from the cube studios in palo alto in boston bringing you data driven insights from the cube and etr this is breaking analysis with dave vellante snowflake they love the stock at 400 and hated at 165 that's the nature of the business i guess especially in this crazy cycle over the last two years of lockdowns free money exploding demand and now rising inflation and rates but with the fed providing some clarity on its actions the time has come to really dig into the fundamentals of companies and there's no tech company that's more fun to analyze than snowflake hello and welcome to this week's wikibon cube insights powered by etr in this breaking analysis we look at the action of snowflake stock since its ipo why it's behaved the way it has how some sharp traders are looking at the stock and most importantly what customer demand looks like the stock has really provided some great theater since its ipo i know people who got in at 120 before the open and i know lots of people who kind of held their noses and bought the stock on day one at over 300 a day when it closed at around 240 that first day of trading snowflake hit 164 this week it's all-time low as a public company as my college roommate chip simonton a long time trader told me when great companies trade at all times time lows because of panic it's worth taking a shot he did now of course the stock could go lower there's geopolitical risk and the stock with a 64 billion market cap is expensive for a company that's forecast to do around 2 billion in product revenue this year and remember i don't recommend stocks you shouldn't take my advice and my comments you got to do your own research but i have lots of data and i have opinions and i'm willing to share that with you stocks like snowflake crowdstrike z-scaler octa and companies like this are highly volatile when markets are moving up they're going to move up faster than the mean when they're declining they're going to drop more severely and that's clearly what's happened to snowflake so with a company like this you when you see panic selling you'll also see panic buying sometimes like we we've seen with this name it went from 220 to 320 in a very short period earlier snowflake put in a short-term bottom this week and many traders feel the issue was oversold so they bought okay but not everyone felt this way and you can see this in the headlines snowflake hits low but cloud stocks rise and we're going to come back to that is it a buy don't buy the dip buy the dip and what snowflake investors can learn from microsoft and from the street.com snow stock is sliding on the back of ill-conceived guidance and to that i would say that conservative guidance these days is anything but ill-conceived now let's unpack all this a bit and to do so i reached out to ivana delevska who has been on this program before she's with spear invest a female-led etf that goes deep into understanding supply chains she came on breaking analysis and laid out her thesis to buy the dip on snowflake this is a while ago she told me currently spear still likes snowflake and has doubled its position let me share her analysis she called out two drivers for the downside interest rates you know rising of course in snowflakes guidance which my own publication called weak in that previous chart that i just showed you so let's dig into that a bit snowflake guided for product revenues of 67 year on year which was below buy side expectations but i believe within sell side consensus regardless the guide was nuanced and driven by snowflake's decision to pass along price efficiencies to customers from optimizing processor price performance predominantly from aws's graviton too this is going to hit snowflakes revenue a net of about a hundred million dollars this year but the timing's not precise because it's going to hit 165 million but they're going to make up 65 million in increased demand frank slootman on the earnings call made this very clear he said quote this is not philanthropy this stimulates demand classic slootman the point is spear and other bulls believe that this will result in a gain for snowflake over the medium term and we would agree price goes down roi gets better you throw more projects at snowflakes customers going to buy more snowflake and when that happens and it gives the company an advantage as they continue to build their moat it's a longer term bet on cloud and data which are good bets now some of this could also be competitive pressures there have been you know studies that are out there from competitors attacking snowflakes pricing and price performance and they make comparisons oracle's been pretty aggressive as have others but so far the company's customers continue to consume now at a very fast rate now on on this front what can we learn from microsoft that applies to snowflake that's the headline here from benzinga so the article quoted a wealth manager named josh brown talking about what happened to microsoft after the dot-com bubble burst and how they quadrupled earnings over the next decade and the stock went sideways suggesting the same thing could happen to snowflake now i'd like to make a couple of comments here first at the time microsoft was a 23 billion dollar company and it had a monopoly and was already highly profitable steve ballmer became the ceo of microsoft right after the dot-com bubble burst and he hugged onto windows for dear life and lived off of microsoft's pc software monopoly microsoft became an extremely profitable and remarkably uninteresting caretaker of a pc in on-prem software estate during balmer's tenure so i just don't see the comparison as relevant snowflake you know they're going to make struggle for other reasons but that one didn't really resonate with me what's interesting is this chart it poses the question do cloud and data markets behave differently it's a chart that shows aws growth rates