Investor letter, January 2022
Grounded extraction
Companies discussed
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Cellebrite is a new holding; a recent SPAC carve-out from Sun Corporation, sponsored by Adam Clammer (ex-KKR growth investor); serves over 5,000 public-safety and 1,700 enterprise customers; 25% revenue growth (understated due to license-to-SAAS shift); NRR over 140%; recurring revenue growing over 30% per year; 80% gross margins; 20% penetrated on current base; shares trade at less than 5x 2022 revenues, a more than 50% discount to peers.
“Cellebrite (CLBT) is a recent SPAC/carve-out from a Japanese company, Sun Corporation. The sponsor of the SPAC is Adam Clammer, who spent 18 years in growth investing at KKR. The company is in the Digital Intelligence "DI" space, and their customers are primarily government agencies and law enforcement (state and local) who use their products to extract and manage data from cell phones.”
Costco is cited as one of Nomad's largest investments whose share price is up more than 11x since their 2005 thesis write-up, with returns coming in chunks over time.
“One of Nomad's largest investments was Costco (COST), whose share price is up more than 11X from their thesis writeup published in Value Investor Insight (link) back in 2005.”
Elastic is described as the market leader in search with a strong security product line, NRR around 130% or higher, cloud business growing over 80% last quarter, reached $1B in sales in less than a decade with all raised capital on the balance sheet, and shares trading at less than 9x this year's revenues on expected growth over 30%.
“Elastic (ESTC) – Elastic is the market leader in search and has a strong product line-up in security. Very few companies are able to consistently generate 30% more revenue from their existing customers than they did the year before. Elastic is one of them. Their Net Revenue Retention (NRR) has been hovering around 130% or higher for as long as it has been disclosed.”
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