{"id":4505,"date":"2024-02-01T12:34:55","date_gmt":"2024-02-01T11:34:55","guid":{"rendered":"https:\/\/monocle.lu\/?p=4505"},"modified":"2024-02-01T12:34:55","modified_gmt":"2024-02-01T11:34:55","slug":"poster-boy","status":"publish","type":"post","link":"https:\/\/monocle.lu\/en\/2024\/02\/01\/poster-boy\/","title":{"rendered":"\u00ab\u00a0Poster Boy\u00a0\u00bb"},"content":{"rendered":"

Last year, there weren't many IPOs in the Cloud.<\/p>\n

 <\/p>\n

In fact there was only one: KLAVIYO<\/p>\n

 <\/p>\n

After the 2022 debacle* in the sector, there weren't many amateurs left to attempt the exercise.<\/p>\n

\"\"<\/p>\n

So, as you can see from the image above, taken from the blog of Battery Ventures - Tech's big private equity fund - only the world champions could risk it. And that was the case with Klaviyo.<\/p>\n

 <\/p>\n

In this sector, which was emerging from record years in terms of valuation, the watchword was \u2018The Rule of 40\u2019. The concept is as follows: the sum of your growth and your margin must be 40% or more. So if you're growing at 10%, you need to show a 30% margin. If you're growing at 40%, you can have no margin at all.<\/p>\n

 <\/p>\n

When we look at the details, as given\u00a0here<\/a>\u00a0by Bessemer, another large Tech private equity fund, there is a fair amount of flexibility in the calculations. The margin is the Free Cash Flow - as for these companies a large part of the costs are stock options given to employees, this has a slight advantage in the calculations.<\/p>\n

 <\/p>\n

But in short, based on these metrics, Klaviyo was THE POSTER BOY: strong growth, high margin. So we floated at $30 on 19 September 2023. Four months later, we're at $25.90, so I think there might be an opportunity. I look at the results for the previous quarters: growth of over 50% and, in the last quarter, an 89% increase in customers representing over $50,000 in annual sales and still positive margins: the Apollo rocket. OK, the valuation isn't cheap - 9 times last quarter's annualised recurring revenue - but for this sector it's not expensive, say the likes of Bessemer, Battery etc...<\/p>\n

 <\/p>\n

I dug deeper. As I dug deeper, I learned that a few months before the IPO, Klaviyo raised its prices by 30%. The monthly subscription fee went from $3500 to $4550, and all its customers went above $50,000 a year, hence the 89% increase in the number of customers announced above.<\/p>\n

 <\/p>\n

Being able to increase prices in this way without customers leaving in droves is a good thing, but it's not repeatable. Without a price increase, this company is not growing at all at 50% a year.<\/p>\n

 <\/p>\n

This is the slide from the presentation of the Q3 results in November:<\/p>\n

\"\"<\/p>\n

No mention of the price increase. It will therefore be difficult to trust management in its financial communication going forward.<\/p>\n

 <\/p>\n

When Klaviyo presented its results on 7 November, it announced a growth forecast of +34% for Q4. The market reacted immediately: -18% in two days, as it was expecting the +50% it had been sold at the time of the IPO three months earlier.<\/p>\n

Klaviyo publishes next week (6 February). We'll see. In the meantime, she's not getting into the background.<\/p>\n

 <\/p>\n

And if this was the Poster Boy of the sector - the only company capable of entering the market after the 2022 downturn - it doesn't reassure us about the rest.<\/p>\n

 <\/p>\n

* stampede: on the 1st graph above, in the small centre, you can see all the cloud IPOs for 2020-21. I looked at the performance:<\/p>\n

 <\/p>\n

Bill\u2002\u2002\u2002\u2002\u2002\u2002\u2002\u2002 +100%<\/p>\n

JFrog:\u2002\u2002\u2002\u2002\u2002 \u2002-50%<\/p>\n

UiPath:\u2002\u2002\u2002\u2002 \u2002-70%<\/p>\n

Confluent:\u2002 \u2002 -50%<\/p>\n

Sumo Logic\u2002 -50%<\/p>\n

Sprinklr:\u2002\u2002\u2002\u00a0 \u00a0-40%<\/p>\n

HashiCorp:\u2002 -75%<\/p>\n

Gitlab:\u2002\u2002\u2002\u2002\u2002 \u2002-40%<\/p>\n

Asana:\u2002\u00a0 \u00a0 \u00a0 \u00a0 \u00a0-33%<\/p>\n

ZoomInfo:\u2002\u2002\u2002 -60%<\/p>\n

Freshworks:\u2002-50%<\/p>\n

SentinelOne:\u2002-40%<\/p>\n

Procore:\u2002\u2002\u2002\u2002\u2002-20%<\/p>\n

Monday:\u2002\u2002\u2002\u2002\u2002+11%<\/p>\n

 <\/p>\n

So if you put $100 in all those boxes - those space rockets as they were called back then - you're at 33% off today. Not too good.<\/p>\n