over time and superimposes the revenue in the red in q1 2018 aws generated 5.4 billion dollars in revenue and that was growing at the time at nearly a 50 rate now that rate as you can see decelerated quite significantly as aws grew to a 50 billion dollar run rate company that down below where you see it bottoms now it makes sense right law of large numbers you can't keep growing that fast when you get that big well oops look what happened in 2021 aws's growth rate bottoms in the high 20s and then rockets back up to 40 this past quarter as aws surpasses a 70 billion dollar run rate so you have to ask is cloud different is data different is cloud data different or data cloud different let's put it in the snowflake parlance can cloud because of its consumption model and the speed of innovation and ecosystem depth and breadth enable snowflake to exhibit lots of variability in its growth rates versus a say progressive and somewhat linear decline as the company grows revenue which is what you would expect historically and part of the answer relates to its market size here's a chart we've shared before with some additions it's our version of snowflake's total available market they're tam which snowflake's version that that blue data cloud thing superimposed on the right it shows the various layers of market opportunity that we came up with that that snowflake and others we think have in front of them emerging from the disruption of legacy data lakes and data warehouses to what snowflake refers to as its data cloud we think about the data mesh concept and decentralized data architectures with domain ownership and data product and service builders as consistent with snowflake's data cloud vision where snowflake data stores are nodes they're just simply discoverable nodes on the mesh you could have you know data bricks data lakes you know s3 buckets on that mesh it doesn't matter they can be discovered they can be shared and of course they're governed in a federated model now in snowflake's model it's all inside the snowflake data cloud that's fine then you'll go to the out years it gets a little fuzzy you know from edge locations and ai inference it becomes massive and decision making occurs in real time where machines and machine data take over the world instead of you know clicks and keystrokes sounds out there but it's real and how exactly snowflake plays there at this point is unclear but one thing's for sure there'll be a lot of data and it's going to find its way into snowflake you know snowflake's not a real-time engine it's an analytical system it's moving into the realm of data science and you know we've talked about the need for you know semantic layer between those those two worlds of analytics and data science but expanding the scope further out we think that snowflake is a big role to play in this future and the future is massive okay check you got the big tam now as someone that looks at companies through a fundamentals prism you've got to look obviously at the markets in the tan which we just did but you also want to understand customers and it's not hard to find snowflake customers capital one disney micron alliance sainsbury sonos and hundreds of other companies i've talked to snowflake customers who have also been customers of oracle teradata ibm neteza vertica serious database practitioners and they tell me it's consistent soulflake is different they say it's simpler it's more agile it's less complicated to secure and it's disruptive to their traditional ways of doing data management now of course there are naysayers i've spoken to a number of analysts that feel snowflake is deficient in areas like workload management and course complex joins and it's too specialized in a world where we're seeing the convergence of analytics and transactional workloads our own david floyer believes that what oracle is doing with mysql heatwave is radically disruptive to many of the database architectures and blows away anything out there and he believes that snowflake and the likes of aws are going to have to respond now this the other criticism here is that snowflake is not architected for real-time inference where a lot of that edge activity is is going to happen it's a multi-hundred billion dollar market and so look snowflake has a ton of competition that's the other thing all the major cloud players have very capable and competitive database platforms even though they all partner with snowflake except oracle of course but companies like databricks and have garnered tons of vc other vc funded companies have raised billions of dollars to do this kind of elastic consumption based separate compute from storage stuff so you have to always keep an open mind and be aware of potential blind spots for these companies but to the criticisms i would say look snowflake they got there first and watch their ecosystem it's a real key to its continued success snowflake's not going to go it alone and it's going to use its ecosystem partners to expand its reach and accelerate the network effects and fill those gaps and it will acquire its stock is valuable so it should be doing that just as it did with streamlit a zero revenue company that it bought for 800 million dollars in stock and cash just recently streamlit is an open source python library that gets snowflake further deeper into that data science space that data brick space and look watch what snowflake is doing with snowpark it's an api library for processing data and building data intensive applications we've talked about snowflake essentially being becoming the super cloud and building this sort of path-like layer across clouds rather than trying to do it all themselves it seems snowflake is really staring at the api economy and building its ecosystem to plug those holes so let's come back to the customers here's a chart that shows snowflakes customer spending momentum or net score