We call this ‘hell week’, not because of any pandemic or elections, but because of the sheer mass of earnings reports that we must get through.
Oct. 30, 2020
The Quick Fix
#ShikShok — Terrible hashtag, I know, but what else can I do after hearing that Shopify is bringing its e-commerce offering to TikTok?
#FarmvilleWho? — This week, Facebook announced that cloud-powered games are now playable on its platform, whilst the social media giant also continued its feud with Apple.
#TheChipsAreDown — Not ready to sit back and let Nvidia rule the chip-making world, AMD looks set to buy chip peer Xilinx for $35 billion in a data-center push.
#MoreEarnings — You thought you could forget about earnings? Think again! The busiest week of the quarter had plenty of ups and downs.
#AndFinally — Starbucks rival and donut maestro Dunkin’ Brands shocked investors this week as rumors emerged that it may go private.
We almost went a whole month without a single TikTok story, but then Shopify swooped in and announced a sparkly new partnership with the short-form video platform that has riled up millennials and governments alike.
So, can I sell stuff on TikTok now?
For now, you won’t be selling those ‘totally original’ animal-patterned face masks on TikTok, so stick to Etsy. However, the agreement allows Shopify merchants to create, run, and optimize their TikTok marketing campaigns directly from the Shopify dashboard and will eventually expand to include other in-app shopping features as well, the two companies confirmed. As of Tuesday, the feature has been made fully available to U.S. merchants and represents a fresh new medium for small to medium-sized businesses in reaching younger audiences, with TikTok boasting more than 100 million U.S. users alone. It may seem a risky move, given TikTok’s less-than-stellar relationship with the Trump administration, but the upcoming presidential election has pushed this issue to the sidelines temporarily. With Oracle and Walmart taking a 20% stake in TikTok last month, Shopify appears confident that TikTok will not be banned in the U.S. any time soon. For Shopify’s earnings this week, see #MoreEarnings below.
Bet you didn’t know
The U.S. represents more than 70% of all Shopify’s merchants, with the next biggest market being the UK at just 9%.
This week, Facebook announced that cloud-powered games are now playable on its platform, whilst the social media giant also continued its feud with Apple.
Status Update: Facebook is now friends with Cloud Gaming
You know the way every kid asks: “You got games on your phone?” Well, iPhone users won’t have Facebook’s new cloud games as they will not be launched on iOS devices due to the restrictions Apple puts on gaming developers in its App Store. In addition to being limited to just Android phones and desktops, Facebook said its new cloud games are not aiming to recreate the console experience, unlike Microsoft’s xCloud’s standalone cloud gaming services. Players can enjoy the free games online, which include titles such as ‘Asphalt 9: Legends’ and ‘PGA TOUR Golf Shootout’ without having to download them. Facebook is essentially blurring the lines between gaming and advertisements by offering developers a tool to promote their new product and allowing users to play full games within advertisements. Cloud gaming will also increase the amount of time users spend on Facebook, which it needs to sell more ads! Greedy Zuckerberg… For Facebook’s earnings this week, see #MoreEarnings below.
Bet you didn’t know
Ironically, Mark Zuckerberg is very protective of his privacy. In 2014, he bought a plot of land for $100 million in Hawaii and also tried to tear down four houses around his home in California, all to keep away prying eyes.
Advanced Micro Devices has looked at rival Nvidia’s $40 billion Arm acquisition and said: “pfft, I can do that too”.
Who is AMD buying?
The semiconductor designer announced on Tuesday that it has agreed to buy Xilinx in a $35 billion all-stock deal that will intensify its battle with Intel and Nvidia in the data-center chip market. The deal, which AMD expects to close at the end of 2021, would create a combined megafirm with 13,000 engineers and a completely outsourced manufacturing strategy that relies heavily on Taiwan Semiconductor Manufacturing. Though Intel has been AMD’s closest rival of late, the real ‘big bad’ of this nerdy posse has been Nvidia, which in Q2 saw its data center revenue surpass gaming for the first time. Now, AMD will up the ante in this storied rivalry with Xilinx’s programmable processors that help speed up specialized tasks such as compressing videos or providing digital encryption. With the upcoming release of Microsoft and Sony’s fifth-generation games consoles — of which AMD exclusively provides the chips — Nvidia could have some serious competition on its hands.
Bet you didn’t know
The first-ever central processing unit, the 4004, was capable of roughly 96,000 instructions per second, compared to the 1,000,000 instructions per second a modern unit can produce.
It’s the busiest week on the MyWallSt calendar as almost a third of our stocks report Q3 earnings. However, we were also blessed with Twitter CEO Jack Dorsey’s magnificent beard when he showed up to a Congressional hearing, so it kinda’ balances out.
