$FB Facebook reported Q1 EPS of $3.30 (+95% YoY), $0.93 better than the analyst estimate of $2.37
$FB Revenue for the quarter came in at $26.17B (+47% YoY) versus the consensus estimate of $23.67B.
$FB daily active users (DAUs) – DAUs were 1.88B on average for March 2021, (+8% YoY).
$FB monthly active users (MAUs) – MAUs were 2.85B as of March 2021 (+10% YoY).
$FB Ad rates and pricing rose 30% YoY driving strong revenue gains, which led 4 analysts to raise price targets to $380 – $400.
$FB is investing in the consumer shopping experience – with ~9% of total MAUs now interacting with merchandise, which can drive universal adoption of Shops and subsequently increase the shopping use case.
$FB disclosed that there 1M active shopping stores, 250M visitors to these stores.
$FB announced another $4B in share buybacks as well, likely raising EPS. $FB has $62B in cash with no debt.
A 12-month price target of $380 seems reasonable based on 24x 2022 GAAP EPS estimate plus cash, and implies ~16.0x ’22E Adjusted EBITDA.
“We have a long way to go to build out a full featured commerce platform across our services, and this is a multiyear journey. But I am very committed to getting there” – Mark Zuckerberg
“We’re looking forward to offering businesses a native way to manage their customer relationships on our platforms” – Mark Zuckerberg
“We’re rebuilding meaningful elements of our ad tech so that our system continues to perform when we have access to less data in the future (Apple IDFA)” — Sheryl Sandberg
$HNST Honest company, founded by Jessica Alba is going public next week on May 5th, expecting to raise $105M in cash at $14-$17 / share valuing the company at $1.4B to $1.8B.
$HNST sells Baby, Skin Care, and Wellness products online and via retail outlets. It was founded in 2012.
The company is a digital native company with a mission to make natural products with a green and clean footprint for the socially conscious consumer.
$HNST develops products in its in-house lab, and is transparent around how its products are made and what ingredients are put inside them.
“Clean and Natural” segment is ~$17B per year in annual spend, and is a rapidly growing segment within a large consumer market for Baby, Skin care, and Wellness products (~$130B per year). 80% of this market is offline retail store. Honest is an omnichannel company with D2C (Direct to Consumer) & 30K store distribution through retail.
$HNST: Multiple changes in management and some challenging years (2017-2018) forced the company to go from a monthly subscription model to a regular à la carte retail model with non-Baby products approaching 40% of sales in 2020.
55% of sales come from online (mobile, web) and remaining from retail.
The top three $HNST categories are Diapers and Wipes, Skin and Personal Care, and Household and Wellness, which represented 63%, 26%, and 11% of its 2020 revenue.
$HNST IPO pricing range of $14 to $17 per share implies a market cap ranging from ~$1.4bn to $1.7bn (101M fully diluted shares outstanding).
Pre-IPO investors include IVP, Fidelity, Lightspeed, General Catalyst, ICONIQ, and Dragoneer.
$HNST revenues increased 27.6% from ~$236M to ~$301M in 2020, with Gross Margins in the 35% range.
$HNST reported positive EBITDA of ~$11mn during 2020 at 4% operating margin.
$HNST faces competition vs. large retailers and well-established brands such as $AMZN (Amazon), $COST (Costco) and $PG (Procter and Gamble) Pampers and $KMB (Kimberly Clark) Huggies.
$HNST could generate revenues ranging from $350M to $375M (2021) and $425M to $450M (2022), implying 17% YoY growth, with gross margin and EBITDA margin approaching ~39% and ~8%, respectively, in 2022.
$HNST valuation implies 3.0x to 3.5x on 22E revenues and 7.5x to 9.0x 22E Gross Profit.
I dont think this company will soar on IPO, but I may be wrong. I do think there is a segment of their consumers who love them and they might buy the stock, but I believe there are better opportunities in other places to generate better returns.
Alphabet (Google) $GOOG $GOOGL reported 1Q 2021 earnings yesterday. The results were significantly above both street estimates and guidance.
Alphabet $GOOG reported Q1 2021 EPS of $26.29, $10.41 better than the analyst estimate of $15.88. Revenue for the quarter came in at $55.31B versus the consensus estimate of $51.68B
$GOOG saw strong growth in YouTube, Cloud and accelerating search revenue. I believe this might be one of the best Covid recovery plays along with $FB.
Google Cloud and YouTube segment revenue growth stayed above 45% YoY.
$GOOG repurchased $7.9B worth of shares; repurchased ~$76bn worth of shares in the past 4 years; $GOOGL board authorized another $50B buyback.
Cloud: Revenue increased 46% YoY, and backlog increased to vs. ~$30B in 4Q vs. $19bn in 3Q.
