Narrative: 5G / IOT
Product Family: Aggressive Growth
3 newer companies have surfaced as potential speculative investments within the IOT narrative: SUMO, DT and FROG (FROG and SUMO are recent IPOs)
Objective: Each of these 3 companies have a compelling technology and are positioned to ride the modern application / infrastructure evolution, which of the 3 is the better investment for 12-24 month aggressive (high risk) capital appreciation? This post represents part 1 to filter out which of the 3 is best suited for additional deep dive (if any).
Business overview – per Simply Wall St (link)
- SUMO: 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. Its platform enables organizations to automate the collection, ingestion, and analysis of application, infrastructure, security, and IoT data to derive actionable insights. The company offer a suite of solutions to address areas, such as operational intelligence, security intelligence, business intelligence, and global intelligence.
- DT: Dynatrace, Inc. provides a software intelligence platform for the enterprise cloud applications. It operates Dynatrace, a platform for running and optimizing multi-cloud environments. Its products include AppMon that works in various application environments, such as mobile apps, web apps, web browsers, web servers, Java, .NET, Node.js, PHP, databases, middleware, and mainframe; and Classic Real User Monitoring, which tracks user’s experience from an edge devices comprising smart phones, tablets, PCs, or kiosk through cloud services, as well as customer’s web tiers. The company also provides Synthetic Classic, which offers customer experience, as well as is used to monitor application and application program interface availability and performance; and Network Application Monitoring that provides enterprise applications, network services, user experience, and application delivery across wide-area networks. Its platform allows its customers to modernize and automate IT operations, develop and release software, and enhance user experiences. The company also offers implementation, consulting, and training services. Dynatrace, Inc. markets its products through a combination of direct sales team and a network of partners, including resellers, system integrators, and managed service providers. It serves customers in various industries comprising banking, insurance, retail, manufacturing, travel, and software.
- FROG: JFrog Ltd. provides DevOps platform to achieve continuous software release management platform enabling organizations to deliver software updates across any system in the United States. Its platform acts as bridge between software development and deployment, which enable organizations to build and release software faster. The company’s products include JFrog Artifactory, a package repository that allows teams and organizations to store, update, and manage their software packages at any scale; JFrog Pipelines to secure packages; JFrog Distribution that provides software package distribution with enterprise-grade performance; JFrog Artifactory Edge that utilizes and leverages metadata from JFrog Artifactory to facilitate the transfer of the incremental changes in software packages from their previous versions; JFrog Mission Control, a platform control panel that provides a view of moving pieces of an organization’s CSRM workflow; and JFrog Insight, a DevOps intelligence tool. Its products also comprise JFrog Pro, JFrog Pro X, JFrog Enterprise, and JFrog Enterprise Plus products that offer ongoing updates, upgrades, and bug fixes, as well as cluster configuration, multi-site replication, and SLA support.
