Specialist
Former Divisional Head at Heap.io Inc
Agenda
- Key trends in Heap.io’s operating environment and the broader digital insight software category, sense-checking Amplitude’s (NASDAQ: AMPL) TAM assumption
- Competitive dynamics among Heap, Amplitude and others – Heap’s relative scale and opportunities to take market share
- Product differentiation, customer penetration and market expansion – associated cost pass-through, upsell capabilities and potential product opportunities
- Outlook for Q4 2021 and beyond in light of recent management additions – customer count, ACV and best- and worst-case revenue trajectory
Questions
1.
Could you give an overview of Heap’s digital insights platform, the value prop of its offering and the target customer base across different use cases?
2.
Do most of Heap’s customers skew towards SMB, mid-market or enterprise? Who is the primary buyer within the customer organisations?
3.
What key trends should investors track in Heap’s operating environment and the broader digital insights category? What industry headwinds or tailwinds are front of mind?
4.
How should we frame the market opportunity Heap is competing for? It seems to be a fairly rapidly growing market, and even Heap’s largest competitor, Amplitude, said in its recent S-1 the TAM for the digital optimisation and insights software segment is about USD 37bn and growing. How penetrated is it and how would you ballpark a rough growth rate for the next few years?
5.
What nuances should we note across customer buckets within the USD 10bn-12bn TAM, whether the general size across SMB up through enterprise, geographies or even end verticals? How do demand and adoption differ across buckets and what does this signal about industry growth?
6.
How is Heap uniquely positioned to capture any gains in this expanding market? Is it more of a rising tide lifting all boats between the company and its competitor set?
7.
What are the core competitive dynamics between Heap and Amplitude? How will they typically go head-to head? What stands out to customers and when will Heap win out over Amplitude or other competitors?
8.
How does collecting all the data impact Heap’s costs, across those the company bears and those passed along to customers from more data being shared?
9.
Heap’s TCO [total cost of ownership] is marginally higher than Amplitude’s. How do customers evaluate that? Are they price-sensitive, or is it more determined by the offering’s robustness and overall functionality?
10.
How does Amplitude’s late-September IPO change things? Will that materially impact the competitive landscape and Heap’s longer-term ability to effectively compete at scale?
11.
What are your thoughts on other vendors such as Pendo, Mixpanel or Adobe Analytics and the competitive threat they pose to Heap?
12.
How sticky is business once won? How should we frame the average life cycle of a customer and the switching costs associated with the solutions?
13.
How strong is the product moat for Heap’s platform? How defensible is the company’s platform functionality positioning, having discussed its differentiated strategy? Is the focus on a low-code-type offering a longer-term net opportunity or risk?
14.
How does Heap’s June-launched Illuminate factor into its differentiation and ability to compete more effectively with peers?
15.
How does Illuminate know where to search relative to where analysts are searching to point out insights that might not be front-of-mind?
16.
What are Heap’s product weak points or potential areas of improvement? Where could the company do better, and how front-of-mind is it to fill any gaps?
17.
Heap has a huge partner network with numerous companies including WalkMe, Chameleon, Salesforce and Segment. How does the partner strategy factor into the company’s differentiation and ability to service customers better than its peer set?
18.
You noted Heap’s distinctive integration with data warehouse vendors. How do its relationships with Snowflake, Amazon Redshift, Google, BigQuery or others factor into its product differentiation and ability to win business?
19.
What is Heap’s largest product opportunity and how will that factor into its product roadmap? Might it be more organic platform and offering expansion, inorganic growth through M&A or perhaps expanding through increased partnerships?
20.
Heap has 8,000-plus customers including big names such as Splunk, E-Trade and Freshworks. How high could its total customer count go in the next 3-5 years? What’s a reasonable growth rate, and what impact do you expect from its new Chief Customer Officer, Ahmed Quadri, who joined the company in June?
21.
Is there a substantial cost supporting non-paying customers for Heap, or is that more than offset by the paying customers?
22.
How should we frame Heap’s ability to convert free users to the growth product and then upsell to pro and premier? How does it push customers seeking to expand data use or add new features into higher-paying tiers? Are there instances where bigger companies aren’t getting upsold into these larger buckets?
23.
How will the price increases impact Heap’s ability to drive ACV gains in aggregate?
24.
Heap has grown ARR at a 224% YoY CAGR as of August 2021. How sustainable is that growth and how might it trend over the next few years? How will the addition of new Chief Revenue Officer, Sean Andrew – also in August – impacts the company’s ability to grow top line?
25.
What’s a top-end growth range for Heap vs a lower-end rate if the company can’t expand the customer base but continues to grow with its existing base?
26.
What are your thoughts on Heap’s new leadership? In the past year, the company has added Steve Love as CFO, Sean Andrew as Chief Revenue Officer, Ahmed Quadri as Chief Customer Officer, Rachel Obstler as EVP of Product, David Fullerton as EVP of Engineering and Ken Fine as the new CEO. How should we gauge their ability to shepherd Heap through its next growth chapter over the next few years?
27.
What would you pinpoint as Heap’s biggest risk and opportunity?
28.
What is your best- and worst-case scenario for Heap over the next few years?
29.
What key questions should investors have in mind when evaluating Heap and the broader category?
Gain access to Premium Content
Submit your details to access up to 5 Forum Transcripts or to request a complimentary one week trial.
The information, material and content contained in this transcript (“Content”) is for information purposes only and does not constitute advice of any type or a trade recommendation and should not form the basis of any investment decision.This transcript has been edited by Third Bridge for ease of reading. Third Bridge Group Limited and its affiliates (together “Third Bridge”) make no representation and accept no liability for the Contentor for any errors, omissions or inaccuracies in respect of it. The views of the specialist expressed in the Content are those of the specialist and they are not endorsed by, nor do they represent the opinion of, Third Bridge. Third Bridge reserves all copyright, intellectual and other property rights in the Content. Any modification, reformatting, copying, displaying, distributing, transmitting, publishing, licensing, creating derivative works from, transferring or selling any Content is strictly prohibited