Analyst Price Targets (PT) upgrades
PT Raised to $2,850 at Jefferies PT Raised to $2,800 at Canaccord Genuity PT Raised to $2,635 at Piper Sandler PT Raised to $2,700 at Cowen PT Raised to $2,575 at Morgan Stanley PT Raised to $2,700 at Needham & Company PT Raised to $2,750 at Raymond James
$ZIP ZipRecruiter is an online marketplace for jobs. ZipRecruiter works like a matchmaker curating job opportunity for job seekers, and candidates for employers.
$ZIP is planning to go IPO via direct listing sometime in Q2 2021.
The company was founded in 2010 by Ian Siegel Joe Edmonds, Ward Poulos and Will Redd in Santa Monica, California. The company’s investors include venture capital firms IVP and Basepoint Ventures.
$ZIP has raised more than $250M in funding and was previously valued at $1.5B in 2019.
Employers spend more than $205B per year in the United States alone to recruit talent.
Online recruitment alone represents over $13 billion of this opportunity. The online segment of the U.S. recruiting market is expected to grow at a compound annual growth rate, or CAGR, of 14.1% from 2016 to 2025.
The online segment of the recruiting market in the U.S. is expected to continue expanding its share of the recruiting market, with online share increasing from 3% in 2016 to 6% in 2020 and to 8% in 2025.
ZipRecruiter has competition in LinkedIn, Indeed, as well as from many well-established online job sites such as CareerBuilder, Craigslist, Glassdoor, and Monster and may face additional competition from Google for Jobs or Facebook.
Jobs posted with ZipRecruiter are distributed to well over 1,000 career sites.
When employers post a job, ZipRecruiter’s matching technology identifies and sends an alert to the best job seekers in $ZIP
$ZIP provides employers with access to 14M monthly Active Job Seekers.
Roughly about 2.8 M employers and 110M job seekers use $ZIP
$ZIP experiences a decline in the Paid Employers during the fourth quarter as a result of seasonal hiring dynamics.
The number of Quarterly Paid Employers December 31, 2019 declined by 9% as compared to the quarter ended September 30, 2019.
In 2020, $ZIP experienced a decrease in sequential revenue of 23% in the quarter ended June 30, 2020 as a result of the COVID-19 pandemic, but saw consecutive quarters of revenue growth of 17% and 11% in the third and fourth quarters of 2020 as employers started to return.
Revenue in the second half of the year represented 52% of total annual revenue in 2018, 2019 and 2020.
The average customer spends about $1200+ each year.
$ZIP provides a variety of pricing plans from flat rate pricing on terms ranging from a day to a year, as well as performance-based pricing for employers that run sophisticated recruitment marketing campaigns.
$ZIP subscription revenue consists of time-based job posting plans, upsells which complement or expand visibility and prominence to job posting plans, and resume database plans.
Go to Market
Customer payback period averaged less than 16 months, meaning that the Cohort’s Employer Acquisition Expense was, on average, recovered within 1.5 years.
$ZIP spends money on marketing campaigns and has an inside sales team.
ZipRecruiter is run by a seasoned management team with average tenure of about 24 months at $ZIP
Last year, it had net income of $86M on revenue of $418M , compared with a net loss of $6.3M on revenue of $430M in 2019.
Revenue slowed because of Covid but they turned a profit.
The company was worth $1.5 billion in a 2018 fundraising round. ZipRecruiter is expected to list the IPO at between $3B and $5B in valuation.
The company hired Goldman Sachs Group Inc and JPMorgan Chase & Co to lead in the preparations for the IPO.
At $3B – $5B in valuation, with expected 20% growth the company is valued at 7X to 12X 2020 revenues.
While this is an interesting company, I am going to wait for 6-9 months until after the IPO and 2 quarters of execution before I even take a position (or not).
$KNBE Knowbe4 (Know Before) is a Security Training and awareness SaaS company that went public last week.
$KNBE was founded in 2010 by Stu Sjouwerman in Tampa Florida and has famed hacker Kevin Mitnick on board as well.
$KNBE listed at $16/share, raising $201 Million at a valuation of $2.4B for the company, which recorded $174.8M in 2020 revenues growing at 45% YoY.
The company has over 37K customers paying over $4000 per year to provide security training services, which prevent attacks such as data breaches and speak phishing.
$KNBE has a 3 steps process to train users, simulate attacks and review results to ensure compliance. They also provide free tools to test users and network which help to identify the problems of social engineering, spear phishing and ransomware attacks.
$KNBE opened at $19.95 per share Thursday, above expectations, and peaked at $25.94 shortly before closing at $24.14. At the highest price, the company’s was worth nearly $4.3B
$KNBE saw revenues of $174.9M in 2020, up from $120.6M in 2019 and $71.3M in 2018. It did not, however, turn a profit in any of those years. Last year’s net loss was $2.4M a dramatically lower number than the $125M loss the year earlier.
