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`SW77. If the growth rates change direction as forecast by DT., I think your optimism iwill be well justified. I would concur with your view as to 25% undervaluation on current fundamentals But, as we know, Mr Market is a manic depressive and will continue to swing from being over pessimistic to wildly optimistic. So what the SP will do in the short term I cannot hazard a guess.

I thought the next results were only due mid-september.

Next week we should get a trading update on customer numbers, revenue and AAR and their respective growth rates - the latter have been showing a decelerating trend over the last 2 yrs. DT said they were expecting the growth rates to stop slowing, or even start reaccelerating. Let’s hope this is the case.

All their competitors Crowdstrike, SentenelOne, Fortinet, Palo Alto etc. report fierce competition but with an otherwise healthy demand for cyber security. There will be winners and losers on the way. Does DT still have sustainable competitive advantage we all hoped it had with its still unique approach is the question I am asking myself?

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“A company listed in the FTSE 100 is only ejected if its ranking drops below 110. Similarly, promotion into the FTSE100 requires a ranking of 90 or higher.” It will need a market cap of approx £4.3 B to match position 90.

*Minus (-) 1890/31.

Getafgrip - Do you regard ROO as being s good investment?

By the way, ROO is not yet bottom line profitable (E = net profit = -31m in 2023) This would make the PE ratio minus1890/3. Revenue will need to rev up from the current 3% growth rate IMHO.

HKK - are your revenue numbers for CRWD correct? They report a year-on-year figure 0f $3.06b in their latest update.

As the future value of CRWD & DARK largely depends on future earnings, I think the growth rates are much more important than current metrics and should be modelled in any comparison. For instance the latest revenue growth of CRWD is 36%vs DARK of 27%. And the net AAR added of CRWD is accelerating at 27% and DT decelerating by 10%.

I don’t dispute the valuation difference is huge. To my mind it is probably a little of CRWD being overvalues and DARK being undervalued. How this impacts the worth of the customer base I have no idea.

Incidentally CRWD seems to be able to get $130k revenue per customer and DARK $60k.

SW77 =Spot on, reminds me of a Buffett comment in his 1997letter to SHs

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A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves.

But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the "hamburgers" they will soon be buying. This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.

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They would need to take great care that they did not fall fowl of the insider trading regulation - “‘the illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information”. Would they be that careless?

I have been surprised at the time it has taken for Summit (and KKR) to exit after their”liquidity event” (IPO). Usually they move on within a year - having made their margin prior to IPO. And, yes, it is surprising they sold prior to the results - the Chinese wall between Summit and their Director cannot be that water tight. Or………

Summit sold 4% before the results and KKR 2.5% now. Ending of an Era. We need2 new Directors. The price will be interesting.

HKK - The examples you give, - and we can add Gates, Lynch etc. - are all the founding owners and, in part, only went to IPO to create a “liquidity event” to allow them to monitise their company. Musk sold in 2022 after asking the views of the SHs - and them using the cash to buy Twitter.

I think this differs from Executives selling shares issued to them as compensation as this was meant to tie their interests in with the other owners of the company (us). We all use all bits of information to make a judgement about a company - as with all intelligence - Execs selling is one bit and it would help were they to give a reason, as many do.

Ok to close the discussion, a review by others on the good, bad and ugly of execution purchases and sales.

https://stocksdownunder.com/article/director-trades-good-or-bad-sign/

OK HkK - point taken wrt pre IPO options. And no, never been there.

HKK - this is where the attitudes to investments in equities differ. I don’t regard my holdings in equities as paper shares, but a part ownership in a company I would wish to own outright were I able. Once identified, and assuming my initial conviction remains, my preferred holing time is forever.

Different strokes for different folks.

Cr888 - I think you will find that DT have used Channel Partners fo a long time even accounting for 35% of sales at IPO. The contracts are non-exclusive.

A small extract from the IPO. Several pages are devoted to it. Risk is small perhaps, but the consequences would be significant. Clearly views differ as to the importance this matter has on the company.

