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

<ul>
<li>ServiceNow acquired Era Software this week to extend its presence in the observability and log management space.</li>
<li>The deal is most threatening to DT/ESTC (we advocate as longs) and SPLK (short) because of ServiceNow's ability to bundle functionality for larger deals.</li>
<li>That said...the observability space remains one of the hottest in digital transformations, and the deal is on net, more validating than threatening to DT/ESTC.</li>
</ul>


ServiceNow acquired Era Software this week to extend its presence in the observability and log management space.
The deal is most threatening to DT/ESTC (we advocate as longs) and SPLK (short) because of ServiceNow's ability to bundle functionality for larger deals.
That said...the observability space remains one of the hottest in digital transformations, and the deal is on net, more validating than threatening to DT/ESTC.


Observability: ServiceNow Acquisition Threatens Dynatrace and Elastic

<ul>
<li>Crowdstrike continues to gobble up share, printing another strong beat and raise, with ARR now at $2B, the second fastest software company to hit that mark.</li>
<li>EBIT margins up 800bps YoY, TTM FCF Margins 30%...profitable growth at Scale.</li>
<li>13x forward P/S for a unique software asset with long runways for 40%+ growth and multi-module driven margin expansion with a 15% pullback in the past week despite earnings.</li>
</ul>


Crowdstrike continues to gobble up share, printing another strong beat and raise, with ARR now at $2B, the second fastest software company to hit that mark.
EBIT margins up 800bps YoY, TTM FCF Margins 30%...profitable growth at Scale.
13x forward P/S for a unique software asset with long runways for 40%+ growth and multi-module driven margin expansion with a 15% pullback in the past week despite earnings.


Crowdstrike FY2Q23: FY2Q23: Not Just Endpoint, Identity and SIEM Accelerating Too

<ul>
<li>Like PANW and SNOW, Elastic continues to power through macro headwinds seen by many other software companies.</li>
<li>Elastic has a Crowdstrike like dynamic, where it is capturing new workloads from incumbents, in the cloud. In this case, Symantec's share donator role is being played by Splunk.</li>
<li>In this tough volatile environment, we like an observability pair trade of Long ESTC / Short SPLK.</li>
</ul>


Like PANW and SNOW, Elastic continues to power through macro headwinds seen by many other software companies.
Elastic has a Crowdstrike like dynamic, where it is capturing new workloads from incumbents, in the cloud. In this case, Symantec's share donator role is being played by Splunk.
In this tough volatile environment, we like an observability pair trade of Long ESTC / Short SPLK.


Observability Pair Trade: Long Elastic / Short Splunk

Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sumo-logic-inc" target="_blank" data-smartkarma-citation="entities:29265:1" rel="noopener">Sumo Logic Inc (SUMO US)</a>  surprised investors and reported solid 2QFY23 results pushing shares up over 10% during a regular trading session on Friday. </li>
<li>Provider of cloud-based machine data analytics reported revenue/non-GAAP EPS of $74.1M/($0.10), above consensus, and improved FY23 outlook.  </li>
<li>Management focused on delivering more efficient growth and reduced hiring plans. Customer metrics remained strong, with a dollar-based net retention rate of 115%.</li>
</ul>



Sumo Logic Inc (SUMO US)  surprised investors and reported solid 2QFY23 results pushing shares up over 10% during a regular trading session on Friday. 
Provider of cloud-based machine data analytics reported revenue/non-GAAP EPS of $74.1M/($0.10), above consensus, and improved FY23 outlook.  
Management focused on delivering more efficient growth and reduced hiring plans. Customer metrics remained strong, with a dollar-based net retention rate of 115%.


Sumo Logic. 2QFY23 Wrap: Rising From The Ashes?

<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>  reported stronger than expected 4QFY22 results, and management provided guidance for FY25 total revenue of $2 billion. </li>
<li>The net expansion rate was 140%+ for Elastic Cloud in 4QFY22, and the company expects cloud revenue to exceed 50% of total revenue by 4QFY24.  </li>
<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> appears well-positioned to outperform across observability and security market segments. Management was confident in achieving growth objectives in FY23 and beyond.</li>
</ul>



Elastic NV (ESTC US)  reported stronger than expected 4QFY22 results, and management provided guidance for FY25 total revenue of $2 billion. 
The net expansion rate was 140%+ for Elastic Cloud in 4QFY22, and the company expects cloud revenue to exceed 50% of total revenue by 4QFY24.  

Elastic NV (ESTC US) appears well-positioned to outperform across observability and security market segments. Management was confident in achieving growth objectives in FY23 and beyond.


Elastic: Beat and Raise. $2B in Total Revenue in FY25

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)

Observability: ServiceNow Acquisition Threatens Dynatrace and Elastic

The log management observability TAM has shown itself to be largely recession resistant based on the last two quarter's results for DT/DDOG...

Aaron Gabin

Crowdstrike FY2Q23: FY2Q23: Not Just Endpoint, Identity and SIEM Accelerating Too

Crowdstrike’s stock has pulled back in the past week or so by 15%, despite another superb quarter. 13x forward forward P/S sounds reasonable given...

Aaron Gabin

Observability Pair Trade: Long Elastic / Short Splunk

Elastic is another rare software company that has powered through tough macro this quarter. In this tough volatile environment, we like an...

Aaron Gabin

Sumo Logic. 2QFY23 Wrap: Rising From The Ashes?

Sumo Logic could report a solid 2QFY23 results despite macro uncertainty and turbulent market conditions. Revenue growth accelerated to 26% y/y and...

Andrei Zakharov

Elastic: Beat and Raise. $2B in Total Revenue in FY25

Elastic surprised investors and provided top-line guidance for FY25 total revenue of $2B. We maintain a bullish view on Elastic and see ESTC’s...

Andrei Zakharov

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