Clouded Judgement

Clouded Judgement offers weekly data-driven analysis on SaaS companies, focusing on financial metrics, economic impacts, and market trends affecting the cloud software industry. It covers topics from IPO readiness and valuation methods to quarterly earnings and optimization cycles, providing insights into the health and future of software businesses.

SaaS Company Analysis Economic Trends and Their Impact on Technology Financial Metrics and Valuation IPO Process and Market Openings Quarterly Earnings Reports Software Consumption Trends Monetary and Fiscal Policy Effects on Markets

The hottest Substack posts of Clouded Judgement

And their main takeaways

Clouded Judgement 2.29.24 - Shads of 2021

16 implied HN points • 01 Mar 24
💼 Business Market Trends
  1. Venture markets are showing similarities to 2021, with rounds at high valuations and lots of pre-empted deals causing FOMO
  2. Investors are motivated by 'not losing relevance' and may overlook risks in high valuation rounds
  3. SaaS businesses are valued based on revenue multiples, with different growth brackets affecting valuation

Clouded Judgement 2.23.24 - Rule of X

15 implied HN points • 23 Feb 24
💰 Finance Market Analysis Company performance Investment Strategies
  1. The importance of growth and profitability in the Rule of 40 for cloud software companies varies over time, with current public markets valuing growth 3.0x more than FCF margin in valuation multiples.
  2. 2024 guides from Q4 calls are not increasing consensus estimates, indicating companies are setting cautious expectations amidst market uncertainty.
  3. Valuation multiples for SaaS businesses are calculated based on their projected revenue, with growth, FCF margin, and NTM growth rate influencing stock valuations.

Clouded Judgement 2.16.24

14 implied HN points • 16 Feb 24
💰 Finance Software Inflation
  1. Software companies are showing signs of a potential rebound in January based on earnings reports and early data, signaling green shoots for the industry.
  2. January inflation, especially the CPI, was higher than expected, impacting market expectations for future rate cuts and projections for the Fed Funds rate.
  3. Valuations for software businesses are often calculated based on multiples of revenue, with different growth rates affecting these valuations significantly.
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Clouded Judgement 3.8.24

6 implied HN points • 08 Mar 24
💰 Finance Guides Earnings Market Analysis
  1. Some 2024 company guides are below consensus, possibly indicating a conservative approach to set achievable targets.
  2. SaaS businesses value is often based on revenue multiples, considering future growth potential.
  3. Analyzing EV/NTM Rev Multiple versus NTM Rev Growth can show how cheap/expensive a stock is relative to growth expectations.

Clouded Judgement 1.5.24

24 implied HN points • 05 Jan 24
💰 Finance Stocks Valuation Earnings Metrics Investing
  1. Software stocks have seen a drop in the start of the year due to rising interest rates.
  2. Valuation of SaaS businesses is generally done based on revenue multiples for the next 12 months.
  3. The growth rate of a company plays a significant role in determining its valuation multiple.

Clouded Judgement 1.19.24 - The Bar for Going Public

2 HN points • 19 Jan 24
💼 Business Finance Metrics Investing Market Analysis Valuation
  1. The bar for going public is set very high, with companies needing impressive metrics like $200m ARR, 50% YoY growth, and over 120% net retention.
  2. New IPOs face challenges like concentrated ownership, lower liquidity, high stock dilution, and the need to build trust with public market investors.
  3. Startups aiming to go public should focus on metrics attractive to public market investors, including understanding stock compensation and equity dilution.

Clouded Judgement: IPO Process Overview - Are IPO Markets Opening Soon?

12 implied HN points • 02 Aug 23
💼 Business Market Analysis Investor Relations Market Dynamics
  1. The IPO process involves selecting investment banks known as the "Bakeoff" where the company chooses banks to help with the offering.
  2. Before going public, a company prepares the S-1 document, audited financials, and a presentation for potential investors.
  3. After the IPO pricing, the company completes the Roadshow to meet with investors and determine allocations, leading to the first day of trading.

A Look Back at Q1 '23 Public Cloud Software Earnings

12 implied HN points • 20 Jun 23
💼 Business Earnings Metrics Guidance Performance Valuations
  1. Analysis of Q1 public cloud software earnings provides insights for startup entrepreneurs on managing their businesses.
  2. Indications suggest a potential bottoming phase in the software industry with hopes for reacceleration by the year's end.
  3. Metrics such as revenue performance, growth, and sales efficiency play key roles in evaluating the success of a quarter for cloud businesses.

Clouded Judgement 5.19.23

13 implied HN points • 19 May 23
💼 Business Software Stocks Earnings Valuation Metrics
  1. Cloud software companies saw a boost in stock prices, but operating performance is not as positive.
  2. Companies added less new ARR in Q1 '23 compared to the previous year, indicating a headwind in new bookings.
  3. Median revenue growth rate declined in Q1 '23, along with net retention rates, CAC payback periods, but FCF margins showed improvement.

Clouded Judgement 5.26.23

12 implied HN points • 26 May 23
💼 Business Finance Software Earnings Valuation Metrics
  1. Snowflake reported weakening consumption trends in April/May compared to Feb/March.
  2. The change in data retention policies by customers was a big factor in consumption weakness for Snowflake.
  3. Snowflake's report raises questions about the anticipated acceleration in consumption software and highlights the volatility of consumption models.

Clouded Judgement 6.23.23 - Atlas Consumption and Q1 Earnings Trends

10 implied HN points • 23 Jun 23
💰 Finance Software Metrics Valuation
  1. MongoDB Atlas consumption trends showed a drop in Q2 of last year but picked up in Q1 and may continue. Monitoring this trend is key.
  2. Quarterly metrics trends like growth, net retention, sales efficiency, and FCF margins have been fluctuating in the recent quarters.
  3. Valuation metrics like EV/NTM revenue multiples and growth rates are important for understanding the relative valuation of software companies.

Clouded Judgement 6.9.23

10 implied HN points • 09 Jun 23
💼 Business Software companies
  1. Consumption trends in Q1 '23 show some positive signs for certain software companies.
  2. Some companies like Mongo and Azure are showing strength, while others like AWS and Snowflake are facing challenges.
  3. Overall, the sentiment on consumption software trends suggests a possible back half acceleration in the future.