Stockideas

Sumo Logic, Inc
(NASDAQ:SUMO)
Sumo Logic, Inc

Sumo Logic, Inc. provides cloud-native software-as-a-service platform that enables organizations to address the challenges and opportunities presented by digital transformation, modern applications, and cloud computing worldwide. Its platform enables organizations to automate the collection, ingestion, and analysis of application, infrastructure, security, and IoT data to derive actionable insights. The company offers a suite of solutions to addr...
Founded: 2010
IPO date: 2020-09-17
IPO price: $22
Full Time Employees: 759
Co-Founder: Christian Beedgen
CEO: Ramin Sayar  (Dec 2014~)
CFO: Sydney Carey 
CTO: Christian Beedgen 
Sector: Technology
Industry: Software-Application
Next Earnings Date: 2022-12-05
Stock price: $7.825 (+2.97%)
2020 SaaS review
By: ssmlee04 Community Lead :))   💬 97   
   on Jan 03, 2021

2020 is an interesting year for SaaS companies. Some of them went public and gained huge success in the stock market. Some of them continued their rally from 2016-2019 and have another great year. Some of them have greater success than the others because of their business models in the work-from-home environment. And there's a common thing for those SaaS companies, that is: those companies probably developed something people want.

The following is a list of the top 15 SaaS performers in our database in the last 250 days as of December 31, 2020. https://i.imgur.com/xL1w2F2.jpg

Some of the companies here are getting a lot of attention this year. Terminologies like Zoom Fatigue even appeared in the second quarter. It seems everyone was talking about Zoom at some point. And that's reasonable because Zoom is the clear winner in this video conferencing space. They keep your company operational by providing you a smooth video call user experience for your employees and your clients. There are literally companies built on top of Zoom calls that provide you remote journey experiences, and they do great because of Zoom and Covid.

https://i.imgur.com/KWx3Ea2.png

Cybersecurity is also something to worry about for companies in 2020. Intuitively, when companies are working remotely it would be harder for companies to safeguard their infrastructure. That's when companies like CrowdStrike or Zscalar or Okta come into play. Okta help companies manage their employees' access identities. Zscalar and CrowdStrike protect your web infrastructure using technologies to derive insights from your data and protect your infrastructure in real-time or near real-time.

Also when a lot of people are working remotely you'd expect Internet usage to go up. Cloudflare is a CDN company that help websites serve their requests fast. Fastly is also doing similar things in the video CDN space and helps companies like TikTok serve their videos. And as more people spend more time on their mobile devices those companies also do well. And to support those web requests you need companies like Twilio to send you SMS messages or phone calls, without Twilio you might not even able to login to your apps.

Also when people are staying at home people have more time to get creative. So maybe people start selling stuff on Shopify or Etsy or Pinterest or create websites on Wix. And at the same time, you have marketing companies like Facebook or TradeDesk or Digital Turbine to help you advertise your stuff on mobile devices. The success stories for those SaaS companies are inter-connected.

There are many other interesting SaaS companies that are not mentioned above. They are not in the top 15 maybe because they're not directly related to the stay-at-home trend, but that doesn't mean they're less interesting. As a software engineer, I have to use application monitoring services, database services, image compression and processing services, mailing services... and many others. This is what makes a modern software company functional. And as long as your company is growing you would continue to add and look for the best services for your company. And when more companies are becoming software companies I can imagine those SaaS companies to have a great future ahead.

A few things in common here for the companies on the list:

  • They grow REALLY fast. A lot of the companies on the list are growing 40-80% a year.
  • They all have really high gross profit margins.
  • They're traded at a very high valuation. A lot of them have a p/s ratio of 40-60.
  • The majority of them are losing money.
  • They don't pay dividends.

A possible explanation is that there are no clear winners in the space they're operating in, so they're doing whatever it takes to make sure they win in the long run. And of course that means they cannot afford to pay dividends. Also they're all traded at astronomical levels of valuations maybe because they have high profit margins, and the future for those companies are expected to be good.

