TMTB: CRWD +23% takes shots at PANW; TSM JPM bulls; TSLA Jonas at MS cuts #s; JD solid EPS; 3P Roundup (TSLA, ORCL, META); SMCI +ve initiation; NVDA +ve initiation; GTLB ug at Wolfe; PLTR Army contrac

Good morning. QQQs are up 75bps, BTC is up 4.5%, China is +2.5%, yields are flat. What a difference one print makes: big move by CRWD this morning shows how neg sw sentiment was heading in post other sw misses (ZS, PANW, WDAY, ESTC, SNOW). Do we get a reversal in the hw vs. sw trade today?

Day 3 at MS TMT….Key presentations I’m watching today: PINS CEO 7:15am, ZS CEO 7:15am ESTC CEO 8:45am, Databricks CEO 10:15am, INTC CEO 10:15am, UBER CEO 12:35pm, SHOP CFO 1:20pm, TTD CEO 2:05pm; GOOGL SVP 2:05pm

Let’s get to the fun stuff…

CRWD +23% with a great q with the standout being much better NNARR at $282M vs bogeys of $255M-$260M and street at $241M.

Q1NNARR expected to see up to low teens y/y growth.

Bulls will say CRWD will continue to accelerate revs and NNARR while margins expand and $1B+ NNARRR is on the table based on the CAGR implies in the 5-7 year $10B target as the ARR base that is coming from Identity, Cloud, SIEM will eventually represent 50% of that target. Bulls will also say given PANW/ZS challenges, investors who still want exposure to cyber have less to choose from and CRWD the best game in town. Bears will say stock is expensive but bulls will say given good visibility/execution and scarcity value of ~30% ARR and FCF CAGRs, paying 40x FCF is reasonable.

CRWD CEO was bullish on the call talking up competitive advantage vs others in the space (wouldn’t be surprised to see PANW weak on some of his comments). He didn’t hold back when going after competitors. On why a global financial services giant replaced PANW with CRWD products: "The patchwork of multi-product, multi-agent, multi-console, separate platform technologies resulted in visibility gaps, asynchronous alerts & overall fatigue managing cloud security"

Other Key quotes from CEO:

“I heard a lot about platformization over the last week. To me, it's kind of a made-up, fugazi term, but what I believe our competitors are talking about is bundling, discounting, and giving products away for free, which is nothing new in its software and security software. It's been done for the last 30 years…So, I've been around the block for a bit. I've seen this movie of wrap and roll and bundling together with multiple products that were acquired. And last time I saw that, I was at McAfee.””

“We have a single platform. Our competitors have many other platforms, as they call them. We have a single agent. Our competitors have five, six, seven, eight, eights, depending on the competitors…..I've, in a prior life, I've been involved in companies that acquired a lot of products, and I can tell you, it is near impossible to stitch all this stuff together, particularly at the agent level, unless you're very diligent about it.”

Citi noted keys from the callback included: 1) no 1x outsized influences 2) still plenty of displacement to go 3) robust GM is cultural and structural and 4) strong LT DR is just as seasonal outcome, expect more pronounced Q4/Q1 billings seasonality.

The move speaks for itself about how bad sw sentiment had gotten after several misses (ZS, PANW, WDAY, ESTC, SNOW) and the big down move yesterday in the space. This will help repair some of the negative sw sentiment over the last few days —I imagine MDB gets a nice bid today given it’s next on the docket.

Details:

Q4 Revs $845.3mm vs. street $840mm (guidance $836.6-$840mm)
Q4 ARR $3.44bn vs. Street $3.394bn
Q4 Net New ARR $282M vs Street $241M and bogeys of $260-$265M
Q4 OI $213.1M in line with street (guidance $186.5-$189mm)
Q4 EPS $0.95 vs. Street $0.83

Q1 Rev Guide $902.2-$905.8M vs. DB street $899M
Q1 OI $188.1-190.8M vs. Street $189M
Q1 EPS $0.89-$0.90 vs street $0.82

FY25 Rev Guidev$3.924.9-$3.989B vs. street$3.941bn
FY25 OI $863.6-$913.0M vs. Street $877M
FY25 EPS $3.77-$3.97 vs street $3.76

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TSM: JPM raises PT to NT850 from 770 based on expectations for higher AI related rev growth (25% of total revs by 2027) and says the company is “the enabler for almost all AI processing at the data center and the edge”

JPM also notes that INTC may increase outsourcing to TSM at N3, perhsaps including some of its CPU tiles at Arrow Lake, which means INTC revs to TSM could reach $8-9B in 2025, well ahead of prior expects of $5.5-6B

TMTB: Good note here as $3B of incremental revenue from INTC would be a big deal. Sentiment has been picking up on TSM lately as investors realize its key enabled of AI and has lagged other AI stocks (likely bc geopolitical risks). Heard someone comment in TMTB chat the other day: If they were called Japan semi instead of Taiwan semi, stock would be 100% higher.

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TSLA: MS lowers EPS on continued soft EV demand

MS says that EV demand continues to decelerate despite continued price cuts (however, 3p data showing TSLA demand actually holding up well). MS expects TSLA’s 1H24 results to come in below expectations on profitability with OP margins in 2-3% range, implying underlying EV mfg margins to be potentially red / Jonas cuts EPS to 1.51 vs 2.04 previously and FCF to $86M vs $1B previously.

TMTB: Pretty big # cuts by Jonas at MS (supposedly he met with IR before writing the note), but not much new in the note in terms of what’s going on with EV demand and interestingly 3p is actually showing TSLA demand holding up decently. While 2024 is a tough year for TSLA as we get into 2025 with next-gen platform and roadster release, the catalyst/narrative path will get better. While closer to 2025, it could make for an interesting long, currently we don’t have a strong view of what to do with the stock.

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3P roundup: