Earnings releases of Q3/2024

My comments on the most recent earnings releases

I will write here a short summary and my thoughts on the most recent earnings of some selected companies. Over time I will add more summaries, so be sure to come back.

You will find quotes from the earnings release or the earnings call with a blue bar on the left side.

To make this more fun, I will add my judgment for the earnings with disappointing, neutral, or encouraging.

Adobe - encouraging

Revenue +11% YoY; Operating Income +17%, EPS +23%. Gross margin reached 90%. Outstanding shares down 2.6%. RPO of 18bn. 20bn of the share repurchase program is still outstanding which is 9% of the total market cap.

Some deals that usually closed in Q4 came into Q3. Therefore Q3 is very strong, while Q4 will be a bit weaker than expected. For the long term this if fully irrelevant

"We train our Firefly models on data that allows us to offer customers a solution designed to be commercially safe."

Adobe is not just offering AI for picture editing, but also for video editing and generation as well as PDF editing.

"increased top of funnel through Acrobat Web with monthly active users growing over 35% year-over-year as a result of link sharing and our Microsoft Edge and Google Chrome extensions"

"As we integrate Firefly innovations throughout our tools, usage continues to accelerate, crossing 12 billion generations since launch"

"40 years into this business, the rise of PDF and PDF becoming the de facto standard for content as unstructured content as a whole is a remarkable foundation for us to be building on".

There are further steps taken to push customers into subscriptions:

" Document Cloud is substantially a subscription business, but now with AI Assistant being available to subscribers and not as directly to perpetual users, we expect that to continue to transition even further."

Find my deep dive here:

Adobe Stock Analysis & Deep Dive

Airbnb - disappointing

Q2/24: Revenue +11% YoY, +9% nights and experiences booked. The high share buybacks are significantly diluted by new share issues through SBC.

TTM Operating income is below 2022 and only the interest income drives net income. The same goes for the comparison of Q2/23 to Q2/24. If the interest rates come down this will be an issue. Share Buybacks of 749m, 5.3bn in share buybacks outstanding.

Latin America and Asia Pacific continue to be our fastest growing regions. However, we are seeing shorter booking lead times globally and some signs of slowing demand from U.S. guests.

We're now beginning to prepare the next chapter of Airbnb. And I want to Airbnb to be one of the most important companies of our generation. And to do that, we're going to need to do more than one thing. We're going to have to do multiple new things. We're going have to have multiple new products and multiple new services.

Imagine if we had an index of the world's communities. We told you we had information about every community, and we can provide the end-to-end trip for you. So there's a lot of opportunities as we develop new interfaces to cross-sell new more inventory.

ASML- neutral

Q2/24: Operating Income is down due to lower revenues and higher Opex. Net bookings of 5.6bn of which 2,5bn ins EUV. The total backlog is 39bn. Gross Margin stable at 51%. bought back shares worth 96m "In line with previous quarters, overall semiconductor inventory levels continue to improve, and we also see further improvement in litho tool utilization levels at both Logic and Memory customers. While there are still uncertainties in the market, primarily driven by the macro environment, we expect industry recovery to continue in the second half of the year." "We see 2024 as a transition year with continued investments in both capacity ramp and technology. We currently see strong developments in AI, driving most of the industry recovery and growth, ahead of other market segments," " There continues to be pressure on free cash flow as we provide some support for our customers and operate at higher inventory levels, the latter being a result of the increased material intake, including High-NA, as part of our planned capacity ramp in preparation for strong demand next year. We expect a gradual return to normal cash conversion levels as the industry continues to recover." "High-NA will enable an almost 3x increase in transistor density relative to the Low-NA system. So all in all, good momentum on High-NA and progressing well against customer expectation." "we need to prepare for a number of new fabs that are being built across the globe, in some instances, clearly supported by several government incentive plans. These fabs are spread geographically and are strategic for our customers. They are all scheduled to take our tools."

Axcelis - neutral

Silicon carbide remains strong. The second half-year to be better than the first. Expect memory (DRAM) spending to go up and contribute to the revenues in the upcoming quarters. Currently only 2% of revenue.

