More from @investing_city

Ryan Reeves

@investing_city

4 Jun

SentinelOne looks like it's where CrowdStrike was 3 years ago.

The numbers are extremely similar. We'll see how SentinelOne scales from here. It's a tough act to follow as CrowdStrike has executed wonderfully.

• SentinelOne's (S) FY '21 TTM revenue was $113 million
• CrowdStrike's (CRWD) FY '18 TTM revenue was $118 million

So yep, pretty much exactly 3 years apart.

• S's gross margin for Q4 2021: 51%
• CRWD's gross margin for Q4 2018: 50%

• S's GAAP operating loss for 2021: -134%
• CRWD's GAAP operating loss for 2018: -111%

• S's FCF margin for 2021: -82%
• CRWD's FCF margin for 2018: -69%

Read 7 tweets

Ryan Reeves

@investing_city

20 May

1/6 Mini-Thread

Roblox may have the most optionality of any business I've looked at.

I realize that's quite a statement.

So why do I think that?

2/ Well, it's a platform for user-generated games. If you think about any UGC platform, once there is a critical mass, content can scale infinitely.

Nearly every day, 8 million developers are creating more and more experiences.

3/ Right now, Roblox looks like silly games of delivering pizza or being a DJ, or taking care of an animal.

But Roblox just provides the tools, and the developers will create things we haven't even dreamed of yet.

Read 6 tweets

Ryan Reeves

@investing_city

10 May

1/15

An interesting metric to track is EBIT conversion.

EBIT conversion = EBIT margins / gross margins

Here's why it's interesting and how you can use it to assess business quality...

[THREAD] ⬇️

2/ It's a rough way to filter through business quality.

Why?

1) Low gross margins don't give much room for high EBIT margins (which are a key driver for ROIC)
2) Low opex hints at some sort of moat

3/ For example, if a company does $10 billion in revenue but has 10% gross margins, that's $1 billion in gross profit.

But say the company brings in $300 million in EBIT.

That's a 3% EBIT margin or 30% EBIT conversion (300 mil/1 bil)

Read 15 tweets

Ryan Reeves

@investing_city

13 Apr

If you back out cost of revenue for Roblox, you get 75% gross margins.

But if you take out infrastructure, trust and safety (depreciated server costs), gross margins are more like 50%.

Then, if you count DevEx fees as part of COGS, "gross margins" are 13%.

Am I off here?

The interesting thing is that the S-1 says:

In the past 2 years, DevEx fees as a percentage of revenue were 22%.

This year, they shot up to 36% and the S-1 suggests that proportion should continue to increase.

Read 4 tweets

Ryan Reeves

@investing_city

12 Apr

What I was reading this morning...

- latest TTD partnership
- 2 blog posts on Bitcoin metrics
- Creator NFTs
- Cloudflare's innovation engine
- Shopify Tegus transcript
- SaaS transitions
- History of entrepreneurship
- Lessons from 2020

Sources below ⬇️

1/

The Trade Desk partnered with Publicis, one of the world’s biggest ad agencies. Epsilon, Publicis’ data platform, will now be interoperable with The Trade Desk’s Unified ID 2.0
thetradedesk.com/us/knowledge-c…