Another quarter, another chance for Palo Alto $PANW to completely change up how it tracks customer counts within its Next-Gen Security segments.

This company cannot decide on what the hell to report for custs on Prisma SASE (Zero Trust), Prisma Cloud (CNAPP), and Cortex (XDR). This time in Q4, they morphed from "pure" SASE customers (Access + Cloudgenix) to now include PANOS SD-WAN (their other SD-WAN before Cloudgenix acquire) and "SaaS Security subs" (WTF that is).

So they last revised this KPI in Q1, and now revise it AGAIN in Q4. WTF!

Let's dig into $FSLY earnings a little more, beyond their new (to the company and the role) CEO.

Revenue +20.6%, flat QoQ, w/ a 0.5% beat.

Far cry from their "TikTok" high of +62% (pre SigSci), but better than the +14%, flat QoQ last yr (only +2.5% was organic).
/1 Margins have heavily eroded over last 6Qs.
* Adj Gross Margin 63.7% -> 50.4% !!
* Adj Op Margin -10.8% -> -26.2%

FCF Margin over last year went -29.7% -> -59.5% !!
/2

Fastly $FSLY hired a new CEO, ex Cisco EVP of Enterprise Networking & Cloud, starting in Sept.

investors.fastly.com/news/news-deta…

The lack of CEO experience worked out so well last time they decided to go for it again. Let's look at his background... He came out of their Meraki division, which Cisco acquired back in 2012 for on-prem Wifi & network appliances that are managed centrally via a cloud-based platform. It has expanded into SD-WAN appliances, connected IoT, and mobile device mgmt. ...

Today is Cloudflare's 11th birthday. $NET

I greatly enjoyed this founders' letter that kicked off Birthday Week yesterday: blog.cloudflare.com/cloudflares-an… ... and hints of a few small things coming this week

"... driving down costs of core cloud services, pushing the boundary of our network to our customers' doorsteps, and investing in new technologies that may someday disrupt the web as we know it today"

An investment strategy: buy and forget
Another: buy and shift (from low to strengthening convictions)
Another: actively trade a well understood core
Another: actively trade market / momo
Another: bungle around just jumping on tips

(I am “buy and shift”) A concentration strategy: widely diverse port
Another: concentrate to highest of diverse convictions
Another: heavily concentrated into conviction (under 12)

(I am “heavily concentrated”)

I am not impressed with $FSLY's performance or mgmt ... yet again.

Rev +40%, decelerating -4pp YoY. That isn't the issue; they are usage based and bounce around.

But it's their first Q of SigSci -- adj out the $6M (an analyst had to wiggle out in Q&A), and they grew 30%. Sorry, but for my rules, 30% rev growth is NOT hypergrowth.

Looking forward, guidance for Q1 was 32-36% YoY growth, but again adj out SigSci's expected 8M, and it's really 19-24% YoY. Terrible! Clearly no Compute@Edge contribution either.

Resolution: Greatly improve the security and privacy of the network traffic from your home network and device, with a few simple steps.

I follow @Cloudflare for their enterprise solutions, but they help us consumers out too. And a lot of it is free.

A thread... /1 The content of your web traffic is encrypted (HTTPS) - but your ISP can still see what domains you are calling. Help protect your web requests by using 1.1.1.1 (fast & secure DNS resolver), and 1.1.1.1 for Families (block known malware sites, or malware + adult content). /2

Lots of folks brooding about $FSLY and asking my take over past week. My take is... “I want more info”. I am not one to rush decisions, and want to see what earnings shows on Wed before deciding. /1 Basically Fastly proved it is mortal. Rev will be at the 42% they just pegged it at (the Q in question already ended) which is right back in the high end of the range it was bouncing around at pre-pandemic. /2

Today’s new One feature is a bigger deal than I thought it’d be from yesterday’s teaser. Bold moves that are understated from the headline. Cloudflare just took a big step into ‘s lane. /1

https://twitter.com/Cloudflare/status/1316002006499241997

They are angling Access to be an SSO, not only accessing internal apps via Zero Trust (like ZPA), but also for all the other SaaS apps your enterprise uses. (Which up til now was solely the purview of the Gateway secure web gateway side.) /2

The market sure in love with $NET today in realizing they are a $ZS competitor. Some of us have known this was coming since... uh (checks notes).... February.

