Weekly Roundup 2022-08-26

Weekly Roundup 2022-08-26

Lunar Capital Weekly Roundup

 

Index / Fund / Rate Start of Year Last week This Week % change YTD
JSE ALSI 73 723 69 719 70 173 -4.81%
NASDAQ Composite 15 833 12 705 12 142 -23.31%
S&P 500 4 797 4 228 4 058 -15.40%
Prime Lending Rate 7.25% 9.00% 9.00% 24.14%
Lunar BCI WW Flexible Fund 165.68 151.96 149.91 -9.52%
USD/ZAR 15.96 17.01 16.88 5.76%
EUR/ZAR 17.95 17.08 16.82 -6.30%
Brent Crude 77.86 95.78 100.70 29.33%

Source: iress

Company and Market News

Snowflake, a data cloud company, released their 2nd quarter 2023 results last week. Revenue for the quarter increased by 83% year-on-year to $466.3 million. And the gross-profit margin for the quarter was a healthy 72%. One of the interesting metrics Snowflake uses in their press release is: net revenue retention. Net revenue retention measures, as a percentage, how much the same Snowflake customers spend this year compared to the previous year. Net revenue retention for Snowflake was 171% as of 31 July 2022. This shows that the customers that use Snowflake’s platform, gain quite a lot of value from it, and thus use the product more in the future. This is especially strong, seeing as a lot of companies have been cutting back on spending this year. Snowflake’s share price increased by 31.68% between the beginning and end of last week. By the end of Friday, the market cap for Snowflake was $62.89 billion.

The data cloud allows organisations to share their data easily on the Snowflake platform, which operates on any of the major cloud infrastructures (AWS, Microsoft Azure, Google Cloud). Snowflake takes data from its clients and formats it so it can be easily accessible on their platform. All the clients on Snowflake’s platform have access to the data. Companies are able to monetise off the data that they share. Snowflake uses the pay-per-use model for the data on their platform. The more a client uses the data – the more the client pays. And the more clients Snowflake gets, the better the product becomes for all their clients.

One of the risks Snowflake faces, is that they have a lot of expensive fixed costs. If they aren’t able to grow their customer base and revenue fast enough – they face the risk of not recovering the costs quickly enough. Despite Snowflake creating the data cloud, other companies, with a lot of fire power, could try develop their own data cloud models. Snowflake, however, has the first-mover advantage.

Disclosure: Snowflake, Amazon, Microsoft, and Alphabet are held in the Lunar BCI Worldwide Flexible Fund.

Read our full Disclosure statement: https://lunarcapital.co.za/disclosures/

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The Lunar BCI Worldwide Flexible Fund Fact Sheet together with our Disclaimers can be read here.

A&EO.

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