on the the top line that's the vertical axis and pervasiveness in the data or market share and that bottom brown line snowflake has unprecedented net scores and held them up for many many quarters as you can see here going back you know a couple years all leading to its expanded market penetration and measured as pervasiveness of so-called market share within the etr survey it's not like idc market share it's pervasiveness in the data set now i'll say this i don't see how this is sustainable i've been waiting for this to moderate i wouldn't be surprised to see snowflake come back to earth a little bit i think they'll clearly still be highly elevated based on the data that i've seen but but i could see in in one or more of the etr surveys this year this starting to moderate as they get they get big it's just it has to happen um but i would again expect them to have a high spending velocity score but i think we're going to see snowflake you know maybe porpoise a bit here meaning you know it moderates it comes back up it's just really hard to sustain this piece of momentum and higher train retain and scale without absorbing some some friction and some head woods that's going to slow you down but back to the aws growth example it's entirely possible that we could see a similar dynamic with snowflake that you saw with aws and you kind of see it with salesforce and servicenow very successful large entrenched entrenched companies and it's very possible that snowflake could pull back moderate and then accelerate that growth even though people are concerned about the moderated guidance of 80 percent growth yeah that's that's the new definition of tepid i guess i look i like to look at other some other metrics the one that really called you know my my my attention was the remaining performance obligations this last quarter rpo snowflakes is up to something like 2.6 billion and that is a forward-looking indicator of of future revenues so i want to i'd like to see that growing and it's growing at a fast pace so you're going to see some ups and downs with snowflake i have no doubt but i think things are still looking pretty solid for the company growth companies like snowflake and octa and z scalar those other ones that i mentioned earlier have probably been repriced and refactored by investors while there's always going to be market and of course geopolitical risk especially in these times fundamentals matter you've got huge market well capitalized you got a leadership position great products and strong customer adoption you also have a great team team is something else that we look for we haven't touched on that but i'll leave you with this thought everyone knows about frank slootman mike scarpelli and what they've accomplished in their years of working together that's why the stock you know in ipo was was so overvalued they had seen these guys do it before slootman just documented in all this in his book amp it up which gives great insight into the history of of that though you know that pair and and the teams that they've built the companies that they've built how he thinks about building companies and markets and and how you know total available markets super important but the whole philosophy and culture that that he's building in his management style but you got to wonder right how long is this guy going to keep going what keeps him motivated you know i asked him that one time here's what he said why i mean are you in this for the sport what's the story here uh actually that that's not a bad way of characterizing it i think i am in it uh you know for the sport uh you know the only way to become the best version of yourself is to be uh to be under the gun and uh you know every single day and that's that's certainly uh what we are it sort of has its own rewards building great products building great companies uh you know regardless of you know uh what the spoils may be uh it has its own rewards and i i it's hard for people like us to get off the field and uh you know hang it up so here we are so there you have it he's in it for the sport how great is that he loves building companies and that my opinion that's how frank slootman thinks about success it's not about money money's the byproduct of success as earl nightingale would say success is the progressive realization of a worthy ideal i love that quote building great companies building products that change the world changing people's lives with data and insights creating jobs creating life-altering wealth opportunities not for himself but for thousands of employees and partners i'd say that's a pretty worthy ideal and i hope frank slootman sticks with it for a while okay that's it for today thanks to stephanie chan for the background research she does for breaking analysis alex meyerson on production kristen martin and cheryl knight on social with rob hoff on siliconangle and thanks to ivana delevska of spear invest and my friend chip symington for the angles from the money side of things remember all these episodes are available as podcasts just search breaking analysis podcast i publish weekly on wikibon.com and siliconangle.com and don't forget to check out etr.plus for all the survey data you can reach me at devolante or david.velante siliconangle.com and this is dave vellante for cube insights powered by etrbsafe stay well and we'll see you next time [Music] you

from the cube studios in palo alto in boston bringing you data driven insights from the cube and etr this is breaking analysis with dave vellante by the dip has been been an effective strategy since the market bottomed in early march last year the approach has been especially successful in tech and even more so for those tech names that one were well positioned for the forced march to digital i sometimes call it i.e remote work online commerce data centric platforms and certain cyber security plays and two already had the cloud figured out the question on investors minds is where to go from here should you avoid some of the high flyers that are richly valued with eye-popping multiples or should you continue to buy the dip and if so which companies that capitalized on the trends from last year will see permanent shifts in spending patterns that make them a solid long-term play hello and welcome to this week's wikibon cube insights powered by etr in this breaking analysis we shine the spotlight on three companies that may be candidates for a buy the dip strategy and it's our pleasure to welcome in ivana delevco who's the chief investment officer and founder of spear alpha a new research-centric etf focused on industrial technology ivana is a long-time equity analyst with a background in both long and short investing ivana welcome to the program thanks so much for coming on thanks for having me david yeah it's really our pleasure i i want to start with your etf and give the folks a bit more background about you first you know we gotta let people know i'm not an investment pro i'm not an advisor i don't make stock recommendations i don't sell investments so you got to do your own research i have a lot of data so happy to share it but you got to understand your own risks you of course yvonne on the other hand you do offer investment services and so people before investing got to carefully review all the available available investment docs understand what you're getting into before you invest now with that out of the way ivana i have some stats up here on this slide your spear you're a newly launched female lead firm that does deep research into the supply chain we're going to talk about that you try to uncover as i understand it under-appreciated industrial tech firms and some really pretty cool areas that we list here but tell us a little bit more about your background and your etf so thanks for having me david my background is in industrial research and industrial technology investments i've spent the past 15 years covering this space and what we've seen over the past five years is technology changes that are really driving fundamental shifts in industrial manufacturing processes so whether this is 5g connectivity innovation in the software stack increasing compute speeds all of these are major technological advancements that are impacting uh traditional manufacturers so what we try to do is assess speak to these firms and assess who is at the leading and who is at the lagging end of this digital transformation and we're trying to assess what vendors they're using what processes they're implementing and that is how we generate most of our investment ideas okay great and and we show on the bottom of of this sort of intro slide if you will uh so one of the processes that you use and one of the things that that is notable a lot of people compare you uh to kathy woods are investments when you came out uh i think you use a different process i mean maybe there are some similarities in terms of disruption but at the bottom of this slide it shows a mckinsey sort of graphic that that i think informs people as to how you really dig into the supply chain from a research standpoint is that right absolutely so for us it's all about understanding the supply chain going deep in the supply chain and gather data points from primary sources that we can then translate into investment opportunities so if you look at this mckinsey graph uh you will see that there is a lot of opportunity to for these companies to transform themselves both on the front end which means better revenue better products and on their operation side which means lower cost whether it's through better operations or through better processes on the the back end so what we do is we will speak to a traditional manufacturing company and ask them okay well what do you use for better product development and they will give us the name of the firms and give us an assessment of what's the differences between the competitors why they like one versus the other so then we're gonna take the data and we will put it into our financial model and we'll understand the broader market for it um the addressable market the market share that the company has and will project the growth so for these higher growth stocks that that you cover the main alpha generation uh potential here is to understand what the amount of growth these companies will generate over the next 10 to 20 years so it's really all about projecting growth in the next three years in the next five years and where will growth ultimately settle in in the next 10 to 20 years love it we're gonna have a fun conversation because today we're going to get into your thesis for cooper snowflake and z scalar we're going to bring in some of our own data some of our data from etr and and why you think these companies may be candidates for long-term growth and and be buy the dip stock so to do that i hacked up this little comparison slide we're showing here i do this for context our audience knows i'm not a cfa or a valuation expert but we like to do simple comparisons just to give people context and a sense of relative size growth and valuation and so this chart attempts to do that so what i did is i took the most recent quarterly revenue for cooper snowflake and z scalar multiplied it by four to get a run rate we included servicenow in the table just for baseline reference because bill mcdermott as we've reported aspires to make service now the next great enterprise software company alongside with salesforce and oracle and some of the others and and all these companies that we list here that through the three here they aspire to do so in their own domain so we're displaying the market cap from friday morning september 10th we calculated a revenue run rate multiple and we show the quarterly revenue growth and what this data does is gives