Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Equity Bottom-Up

<ul>
<li>Splunk shares outperformed in 2023 and rose ~69% as total ARR exceeded $4B, operating loss narrowed, and FCF margin improved. The company executed well to drive long-term durable growth.</li>
<li>Over the past 2 years, Splunk transformed itself into a cloud company. In 2022, WSJ reported that Cisco made a $20B+ takeover offer. However, no deal was on the table. </li>
<li>Following M&amp;A rumors, the company’s cloud transition, and strong fundamentals, Cisco offered a $157 per share to acquire Splunk in a $28B mega all-cash deal on September 21, 2023. </li>
</ul>


Splunk shares outperformed in 2023 and rose ~69% as total ARR exceeded $4B, operating loss narrowed, and FCF margin improved. The company executed well to drive long-term durable growth.
Over the past 2 years, Splunk transformed itself into a cloud company. In 2022, WSJ reported that Cisco made a $20B+ takeover offer. However, no deal was on the table. 
Following M&amp;A rumors, the company’s cloud transition, and strong fundamentals, Cisco offered a $157 per share to acquire Splunk in a $28B mega all-cash deal on September 21, 2023. 


Splunk and $28B Mega Deal: Will Cisco Overpay For San Francisco-Based Software Company?

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

<ul><li>Elastic NV delivered an all-around beat in the most recent quarterly result.</li><li>The company achieved a milestone with annual contract values exceeding $100,000, demonstrating Elastic's rising popularity as the preferred data analytics platform for real-time search use cases.</li><li>The second trend involved customers consolidating their operations onto the Elastic platform for multiple use cases, benefiting from Elastic's core strengths and unmatched value proposition in search, log analytics, and security analytics.</li></ul>

Elastic NV delivered an all-around beat in the most recent quarterly result.The company achieved a milestone with annual contract values exceeding $100,000, demonstrating Elastic's rising popularity as the preferred data analytics platform for real-time search use cases.The second trend involved customers consolidating their operations onto the Elastic platform for multiple use cases, benefiting from Elastic's core strengths and unmatched value proposition in search, log analytics, and security analytics.

Elastic N.V.: Riding the AI Wave - A Look at Their Market Dominance - Major Drivers

<ul>
<li>
<a href="https://www.smartkarma.com/entities/elastic-nv" target="_blank" data-smartkarma-citation="entities:27526:1" rel="noopener">Elastic NV (ESTC US)</a> delivered a high quality beat and raise and reported a modest upside to revenue and profitability. The start of the fiscal year looked strong.</li>
<li>The leading provider of search engine for enterprises and SMBs guided FY24 ahead of consensus estimates. I reiterate our Overweight rating on ESTC.</li>
<li>The 1Q print was outstanding, with +17% y/y revenue growth, a record non-GAAP Op Margin of ~10% and FCF margin of ~13%.</li>
</ul>



Elastic NV (ESTC US) delivered a high quality beat and raise and reported a modest upside to revenue and profitability. The start of the fiscal year looked strong.
The leading provider of search engine for enterprises and SMBs guided FY24 ahead of consensus estimates. I reiterate our Overweight rating on ESTC.
The 1Q print was outstanding, with +17% y/y revenue growth, a record non-GAAP Op Margin of ~10% and FCF margin of ~13%.


Elastic: Blowout 1QFY24 Earnings. Shares Popped ~20% On Heavy Volume

<ul>
<li>Following takeover rumors surrounding <a href="https://www.smartkarma.com/entities/new-relic-inc" target="_blank" data-smartkarma-citation="entities:16283:1" rel="noopener">New Relic Inc (NEWR US)</a> , private equity firms finally agreed to acquire a US-based low-cost observability provider for ~$6.5B.</li>
<li>American private equity firm Francisco Partners and global alternative asset manager TPG offered $87 per <a href="https://www.smartkarma.com/entities/new-relic-inc" target="_blank" data-smartkarma-citation="entities:16283:1" rel="noopener">New Relic Inc (NEWR US)</a> share in an all-cash transaction.</li>
<li>The <a href="https://www.smartkarma.com/entities/new-relic-inc" target="_blank" data-smartkarma-citation="entities:16283:1" rel="noopener">New Relic Inc (NEWR US)</a> Board of Directors approved the buyout deal, and is expected to close in late 2023 or early 2024.</li>
</ul>


Following takeover rumors surrounding New Relic Inc (NEWR US) , private equity firms finally agreed to acquire a US-based low-cost observability provider for ~$6.5B.
American private equity firm Francisco Partners and global alternative asset manager TPG offered $87 per New Relic Inc (NEWR US) share in an all-cash transaction.
The New Relic Inc (NEWR US) Board of Directors approved the buyout deal, and is expected to close in late 2023 or early 2024.


