Earnings season is upon us! All of the companies in my portfolio will be releasing their first quarters earnings in the next month… 3 of them starting THIS week!
AYX 5/6
NET 5/7
TTD 5/7
DDOG 5/11
OKTA. 5/28
COUP 6/1
MDB. 6/3
SMAR. 6/3
CRWD 6/4
ZM 6/2
A few other established SaaS companies have already released earnings and suggested that the Covid-19 is actually adding tailwinds to the global adoption of their digital services and subscriptions. It has also been claimed by several cloud and digital companies that the virus has accelerated the adoption of cloud technology overall by up to 5 years! If this is true, then it may bode extremely well for the companies listed above. In the meantime, it will continue to be a very challenging economic environment for the foreseeable future (not to confuse the stock market with the overall economy) and Friday’s unemployment numbers will be dire, as will the continued death toll from this CoronaVirus. Even with phenomenal earnings growth, the companies in the portfolio may still struggle, SHORT-TERM. And indeed many of them will likely follow suit with other companies who are simply declining to give ANY forward-guidance in this uncertain time. Who can blame them. That said, there are less than a few dozen companies of this size (over $5B market cap) growing revenues greater than 50% quarter over quarter over quarter over quarter (you get the point), with little or no debt, ARR (annual recurring revenues), subscription contracts 1 to 3 years in advance, extremely strong Net Dollar based expansion rates above 120%, positive free cashflow, customer % growth in the triple digits, and, and, and…LONG-TERM, I am extremely happy and enthusiastic with the companies in this portfolio and they have rewarded us by being up over 28% YTD (yes, since Jan 1, 2020 amidst this downturn) and over 300% in the past three years. Except for TTD, which I have been reducing exposure to lately to add to other positions, I have been adding to most of the other companies opportunistically when the price dips too low.
How do I do it? Earnings releases typically occur immediately after the daily stock market close at 1pm PT. I google the company website and click on the investor relations tab for each company to see the date the earnings call is being held and to get the link to the earnings call. One can also click on the link directly to “read” the release from the company site and also sign up to get a notice whenever the company has a news release.
I STRONGLY encourage you to pick just one company above and listen to a call. Read the release. It is probably the single most important thing you can do for any company you own and will give you a huge advantage (yes, even over the analysts) in getting in or out of an investment quickly and before the public and understanding the financial and management health of a company. I know people who research for hours what TV or iPhone or computer to buy, or what house or neighborhood to move into, but they don’t do the most basic 45 minute review of their stock investment?? It takes me less than 30 minutes to read an earnings release and I never regret it…especially when it is my retirement on the line. I often buy or sell shares in a company the day following based on what I hear and always come away with a better understanding of why I’m invested in that company. Stay healthy and thrive.
I will leave you with a favorite quote from good ‘ol Walt for your deliberation:
“Either define the moment or the moment will define you. -Walt Whitman
Cheers!!