Let’s refresh on a few past tidbits.... /1 “Sound familiar? It turns out Cloudflare is now a direct competitor to Zscaler. ... This new product line, Cloudflare for Teams, is a carbon copy of Zscaler.” - me back in Feb /2

hhhypergrowth.com/a-cloudflare-d…

The Friday scoop from Forbes played out. $TWLO acquired Segment, a “customer data platform” startup. This adds integration tools, ingest pipelines, customer vision, and analytics into Twilio stack. /1

https://twitter.com/alexrkonrad/status/1315620190328164353

Lawson really clarifies what they went after: “Communications was just the entry point for the real opportunity, which has been really providing a comprehensive platform for customer engagement....”. /2

A quick take on Palantir $PLTR - not interested in the least. What ultimately rules it out for me is how few customers they have, and hard it is to implement as a new customer. Yes, recent growth has spiked to 42% but 2019 ARPU growth was 8%. It's all about landing new custs. It can take $1M+ just to implement! Palantir more resembles a services org for analytics & data enrichment (from intel sources), than an enterprise SaaS platform. So think of Palantir more as IBM or SAP (services over their analytics platform), not Databricks or Alteryx.

enhances Workers w stateful objects. This opens a huge new use cases for app dev. blog.cloudflare.com/introducing-wo…. Blog post from @KentonVarda does a good job in showing its potential in laymen’s terms. This is pretty exciting from a developer stand point. /1 This is way more impactful than the “edge db” I was guessing (a stateful data store). This is stateful OBJECTS — instead of having a shared db across Worker instances, the Worker instance itself is what is shared. /2

Someone has commercials allll over NFL recaps today on Youtube. Literally one every commercial break. Go $CRWD

Wow, 10k+ followers. Thank you to all the new folks joining along.

A bit about me - I'm a technologist & investor who likes to dive into the tech behind today’s hypergrowth companies, and what drives the platforms they are creating. All through the lens of an investor. I really like the companies that are executing incredibly well, customers are flocking to and spending more and more, and that can scale. From there, the best ones can pivot their platform into new directions, expanding TAM.

All that tends to equal investment success.

Some reading material for your weekend - my deep dive into the Snowflake platform & architecture.

Snowflake wants to be the engine that drives all analytics – both business intelligence (BI) and data science (ML/AI) -- over the entire enterprise. Snowflake provides a turnkey cloud-native, scalable database platform with a heavy focus on enterprise concerns of security, governance & compliance, while having a rich ecosystem of integrations & tooling available for ingest, BI and analytics.

Slaaaaaaaaaaaaaaaaack. Never been a fan of $WORK’s platform. Too many “free” options like Teams chipping away and now Chat. Yes yes automation is a differentiator. Is that enough? Condolences to any holders. Intent was not to pile on, just never understood the appeal. On the plus side the growth has been very consistent — but that was probably what drove the sell off. Folks wanted more from the supposed tailwind.

Zoom just increased their revenue by 102% in 3 months. They just doubled... in a quarter. Zoom CC: "Hi everyone. Just take what we did in Q1 and double it."

Watching some late night hockey playoffs and scrolling the twitters in the slow moments. Who has a question about SaaS co or their tech? Lighting round AMA I’ll start. Do I like ? Not really. Growth spurt is great but over very low margins that doesn’t show any leverage. They are a middle man ad broker (installed apps in new devices) that is riding success in device ownership. Not interested.

Look at those $CRWD numbers, the trends that you see. To me, it says “Hypergrowth top line showing strong signs of operational leverage.” That should perk up your ears - catch your attention.

https://twitter.com/seifelcapital/status/1290769724947795971

My rather simple strategy: Follow the companies with hypergrowth revenue. Watch for any sign of strong uptick in op margins and cash flow. When you see it, ACT. Establish a position immediately. It forces you into further research.

I had many epiphanies while researching Edge Networks, and hopefully you did too while reading. So where to begin with the takeaways? I think the biggest for me was seeing that CDN features are but one application on top of the edge networks at and , the first of many more to come. Do not limit your thinking by lumping them in w/ legacy CDNs in a commoditized market!