you a sense of the three companies they're well on their way to a billion dollars in revenue it underscores the relationship between revenue growth and valuation snowflake being the poster child for that dynamic savannah i know you do much more detailed financial analysis but let's talk about these companies in order maybe start with koopa they just crushed their quarter i mean they blew away consensus on the top line what else about the company do you like and why is it on your by the dip list so just to back up david on valuation these companies investors either directly or indirectly value on a dcf basis and what happened at the beginning of the year as interest rates started increasing people started freaking out and once you plug in 100 basis points higher interest rate in your dcf model you get significant price downside so that really drove a lot of the pullback at the beginning of the year right now where we stand today interest rates haven't really moved all that significantly off the bot of the bottom they're still around the same levels maybe a little bit higher but those are not the types of moves that are going to drive significant downside in this stock so as things have stabilized here a lot of these opportunities look pretty attractive on that basis so koopa specifically came out of our um if you go back to that uh the chart of like where the opportunities lie in um in across the manufacturing uh um enterprise koopa is really focused on business pen management so they're really trying to help companies reduce their cost uh and they're a leader in the space uh they're unique uh unique in that they're cloud-based so the feedback we've been hearing from from our companies that use it jetblue uses it train technologies uses it the feedback we've been hearing is that they love the ease of implementation so it's very easy to implement and it drives real savings um savings for these companies so we see in our dcf model we see multiple years of this 30 40 percent growth and that's really driving our price target yeah and we can i can confirm that i mean i mean just anecdotally you know you know we serve a lot of the technology community and many of our clients are saying hey okay you know when you go to do invoicing or whatever you work with procurement it's koopa you know this is some ariba that's kind of the legacy which is sap we'll talk about that a little later but let's talk about snowflake um you know snowflake we've been tracking them very closely we know the management there we've watched them through their last two companies now here and have been following that company early on since since really 2015. tell us why you like snowflake um and and maybe why you think it can continue its rapid growth thanks david so first of all i need to compliment you on your research on the company on the technology side so where we come in is more from understanding where our companies can use soft snowflake and where snowflake can add value so what we've been hearing from our companies is the challenge that they're facing is that everybody's moving to the cloud but it's not as simple as just send your data to the cloud and call aws and they're gonna generate more revenue for your solve your cost problem so what we've been hearing is that companies need to find tools that are easy to use where they can use their own domain expertise and just plug and play so um ansys is one of the companies we covered the dust simulation they've found snowflake to be an extremely useful tool in sales lead generation and within sales crm systems have been around for a while and they're they've really been implemented but analyzing sales numbers is something that is new to this company some some of our companies don't even know what their sales are even when they look back after the quarter is closed so tools like this help um companies do easy analytics and therefore drive revenue and cost savings growth so we see really big runway for for this company and i think the most misunderstood part about it is that people view it as a warehousing data warehousing play while this is all about compute and the company does a good job separating the two and what our their customers like or like the companies that we cover like about it is that it can lower their compute costs um and make it much easier much more easily manageable for them great and we're going to talk about more about each of these companies but let's talk about z-scaler a bit i mean z-scaler is a company we've been very excited about and identified them kind of early on they've definitely benefited from the move to cloud generally and specifically the remote work uh situation with the cyber threats etc but tell us why you like z-scaler so interestingly z-scaler um we like the broader security space um the broader cyber security space and interestingly our companies are not yet spending to the level that is commensurate with the increase in attack rate so we think this is a trend that is really going to accelerate as we go forward um my own board 20 of the time on the last board meeting was spent on cyber security what we're doing and this is a pretty simple operation that that we're running here so you can imagine for a large enterprise with thousands of people all around the world um needing to be on a single simple system z-scaler really fits well here very easy to implement several of our industrial companies use it siemens uses it ge uses it and they've had great great experience with it excellent i just want to take a quick look at how some of these names have performed over the last year and and what if anything this data tells us this is a chart comparing the past 12 months performance of of those four companies uh that we just talked about and we added in you know servicenow z scalar as you can see has outperformed the other despite your commentary on discounted cash flow