YoY
-GAAP e-commerce revenue was up 250%

Full year 2021 guidance was +38% for digital entertainment and 112.3% for E-commerce. With lockdowns still in place in many parts of the developing world, I don't see Sea slowing down much anytime soon.

-Both in Southeast Asia and in Taiwan, Shopee ranked first in the Shopping category by average monthly active users and total time spent in app on Android for the first quarter of 2021, according to App Annie3.

-In Indonesia, where Shopee further accelerated its year-on-year growth in gross orders, it continued to rank first by average monthly active users and total time spent in app on Android in the Shopping category for the first quarter of 2021,according to App Annie.

Is their hit video game, Free Fire slowing down? Not at all. Free Fire, continued to be the highest grossing mobile game in Latin America, Southeast Asia and India for the first quarter of 2021, according to App Annie3. Free Fire has maintained this leading position for the past seven consecutive quarters in Latin America and Southeast Asia, and two consecutive quarters in India.

Good deep dive by DJY research that was posted by RollerCoaster: https://djyresearch.com/2021/05/05/sea-limited/


UPST (Upstart) - On the strength of Bert's article and the discussion on the board, I starting buying shares of Upstart in early May all the way down to $83/share. I started a mid-sized position but it has grown to my 4th largest position. I haven't trimmed any yet, but will be forced to if it continues to grind higher. I posted some of my research on the board. https://boards.fool.com/upstart-research-34835810.aspx

This company has some big risks and I'm no expert on the lending industry. The biggest risk is clearly customer concentration with over 80% of revenue coming from Credit Karma (Intuit) and Cross River bank. There is also agency risk, the fact that Upstart buys back many of the loans and then sales them to Institutional investors.

The excitement stems from the fact that Upstart could hit 200% revenue growth this year, it's profitable, and is expanding its TAM from $92B to $626B as it moves from personal loans to the Auto Industry. It is a first mover, though it's MOAT in AI might be dicey. Hopefully it can hold on and take advantage of small and mid-sized banks lack of scale.

I love the numbers but this could be a wild ride. “Upstart is delivering a combination of growth and profits that is rare in FinTech and in the technology industry overall,” said Dave Girouard, CEO of Upstart. He added, “The advantages of AI in lending are becoming more apparent by the day and Upstart is synonymous with this newly emerging category.”

Some of the Q1 Numbers:

Q1 revenues: $121M versus $116M expected, up 90% and 39% qoq

Q2 revenue guidance raised from $117M to $155M, up 28% qoq

Full year 2021 guidance raised from $500M to $600M, up from 115% to 158%


DDOG (Datadog) - I was impressed with Datadog's numbers for Q1. First quarter revenue grew 51% year-over-year to $199 million. They showed strong growth of larger customers, with 1,437 $100k+ ARR customers, up from 960 a year ago. Guidance was for 52% growth, and could end up over 60% with a solid beat. I built my position this month from 1% to 8.5% based on the strong quarter and the fact that the comps will get easier this year once they lap the Covid slow down from last year.


ROKU - My disappointment in Magnite and The Trade Desk was countered by a very strong quarter from ROKU.

Q1 2021 Highlights

• Total net revenue grew 79% year-over-year (YoY) to $574.2 million;
• Platform revenue increased 101% YoY to $466.5 million;
• Gross profit was up 132% YoY to $326.8 million;
• Roku added 2.4 million incremental Active Accounts in Q1 2021 to reach 53.6 million;
• Streaming Hours increased by 1.4 billion hours over last quarter to 18.3 billion;
• Average Revenue Per User (ARPU) grew to $32.14 (trailing 12-month basis), up 32% YoY;
• Raised approximately $1 billion through an At-The-Market (ATM) stock offering

Strong Outlook

"Our Q2 outlook is for robust growth with total net revenue of $615 million at the midpoint (up 73% year-over-year) and total gross profit of $300 million at the midpoint (up 104% year-over-year). Strong gross profit grow this expected to outpace operating expense (OPEX) growth, resulting in Q2 Adjusted EBITDA of $65 million at the midpoint."

The comps will be tougher in the 2nd half of 2021 but there wasn't much to complain about. Gross Margin improved to 56.9%, TV streaming ad impressions delivered through OneView nearly tripled year-over-year, while total impressions on the Roku platform (sold by Roku or its publishers) more than tripled.

Roku celebrated "Streaming Day" by unveiling 30 "Roku Originals" on The Roku Channel May 20. Roku signed its first ever "pay-one" window streaming rights deal, coming to an agreement with smaller film distributor Saban Films for some of its 2021 movies. About a third of Saban's 2021 slate are in the deal and will stream free exclusively on The Roku Channel about three months after their theatrical premiere. Those will be led by Echo Boomers, starring Michael Shannon and Patrick Schwarzenegger and coming to Roku June 15. Other films include Happily (starring Joel McHale and Kerry Bishé); Percy vs. Goliath (starring Christopher Walken, Christina Ricci and Zach Braff); and Under the Stadium Lights (starring Laurence Fishburne and Milo Gibson). Roku has a 24-month exclusive window on the films.


