Clouded Judgement

MARCH 22, 2024

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now ARR (Annual Recurring Revenue) vs ERR (Experimental Runrate Revenue) ARR (Annual Recurring Revenue) is one of the most popular SaaS (Non-GAAP) metrics. However, it’s also one of the most loosely used metrics, and is frequently misused.

AI 183

AI Revenue Cloud Technical Advisors 183

Clouded Judgement

MARCH 15, 2024

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Q4 ‘23 Earnings Summary Preview We’re almost through Q4 ‘23 earnings season with just a few stragglers left to report (Braze, nCino, Sprinklr). I’ll put together my standard deeper dive quarterly review, but wanted to share some high level summary charts today.

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Cloud Software Review Subscription Payment Features 161

Clouded Judgement

MARCH 8, 2024

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now 2024 Guides - Are they Conservative? So far we’ve got a number of full year 2024 guides. Overall, companies are not guiding above current consensus (median guide is 0.2% below consensus). Is this just companies guiding conservatively, to set up the year for beat and raises?

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Cloud Revenue Subscription Payment Features 161

Clouded Judgement

MARCH 1, 2024

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Shades of 2021 in Venture Markets Private markets are really starting to heat up, and I’m starting to see shades of 2021. Anything AI related has always been “hot,” but it has really hit a fever pitch in the last few months.

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Cloud AI Investment Metrics 311

Clouded Judgement

FEBRUARY 23, 2024

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Rule of X Meritech and Bessemer both recently did an analysis that looked at the Rule of 40 and asked the question “what if growth / profitability shouldn’t be treated equally in the Rule of 40?” The Rule of 40 looks at the sum of a companies growth rate and FCF margin (or some other profitability metric like EBIT margin) and says that the sum s

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Cloud Metrics Subscription Payment Features 152

Clouded Judgement

FEBRUARY 16, 2024

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now January Green Shoots A couple key software players have given us commentary in their Q4 earnings report (quarter ending December) that January (the first month of Q1) saw some green-shoots. Could this be the sign of a slow rebound?

Cloud 161

Cloud AWS Metrics Subscription 161

Clouded Judgement

FEBRUARY 9, 2024

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Are Forward Estimates Going Up? Going in to this earnings season I expected a big driver of stock price performance to be how 2024 full year estimates change pre / post earnings. Since the macro feels more “stabilized” it felt fair to assume “are numbers going up or down” to be the question most correlated with stock price performance.

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Cloud Pricing Startup Revenue 195

Clouded Judgement

FEBRUARY 2, 2024

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Cloud Giants Report Q4 ‘23 Two quotes from the Amazon and Microsoft earnings call really stood out to me this week. Amazon on AWS : “…customers are continuing to shift their focus towards driving innovation and bringing new workloads to the cloud.

Cost optimization & reporting 161

Cost optimization & reporting Cloud Azure AWS 161

Clouded Judgement

JANUARY 26, 2024

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now ServiceNow Kicks Off Q4 Earnings Season ServiceNow kicked off Q4 earnings season on Wednesday (they are almost always the first software company to report), and I thought I’d dig in to see if they left any clues for what we should expect for the broader software market.

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Cloud Marketplace as a Service AI Subscription 161

Clouded Judgement

JANUARY 19, 2024

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now The Bar For Going Public There’s a lot of talk recently about “are IPO markets open” or “what scale do I need to get public.” If we look historically at the period from 2015-2020 (ignoring 2021 IPOs) the rough medians were ~$200m ARR (minimum was $100m ARR), 50% YoY growth, and >120% net retention.

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Cloud Scale Compensation Metrics 177

Clouded Judgement

JANUARY 12, 2024

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Reinventing Founder Friendliness - Back to the Future This week I joined Ed Sim (Founder and Managing Partner at Boldstart Ventures) on Harry Stebbings podcast to chat about the state of venture backed companies heading into 2024 and 2025.

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Cloud Venture Capital Acquisition Metrics 284

Clouded Judgement

JANUARY 5, 2024

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now 10Y Rising The start of the year has not been kind to software stocks! In the basket I track and discuss in Clouded Judgement (~80 companies), no one is up on the year. In just the last couple weeks from mid December to today we’ve seen the 10Y move from 3.8% to 4%.

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Clouded Judgement

DECEMBER 29, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now 2023 Top Performers In 2023, there were 14 cloud software companies that were up 100%+ this year (in the index I track of ~80 total)! Only 20 traded down on the year, and the median year-to-date performance of the basket of companies was +40!