The silicon carbide device market is estimated by [ EL ] to grow at a 25% CAGR from 2023 to 2029 and we are the leading ion plant provider for this market, which is one of the most critical steps in the manufacturing of these devices.”

Axcelis sees potential in advanced logic:

For example, as we move from 7-nanometer to 2-nanometer technology, we forecast a more than doubling of our ion implantation steps in the middle of line processes.

our long-term model calls for growth to approximately $1.6 billion by 2027” (Currently it is 1.1bn.)

So yes, China has a really strong demand for silicon carbide. I think we've talked in the past that the -- they're currently supplying 10% domestically through their own vehicles, but they have a goal of achieving 25%, and probably beyond that, they'd like to probably supply the entire world. Because this is a really great opportunity for them. However, like I say, our silicon carbide business is very global. So we have multiple customers in every region. So North America, Europe, Korea, Taiwan, Japan and obviously, China. But I'd say that silicon carbide remained strong in general, China is certainly a very bright spot for us.

Find my deep dive here:

Axcelis Stock Analysis Deep Dive

Expedia - disappointing

Q2/24 Gross Bookings +6% YoY, Revenue +6% YoY. Repurchased 1.2bn of Stock from Jan-July, share count -9% YoY. This led to an increase in EPS even though the net income was flat. B2B still growing strong, B2C flat. Lowered the full-year forecast from mid to high single digits to just mid-single digits. Still investing in VRBO, growth slowly comes back

we have seen a more challenging macro environment and a softening in travel demand. We are therefore adjusting our expectations for the rest of the year,

we expect to utilize the strong cash-generating power of our business and our remaining $3.6 billion share repurchase authorization to continue to buy back our stock opportunistically.

At the current valuation, Expedia is still cheap. For this FY an EV/Net income of 15 and EV/FCF of 10.5. The number of outstanding shares continues to fall and therefore boosts the EPS. To be fair: Booking is the better company.

Kontron - encouraging

High Capex, a strong increase in OpEx due to the Katek acquisition. Sales +53% YoY. Full-year earnings to rise from 77m in 2023 to 100m and continue to rise strongly in 2025. Strong contribution from the Katek acquisition. Order backlog of almost EUR 2bn (last year total sales were EUR 1.3bn).

The stock has been going absolutely nowhere in the last 5 years. The question is if these strong numbers can finally start a rally.

Markel - neutral

The portfolio continues to grow strongly and is now worth 10.5bn. Markel as a whole is only worth 20bn. Rising interest income contributes to the earnings. Markel Ventures is growing slowly but steadily, Insurance is doing well, and Reinsurance is not doing so well. Net income excl temporary investment gains/losses continues to rise. Seems cheap, but tough to evaluate

"one, we look for businesses with good returns on capital that don't use too much debt. Second, we look for management teams with equal measures of talent and integrity; Third, we look for businesses with reinvestment opportunities and capital discipline, and four, we look for all of those first 3 lovely attributes at a fair price."

"Five years ago, at June 30, 2019, we had total net investments, that is our entire investment portfolio plus cash minus debt of $17.5 billion. As of June 30, 2024, that number stands at $28.2 billion, an increase of 61%. Five years ago through June 30, 2019, we earned underwriting and insurance income of $142 million. Five years later, through June 30, 2024, we earned underwriting and insurance income of $313 million, an increase of 120%. Five years ago through June 30, 2019, we earned $133 million of operating income in our Markel Ventures operations. Through June 30, 2024, we earned $281 million of operating income, an increase of 112%. At June 30, 2019, each share of Markel sold for about $1,100. At June 30, 2024, each share of Markel sold for about $1,575, an increase of about 43%. The share price change is the lowest number on the page."

Markel acts very conservatively, which is exactly what you want from an insurance company

we set our reserves at levels that are more likely to prove redundant than deficient.

Find my deep dive here:

Markel Stock Analysis & Deep Dive

Mercado Libre - great!

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