After over a year of headwinds from customer workload optimization, it appears the hyperscalers are finally reaching a point where future growth will be driven by a more normalized expansion cycle. All three hyperscalers delivered annual growth in Q4 that was either equal to or above the prior quarter. Sequential revenue growth rates for AWS […]| Software Stack Investing
Snowflake’s consumption business continues to feel pressure as large enterprise customers look for ways to optimize usage. While it seemed that management had a handle on forecasting the impact of this effect when they lowered guidance back in Q4, they still underestimated the trend. With the Q1 report, they once again brought down the full […]| Software Stack Investing
Datadog stock surged 45% over the month of May, following their earnings report on May 4th. The results aligned with the common theme of “better than expected”, shared with several other software companies reporting results recently. This outperformance appears to have set a baseline across the software sector, with upward momentum building as more companies […]| Software Stack Investing
After languishing for most of 2023, software and security infrastructure stocks finished the year with an impressive run. This inflection started with Q3 results as the hyperscalers telegraphed a moderation of the optimization headwinds that had been plaguing the sector since 2022. After spending the prior 12 months wringing out savings from their cloud workloads, […]| Software Stack Investing
I want to thank everyone for your inquiries over the past couple of months. I took a break from regular blog posts, in order to focus on a few side projects. These included new research areas, doubling down on angel investing and another guest lecture for the London Business School. A common thread within these […]| Software Stack Investing
Following a disappointing Q1 earnings report highlighted by challenges in the go-to-market effort, Cloudflare demonstrated renewed momentum in Q2. The sales reorganization is progressing well. Large enterprises expanded spend, adding to multi-product subscriptions across several categories. In parallel, profitability measures continue to improve with growing operating margin and cash flow. With a mission statement to […]| Software Stack Investing
After delivering favorable results in Q1, Confluent continued on largely the same trajectory in Q2. Sequential growth rates even imply stabilization around 30% annually, after almost 2 years of deceleration from Covid highs. This growth is being led by rapid adoption of Confluent Cloud, with the licensed Confluent Platform offering for on-premise deployments demonstrating surprising […]| Software Stack Investing
Headwinds from workload optimization may have peaked in Q2. After nearly a year of negative drag on revenue growth for the hyperscalers, it appears that cloud infrastructure customers are shifting their focus away from workload optimization and back towards the deployment of new ones. At least that is what Amazon’s CEO told us in the […]| Software Stack Investing
AI has crashed onto the investing stage in 2023, driving significant stock price gains for several companies. Some, like Nvidia and Microsoft have already projected a direct revenue benefit as part of recent earnings reports. Others have indicated they expect AI to drive demand tailwinds going forward as part of management commentary. Eventually, most software […]| Software Stack Investing
After guiding for a sequential 4% drop in revenue for Q1, MongoDB delivered a strong beat. More importantly, their preliminary estimate for Q2 revenue would achieve a reacceleration of annual growth if they outperform at the same level as Q1. The revenue projection for Q2 even leapfrogged past the analyst consensus for Q3. While the […]| Software Stack Investing