‘There remains a risk that the Group could be charged with offences, arising from the allegations in the superseding indictment against Messrs. Lynch and Chamberlain, including money laundering offences. To the Group’s knowledge, it is not the target of an investigation by the DOJ, the Group has complied with subpoenas issued by the DOJ in 2018, and prior to and following the Group’s interactions with the DOJ during that process, there has not been any communication from the DOJ. Having analysed and considered the relevant circumstances the Directors believe this risk to be low.

In the event of any action taken by the U.S. DOJ in respect of these risks, the consequences of those actions could be significant for the Group and could include, in addition to the reputational risks: financial penalties, forfeiture, management time and expense dealing with an investigation and defence, a criminal conviction and future debarment from public procurement. If any of the foregoing occurs, it could result in a material adverse effect on the Group’s business, financial condition, results of operations and prospects could be negatively impacted.”

The. IPO prospectus, and latest annual report, lists the possible impacts on reputation and, amongst other, the consequences of laundering legislation in the US, Europe and US. I don’t know the probability, (possibly low)but the consequences identified are not trivial. I don’t think you can honestly claim that “ML has no impact here”. Do you honestly know of no sales losses because of the association with the start-up being funded by Invoke? Do you know that if ML is found guilty, DT will not be banned from US government contracts? These are the types of consequences the DT themselves identified as potential impacts.

The judgement by the UK CivilCourt on the case HP vs ML, according to Bloomberg, came to a differing conclusion.

‘Founder Mike Lynch was found to have inflated Autonomy’s revenue alongside his chief financial officer Sushovan Hussain and induced HP to buy the firm for $11 billion, according to a London civil judgment in 2022.”

For the sake of debate, let me give a differing perspective on the results.

On the one hand DT have done an excellent job in improving their organisational capabilities, up-selling new products to their existing customers; controlling costs - generating a profit of £50m. And, yes, the cyber security and landscape becoming even more favourable.

On the other hand, my optimism is tempered somewhat, as there are, as yet, no hard numbers to support a reversal of the deceleration of the growth rates of Customer Numbers and Revenue. I guess the lower growth in new customers added was the primary cause that the net ARR added fell by 10% this HY. In contrast, and over the same period, Crowstrike’s net ARR grew by 25% according to their latest results, and their customer-number and revenues growth rates are also higher - so I think making direct valuation comparisons on current metrics is problematical.

So let’s see how the customer numbers and changed over the first half years for FY21, FY22, FY23, FY24.

The customer numbers for these years are:4677; 6573; 8178; 9232. This results in to a period-over-period increase of customers of: 1896; 1605; 1054: and gives a customer number growth rates of: 40.5%; 24.4% and 12.9% respectively.

The revenue numbers for the same HY periods are : £126m; £193m; £259m; £330m. So period-over-period increases of revenue are: £61m; £67m; £71m and the growth rates: 52%; 35%; 27% respectively.

So both the growth rates in customer numbers and revenue have been decelerating over the last 3 years. This is not an over exciting future prospect for a high growth stock if this decline were to continue. Mid April we will get some hard data one way or another. I hope and trust DT is right that we are moving again to a period of acceleration in these indicators - otherwise it will be hard to justify a rapidly upward moving SP.

I note that DT has changed their strategy regarding the expensing of commission. This will have caused the profit this HY to be higher than it would have otherwise have been. Also, the end year profitability will be further enhanced if they do a s they say and no longer issue shares for share based compensation - and expense them on the P&L - but buy them back from the market using distributable profits or using shares already held in treasury. If this is indeed done, the profits will look cosmetically much better than they will otherwise be in FY24, but SHs will be paying for it one way or another. who said management hs no control over the SP?

My I wish all LT shareholders continuing good fortune.

I agree with Openthebox. Bitcoin is a pure Greater Fool Theory play and bares no comparison with a share. The value of a company - and its share price - ultimately depends on how much cash it has now and will generate in future discounted at an appropriate rate. In a sense it is no different from the value of a bond which is the future cash generated (through coupon distribution) and the maturity value - both discounted at the currently prevailing interest rates.