MELI (MercadoLibre) - MELI reported Q1 earnings on 5/6 and they looked good to me.

-Net revenues for the first quarter were $1.4 billion, a year-over-year increase of 111.4% in USD
and 158.4% on an FX neutral basis.
-Commerce revenues increased 139.2% year-over-year in USD reaching $910.6 million, while
Fintech revenues increased 72.4% year-over-year in USD reaching $467.8 million.
-Gross profit was $591.4 million with a margin of 42.9%, compared to 48.0% in the first
quarter of 2020.
-Total operating expenses were $500.5 million, an increase of 46% year-over-year in USD. As
a percentage of revenues, operating expenses were 36.3%, compared to 52.5% during the
first quarter of 2020.
-Unique active users grew by 61.6% year-over-year, reaching 69.8 million.
-Gross merchandise volume (“GMV”) grew to $6.1 billion, representing an increase of 77.4% in USD and
114.3% on an FX neutral basis.
-Successful items sold reached 222.0 million, increasing by 110.2% year-over-year.

MELI's triple digit growth continues. Similar to Sea, the lockdowns continue in much of the developing world, which counts as tailwind for MELI. The Fintech business is really what makes MELI so promising over the long-term. Online Payments grew 139% year-over-year and MELI continued expanding its merchant
base, while also becoming the most profitable MercadoPago business this quarter. Besides increased engagement on its wallet, they recently launched a debit card. They are also working on expanding their services into savings, insurance, and investments. They even invested $7.8M in bitcoin, as crypto is gaining more wide acceptance.


TWLO (Twilio) - A very good quarter from Twilio.

First Quarter 2021 Financial Highlights

-Revenue of $590.0 million for the first quarter of 2021, up 62% year-over-year, including $44.6 million from Twilio Segment.

-GAAP loss from operations of $197.3 million for the first quarter of 2021, compared with GAAP loss from operations of $92.7 million for the first quarter of 2020.

-Non-GAAP income from operations of $17.3 million for the first quarter of 2021 compared with non-GAAP income from operations of $6.1 million for the first quarter of 2020.

-First Quarter Revenue Dollar-Based Net Expansion Rate of 133%

Outlook

-Revenue Growth of 47%-50% on $591-$601 million in Revenue
-Guidance includes the revenue contribution from Twilio Segment

Non-GAAP loss from operations of ($27) million to ($22) million
• Non-GAAP loss per share of ($0.16) - ($0.13)

Twilio’s second-quarter forecast predicted adjusted losses beyond analysts’ expectations. For Q2, Twilio forecasted adjusted losses of 13-16 cents a share on sales of $591-$601 million. Analysts on average were expecting adjusted losses of 4 cents a share on sales of $579 million in the second quarter, according to FactSet.

CFO Shipchandler explained in the Prepared Remarks:

"With regards to our operating loss guidance for the second quarter, as we have
previously discussed, some of the investments we planned on making last year did not
materialize as we had originally forecast due to COVID. Those investments are largely
centered on enterprise sales, Flex and new growth products, plus core systems and
infrastructure. As of the end of Q1, we have largely caught up on the hiring related to
these investments, which will generate losses in the short term while allowing us to
grow at elevated levels, and sets us up well to scale in the long term."

Twilio also acquired SMS service Zipwhip for $850M evenly split across cash and stock. The deal is expected to close by the end of 2021. The acquisition builds on Twilio's investments in messaging and expands its toll-free messaging use case. “Messaging is becoming a preferred way for consumers to engage with brands, therefore it’s critical to provide multiple messaging options,” says Simon Khalaf, SVP and general manager of the Twilio Communications Platform. “By bringing together the world’s leading cloud communications platform and a trusted partner in the messaging ecosystem, we have the ability to deliver more secure, high-quality toll-free traffic at scale. We are thrilled to welcome Zipwhip to the Twilio team as we continue our journey to become the world’s leading customer engagement platform trusted by developers and companies globally.”

I've held Twilio for a couple of years and it's as solid as ever. I'm happy to keep it as a mid-sized position.


FVRR (Fiverr) - Blow out earnings from Fiverr with a beat and raise.

