EVENT DETAILS:
- Date & Time: Monday, 12/3 @ 2:00PM ET
- Dial-In & Video Link: To be provided in a follow-up invite
- Add Call Details to Outlook Calendar: CLICK HERE
Adding CLDR to Best Ideas LONG:
This was one of the toughest deep dives we have done in the last two years. The intense argot of the data management sub-segment, the continuum of change, and the merger of discrete entities made it a tough riddle to unravel; is the CLDR/HDP merger a chance to be Short a technology that is past its prime and ready for the dustbin or a chance to get Long a leading participant in the new, new thing at an extreme discount?
CLDR/HDP will have an increasingly difficult time in capturing new customers and keeping existing customers over a multi-year horizon. For one, the easy button of S3 will appeal to most companies and obviate the deep technical work the company has done to make the plumbing work. For the other, a short term go-to-market opportunity is bullish but it exists in the shadow of a much larger incumbent who can circumcise the opportunity.
The stocks are down to near ~10x combined EV/FCF CY20 (~$9), with positive short term revenue momentum for both companies, making it an unhealthy Short at the current price. We are putting CLDR on the LONG side with ~50+% upside thanks to positive inflections in growth for CLDR, pivot to positive cash flows for both, valuation, and the chance for CLDR to upsell unique products across the existing two companies' base of business. We think the latter will dominate the ~6-9 month story line on the stock. We think the long term risks remain but we see better math on the Long side today.
THESE ARE THE KEY TOPICS WE PLAN TO REVIEW WITH YOU ON THE CALL:
- One of these stocks is a Short, the other a Long (and maybe not the ones you thought), sorting it through is critical to getting this right.
- We will take you through the Technology Soup with the aim of showing where the demand creation puddles are, and perhaps where you don’t want to be so much today.
- Competitive analysis: in the medium term, what happens to the cloud data warehouse market when – at some point – AWS Redshift is likely to offer a re-architected product similar to Snowflake and maybe for a steep discount…
- We do our usual sleuthing on vague KPI to match them and model them and translate them into dollars of new customer revenue versus existing and likely fall-down holes in the business model, but also obviously upside.
- Plus: employee retention metrics x2, key customers who have abandoned the platform, integrated model, AND, a first for us, all customers who participate on the call will get access to our ~100 pages of (digital) notes ordered, tagged and highlighted to help you see the key string of ideas and sources that shape our deep dive on CLDR/HDP.
The combination of heavy tech jargon as well as the merger of two supposedly similar but maybe-not-so-much companies meant this one took us longer (and admittedly had less joy) than most of our other efforts. But the process, as always, is rewarding, and we’re excited to share it all with you next Monday 12/3 at 2PM.
(*Nepholopsia either means ‘seeing clouds’ or 'being enveloped by clouds', per HERE.)
Please call or e-mail with any questions.
Ami Joseph
Managing Director
Yosef Vaitsblit
Analyst