snowflake is underperformed really precisely for the reasons that you mentioned not to mention the fact that it was pretty highly valued and you can see relative to the nas but it's creeping back lately after very strong earnings even though the stock dropped after it beat earnings because the street wants the cfo to say to guide even higher than maybe as mike scarpelli feels is prudent and you can see cooper has also underperformed relatively speaking i mean it absolutely destroyed consensus this week the stock went up but it's been off with the the weaker market this week i know you like to take a longer term view but but anything you would add here yeah so interestingly both z-scaler and koopa were in the camp of as we went into earnings expectations were already pretty high because few of their competitors reported very strong results so this scalar yesterday their revenue growth was was pretty strong the stock is down today uh and the reason is because people were kind of caught up a little bit in the noise of this quarter growth is 57 last quarter it was 60 like is this a deceleration we don't see it as that at all and the company brought up one point that i thought was extremely interesting which is as their deal sizes are getting larger it takes a little longer time for them to see the revenue come through so it takes a little bit of time to for you to see it into from billings into into revenue same thing with cooper very strong earnings report but i think expectations were already pretty high going into it uh given the service now and um and anna plan as well reported strong results so i think it's all about positioning so we love these setups where you can buy the deep in on this opportunity where like people get caught up in um short-term noise and and it creates good entry points excellent i i want to bring in some data from our partner etr and see if you have any comments ivana so what we're showing here is a two-dimensional chart we like to show this uh very frequently it's based on a survey of between a thousand and fifteen hundred chief information officers and technology buyers every quarter this is from their most recent july survey the vertical axis shows net score which is a measure of spending momentum i mean this it measures the net percentage of customers in the survey that are spending more on a particular product or platform in other words it essentially subtracts the percentage of customers spending less from those spending more which yields a net score it's more granular than that but basically that's what it does the horizontal axis is market share or pervasiveness in the data set it's not revenue market share like you get from idc it's it's a mention market share and now that red dotted line at the 40 percent mark on the vertical represents an elevated level in other words anything above 40 percent we consider notable and we've plotted our three by the dip companies and included some of their competitors for context and you can see we added salesforce servicenow and oracle and that orange ellipse because they're some of the bigger names in the software business so let's take these in alphabetical order ivana starting with koopa in the blue you can see we plotted them next to sap's ariba and you can see cooper has stronger spending momentum but not as much presence in the market so to me my influence is oh that's an opportunity for them to steal share more modern technology you know more facile and of course oracle has products in this space but the oracle dot includes all oracle products not just the procurement stuff but uh maybe your thoughts on this absolutely i love this chart i think that's your spot on this would be the same way i would interpret the chart where um increased spending momentum is is a sign of the company providing products that people like and we we expect to see cooper's share grow market share grow over time as well so let's come back to the chart and i want to i want to really point out the green ellipse this is the data zone if you will uh and we're like a broken record on this program with snowflake has performed unbelievably well in net score and spending momentum every quarter the dtr has captured enough end sample in its survey holding near or above 80 percent its net score consistently is has been up there and we've plotted data bricks in that zone it's been expected right that data bricks is going to do an ipo this year late last month company raised 1.6 billion in a private round so i guess that was either a strategy to delay the ipo or raise a bunch more cash and give late investors a low risk bite at the apple you know pre-ipo as we saw with snowflake last year what we didn't plot here are some of snowflake's biggest competitors ivana who also happen to be their partners most notably the big cloud players all who have their own database offerings aws microsoft and google now you've said snowflake is much more than a database company i wonder if you could add some color here yeah that's a very good point david uh basically the the driver of the thesis in snowflake is all about acceleration and spending and what we are seeing is the customers that are signed up on their platform today they're not even spending they're probably spending less than five percent of what they can ultimately spend on this product and the reason is because they don't yet know what the ultimate applications are for this right so you're gonna start with putting the data in a format you can use and you need to come up with use cases or how are you actually going to use this data so back to the example that i gave with answers the first use case that they found was trying to optimize leads there could be like 100 other use cases and they're coming up with with those on a daily basis so i would expect um this score to keep keep uh keep up pretty high or or go even higher as we as