$68.3 million revenue (100% y/y growth)
3.8M active buyers (56% y/y growth)
$216 spend per buyer (22% y/y growth)
Gross Margin 83.1% GAAP / 84.1% Non-GAAP
($0.7M) Adjusted EBITDA
(1.0%) Adjusted EBITDA Margin
27.2% Take Rate (10bps y/y improvement)

Financial Outlook
Q2 2021
$73-75M Revenue (55-59% y/y)
$5-$7M Adjusted EBITDA

FY2021
$302-308M (59-63% y/y)
$19.5-$24.5M Adjusted EBITDA

Massive start to 2021
? New data vertical: We launched our ninth vertical to expand our catalog into data related services and deepen our penetration in this fast growing industry
? Fiverr Business: Buyers purchase more frequently and more expensive Gigs on Fiverr Business compared to the marketplace, and on average spend three times more on the Fiverr platform
? Subscriptions and Milestones expansion: Subscriptions is now available in 25 categories, tripling from 8 in Q4’20, and Milestones are now open to all Fiverr community members
? Significantly increasing FY’21 guidance: Fiverr expects business momentum to continue and is upgrading guidance for 2021 from 46-50% to 59-63% revenue growth

I wasn't sure that Fiverr was really the stock for me over the long run but these numbers were very strong. The Covid-bump looks like it is sustainable as growth is actually speeding up.


DOCU (Docusign) - This is a bit of an annoying stock to own. It's lost to the market over the last 12 months but its numbers keep getting better and better. Maybe the price action was a combination of being over-valued and simply forgotten. Maybe it's just not considered a premium brand? Hopefully things continue to improve on 6/3 when they report. If they do, I'll likely keep holding until CLM starts to move the needle later this year.

DocuSign agreed to acquire the IP rights and hire the team of smart agreement planner Clause for undisclosed terms. The companies had an existing partnership and Clause's products already integrate with DocuSign's eSignature solution. DocuSign is working on "deeper connections" between the product portfolios of each company. "As we have evolved the DocuSign Agreement Cloud platform over the past few years, we have paid particular attention to how agreements are evolving from static digital documents—simple “pictures of paper”—into living documents which include functionality that adds value throughout the agreement process," says DocuSign CTO Kamal Hathi in a blog post discussing the deal. He later continued, "It is a compelling and exciting frontier of technology, and it’s an important enabler of making our Agreement Cloud smart. It’s against that backdrop that DocuSign has entered into a definitive agreement to acquire the IP rights and hire the team from one of the industry’s smart agreement pioneers, Clause."


ZI (Zoom Info) - This is bit of a weird stock that doesn't seem to get a lot of press. The numbers for Q1 were very positive, however. I can't see it ever becoming a large position for me but I can't argue with the numbers and incredible Free Cash Flow.

Revenue of $153.3 million, an increase of 50% year-over-year.
Operating income of $28.0 million and Adjusted Operating Income of $66.1 million.
GAAP operating income margin of 18% and Adjusted Operating Income Margin of 43%.
Cash flow from operations of $93.0 million and Unlevered Free Cash Flow of $97.5 million.

-The ZoomInfo platform has been named a Leader by Forrester Research in The Forrester Wave™: B2B Marketing Data Providers, Q2 2021.

-Significantly expanded the integration points between Engage and the ZoomInfo platform, enhancing the ability to search and import contacts from ZoomInfo and Salesforce.com into Engage for improved efficiency, and configuring target market personas to receive recommended contacts to target.

-Earned the TrustRadius top-rated award for sales intelligence software for the fourth consecutive year.

-Attained 2021 TrustArc GDPR and CCPA Practices Validations, confirming ZoomInfo’s status as a privacy-forward organization.

ZoomInfo might sound like some shady, cold calling company but it has an impressive list of customers and partners such as Zoom, Docusign, and Amazon. B2B sales has a need and ZI knows how to fill it. This, along with it's list of industry awards make it sound like a solid company. I bought it for the ridiculous Free cash flow and solid growth. As Saul pointed out, Operating Cash flow was 61% of revenue and adjusted Free Cash Flow was 63% of revenue.


SNOW (Snowflake) - This is a much talked about stock on the board. The valuation scares the crap out of me, but I starting picking up shares at $195/share earlier this month. I figured it had fallen so much, it couldn't go much lower. I picked up a few more shares at $200 on 5/11. It turned out to be a solid decision so far. It is clearly a dominant company and the earnings report was outstanding with revenue up 110% YoY and net revenue retention at 168%. I'll keep it smallish to mid-sized and see how it goes.


FUBO (FuboTV) - Pick out any metric you want and fuboTV kicked butt this quarter.