Market and portfolio focus<\/strong><\/h2>\n

Behaviour:<\/strong><\/h2>\n

From 19\/01 to 26\/01, the fund gained 2.4%, while the S&P 500 gained 1.1% and the CAC 40 3.6%. At the end of last week, the fund benefited from our large position (9% of the fund) in LVMH (1.5% contribution). We have since halved our position: at \u20ac660 it was a bargain, at \u20ac770 it's OK, and above \u20ac850 it's starting to look like a lure.<\/p>\n

The rest of the performance came from 2 other equity positions: Teleperformance and Tidewater (both contributing 0.3%). Sentiment is changing on these stocks and we are eagerly awaiting their results.<\/p>\n

Lines:<\/strong><\/h2>\n

Only one operation on the fund this week: the reduction of our LVMH line after the results. We are now below 5%.<\/p>\n

En parall\u00e8le, on a plusieurs investissements dans le viseur. On devrait rapidement passer \u00e0 l’action dessus.<\/p>","protected":false},"excerpt":{"rendered":"

L’ann\u00e9e derni\u00e8re, il n’y a pas eu beaucoup d’introductions en bourse dans \u00a0le Cloud.   En fait il n’y en a eu qu’une : KLAVIYO   Car apr\u00e8s…<\/p>","protected":false},"author":8,"featured_media":4506,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-4505","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-le-billet-de-monocle"],"acf":[],"yoast_head":"\nMonocle - "Poster Boy"<\/title>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Monocle - "Poster Boy"\" \/>\n<meta property=\"og:description\" content=\"L’ann\u00e9e derni\u00e8re, il n’y a pas eu beaucoup d’introductions en bourse dans \u00a0le Cloud.   En fait il n’y en a eu qu’une : KLAVIYO   Car apr\u00e8s...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/monocle.lu\/en\/2024\/02\/01\/poster-boy\/\" \/>\n<meta property=\"og:site_name\" content=\"Monocle\" \/>\n<meta property=\"article:published_time\" content=\"2024-02-01T11:34:55+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/monocle.lu\/wp-content\/uploads\/2024\/02\/Cloud.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"720\" \/>\n\t<meta property=\"og:image:height\" content=\"458\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"L'\u00e9quipe Monocle\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"L'\u00e9quipe Monocle\" \/>\n\t<meta name=\"twitter:label2\" content=\"Estimated reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/monocle.lu\\\/2024\\\/02\\\/01\\\/poster-boy\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/monocle.lu\\\/2024\\\/02\\\/01\\\/poster-boy\\\/\"},\"author\":{\"name\":\"L'\u00e9quipe Monocle\",\"@id\":\"https:\\\/\\\/monocle.lu\\\/#\\\/schema\\\/person\\\/f095305e6c0f0cb67a0905de33670595\"},\"headline\":\"\u00ab\u00a0Poster Boy\u00a0\u00bb\",\"datePublished\":\"2024-02-01T11:34:55+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/monocle.lu\\\/2024\\\/02\\\/01\\\/poster-boy\\\/\"},\"wordCount\":810,\"publisher\":{\"@id\":\"https:\\\/\\\/monocle.lu\\\/#organization\"},\"image\":{\"@id\":\"https:\\\/\\\/monocle.lu\\\/2024\\\/02\\\/01\\\/poster-boy\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/monocle.lu\\\/wp-content\\\/uploads\\\/2024\\\/02\\\/Cloud.jpg\",\"articleSection\":[\"Les Billets de Monocle\"],\"inLanguage\":\"en-GB\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/monocle.lu\\\/2024\\\/02\\\/01\\\/poster-boy\\\/\",\"url\":\"https:\\\/\\\/monocle.lu\\\/2024\\\/02\\\/01\\\/poster-boy\\\/\",\"name\":\"Monocle - 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