Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

Equity Bottom-Up

<ul>
<li>Darktrace is a cyber security and AI unicorn backed by leading VC firms. The company was founded in Cambridge, UK, in 2013 and crossed the $500M ARR mark in 2022.  </li>
<li>
<a href="https://www.smartkarma.com/entities/darktrace-plc" target="_blank" data-smartkarma-citation="entities:34466:1" rel="noopener">Darktrace (DARK LN)</a>  currently trades at ~4x EV/CY22E revenues, a steep discount relative to other US-based cybersecurity peers that trade at an average of ~9x EV/CY22E revenues.</li>
<li>The cyber defense company achieved GAAP Op Margin and FCF Margin break-even in FY21 and FY22, with an opportunity to deliver profitable stellar growth in the coming years.</li>
</ul>


Darktrace is a cyber security and AI unicorn backed by leading VC firms. The company was founded in Cambridge, UK, in 2013 and crossed the $500M ARR mark in 2022.  

Darktrace (DARK LN)  currently trades at ~4x EV/CY22E revenues, a steep discount relative to other US-based cybersecurity peers that trade at an average of ~9x EV/CY22E revenues.
The cyber defense company achieved GAAP Op Margin and FCF Margin break-even in FY21 and FY22, with an opportunity to deliver profitable stellar growth in the coming years.


Darktrace: Undervalued Cyber Defense Unicorn. A Steep Discount Is Unjustified

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.

<ul>
<li>First ever ARR miss, and big initial guide down on FY2024 ARR growth: low 30s vs. 37% into the Q. Pretty shocking given Crowdstrike's track record.</li>
<li>Macro Macro Macro - deal close times pushed out for SMBs and Enterprise customers reworking timing of deal starts to match opex budgets.</li>
<li>Stock is overly punished down 20% and trading at 9x forward sales for a platform consolidator with 30% FCF margins.</li>
</ul>


First ever ARR miss, and big initial guide down on FY2024 ARR growth: low 30s vs. 37% into the Q. Pretty shocking given Crowdstrike's track record.
Macro Macro Macro - deal close times pushed out for SMBs and Enterprise customers reworking timing of deal starts to match opex budgets.
Stock is overly punished down 20% and trading at 9x forward sales for a platform consolidator with 30% FCF margins.


FY3Q23: If It’s All Macro, Do You Buy the Dip?

<ul>
<li>61% revenue growth, 17% operating margins (up 720bps YoY) and 32% FCF margins. Best in class growth + profitability.</li>
<li>ECommerce engine opening up from 4 modules to 12 means higher velocity sales on the come.</li>
<li>VMWare's Carbon Black will become a major share donator due to Broadcom acquisition.</li>
</ul>


61% revenue growth, 17% operating margins (up 720bps YoY) and 32% FCF margins. Best in class growth + profitability.
ECommerce engine opening up from 4 modules to 12 means higher velocity sales on the come.
VMWare's Carbon Black will become a major share donator due to Broadcom acquisition.


Crowdstrike FY1Q23: Share Gains Will Lead to Share Gains

<ul>
<li>
<a href="https://www.smartkarma.com/entities/knowbe4-inc" target="_blank" data-smartkarma-citation="entities:35519:1" rel="noopener">KnowBe4 (KNBE US)</a>  is the world's largest security awareness training platform, teaching people how to recognize bad phishing, bad social engineering scenarios and report to management.</li>
<li>The most notable ransomware attacks began with social engineering, and social engineering has remained a top threat for the last five years, according to a report released by Verizon.</li>
<li>We like the company's cash generating SaaS model, strong balance sheet, and multi-product approach targeting SMBs and the enterprise market worldwide.</li>
</ul>



KnowBe4 (KNBE US)  is the world's largest security awareness training platform, teaching people how to recognize bad phishing, bad social engineering scenarios and report to management.
The most notable ransomware attacks began with social engineering, and social engineering has remained a top threat for the last five years, according to a report released by Verizon.
We like the company's cash generating SaaS model, strong balance sheet, and multi-product approach targeting SMBs and the enterprise market worldwide.


KnowBe4: Hidden Gem Growth Stock In the Cybersecurity Space

<ul>
<li>Crowdstrike printed another strong quarter, continues to beat and raise despite overblown competitive concerns.</li>
<li>Revenue growth (+64%), Margin expansion (+520bps) and FCF generation (32% FCF margins) shows best in class rule of 40 SaaS metric.</li>
<li>Humio continues to show great traction, achieved 6 month signup target in 6 weeks.</li>
</ul>


Crowdstrike printed another strong quarter, continues to beat and raise despite overblown competitive concerns.
Revenue growth (+64%), Margin expansion (+520bps) and FCF generation (32% FCF margins) shows best in class rule of 40 SaaS metric.
Humio continues to show great traction, achieved 6 month signup target in 6 weeks.


Crowdstrike FY3Q22: Platform, Not Endpoint

United States

SentinelOne, Inc. operates as a software company. The Company develops security platforms to protect organizations against advanced threats and nation state malware. SentinelOne serves customers worldwide.

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SentinelOne (S US)

Darktrace: Undervalued Cyber Defense Unicorn. A Steep Discount Is Unjustified

Our analysis suggests Darktrace shares look undervalued relative to peers, and we believe a steep discount is unjustified

Andrei Zakharov

FY3Q23: If It’s All Macro, Do You Buy the Dip?

Buy the dip in Crowdstrike. Still a top software asset with 30% FCF margins and share gains still to come, macro headwinds are now in the numbers....

Aaron Gabin

KnowBe4: Hidden Gem Growth Stock In the Cybersecurity Space

Valuations of cybersecurity stocks look attractive after the broader sell-off in tech shares, and our analysis suggests KnowBe4 shares are...

Andrei Zakharov

Crowdstrike FY3Q22: Platform, Not Endpoint

Another strong beat and raise despite overblown competitive concerns. Revenue growth (+64%), Margin expansion (+520bps) and FCF generation (32% FCF...

Aaron Gabin

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Darktrace: Undervalued Cyber Defense Unicorn. A Steep Discount Is Unjustified

Our analysis suggests Darktrace shares look undervalued relative to peers, and we believe a steep discount is unjustified

Andrei Zakharov

FY3Q23: If It’s All Macro, Do You Buy the Dip?

Buy the dip in Crowdstrike. Still a top software asset with 30% FCF margins and share gains still to come, macro headwinds are now in the numbers....

Aaron Gabin

Crowdstrike FY1Q23: Share Gains Will Lead to Share Gains

Another superb quarter for CRWD: 61% revenue growth, 17% operating margins (up 720bps YoY!) and 32% FCF margins. Rival Carbon Black's acquisition...

Aaron Gabin

KnowBe4: Hidden Gem Growth Stock In the Cybersecurity Space

Valuations of cybersecurity stocks look attractive after the broader sell-off in tech shares, and our analysis suggests KnowBe4 shares are...

Andrei Zakharov

Crowdstrike FY3Q22: Platform, Not Endpoint

Another strong beat and raise despite overblown competitive concerns. Revenue growth (+64%), Margin expansion (+520bps) and FCF generation (32% FCF...

Aaron Gabin