-Q1 revenue was up 135%, subscription revenue was up 131%

-FY revenue guidance was raised and is expected to come in at 95% growth YoY

-Subscriber growth was up 105%

-Subscriber growth guidance was raised by 10% from 765,000 to 840,000 for 2021

-Q1 advertising revenue was up 206%

-ARPU per month was up 57%

-FuboTV is making $85 in ARPU per year vs Roku at around $35 ARPU per year (TTM)


Improving cost structure & a solid balance sheet

-Contribution margin was up 5%

-Operating cash flow improved $20 million qoq

-Operating expenses for the quarter were up 80% vs. 135% in revenue increases

-$465 million in cash and low debt to equity ratio


FUBO is a risky stock at this point and I will keep my position small. Does it have the best channel lineup for sports? No, it doesn't have turner sports or carry a lot of NFL games. Can it fix that if it continues to scale. Yes, I think so. Is the sports betting addition risky? Yes. I'll continue to hold as long as the top line metrics look strong, especially revenue % growth, subscriber growth, and ARPU. I did enjoy Beth Kindig's recent bullish article. https://seekingalpha.com/article/4432025-fubotv-why-i-like-t... If you look at the last 10 articles on seeking alpha, 9 are bullish or very bullish and one is neutral.

While Hulu and Netflix slowed down and reduced subscriber guidance, FuboTV is just getting going with a slew of major sporting events this summer. Cord cutters want live sports and this highly valued demographic (Males aged 18-34, Males aged 18-49, Males aged 25-54, Persons aged 18-34, and Persons aged 18-49) has advertisers salivating. The revenue acceleration is extremely impressive considering the company grew 83% last year in the midst of Covid.



LMND (Lemonade) - Another speculative play that I will keep small. It reported larger than expected losses due to claims related to the Texas freeze (Uri) but I think the key metrics look pretty good. The investment thesis is intact, I'm very excited about them adding car insurance.

-In Force Premium-
IFP, defined as the aggregate annualized premium for customers as of the
period end date, increased by 89% to $251.7 million as compared to the first
quarter of 2020, primarily due to a 50% increase in the number of customers
as well as a 25% increase in premium per customer.

-Customers-
Customer count increased by 50% to 1,096,618 as compared to the first
quarter of 2020.

-Premium per Customer-
Premium per customer, defined as in force premium divided by customers,
was $229 at the end of the first quarter, up 25% from the first quarter of
2020. This is primarily due to the continued shift of our business mix toward
products with higher average policy values, an increasing prevalence of
multiple policies per customer, and growth in the overall average policy
value.

-Gross Earned Premium-
First quarter gross earned premium of $56.2 million increased by $25.7
million or 84% as compared to the first quarter of 2020, primarily due to the
increase of in force premium earned during the quarter.

-Revenue-
First quarter total revenue was $23.5 million. Note that our ‘proportional
reinsurance’ agreements went into effect at the beginning of the third quarter of
2020, increasing the proportion of premium that is ceded to 75%. This
meaningfully improves the capital efficiency of our business, but can create
difficulty in making year-on-year comparisons of revenue.

-Gross Profit-
First quarter gross profit of $1.9 million decreased by $2.7 million or 59% as
compared to the first quarter of 2020, primarily due to the impact of Uri,
which resulted in $6.5 million of net incurred losses during the current
period.




Previous Posts

https://boards.fool.com/foolishjeff-january-portfolio-update.........

https://boards.fool.com/foolishjeff-portfolio-at-the-end-of-......

No update in March (I had the COVID)

https://boards.fool.com/foolishjeff-april-portfolio-update-3...

-FoolishJeff
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No. of Recommendations: 4
Nice report Jeff and great work pulling out the salient points of recent earnings reports.

Agree with your take on all the results for all the companies listed - most of which I own, a few that I wish I owned (Fubo TV and Roku), except perhaps 2 takes that landed me on the opposing side of the trade.

The Trade Desk - I actually liked the results (although not necessarily the guidance), it's a complicated story as you say but the like for like numbers taking out the 2019 election impact were still strong with 43%+ growth and a massive profit making churn out to the bottom line producing an almost acceptable p/e ratio - which is pretty much unheard of amongst our portfolio.

Lemonade - I really didn't like the results and when Upstart came along it gave me a faster growing better business model to invest in and I exited my entire holding. Possibly a mistake but time will tell.

Ant
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No. of Recommendations: 2
Hi Ant,

I appreciate the thoughts.

TTD is a great company and will continue to do well long-term. However, it didn't grow fast enough for me considering how the overall ad market is coming back and the CTV tailwinds. I know Q1 is always seasonably slow but to see it go from 48% to 37% (42% if you exclude political ads) wasn't that great. Guidance was a bit disappointing as well IMO. Meanwhile, Roku is kicking major butt and other growth stories like Upstart, Fiverr, etc look more attractive to me. TTD didn't really stumble, they had a good quarter. But in my humble opinion, in the context of my other stocks (and my watchlist) it lost out. Time will tell if it was a good decision.

Lemonade - I'm taking more of a long-term view on this one. I really think car insurance, which I believe is the largest lending market in the world (3X even mortgages) is where Lemonade can really disrupt big-time and that's what I'm waiting for as long as the core kpi's hold up.
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