Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Equity Bottom-Up

<ul>
<li>Freshworks, a cloud-based customer services software unicorn, held its first Investor Day on September 7, 2023. Management highlighted the long-term target to deliver the Rule of 40 by 2025. </li>
<li>The 2023 Investor Day agenda included company vision and strategy, solutions in action, strategy for durable growth, customer spotlight, and financial overview, among others. </li>
<li>Management plans to deliver a long-term balance of growth and profitability, with the 2026 model leading to an FCF margin of 20%+ and $1B+ revenue. </li>
</ul>


Freshworks, a cloud-based customer services software unicorn, held its first Investor Day on September 7, 2023. Management highlighted the long-term target to deliver the Rule of 40 by 2025. 
The 2023 Investor Day agenda included company vision and strategy, solutions in action, strategy for durable growth, customer spotlight, and financial overview, among others. 
Management plans to deliver a long-term balance of growth and profitability, with the 2026 model leading to an FCF margin of 20%+ and $1B+ revenue. 


Freshworks: 2023 Investor Day and Valuation Update

<ul>
<li>
<a href="https://www.smartkarma.com/entities/elastic-nv" target="_blank" data-smartkarma-citation="entities:27526:1" rel="noopener">Elastic NV (ESTC US)</a> delivered a high quality beat and raise and reported a modest upside to revenue and profitability. The start of the fiscal year looked strong.</li>
<li>The leading provider of search engine for enterprises and SMBs guided FY24 ahead of consensus estimates. I reiterate our Overweight rating on ESTC.</li>
<li>The 1Q print was outstanding, with +17% y/y revenue growth, a record non-GAAP Op Margin of ~10% and FCF margin of ~13%.</li>
</ul>



Elastic NV (ESTC US) delivered a high quality beat and raise and reported a modest upside to revenue and profitability. The start of the fiscal year looked strong.
The leading provider of search engine for enterprises and SMBs guided FY24 ahead of consensus estimates. I reiterate our Overweight rating on ESTC.
The 1Q print was outstanding, with +17% y/y revenue growth, a record non-GAAP Op Margin of ~10% and FCF margin of ~13%.


Elastic: Blowout 1QFY24 Earnings. Shares Popped ~20% On Heavy Volume

Algosun Global

<ul>
<li>New Relic reported a solid quarter pushing shares up ~18% during the regular trading session as y/y revenue growth accelerated while gross margin and operating income continued to expand.</li>
<li>We like New Relic’s fundamentals and transformation plan driven across the business. The company raised the outlook for FY23 revenue as 3QFY23 results exceeded guidance. </li>
<li>New Relic invites investors to an Analyst Day in May, where the company will announce the FY24 financial plan details and give more color about the updated GTM strategy. </li>
</ul>


New Relic reported a solid quarter pushing shares up ~18% during the regular trading session as y/y revenue growth accelerated while gross margin and operating income continued to expand.
We like New Relic’s fundamentals and transformation plan driven across the business. The company raised the outlook for FY23 revenue as 3QFY23 results exceeded guidance. 
New Relic invites investors to an Analyst Day in May, where the company will announce the FY24 financial plan details and give more color about the updated GTM strategy. 


New Relic: Impressive 3QFY23. Profitable Growth Accelerated Driven By Efficiency Initiatives

<ul>
<li>We double down on New Relic stock as we see operational improvement and a clear path to non-GAAP profitability. A strong balance sheet will help to survive an economic downturn.</li>
<li>The company will repay 0.5% senior convertible notes in 2023 and is not interested in diluting existing shareholders. New Relic ended 2QFY23 with $833M in cash and cash equivalents.</li>
<li>American activist investor Jana Partners held ~3.2M New Relic shares as of Nov-22. <a href="https://www.smartkarma.com/entities/new-relic-inc" target="_blank" data-smartkarma-citation="entities:16283:1" rel="noopener">New Relic Inc (NEWR US)</a>  shares underperformed in 2022, with shares down ~49%</li>
</ul>


We double down on New Relic stock as we see operational improvement and a clear path to non-GAAP profitability. A strong balance sheet will help to survive an economic downturn.
The company will repay 0.5% senior convertible notes in 2023 and is not interested in diluting existing shareholders. New Relic ended 2QFY23 with $833M in cash and cash equivalents.
American activist investor Jana Partners held ~3.2M New Relic shares as of Nov-22. New Relic Inc (NEWR US)  shares underperformed in 2022, with shares down ~49%


