TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

<p>When we first looked at Snowflake at the time of the IPO, we saw an incredible business with great management and unbelievable business model. But the stock quickly went well beyond our valuation comfort levels, and last quarter we said we couldn’t justify owning it. We reserve the right to change our minds. The number that stood out this quarter was 168% - Snowflake’s net revenue retention in the quarter. We still think Snowflake is expensive – and you can arguably get a similar growth rate and excellent business model at half the valuation with Crowdstrike…but like many compounders (Adobe, ServiceNow), sometimes you never get the entry point you want. We think the drawdown in growth presents that opportunity.</p>
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<p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p>
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When we first looked at Snowflake at the time of the IPO, we saw an incredible business with great management and unbelievable business model. But the stock quickly went well beyond our valuation comfort levels, and last quarter we said we couldn’t justify owning it. We reserve the right to change our minds. The number that stood out this quarter was 168% - Snowflake’s net revenue retention in the quarter. We still think Snowflake is expensive – and you can arguably get a similar growth rate and excellent business model at half the valuation with Crowdstrike…but like many compounders (Adobe, ServiceNow), sometimes you never get the entry point you want. We think the drawdown in growth presents that opportunity.

Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.


Snowflake 4Q21 Earnings: Their Revenues ARE Worth More Than Yours

<p>As a reminder, we advocated buying Coupa around the bottom back in early April as it was a good entry point for a permanently expensive Adobe/ServiceNow like compounder (15x back then). We decided to step to the sidelines last quarter as the company didn’t offer much new disclosures around Pay and an oddly conservative guidance for this quarter….which not so shockingly they blew out. This quarters’ guidance for 4Q21 is equally conservative, and if you strip out its Llamasoft acquisition, you get the same sandbagged guidance as last quarter.</p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

As a reminder, we advocated buying Coupa around the bottom back in early April as it was a good entry point for a permanently expensive Adobe/ServiceNow like compounder (15x back then). We decided to step to the sidelines last quarter as the company didn’t offer much new disclosures around Pay and an oddly conservative guidance for this quarter….which not so shockingly they blew out. This quarters’ guidance for 4Q21 is equally conservative, and if you strip out its Llamasoft acquisition, you get the same sandbagged guidance as last quarter.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

Coupa 3Q21 Earnings: The Boy Who Cried Wolf

<div><p>When we first began writing about Crowdstrike last summer, we saw a company with a beautiful business model that could generate very high incremental margins over time because of its cloud based architecture...collect data once, monetize many times. This quarter was incredibly strong by any measure, but what really stood out in our work is Crowdstrike's best in class combination of revenue growth and profitability.</p></div><div><div><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div></div></div>

When we first began writing about Crowdstrike last summer, we saw a company with a beautiful business model that could generate very high incremental margins over time because of its cloud based architecture...collect data once, monetize many times. This quarter was incredibly strong by any measure, but what really stood out in our work is Crowdstrike's best in class combination of revenue growth and profitability.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

Crowdstrike 3Q21: Like Shooting Fish in a Barrel

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<p>As we head into earnings next week, we note attractive setups for Snap and Microsoft from data that came out this week, along with a very bullish presentation at Crowdstrike's user conference.</p>
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<p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p>
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As we head into earnings next week, we note attractive setups for Snap and Microsoft from data that came out this week, along with a very bullish presentation at Crowdstrike's user conference.




Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.




TMT Weekly:  3 Things that Stood Out The Week of 10/16/​​​​2020

Equity Capital Markets

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<p>We've looked into many IPOs over the last 20 years, and think Snowflake is one of the better ones we've come across. Its architectural competitive advantages vs. legacy data warehouse providers are simply insurmountable, and while the cloud platforms loom as eventual rivals, we think this management team knows how to carve out a defensible place amongst the cloud titans.</p>
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<div class="content-highlight">
<p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p>
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We've looked into many IPOs over the last 20 years, and think Snowflake is one of the better ones we've come across. Its architectural competitive advantages vs. legacy data warehouse providers are simply insurmountable, and while the cloud platforms loom as eventual rivals, we think this management team knows how to carve out a defensible place amongst the cloud titans.




Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.




United States

CrowdStrike Holdings, Inc. provides cybersecurity products and services to stop breaches. The Company offers cloud-delivered protection across endpoints, cloud workloads, identity and data, and leading threat intelligence, managed security services, IT operations management, threat hunting, Zero Trust identity protection, and log management. CrowdStrike serves customers worldwide.

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Crowdstrike Holdings (CRWD US)

Snowflake 4Q21 Earnings: Their Revenues ARE Worth More Than Yours

Snowflake had an incredible quarter and we think its a reasonable entry point for the highest valuation software stock in the market.

Aaron Gabin

Coupa 3Q21 Earnings: The Boy Who Cried Wolf

A great quarter vs. a overly conservative guide...and another overly conservative guide. We are long biased but at 40x forward sales for 11%...

Aaron Gabin

Crowdstrike 3Q21: Like Shooting Fish in a Barrel

Crowdstrike delivered the most impressive performance of any software company during this reporting season so far. Unlike its high valuation peers,...

Aaron Gabin

TMT Weekly: 3 Things that Stood Out The Week of 10/16/2020

Datapoints supportive of upside to earnings for Microsoft and Snapchat this past week, plus an ever expanding TAM justifies Crowdstrike's valuation.

Aaron Gabin

Snowflake: Making It Rain

We've looked into many IPOs over the last 20 years, and think Our investment philosophy attracts us to investing behind THE major secular trend in...

Aaron Gabin

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52-week Range

Market Cap (USDm)

P/E

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Snowflake 4Q21 Earnings: Their Revenues ARE Worth More Than Yours

Snowflake had an incredible quarter and we think its a reasonable entry point for the highest valuation software stock in the market.

Aaron Gabin

Coupa 3Q21 Earnings: The Boy Who Cried Wolf

A great quarter vs. a overly conservative guide...and another overly conservative guide. We are long biased but at 40x forward sales for 11%...

Aaron Gabin

Crowdstrike 3Q21: Like Shooting Fish in a Barrel

Crowdstrike delivered the most impressive performance of any software company during this reporting season so far. Unlike its high valuation peers,...

Aaron Gabin

TMT Weekly: 3 Things that Stood Out The Week of 10/16/​​​​2020

Datapoints supportive of upside to earnings for Microsoft and Snapchat this past week, plus an ever expanding TAM justifies Crowdstrike's valuation.

Aaron Gabin

Snowflake: Making It Rain

We've looked into many IPOs over the last 20 years, and think Our investment philosophy attracts us to investing behind THE major secular trend in...

Aaron Gabin

TMT Weekly: 3 Things that Stood Out The Week of 10/16/2020