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Cloud Software Review Subscription Payment Features 189

Clouded Judgement

DECEMBER 22, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Revisiting the “Is Software Expensive” Question The current median revenue multiple for the software universe is 6.4x, which is ~17% below the long term average multiple of 7.8x. However, when looking at growth adjusted multiples, the current median is 0.48x, which is ~75% above the long term average of 0.28x (you can see this chart later on in this p

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Cloud Subscription Payment Features Metrics 177

Clouded Judgement

DECEMBER 21, 2023

Q3 earnings season for cloud businesses is now behind us. The 63 companies that I’ll discuss here (which is not an exhaustive list, but is still comprehensive) all reported quarterly earnings sometime between October 25th – December 7th. In this post, I’ll take a data-driven approach in evaluating the overall group’s performance, and highlight individual standouts along the way.

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Cloud Software Benchmarks Retention 177

Clouded Judgement

DECEMBER 15, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Macro Update the 10Y rate dropped to 3.9% this week. That’s the lowest it’s been since the summer, and down nearly 25% from where it was just two months ago. That’s a huge move in rates in such a short window.

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Cloud Subscription Payment Features Metrics 183

Clouded Judgement

DECEMBER 8, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Q3 ‘23 Earnings Summary Preview The vast majority of all software companies have now reported Q3. I’ll put together a deeper dive review in a week or two, but wanted to provide a preview here. Overall, I’d describe the tagline of Q3 software performance as “stabilizing trends with some green-shoots starting to show up.” Here’s

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Cloud Software Review Headcount Trends 161

Clouded Judgement

DECEMBER 1, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Amazon ReInvent This week Amazon had their annual AWS ReInvent conference. Couple takeaways for me: 2024 is shaping up to be the “prototype to production” year for AI. This year, there was tons of experimentation.

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AWS Cloud AI Search Cost optimization & reporting 293

Clouded Judgement

NOVEMBER 24, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Happy Thanksgiving! I’ll be back next week with some broader thoughts, but for this week I’m just updating the charts / tables / graphs below. Quarterly Reports Summary Top 10 EV / NTM Revenue Multiples Top 10 Weekly Share Price Movement Update on Multiples SaaS businesses are generally valued on a multiple of their revenue - in most cases the project

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Cloud Subscription Payment Features Metrics 161

Clouded Judgement

NOVEMBER 17, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Inflation Update This week software stocks shot up on lighter than expected inflation figures for October. The lighter inflation gave more credibility to those who argue rates will end up coming down faster than expectations.

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Clouded Judgement

NOVEMBER 10, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now OpenAI Updates OpenAI had their big developer day this week, and I wanted to call out two key announcements (and trends): increasing context windows and decreasing costs. When I think about the monetization of AI (and which “layers” monetize first) I’ve always thought it would follow the below order, with each layer lagging the one that comes be

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Cloud Artificial Intelligence AI GCP(Google Cloud Platform) 183

Clouded Judgement

NOVEMBER 3, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Earnings Season Kicks Off Without Any Sign of Re-Acceleration Q3 earnings season kicked off in earnest this week, and it’s turning out to quite the volatile earnings season. Already we’ve seen huge earnings move.

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Software Review Cloud Software Azure 161

Clouded Judgement

OCTOBER 27, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Cloud Giants Report Q3 ‘23 Not a great signal for software this week from the Cloud Giants (AWS, Azure and Google Cloud)…After Q2 (3 months ago), the tone from the Cloud Giants around optimizations was largely: optimizations have started to ease, and net new workloads have picked up.

Cost optimization & reporting 152

Cost optimization & reporting Cloud Azure AWS 152

Clouded Judgement

OCTOBER 20, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now 10Y Keeps Climbing The 10Y hit 5% this week, which sets a new high water mark. In general economic data has continued to come in strong (a data point suggesting inflation could stay sticky, and the economy can absorb rates staying higher for longer).

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Cloud Azure AWS Software Review 161

Clouded Judgement

OCTOBER 13, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now August Inflation Update We got August inflation this week, here’s where it came in: Headline CPI 3.7% YoY vs +3.6% consensus and +3.7% YoY in Aug Core CPI 4.1% YoY vs +4.1% consensus and +4.3% in Aug Morgan Stanley CIO Survey Morgan Stanley came out with their quarterly CIO survey, and I wanted to highlight some points they made.

