Earnings releases of Q3/2024
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 the 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 judgement for the earnings with disappointing, neutral or encouraging.
Adobe
tbd
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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. 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.
Axcelis - neutral
Silicon carbide remains strong. 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.
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British American Tobacco
tbd
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Evolution
tbd
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Expedia - disappointing
Q2/24 Gross Bookings +6% YoY, Revenue +6% YoY. Repurchased 1.2bn of Stock from Jan-July, sharecount -9% YoY. This leads 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.
Fortinet
tbd
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Kontron - encouraging
High Capex, 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, 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.
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Mercado Libre - great!
To make it short: These earnings were not just encouraging but outstanding!
Revenue +42% YoY, net income margin 10.5%. TPV 46.3bn, GMV 12.6bn. Fintech MAU now >50m. Even on this high base the company keeps accelerating growth (Brazil +36% YoY, Mexico +30%). Ad Business continues to grow and is now 2% of GMV (+51% YoY). Mercado Play follows Amazon Prime with third party streaming content and product placement and ads. Mercado Pago AUM are now 6.6bn.
The encouraging performance of the credit card is strategically important as it is another key pillar of Mercado Pago's long-term value proposition
Insurtech is also growing strongly. More than 300 robots will be placed in the first distribution center and will save 20% in processing time.
On AI: "on the developer side, we have 16,000 developers, which are also using AI tools to improve productivity and that also generating some improvements and efficiencies in the way we deploy products throughout the company."
Just look at this insane growth. There is much more to come.
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Paypal - encouraging
Net revenue + 8%, GP +11% EPS +17%. Sharecount -6% YoY due to 5bn spent on share buybacks. Raised full year guidance for EPS above 2023. The Gross Margin is finally trending up again.
Given the strength across PayPal, we are raising our full year guidance for growth in transaction margin dollars and earnings per share and increasing our investment in strategic growth initiatives that we are driving.
Interesting: A new partnership with Meta.
We are continuing to innovate and create high converting experiences on both desktop and mobile and across platforms and devices. We also continue engaging consumers post purchase with smart receipts, package tracking, push notifications and more, adding increased value and driving the PayPal engagement flywheel. In fact, we drove almost 20 million app logins from our post-purchase experiences in June alone, growing more than 70% from a year ago. P2P is an essential acquisition and engagement tool for us, and we are returning it to growth.
Transaction take rate declined by 3 basis points to 1.72% compared to a 5 basis point decline last quarter." "Transaction margin dollars increased 8% in the second quarter compared to a 4% increase in the first quarter. Higher interest on customer balances, branded checkout, Braintree and Venmo were the largest contributors to year-over-year growth" ". Given the strong start to the year, we are raising our 2024 free cash flow guidance to approximately $6 billion. We are also increasing our share buyback plan to $6 billion compared to our prior guidance for at least $5 billion.
Salesforce - encouraging
Revenue +9%, RPO 26.5bn (+10%); 4.3bn in share repurchases in the quarter, YoY the number of outstanding shares declined by 1.3%. CFO Amy Weaver will leave the position after 3 years. Gross margin increased to 76%, operating margin to 20%. Workday is the first Agentforce Partner.
It's going to turn this into these incredible margin and revenue machines...we're making it easy to build these powerful autonomous agents for sales, for service, for marketing, for commerce, automating the entire workflow on their own, embedding agents in the flow of work and getting our customers to the agent future first. And this is our primary goal of our company right now. This is my singular focus.
delivering 25 trillion Einstein transactions across all of the clouds during the quarter, that's 25 trillion and more than 1 trillion workflows are now managing 250 petabytes of data for our customers.
This is not Copilots. So many customers are so disappointed in what they bought from Microsoft Copilots because they're not getting the accuracy and the response that they want. Microsoft has disappointed so many customers with AI. Listen, these agents are autonomous. They're able to act with accuracy. They're able to come right out of the box.
One of the reasons that our agents are so accurate is because of the huge amount of data and metadata that we had. And data is the foundation for every AI transformation. And with Data Cloud, we're providing a high-performance data lake that brings together all our customer and business data, federating data from external repositories through this credible zero-copy alliance.
nearly 80% of our new business in the quarter was driven by multi-cloud deals
The last point is this, these customers, they're still going to build models, but it's in our platform. They're still going to fine-tune those models in our platform. They're going to still use our AI studios and build their own prompts in our platform.
In my last earnings release post I shared this chart screenshot with a price of 218$ per share. I believe that at 243$ Salesforce is still very attractive.
Texas Pacific Land
tbd
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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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