Why You Might Want to Get Your Head Into the Cloud (TWLO, IMTL, ADBE)

Alan Masterson - March 19, 2019

Whenever you hear that a market segment is “in a bubble”, start looking for new, speculative names in that space. Bubbles aren’t spotted properly until after they pop. And invariably, when something gets into the press as a bubble, it’s really an opportunity. Such is the case at present in the cloud space, with five of the leading names in the space now trading at more than 25x sales on a present basis.

But that big premium to current topline performance is really the result of a massive total addressable market and remarkable growth rates. That’s why we want to focus on a few names that could be interesting in the days, weeks, and months ahead: Adobe Inc (NASDAQ:ADBE), Image Protect Inc (OTCMKTS:IMTL), and Cloudera Inc (NYSE:CLDR).

Adobe Inc (NASDAQ:ADBE) bills itself as a diversified software company worldwide.

Its Digital Media segment provides tools and solutions that enable individuals, small and medium businesses, and enterprises to create, publish, promote, and monetize their digital content. Its flagship product is Creative Cloud, a subscription service that allows customers to download and install the latest versions of its creative products.

This segment serves traditional content creators, Web application developers, and digital media professionals, as well as their management in marketing departments and agencies, companies, and publishers. The company’s Digital Marketing segment offers solutions for how digital advertising and marketing are created, managed, executed, measured, and optimized. This segment provides analytics, social marketing, targeting, media optimization, digital experience management, cross-channel campaign management, audience management, and video delivery and monetization solutions to digital marketers, advertisers, publishers, merchandisers, Web analysts, chief marketing officers, chief information officers, and chief revenue officers. Its Print and Publishing segment offers products and services, such as e-learning solutions, technical document publishing, Web application development, and high-end printing, as well as publishing needs of technical and business, and original equipment manufacturers (OEMs) printing businesses.

The company markets and licenses its products and services directly to enterprise customers through its sales force, as well as to end-users through app stores and through its Website at adobe.com. It also distributes products and services through a network of distributors, value-added resellers, systems integrators, independent software vendors, retailers, and OEMs.

The company was formerly known as Adobe Systems Incorporated and changed its name to Adobe Inc. in October 2018. The company was founded in 1982 and is headquartered in San Jose, California.

ADBE hasn’t really done much of anything over the past week, with shares logging no net movement over that period.

Adobe Inc (NASDAQ:ADBE) pulled in sales of $2.6B in its last reported quarterly financials, representing top line growth of 25.2%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($3.2B against $5.3B, respectively).

Image Protect Inc (OTCMKTS:IMTL) is our spec name in this piece. The company just announced that it is nearing the launch of its exciting new Fotofy Digital Image Marketplace, which will allow users to capture images free of charge, while allowing revenue participation for image rightsholders in an In-Image advertising network.

According to the release, the platform is “Geared to become the world’s largest digital image sharing platform, Fotofy will launch in August at fotofy.com.”

The release also notes that “The Fotofy image sharing marketplace will act as a massive library of high quality freely accessible images for use and sharing. Each image will be embedded with code that allows it to act as a carrier of an in-image advertisement. In other words, everybody wins: users find the images they desire, and image rightsholders have the opportunity to profit from a revenue stream as their creative works are circulated throughout the digital universe.”

Finally, the company says it has a goal of one trillion image sharing events within two years from launch.

On a basic note, the company promulgates itself as a company that focuses on building a community of visual artists to help defend against copyright infringement. Its tracking and recovery technology simplifies copyright protection by combining industry-leading software with a platform of visual artists and copyright experts.

The company’s Web application monitors the global Internet to seek and collect evidence for illegally used visual content; and its legal partners in North America, Europe, Asia, and Oceania ensure that clients receive appropriate compensation and recovering settlement fees when their work has been used without a valid license.

Image Protect finds millions of editorial websites using their client’s photos.

As an option to the standard DMCA takedown notice, Fotofy generates a block of code that allows photos to be copied and pasted into any website – similar to code references on sites that embed Youtube or Vimeo content. It’s as simple as copying and pasting the embed code into the user’s website template, i.e., WordPress, Blogger, SquareSpace, Wix, etc.

The image is then instantly transformed into an online billboard, containing in-image advertising, hot links, social sharing and dynamic messaging. This is turning the traditional Copyright Infringement model into a cooperative relationship for both parties.

Moreover, Image Protect protects and monetizes creative works. By uniting technology with a team of copyright experts, the company ensures that content providers preserve the value of their digital assets. Its web application monitors the global Internet to seek and collect evidence for illegally used visual content. Then, its legal partners across North America, Europe, and Asia ensure that its clients receive appropriate compensation for work used without valid license.

IMTL has had a difficult past week of trading action, with shares sinking something like -6% in that time. But this could be an opportunity. Chart support is nearby and we may be in the process of constructing a nice setup for some movement back the other way.

Cloudera Inc (NYSE:CLDR) promulgates itself as a company that provides platform for machine learning and analytics in the United States, Europe, and Asia.

The company operates through two segments, Subscription and Services. Its platform delivers an integrated suite of capabilities for data management, machine learning, and analytics to customers for transforming their businesses.

The company provides Cloudera Enterprise Data Hub that allows companies to execute various analytic functions against a shared set of governed and secures data in public and private clouds, and data centers; Cloudera Data Science and Engineering enables users to streamline, simplify, and scale big data processing; Cloudera Operational DB that enables stream processing and real-time analytics on continuously changing data; Cloudera Analytic DB optimizes enterprise data warehouses; and Cloudera Essentials.

It also offers Cloudera Altus, a platform-as-a-service offering; Cloudera Data Science Workbench that enables self-service data science for the enterprise; Cloudera Fast Forward Labs, which delivers applied research in machine learning and artificial intelligence to its customers; and Cloudera SDX, a modular software framework that enables its customers to have a shared data experience. In addition, the company provides technical support, professional, and training services.

It serves corporate enterprises and public sector organizations primarily through its direct sales force. The company has a strategic partnership with Intel Corporation.

Shares of CLDR have been taking a hit in recent action, down about -17% over the past week. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -15%.

Cloudera Inc (NYSE:CLDR) managed to rope in revenues totaling $144.5M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 39.7%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($480.7M against $494.5M, respectively).

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Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email ([email protected]) or his Google+ page (https://plus.google.com/103338576216002376250).

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