$KNBE has 84%+ gross margins and will be on track to be EBITDA positive by 2021 end (estimated).
$KNBE has been mentioned as a leader in the Forrester wave for Security awareness and training solutions.
The market for Security awareness and training is about $1B annually, growing at 7% CAGR and is expected to be at $1.9B by 2025.
There are multiple players in the market, including KnowBe4, Webroot, Infosec IQ, Inspired eLearning, Proofpoint $PFPT, The Defence Works, SANS, Symantec, and Ataata.
$KNBE has received at least $158M from investors including Elephant Partners, KKR, Goldman Sachs, Tiger Global, Vista Equity Partners and Kevin Mitnick.
$KNBE has a direct sales force as well as channel partners (drive 37% of revenues) and managed service providers.
Metrics: Average revenue per customer is about $4700 (+17% YoY), while rule of 40 is at 44. DBNER and CAC were not provided in the SEC filings, so it is hard to compare $KNBE to other providers in SaaS.
Valuation: At 22X 2020 revenues and 15X 2021 revenues, $KNBE is richly valued, while growing at 40%-45%.
Recommendation: I am adding $KNBE to my watchlist but not buying yet. I expect the company to base for 3-6 months ($20 – $30 per share until Jun / Aug 2021). I would watch 2 Quarters of public performance closely to give us an indication if this is worth buying.
Double Verify $DV is a software company that ensures brand safety an detects digital advertising fraud for brands. DV was founded in 2008 by Alex Liverant and Oren Netzer in New York.
The company has about 650 employees and was acquired in 2017 by Providence Equity Partners.
$DV provides online media verification and campaign effectiveness solutions for brand marketers, agencies, advertising networks, demand-side platforms, exchanges, and digital publishers looking to ensure quality advertising environments, campaign transparency, and performance.
The marketing analytics software market was an estimated $2.7 billion in 2019 and is expected to reach $8 billion by 2027.
$DV technology platform provides advertisers with data and analytics that can be used to optimize the quality and return on digital ad investments.
$DV is raising $330M at the IPO, selling about 13 million shares on Thursday, April 22nd, 2021 for between $24 – $27 per share, implying a Market Cap of $4B – $4.5B, with 170M shares outstanding.
$DV has grown well through the pandemic, growing 34% to $244M in revenue from $183M in 2019. Is has 30% EBIDTA margins and recorded $79M in 2020. It grew from $104M in 2018 (+74% YoY).
$DV generates revenue in three ways:
$DV (1) Advertiser – Direct (44% of rev) Advertisers can purchase services to measure the quality and performance of ads
$DV (2) Via Demand Side or Advertiser – Programmatic (48% of rev) – Advertisers can purchase its services through programmatic platforms
$DV (3) Via Supply Side (9% of rev) – Supply Side Platforms use data analytics to validate the quality of their ad inventory and provide data to their customers.
$DV raised funding from investors including Blumberg Capitaland IVP.
Providence Equity Partners acquired a majority stake in DoubleVerify in 2017, and the company most recently raised a $350 million private equity round led by Tiger Global Management in October 2020.
The company counts more than 1,000 advertisers and partners on its platform.
$DV competes with companies like Improvely, Integral Ad Science and Forensiq in the analytics and ad fraud detection space.
$DV IPO pricing range implies approx. 8.5x to 10.0x on 22E revenue and 27.0x to 31.0x ‘22E EBITDA.
$DV has partnerships with $TTD (Trade Desk), $GOOG (Google), $AMZN (Amazon), $ROKU (Roku) and $FB (Facebook), $SNAP (Snap), $TWTR (Twitter) and $PINS (Pinterest).
I am going to pass on this opportunity for now, but keep it on my radar for a few more months. Other companies to track include $MGNI (Magnite), $PUBM (Pubmatic) and $KBNT (Kubient) in the same space.
Alight a HR, payroll, health outsourcing company, which was a part of AON was sold to Blackstone in 2017 for $4.3B. It was recording $2.0B in revenue in 2017 and today has grown to $2.6B – growing 30% over 3 years and 6% in 2020.
Today Foley Trasimene Acquisition Corp ($WPF) announced a SPAC merger to take the company public with a valuation of $7.3B
I am going to pass on investing in this company. While the valuation is attractive (2.8X 2020 Revenue), and they have many F1000 customers as clients, the slow growth, combined with a largely low margin outsourcing business that has grown via acquisitions and still delivered little incremental value to justify the growth in EV/Rev from 2.15 in 2017 to 2.81 in 2020.