Gerstner cites Snowflake growing free cash flow over 100% annually with Q4 revenue of $1.4B versus $1.2B prior year.
“Snowflake this year will grow its free cash flow at over a 100% a year, next year probably, you know, 80 or 90%. Free cash flow, not just revenue, free cash flow.”
Gerstner says Uber went from losing $2.5B to profiting $3.5B in free cash flow under Khosrowshahi.
“The company went from losing over 2,500,000,000 or around 2,500,000,000 when Dara took over to profiting over 3,500,000,000, and we're talking free cash flow.”
Gerstner notes consensus forecasts Uber reaching almost $10B in free cash flow in a few years.
“if you look at the consensus forecast for the business, which is pretty mind boggling, it's estimated by the consensus that it'll reach almost 10,000,000,000 in free cash flow, just a few years from now.”
Gerstner explains that rule of 40 and revenue multiples are shortcuts for determining free cash flow multiples.
“Whether your rule of 40 or a multiple of revenue, those are shorthands for getting at the multiple of free cash flow.”