New Relic Takeover Valuation Analysis: The Buyout Price Looks Reasonable

<ul><li>Elastic managed to exceed analyst expectations in terms of revenue as well as earnings.</li><li>In Q4, total revenue increased by 19% year over year in constant currency, while Elastic Cloud increased by 30% year over year in constant currency.</li><li>The subscription revenue was $256 million, increasing 16% year over year or 18% in constant currency, and made up 91% of the overall revenue.</li></ul>

Elastic managed to exceed analyst expectations in terms of revenue as well as earnings.In Q4, total revenue increased by 19% year over year in constant currency, while Elastic Cloud increased by 30% year over year in constant currency.The subscription revenue was $256 million, increasing 16% year over year or 18% in constant currency, and made up 91% of the overall revenue.

Elastic N.V.: Does The Impressive Cloud Growth Make This A ‘Buy’? – Key Drivers

United States

Elastic N.V. provides information technology and data analysis services. The Company offers monitoring, security analysis, enterprise search, cloud computing, and open source application performance monitoring solutions. Elastic serves customers in the United States.

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Elastic NV (ESTC US)

Splunk and $28B Mega Deal: Will Cisco Overpay For San Francisco-Based Software Company?

Despite a transaction price of $157 per share offered by Cisco to acquire Splunk in a $28B mega deal, investors should take profits now.

Andrei Zakharov

Elastic N.V.: Riding the AI Wave - A Look at Their Market Dominance - Major Drivers

Elastic NV delivered an all-around beat in the most recent quarterly result. The company achieved a milestone with annual contract values...

Baptista Research

Elastic: Blowout 1QFY24 Earnings. Shares Popped ~20% On Heavy Volume

Elastic beats expectations with strong Q1FY24 results, guiding FY24 ahead of consensus estimates. I remain bullish on the stock and see further...

Andrei Zakharov

New Relic Takeover Valuation Analysis: The Buyout Price Looks Reasonable

Private equity firms Francisco Partners and TPG have agreed to acquire New Relic for ~$6.5B, with the deal expected to close in late 2023 or early...

Andrei Zakharov

Elastic N.V.: Does The Impressive Cloud Growth Make This A ‘Buy’? – Key Drivers

Elastic managed to exceed analyst expectations in terms of revenue as well as earnings. In Q4, total revenue increased by 19% year over year in...

Baptista Research

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Splunk and $28B Mega Deal: Will Cisco Overpay For San Francisco-Based Software Company?

Despite a transaction price of $157 per share offered by Cisco to acquire Splunk in a $28B mega deal, investors should take profits now.

Andrei Zakharov

Elastic N.V.: Riding the AI Wave - A Look at Their Market Dominance - Major Drivers

Elastic NV delivered an all-around beat in the most recent quarterly result. The company achieved a milestone with annual contract values...

Baptista Research

Elastic: Blowout 1QFY24 Earnings. Shares Popped ~20% On Heavy Volume

​Elastic beats expectations with strong Q1FY24 results, guiding FY24 ahead of consensus estimates. I remain bullish on the stock and see further...

Andrei Zakharov

New Relic Takeover Valuation Analysis: The Buyout Price Looks Reasonable

​Private equity firms Francisco Partners and TPG have agreed to acquire New Relic for ~$6.5B, with the deal expected to close in late 2023 or early...

Andrei Zakharov

Elastic N.V.: Does The Impressive Cloud Growth Make This A ‘Buy’? – Key Drivers

Elastic managed to exceed analyst expectations in terms of revenue as well as earnings. In Q4, total revenue increased by 19% year over year in...

Baptista Research

Elastic beats expectations with strong Q1FY24 results, guiding FY24 ahead of consensus estimates. I remain bullish on the stock and see further...

Private equity firms Francisco Partners and TPG have agreed to acquire New Relic for ~$6.5B, with the deal expected to close in late 2023 or early...