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Cloud Artificial Intelligence Subscription Payment Features 169

Clouded Judgement

OCTOBER 6, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Implied Fed Funds Rate The 10Y got up to 4.9% this week before settling back to 4.7% yesterday. We’ve had quite a shift in rates over the last couple weeks, so I wanted to share some charts that show rate predictions over the next couple years.

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Cloud Banking Subscription Payment Features 152

Clouded Judgement

SEPTEMBER 29, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Rates Keep Going Up Rates continue to push higher, as the aftershock of the Fed’s “Higher for Longer!!” messaging reverberates through the markets. Yesterday the 10Y hit 4.7% which was up from it’s high of ~4.5% last week.

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Cloud Government Banking Software Review 183

Clouded Judgement

SEPTEMBER 22, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Rates! Rates! Rates! This week was quite interesting. We had the FOMC meeting on Wednesday, and it wasn’t a surprise that the Fed did not hike rates any further. However, we saw the 10Y spike to 4.5%. This continues a trend from April that has seen the 10Y steadily rise from 3.3% to 4.5%.

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Cloud Revenue Software Metrics 152

Clouded Judgement

SEPTEMBER 19, 2023

Please note this is a repost from Altimeter’s LinkedIn. You can find the original post here Today we’re very excited to announce our partnership and Series B investment in Tabular , the company behind Apache Iceberg. Tabular is a compelling data lakehouse solution, meaning it brings data warehouse functionality (SQL semantics + ease of use) to the data lake (cost-efficient and scalable).

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Data Government Scale GCP(Google Cloud Platform) 130

Clouded Judgement

SEPTEMBER 15, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Software Setup Currently, interest rates seem to be the primary driver of software valuations. We just wrapped up Q2 earnings season, and are a couple months away from getting incremental data on individual company performances (Q3 earnings season).

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Software Review Cloud Software AWS 130

Clouded Judgement

SEPTEMBER 12, 2023

Q2 earnings season for cloud businesses is now behind us. The 62 companies that I’ll discuss here (which is not an exhaustive list, but is still comprehensive) all reported quarterly earnings sometime between July 27th – September 8th. In this post, I’ll take a data-driven approach in evaluating the overall group’s performance, and highlight individual standouts along the way.

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Cloud Software Benchmarks Retention 169

Clouded Judgement

SEPTEMBER 8, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Q2 Earnings Recap Preview We’re now through Q2 earnings season! I’ll post a much longer recap soon, but today I wanted to post the highlights. Overall, I’d describe Q2 as “Buying environment didn’t get worse, but we’re not out of the woods yet.” We saw some green shoots in AWS and a few other consumption names, and overal

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Cloud Software Review AWS Trends 169

Clouded Judgement

SEPTEMBER 1, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Are Software Companies Over or Undervalued? Today I wanted to dig in to this question and its implications: “Are software companies fairly valued today?” Every week I post a number of charts and tables, but the most popular chart shows the software universe’s median revenue multiple, the long term average, and the 10Y (below).

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Software Review Cloud Software Revenue 183

Clouded Judgement

AUGUST 25, 2023

Klaviyo filed their initial S1 statement today. This is the first S-1 we’ve seen in almost 2 years from a software company! A S-1 is a document companies file with the SEC in preparation for listing their shares on an exchange like the NYSE or NASDAQ. The document contains a plethora of information on the company including a general overview, up to date financials, risk factors to the business, cap table highlights and much more.

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Benchmarks Artificial Intelligence Data Software Review 246

Clouded Judgement

AUGUST 25, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now The 10Y and Software Valuations Much has been written about the 10Y, and interest rates more broadly, and their impact on software valuations. However, there’s a lot to unpack there. Interest rates aren’t simply 1 “thing.” They’re a basket of instruments with different maturities / durations set by different forces.

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Cloud Government Banking Payment Services 130

Clouded Judgement

AUGUST 18, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Q2 Earnings Check In We’re now about halfway through Q2 earnings season (companies with June quarter ends have reported, and we’ll get companies with July quarter ends reporting next week). I wanted to do a quick review of results so far to see what the data is showing us.

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Cloud Software Review Subscription Payment Features 243

Clouded Judgement

AUGUST 11, 2023

Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Subscribe now Datadog Consumption This week we got another earnings report from a key consumption player: Datadog’s Q2. On the surface, it wasn’t good. They narrowly beat estimates for Q2, and then guided Q3 below consensus.

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Cloud Trends Azure GCP(Google Cloud Platform) 130