I will write here a short summary and my thoughts on the most recent earnings call of some selected companies. Over the time I will add more summaries, so be sure to come back.
Anything written in italic is a quote from the earnings call.
Adobe
Revenue +10% YoY, EPS +24%. Bought back 4.6m shares for 2.5bn in last quarter, share count down 2% YoY. 22.7bn of share repurchases are outstanding. That's 10% of the total market value.
A lot of AI talk in the earnings call, AI for creative, AI for PDF etc. In case of Acrobat Reader, AI should enable you to summarize documents or to even have conversations with them. Document Cloud shows strong growth.
Two interesting quotes from the earnings call:
"Generative Fill and Generative Expand are already 2 of the top 3 features used by customers on the latest version of Photoshop"
"When we introduced Adobe Experience Platform 5 years ago, it was a revolutionary approach to address customer data and journeys. Today, we're the #1 digital experience platform and AEP with native apps is well on its way to becoming a billion-dollar business."
Find my deep dive here:
Airbnb
Revenue +18% due to early easter. +10% nights and experiences booked. TTM FCF of 4.2bn with a 41% FCF Margin. Olympia in Paris and the football EM in Germany will provide large bookings. 750m in shares repurchases in Q1, 6bn in share buybacks outstanding. That will cover 6.5% of all outstanding shares. 54% of all nights booked came from the app. Active listings +15%. Take rate of 9.3%
This was an interesting quote from the earnings call:
"And just the last thing I'll say about this is as big as Airbnb is, and we're approaching 0.5 billion room nights a year, for everyone who stays in Airbnb, somewhere around 8 or 9 people stay in hotels. And when you ask people, why are you staying in a hotel? Airbnb is typically more affordable. It's a more local experience. It's much better for groups and families. People say, yes, but hotels are historically a more consistent experience. And so if we can just get one of those travelers from hotels to stay in Airbnb, that would double our size of our business to 1 billion nights a year. And so we think quality and reliability is a multiyear road map".
Airbnb is working on expending the product into other categories and more go for experiences than just stays. Customer profiles will get more features and become an important part of AirBnb.
Airbnb continues to buy back shares at a great pace
The “bank” of Airbnb continues to earn very nice interest income on the customer funds.
Axcelis
Earnings above expectations, strong sales of SiC machines, DRAM remains weak. Advanced Logic is being tackled as a new field. See the AI boom as a new growth driver for NAND, DRAM and CMOS. Data centers are using more and more power devices, SiC can withstand higher temperatures and thus reduces the energy required for cooling and therefore the costs. Systems backlog decreased to 1.1bn. 15m USD of shares bought back, 175m are still in the Bubyback program. 42m of operating cash was generated in the quarter. The second half of the year should be much stronger. Result good but not outstanding. Looking forward to HY2
Find my deep dive here:
British American Tobacco
Outlook for 2024 confirmed. Revenue growth 3-5%. Gained 30bps of market share in cigarttes. Vuse still market leader with 41% market share; illicit single-use vapes lead to losses. In March, 3.5% of ITC was sold. This means that for 700m pounds shares will be bought back in 2024 and for 900m pounds in 2025. HY2 should get better. Inflation and macro lead to less consumption of cigarettes (combustible industry volume is down around 9% YTD).
Find my deep dive here:
Evolution
Q1/24: Sales continue to grow at 16% YoY, net income grows less strongly as the tax rate has risen from 6.7 to 15%. Very high cash position through which the dividend is paid. Delaware added as a new US state. 4 new studios will be opened in 2024. Strong increase in staff +3000 people YoY. Asia still growing the strongest. 90% of profits distributed in 2023 through buybacks and dividends.
"Evolution has a truly unique market position. One of the biggest challenges is to keep up the demand".
50% of profits will continue to be distributed as dividends, further share buybacks are possible
Find my deep dive here:
Fortinet
SASE accounts for 1/3 of billings, service revenue now accounts for 70%. Software and Service ARR is now at 750m. 1bn is still available for Bubybacks; no shares were bought back in the last quarter because the price was unattractive. Revenue to increase by 9% in 2024.
Find my deep dive here:
Markel
Q1/24: Combined ratio of 95%, Markel Ventures continues to earn well. Equity portfolio has grown strongly and interest income from short term investments is rising. Markel continues to buy back shares.
Find my deep dive here:
Paypal
Revenue +9%, GP only +6%. EPS +18% thanks to strong net interest income. 5bn in buybacks in the last 12 months, equivalent to 7% of today's market cap. EPS for 2024 expected to be lower than last year, despite strong buybacks. I don’t like this at all. Take rate now at only 1.91%.
"Transaction take rate declined 5 basis points to 1.74% driven primarily by lower foreign exchange fees and lower gains from foreign currency hedges. In addition, mix shift to large merchants continued to impact our branded checkout take rate."
Then again, the stock is dirt cheap.
Salesforce
Revenue +11%. Remaining Performance Obligations of 26.4bn (+10%). FCF of 6.1bn (+43%). Revenue guidance +8-9% for the year, lowered revenue growth very slightly and also lowered EPS minimally. Gross profit margin increased to 76%, operating margin to 19%. Net income continues to rise strongly. Shares outstanding are slowly coming back, even if SBC are still enormous. FCF typically very high for Q1.
The CEO Marc Benioff had some interesting comments around the whole AI topic and how Salesforce profits strongly from the massive amount of data stored in Salesforce by their customers:
“We're now managing more than 250 petabytes of data for our customers. This is going to be absolutely critical as they move into artificial intelligence.”
“trillion records were ingested in the Data Cloud in the quarter, up 42% year-over-year, and we processed 2 quadrillion records.”
"we've delivered predictive AI across all our clouds with Einstein. Einstein is generating hundreds of billions of predictions per day, trillions per week”.
“We have great momentum with Slack, which again was included in nearly half of our top 50 deals in the quarter.”
“Not every company is as well positioned, as you know, for this artificial intelligence capability of Salesforce is because they just don't have the data.”
At this level, Salesforce is priced very attractively, especially considering the further growth to come
Texas Pacific Land
Strong increase in revenue, in particular due to water revenues. Water service revenue +50% compared to Q1/23. Dividend +8% and further share buybacks. 837m cash on the balance sheet. CapEx declines again. Treatment of polluted water is a focus area. So far, a lot of water has been pumped back into the ground, but due to seismic activity (earthquakes) this is no longer possible to the same extent in the long term.
"While our partner retains the patents on the equipment, TPL has the exclusive rights for the equipment used towards produced water applications. In addition, TPL has filed for a process patent utilizing fractional free desalination to treat produced water for beneficial reuse."
Water technology may mean higher CapEx in the future. No statement on what is to be done with all the cash
Find my deep dive here:
Workday
Q1/23: Revenue +18% YoY. Next 12 month subscription backlog 6.6bn (+18%), total backlog 20.7bn (+24%). 134m buybacks and still the outstanding shares went up by 0.5% or 321m at the current marketcap. Still very high SBC. YoY 3.4% more shares despite 787m in buybacks. Sales forecast for 2024 slightly lowered. Still not cheap and I don't like the high dilution of current shareholders.
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Invest at your own risk, this is not financial advice! This is not a recommendation to buy or sell any securities discussed in the article.
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