people figure out how they can use this product you know the buy-the-dip thesis on snowflake was great last quarter because the stock pulled back after they announced earnings and when we reported we said you know mike the the company see well cleveland research came out remember they got the dip on that and we looked at the data and we said mike scarpelli said that you know we're going to probably as a percentage of overall customers decelerate the net net new logos but we're going deeper into the customer base and that's exactly what's happening with with snowflake but okay let's bring up the slide again last but not least the z scaler we love z scalar we named z scaler in 2019 as an emerging four-star security company along with crowdstrike and octa and we said these three should be on your radar and as you see we've plotted z scalar with octa who with its it's its recent move into to converging identity and governance uh it gets kind of interesting uh we plotted them with palo alto as well another cyber security player that we've covered extensively we love octa in addition to z-scaler we great respect for palo alto and you'll note all of them are over that 40 percent line these are disruptors they're benefiting well not so much palo alto they're more legacy but the the other two are benefiting from that shift to work from home cloud security modern tech stack uh the acquisition that octa-made of of of auth0 and again z scalar cloud security getting rid of a lot of hardware uh really has a huge tailwind at its back if on a zscaler you know they've benefited from the huge my cloud migration trend what are your thoughts on the company so i actually love all three companies that are there right and the point is people are just going to spend more money whether you are on the cloud of the cloud the data centers need more security as well so i think there is a strong case to be made for all three with this scaler the upside is that it's just very easy to use very easy to implement and if you're somebody that is just setting up infrastructure on the cloud there is no reason for you to call any other competitor right with palo alto the case there is that if you have an established um security platfor if you're on their security platform the databa on the data center side uh they they did introduce through several acquisitions a pretty attractive cloud offering as well so they've been gaining share as well in the space and and the company does look pretty attractive on valiation basis so for us cyber security is really all about rising tide lifts all boats here right so you can have a pure play like this scaler uh that benefits from the cloud but even somebody like palo alto is pretty well positioned um to benefit yeah we think so too over a year ago we reported on the valuation divergence between palo alto and fortinet fortinet was doing a better job moving to the cloud and obviously serves more of a mid-market space palo alto had some go-to-market execution challenges we said at the time they're going to get through those and when we talk to chief information security officers palo alto is like the gold standard they're the thought leader they want to work with them but at the same time they also want to participate in some of these you know modern cloud stacks so i we agree there's plenty of room for all three um just to add a bit more color and drill into the spending data a little bit more this slide here takes that net score and shows the progression since january 2019 and you can see a snowflake just incredible in terms of its ability to maintain that elevated net score as we talked about and the table on the insert it shows you the number of responses and all three of these companies have been getting more mentions over time but snowflake and z scale are now both well over 100 n in the survey each quarter and the other notable piece here and this is really important you can see all three are coming out of the isolation economy with the spending uptick nice upticks shown in the most recent survey so that's again another positive but i want to close ivana with kind of making the bull and bear case and have you address really the risks to the buy the dip scenario so look there are a lot of reasons to like these companies we talked about them cooper they've got earnings momentum you know management on the call side had very strong end market demand this the stock you know has underperformed the nasdaq you know this year snowflake and zscaler they also have momentum snowflake get this enormous tam uh although they were punished for not putting a hard number on it which is ridiculous in my opinion i mean the thing is it's huge um the investors were just kind of you know wanting a little binky baby blanket but they all have modern tech in the cloud and really importantly this shows in the etr surveys you know the momentum that they have so very high retention is the other point i wanted to make the very very low churn of these companies however cooper's management despite the blowout quarter they gave kind of underwhelming guidance they've cited headwinds uh they've with the the the lamisoft uh migration to their cloud platform snowflake is kind of like price to perfection so maybe that's an advantage because every every little negative news is going to going to cause the company to dip but it's you know it's pretty high value because salutman and scarpelli everybody expects them to surpass what happened at servicenow which was a rocket ship and it could be all argued that all three are richly priced and overvalued so but ivana you're looking out as you said a couple of years three years maybe even five years how do you think about the potential downside risks in in your by the dip scenario you buy every dip you looking for bigger dips or what's your framework there so what we try to do is really look every quarter the