Crow$ Descriptions
- SUMO – recent IPO in DevOps tools differentiation on Security
- DT – app observability across cloud infrastructures – x-cloud monitoring
- FROG – recent IPO in DevOps and continuous releases cycles (artifact reuse too)
High Level Comparisons
| Symbol | DT | SUMO | FROG |
| Symbol Name | Dynatrace Inc | Sumo Logic Inc | Jfrog Ltd |
| Exchange | NYSE | NASDAQ | NASDAQ |
| Open | 38.96 | 27.04 | 68.14 |
| High | 39.44 | 27.79 | 68.70 |
| Low | 38.47 | 25.80 | 66.01 |
| Last | 39.09 | 26.75 | 68.34 |
| Change | 0.38 | -0.82 | 0.16 |
| % Change | 0.98% | -2.97% | 0.23% |
| Volume | 2,295,526 | 951,600 | 1,120,200 |
| 20-Day Average Volume | 2,165,525 | 1,809,820 | 1,698,100 |
| Previous Close | 38.71 | 27.57 | 68.18 |
| Industry | IT Services | Internet – Software | Internet – Software |
| Has Options | Yes | Yes | Yes |
| 20-Day Moving Average | 37.70 | 23.82 | 65.74 |
| 20-Day Raw Stochastic | 68.73% | 58.35% | 68.00% |
| 20-Day Relative Strength | 52.19% | 56.10% | 51.38% |
| Weighted Alpha | 53.80 | N/A | N/A |
| Today’s Opinion | 8% Buy | N/A | N/A |
| Previous Opinion | 8% Sell | N/A | N/A |
| Last Month’s Opinion | 24% Sell | N/A | N/A |
| 5-Days %Chg | -1.11% since 12/04/20 | -11.16% since 12/04/20 | +0.32% since 12/04/20 |
| 5-Days Low | 37.91 on 12/10/20 | 24.25 on 12/07/20 | 65.68 on 12/10/20 |
| 5-Days High | 41.11 on 12/08/20 | 32.44 on 12/07/20 | 73.61 on 12/07/20 |
| 1-Month %Chg | +8.61% since 11/11/20 | +37.18% since 11/11/20 | +11.94% since 11/11/20 |
| 1-Month Low | 34.65 on 11/13/20 | 18.78 on 11/13/20 | 57.14 on 11/23/20 |
| 1-Month High | 41.11 on 12/08/20 | 32.44 on 12/07/20 | 73.61 on 12/07/20 |
| 3-Month %Chg | -0.10% since 09/11/20 | -0.48% since 09/17/20 | +5.48% since 09/16/20 |
| 3-Month Low | 33.83 on 11/10/20 | 16.71 on 10/30/20 | 57.14 on 11/23/20 |
| 3-Month High | 45.18 on 10/14/20 | 32.44 on 12/07/20 | 95.20 on 10/26/20 |
| 6-Month %Chg | +10.30% since 06/11/20 | -0.48% since 09/17/20 | +5.48% since 09/16/20 |
| 6-Month Low | 33.83 on 11/10/20 | 16.71 on 10/30/20 | 57.14 on 11/23/20 |
| 6-Month High | 48.85 on 09/02/20 | 32.44 on 12/07/20 | 95.20 on 10/26/20 |
| Market Capitalization, $K | 11,027,132 | 2,737,007 | 6,060,050 |
| Shares Outstanding, K | 282,096 | 102,318 | 88,675 |
| Annual Sales | 545,800,000 | 155,056,000 | 580 |
| Annual Net Income | -418,020,000 | -92,137,000 | -719,870 |
| Last Quarter Sales | 168,590,000 | 49,415,000 | 38,890,000 |
| Last Quarter Net Income | 17,480,000 | -12,217,000 | -5,270,000 |
| 60-Month Beta | 1.50 | N/A | N/A |
| Most Recent Earnings | 0.18 on 10/28/20 | 0.06 on 12/07/20 | 0.05 on 11/04/20 |
| Latest Earnings Date | 02/03/21 | 12/07/20 | 02/03/21 |
| Most Recent Dividend | N/A | N/A | N/A |
| Next Ex-Dividends Date | N/A | N/A | N/A |
| Price/Earnings ttm | 107.53 | 0.00 | 0.00 |
| Downloaded from Barchart.com as of 12-13-2020 01:30pm CST |
DT – orange, SUMO – blue, FROG – grey
Valuation Comparisons
Valuations based on past performance are not meaningful given new companies with limited history – Simply Wall St
FinBox
Confidence: DT = Med, SUMO and FROG = Very Low
Given the characteristics of the 3 companies, (only DT has any public historical audited data), different metrics are needed as the traditional rearview mirror analysis is not possible.
First pass set:
- Revenue growth actual
- Revenue growth estimates
- Profit / Loss change – more cash flow than income
- R&D spends vs Rev
- Rev per Employee
- Common shares outstanding (full dilution)
- Revenue over debt
Working primarily from Finbox.io data and in some cases SA, the following was pretty quickly put together – colored cells are indicators Green = Best
Across these metrics, looking at only the last 4 quarters, SUMO is the obvious better selection.
Part 2 will focus on a deep dive into SUMO (trading the stock along the way is planned)