Breaking Analysis with Dave Vellante

A better than expected earnings report in late August got people excited about Snowflake again but the negative sentiment in the market has weighed heavily on virtually all growth tech stocks.  Snowflake is no exception. As we’ve stressed many times, the company’s management is on a long term mission to simplify the way organizations use data. Snowflake is tapping into a multi-hundred billion dollar total available market and continues to grow at a rapid pace. In our view the company is embarking on its third major wave of innovation, data apps, while its first and second waves are still bearing significant fruit. For short term traders focused on the next 90 or 180 days, that probably doesn’t matter much. But those taking a longer view are asking, should we still be optimistic about the future of this high flier or is it just another over-hyped tech play? In this Breaking Analysis we take a look at the most recent survey data from ETR to see what clues and nuggets we can extract to predict the near future and the long term outlook for Snowflake.

Over the past decade, Cloudflare has built a global network that has the potential to become the fourth U.S.-based hyperscale-class cloud. In our view, the company is building a durable revenue model with hooks into many important markets. These include the more mature DDoS protection space, but also extend to growth sectors such as zero trust, a serverless platform for application development and an increasing number of services such as database and object storage. In essence, Cloudflare can be thought of as a giant, distributed supercomputer that can connect multiple clouds and act as a highly efficient scheduling engine– allocating and optimizing resources at scale. Its disruptive DNA is increasingly attracting novel startups and established global firms looking for a reliable, secure, high performance, low latency and more cost effective alternative to AWS and legacy infrastructure solutions. In this Breaking Analysis we initiate deeper coverage of Cloudflare. While the stock got hammered this past week on tepid guidance, we are optimistic about the company’s future. In this post, we’ll briefly explain our take on the company and its unique business model. We’ll then share some peer comparisons with both a financial snapshot and some fresh ETR survey data. Finally we’ll show some examples of how we think Cloudflare could be a disruptive force with a supercloud-like offering that, in many respects, is what multi-cloud should have been. 

Have you ever driven on the highway and traffic suddenly slows way down? And then after a little while it picks up again and you’re cruising along thinking…ok that was weird but it’s clear sailing now…only to find out in a bit that that traffic is building up again, forcing you to pump the brakes as the traffic patterns ebb and flow? Well welcome to the seesaw economy. The Fed induced fire that prompted a rally in tech is being purposely extinguished by that same Fed and virtually every sector of the tech industry is having to reset its expectations – including the cloud. In this Breaking Analysis we’ll review the implications of this week’s earnings announcements from the big 3 cloud players. The growth of AWS and Azure slowed while Google Cloud Platform’s growth accelerated. We’ll explain why GCP’s growth is still not fast enough. We’ll update you on our quarterly IaaS forecasts and share the latest cloud survey data from ETR.

The overall technology spending outlook is deteriorating. And yet there are positive signs making things unpredictable. The negative sentiment is of course being driven by macroeconomic factors and earnings forecasts that have been coming down all year while interest rates keep rising. Making matters worse is many people think earnings estimates are still too high. It’s understandable why there’s so much uncertainty. Technology continues to boom. Digital transformations are happening in earnest. Leading companies have momentum and long cash runways. Moreover, the CEOs of these leading companies are still really optimistic. But strong guidance in an environment of uncertainty is risky and makes navigation more challenging. In this Breaking Analysis we try to put some guardrails on the market by sharing takeaways from from ETRs latest spending survey, which was released to their private clients on the 21st of October. Today we’re going to review the macro spending data, convey where CIOs think their cloud spend is headed, look at the actions organizations are taking to manage uncertainty and then review some of the technology companies that have the most positive and negative outlooks in the ETR data set. 

This past week, we saw two of the “Big 3” cloud providers present an update of their respective cloud visions, business progress, announcements and innovations. The content at these events had many overlapping themes including modern cloud infrastructure at global scale, applying advanced machine intelligence, end-to-end data platforms, the future of work, automation and a taste of the metaverse/Web 3.0. And more. Despite the striking similarities, the differences between these two cloud platforms, and that of AWS, remain significant with Microsoft leveraging its massive application software footprint to dominate virtually all markets; AndGoogle doing everything in its power to keep up with the frenetic pace of today’s cloud innovation which was set into motion a decade and a half ago by AWS. In this Breaking Analysis, we unpack the immense amount of content presented by the CEOs of Microsoft and Google Cloud at Microsoft Ignite and Google Cloud Next. We’ll also quantify with ETR survey data, the relative position of these two cloud giants in four key sectors – Cloud IaaS, BI analytics, data platforms and collaboration software.

Dave Vellante provides his take on the transformation of Dell to Dell EMC to Dell Technologies, the impact of the VMware spin out and what the future holds for this bellwether infrastructure player.

Is the glass half full or half empty? Well, it depends on how you want to look at it. CIOs are tapping the brakes on spending that’s clear. The latest macro survey from ETR quantifies what we already know to be true, that IT spend is decelerating. CIOs and IT buyers forecast that their tech spend will grow by 5.5% this year, a meaningful deceleration from their year end 2021 expectations…but these levels are still well above historical norms – so while the feel good factor may be in some jeopardy, overall things are pretty good – at least for now. In this Breaking Analysis, we update you on the latest macro tech spending data from Enterprise Technology Research, including strategies organizations are employing to cut costs…and which project categories continue to see the most traction.

Virtually all tech companies have expressed caution on their respective earnings calls. And why not… the macroeconomic environment is full of uncertainties and there’s no upside to providing aggressive guidance when sellers punish even the slightest miss. Moreover, the spending data confirms the market is softening across the board, so it’s becoming expected that CFOs will guide cautiously. But companies facing execution challenges can’t hide behind the macro. Which is why it’s important to understand which firms are best positioned to maintain momentum through the headwinds and come out the other side stronger. In this Breaking Analysis we’ll do three things: 1) Share a high-level view of the spending squeeze almost all sectors are experiencing; 2) Highlight some of those companies that continue to show notably strong momentum – and relative high spending velocity on their platforms – albeit less robust than last year; and 3) give you a peek at how one senior technology leader in the financial sector sees the competitive dynamic between AWS, Snowflake and Databricks. 

Like a marathon runner pumped up on adrenaline, UiPath sprinted to the lead in what is surely going to be a long journey toward enabling the modern automated enterprise. In doing so, the company has established itself as a leader in enterprise automation, while at the same time getting out over its skis on critical execution items and disappointing investors along the way. In our view, the company has plenty of upside potential but will have to slog through its current challenges including restructuring its go to market, prioritizing investments, balancing growth with profitability and dealing with a difficult macro environment. In this Breaking Analysis and ahead of Forward5, UiPath’s customer conference, we once again dig into RPA and automation leader UiPath, to share our most current data and view of the company’s prospects, its performance relative to the competition and market overall.

In just over ten years, CrowdStrike has become a leading independent security firm. It has more than $2B in annual recurring revenue, nearly 60% ARR growth, a roughly $40B market capitalization, very high retention and a path to $5B in revenue by mid-decade. The company has joined Palo Alto Networks as a gold standard pure play cyber firm.It has achieved this lofty status with an architecture that enables it to go beyond point product. Combine this with outstanding go to market, solid financial execution, some sharp acquisitions and an ever-increasing total available market and you have the formula for a great company.In this Breaking Analysis and ahead of Fal.Con, CrowdStrike’s user conference, we take a deeper look into the company, its performance, its platform and customer survey data from our partner ETR.