company reports is there something that's driving fundamental change to the story or is it a one-off situation where people are just misunderstanding what the company is reporting so in the case we kind of addressed some of the earnings that that were reported but with koopa we think the man that management is guiding conservatively as they should so we're not very concerned about their ability to execute on on the guidance and and to exceed the guidance with snowflake price to perfection that's never a good idea to avoid a stock uh because it just shows that there is the company is doing a great job executing right so um we are looking for reports like the cleveland report where they would be like negative on the stock and that would be an entry point uh for us so broadly we apply by the deep philosophy but not not if something fundamentally changes in the story and none of these three are showing any signs of fundamental change okay we're going to leave it right there thanks to my guest today ivana tremendous having you would love to have you back great to see you thank you david and def you definitely want to check out sprx and the spear etf now remember i publish each week on wikibon.com and siliconangle.com these episodes they're all available as podcasts all you do is search breaking analysis podcasts you can always connect with me on twitter i'm at d vallante or email me at david.vellante at siliconangle.com love the comments on linkedin don't forget to check out etr.plus for all the survey action this is dave vellante for the cube insights powered by etr be well and we'll see you next time [Music] you

>> From Santa Clara, California, in the heart of Silicon Valley, it's theCUBE covering Technovation's World Pitch 2018. Now, here's Sonia Tagare. >> Hi, welcome back. I'm Sonia Tagare here with theCUBE in Santa Clara, California covering Technovation's World Pitch Summit 2018. A pitch competition in which girls develop apps in order to create positive change in the world. This week 12 finalist teams are competing for their chance to win the coveted gold or silver scholarships. With us today from Mexico we have Edutec and they're consisted of Miriam, Angelica, Luna, and Medina. We have then Luzdhy Huerta and Citalli Ruiz Puga, Ivana Michelle Orozco Lopez, Cesar Valdez, Consuelo Sarahi Checa Navarro, and Vanessa Dinorah Perez Ramirez. Congratulations and welcome to theCUBE. >> Thank you. >> So your app, Care For Me, tell us more about that. >> Who wants to tell? Well, this application, Care For Me, is an app that is focused on the caregiver of a patient with Alzheimer. That normally turns out one person in the family. So during the process of the Alzheimer disease, it's a very difficult situation for all the family. But when they developed the application, they started thinking of the caregiver because sometimes they lost in all the disease. So they developed the application so the caregiver has more support and tools in order to provide very good care for the patient, and as well for themselves. >> And what was the inspiration to create this app? >> Somebody wants to answer that? What is the inspiration? >> My teammate Tivana had a grandma who suffered this disease, so we inspire in this case. >> Well, that's wonderful that you're doing that, and I'm sure it's going to help a lot of people. So what made you join Technovation? (speaks in foreign language) >> Let me just translate it? >> Sure. >> They knew about Technovation because an invitation from the university that we all belong that is (speaks in foreign language). And they mentioned that there were some courses about technology, especially for the science mobile application. (speaks in foreign language) >> Then they mentioned when the course was starting, they informed what is Technovation about, and they know that they have to develop an application with a social impact, so they have to attack some problematic they see in their communities. And then they get very excited to help people, to help another. And at that time, that's where they knew each other because they didn't previously know each other before the competition. >> So how did you all meet? And how did you decide to make this team? (speaks in foreign language) >> So the course is offered by the University of Guadalajara. We offer app inventor and marketing, we brought some experts after some courses. Roughly December, the girls all got together, they didn't know each other, and they decided to form a team, and we're here now, right? (laughs) >> And what are you most excited about for this competition? (speaks in foreign language) (speaks in foreign language) >> She's saying that... Sorry. She's saying that the most exciting about all this and working together is about the opportunity to help other people, and have an impact, and that's why they enjoy working together. >> That's so inspiring. So how do you think Technovation is helping the larger girls in tech conversation? (speaks in foreign language) (speaks in foreign language) >> She's saying that the most impact that they have about these kind of programs is about getting all the fears that you think you have that may be stopping from doing something, so you have to believe that you can to solve all these fears. >> That's awesome. (laughs) So who do you think is the team to beat? Who's the competition? (speaks in foreign language) (speaks in foreign language) >> I think the focus of Technovation is to not pit girls against each other, but to work on themselves and on their project, and hope for the best, I guess. (laughs) >> That's a wonderful perspective to have on this. I want to thank you all so much for being on theCUBE, and congratulations on becoming a finalist, and good luck on your pitch tomorrow. >> Thank you. >> We're here at Technovation's World Pitch Summit 2018 here in Santa Clara, California. Stay tuned for more. (upbeat music)