New Relic: $1B+ Revenue By FY24. Cost Discipline Will Drive Profitability

<ul>
<li>Activist hedge fund Jana Partners bought ~2.66M <a href="https://www.smartkarma.com/entities/new-relic-inc" target="_blank" data-smartkarma-citation="entities:16283:1" rel="noopener">New Relic Inc (NEWR US)</a>  shares in 2Q22 and upped its stake in the tech company to 5.3%.</li>
<li>According to Reuters, New Relic may explore a potential sale following interest from private equity firms. Mr. Galligan, a partner of Jana Partners, joined the New Relic Board in June. </li>
<li>New Relic shares trade at ~4x EV/Rev on our FY23 revenue estimate, and we think Splunk may set a ceiling on the multiple at which New Relic may be acquired. </li>
</ul>


Activist hedge fund Jana Partners bought ~2.66M New Relic Inc (NEWR US)  shares in 2Q22 and upped its stake in the tech company to 5.3%.
According to Reuters, New Relic may explore a potential sale following interest from private equity firms. Mr. Galligan, a partner of Jana Partners, joined the New Relic Board in June. 
New Relic shares trade at ~4x EV/Rev on our FY23 revenue estimate, and we think Splunk may set a ceiling on the multiple at which New Relic may be acquired. 


Will Jana Partners Have Success In Pushing New Relic For A Sale?

United States

New Relic, Inc. provides cloud based application performance management solutions for cloud and data center applications. The Company offers a solution including real user, application, and availability monitoring features that enable developers and operations teams to manage web application performance in real-time. New Relic conducts its business in the United States.

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New Relic Inc (NEWR US)

Freshworks: 2023 Investor Day and Valuation Update

2023 Investor Day highlights massive TAM, ongoing business momentum, adoption of multi-product strategy, and AI monetization opportunities: PT...

Andrei Zakharov

Elastic: Blowout 1QFY24 Earnings. Shares Popped ~20% On Heavy Volume

Elastic beats expectations with strong Q1FY24 results, guiding FY24 ahead of consensus estimates. I remain bullish on the stock and see further...

Andrei Zakharov

New Relic: Impressive 3QFY23. Profitable Growth Accelerated Driven By Efficiency Initiatives

New Relic surprised investors and reported better-than-expected 3QFY23 results driven by consumption and efficiency initiatives

Andrei Zakharov

New Relic: $1B+ Revenue By FY24. Cost Discipline Will Drive Profitability

We like New Relic’s turnaround story and believe revenue growth will accelerate in the coming years while the company will hit $1B+ revenue this year

Andrei Zakharov

Will Jana Partners Have Success In Pushing New Relic For A Sale?

Our analysis suggests that New Relic may be acquired with a premium of 30%-40% vs. current levels, and Jana Partners will succeed by pushing New...

Andrei Zakharov

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Freshworks: 2023 Investor Day and Valuation Update

2023 Investor Day highlights massive TAM, ongoing business momentum, adoption of multi-product strategy, and AI monetization opportunities: PT...

Andrei Zakharov

Elastic: Blowout 1QFY24 Earnings. Shares Popped ~20% On Heavy Volume

​Elastic beats expectations with strong Q1FY24 results, guiding FY24 ahead of consensus estimates. I remain bullish on the stock and see further...

Andrei Zakharov

New Relic: Impressive 3QFY23. Profitable Growth Accelerated Driven By Efficiency Initiatives

New Relic surprised investors and reported better-than-expected 3QFY23 results driven by consumption and efficiency initiatives

Andrei Zakharov

New Relic: $1B+ Revenue By FY24. Cost Discipline Will Drive Profitability

We like New Relic’s turnaround story and believe revenue growth will accelerate in the coming years while the company will hit $1B+ revenue this year

Andrei Zakharov

Will Jana Partners Have Success In Pushing New Relic For A Sale?

Our analysis suggests that New Relic may be acquired with a premium of 30%-40% vs. current levels, and Jana Partners will succeed by pushing New...

Andrei Zakharov

Elastic beats expectations with strong Q1FY24 results, guiding FY24 ahead of consensus estimates. I remain bullish on the stock and see further...