Take DocuSign for example. They're one of the pioneers in e-signature. But e-signature is some sort of niche market. You may come up with another e-signature solution with a small team but by the time you have the solution in place you might already be spending millions achieving zero revenue while DocuSign might grow revenue another 40%. In the end there's just not enough market share for you to survive. So it would not be a good idea to copy DocuSign business model, this makes DocuSign (and all the SaaS companies) unique in a way.

If you look back at Amazon anytime in the past 20 years you'll see it's always traded at high multiples. It is still traded at high multiples today but would anyone complain that Amazon is too expensive? Probably not. Because now we know Amazon is dominating in any spaces they're operating in, we just couldn't see it 20 years ago. So maybe there's a correction between winning and being expensive and that's why all the cloud stocks are expensive because there's a chance all of them are dominating in their space in the next 5-10 years.

But, of course, being expensive does not mean the company would be successful eventually. But if you want to look for something good in the next 5-10 years there's a chance it's on the list but you just don't know it yet.

$ZS $DBX $ZUO $AYX $DOCU $SMAR $DOMO $SVMK $AVLR $TTD $PCOM $NOW $WDAY $PD $WORK $ZEN $TEAM $VEEV $CLDR $SHOP $FSLY $TWLO $ADBE $AAXN $CRM $OKTA $GOOG $DT $ZM $SPLK $WIX $COUP $MDLA $LPSN $APPN $EPAY $AKAM $APPS $FIVN $BL $PANW $PFPT $CRWD $DDOG $NET $HUBS $NEWR $APPF $RNG $ESTC $BILL $GDDY $DCT $ECOM $PLAN $SNOW $SUMO $FROG $ASAN $JAMF $ADSK


Reply
Application monitoring and analytics space are trending
By: ssmlee04 Community Lead :))   💬 97   
   on Dec 17, 2020

This is the top 15 SAAS stocks by 1 day performance with market cap over 1 billion.

https://i.imgur.com/a7z4jrD.jpg

Application monitoring and analytics space are trending today. It could simply be because this sector is going to be really profitable. Many of those companies have high gross profit margins, some of them even have gross profit margins over 80%. And many of them are growing 40% - 80% a year consistently.

It's also a space with heavy competition at the same time. $dt and $ddog for example you can log some information about your infrastructure like cpu or memory usage and put them on a dashboard so your software team can monitor them and do something about your infrastructure. $pd calls you when your server crashes. $sumo and $estc helps you do logging and log searching efficiently. And you need them if you are a modern software company. So the demand for those services can only go high if their clients grow.

Software are meant to scale easily so that when you write it once you can run it in many places without too much extra costs. Also, intuitively, when you have more software companies in the future you need more tools to monitor your software infrastructure. That's why those services would continue to be good in the long run. And that's a reasonable and inevitable future that we're heading.

$DT $ESTC $AYX $SUMO $DDOG $PD


Reply
Top 15 SaaS stocks with market cap over 1b today
By: ssmlee04 Community Lead :))   💬 97   
   on Dec 05, 2020

https://i.imgur.com/tDxDnL6.jpg

$PD calls you when your server crashes. $Sumo does logging for your code. $ESTC does search for your logs and other stuff. $NET does CDN, $DDOG does application monitoring.

They and other similar services are all required for a modern software company to run.


Reply
Sumo Logic S-1
By: ssmlee04 Community Lead :))   💬 97   
   on Sep 17, 2020

https://www.sec.gov/Archives/edgar/data/1643269/000119312520227201/d821436ds1.htm

https://i.imgur.com/zg9nHlS.png

This is another SAAS company that can grow 50% annually. Also the have a p/s ratio of around 20 which is extremely cheap as a high growth SAAS company. $SUMO

https://i.imgur.com/3AEQg9q.png

Some of their biggest customers are jfrog, pokemon, adobe, airbnb, akamai, fastly, okta, pagerduty, ringcentral, shutterstock, teladoc, twitter. So maybe they do have something that other logging service providers does not have.


Reply