So, how did these companies do in Q3?
The Good ?
The Google parent company was the star of the evening after crushing expectations with revenue of $46.17 billion and EPS of $16.40. The results showed a strong rebound in its core advertising revenue — especially with Google Search and YouTube — which was hit hard by customer spending pullbacks amid the COVID-19 pandemic.
The world’s largest e-commerce platform posted sales growth of 37% to $96.15 billion, with earnings per share smashing expectations at $12.37. The company continues to be one of the biggest beneficiaries of the pandemic as consumers flocked to the site for essential goods, groceries, and household items.
The Australian firm topped analyst estimates with earnings of $0.30 per share on revenue of $459.5 million. The move from the office to the home has forced companies to accelerate their cloud computing needs, helping Atlassian increase revenue and add more than 8,600 net new customers during the quarter.
The Axos Bank parent reported an impressive net income increase of 30% YoY to $53 million, or $0.91 per share. “We achieved a record quarter in mortgage banking as a result of 148% year-over-year increase in single-family agency loan originations and robust gain-on-sale margins”, said President and Chief Executive Officer Greg Garrabrants.
The American enterprise software company boasted an impressive 21% revenue growth YoY to $90.5 million, while net losses came in at $8.6 million, or $0.15 per share. Its recent acquisition of Rimilia, a leader in accounts receivable automation solutions, has allowed Blackline to expand both its core customer capabilities and total addressable market.
The machine manufacturer beat expectations with EPS of $0.49 on revenue of $251 million, up from $0.24 per share on $183 million in the year-ago period. “We are proud of the substantial revenue growth and operating margin expansion that we achieved this quarter,” said Robert J. Willett, Chief Executive Officer of Cognex.
Cognizant Technology Solutions Corp
The New Jersey-based tech firm far surpassed Wall Street estimates with revenue of $4.24 billion in Q3 and EPS of $0.64. Cognizant expects full-year earnings in the range of $3.63 to $3.67 per share, with revenue expected to be $16.7 billion.
Selling custom masks must be profitable as vintage e-commerce site Etsy smashed expectations after reporting a third-quarter profit of $91.8 million, or $0.70 per share. Incredibly, Etsy’s revenue soared 128% from the year-ago quarter to hit $451.5 million, while gross merchandise sales jumped 119% to $2.6 billion.
Everyone wants a pickup according to Ford’s blowout Q3 earnings, which saw EPS come in at a whopping $0.65 versus $0.19 expected on revenue of $34.71 billion. Ford recorded its best third-quarter pickup sales in 15 years as demand for trucks industry-wide outpaced supply, with the economy clawing back from the pandemic pause.
The insurance-holding company posted an impressive EPS of $31.03 on revenue of $1.39 billion, up from $13.97 per share on revenue of $1.3 billion in the year-ago period. Revenue guidance for the current quarter comes in at around $2.45 billion.
The social media site that can do no wrong lately posted a massive earnings beat with EPS of $0.13 on revenue of $443 million. Not even the most impressive stat of the day, Pinterest now boasts an impressive 442 million monthly active users, while its advertising got a boost from the #StopHateForProfit ad boycott targeted at Facebook over the summer.
The leading digital workflow company beat the Street after posting Q3 revenue of $1.15 billion, up 30% from a year ago. ServiceNow CFO Gina Mastantuono added that the company sees “strong momentum heading into the last quarter of the year,” with its forecast Q4 subscription revenue rising to between $1.15 and $1.16 billion.
The e-commerce wonder beat estimates across the board with earnings of $1.13 a share compared to a loss of $0.29 a year earlier. A 96% jump in revenue growth was driven by solid growth in its Subscription Solutions division, which means a lot more merchants are joining the platform.
Despite remaining unprofitable, the telehealth leader still beat analyst estimates with losses per share of $0.13 compared to losses of $0.39 a year ago, and revenue of $288.81 million. The big win for Teladoc, which last-quarter announced the acquisition of Livongo Health, was its tripling quarterly visits on an annual basis to 2.8 million.
It was a far-from-cloudy forecast from Twilio as the cloud communications leader beat expectations with 52% YoY revenue growth to $447.9 million. Twilio’s CEO Jeff Lawson said “great digital engagement is becoming more critical to differentiate the customer experience” for its 208,000 active customer accounts, up from 172,000 in Q3 of 2019.
The American sports equipment company topped expectations today, reporting revenue of $1.43 billion versus the $1.16 billion expected. EPS rose to $0.26, smashing Wall Street’s predictions, as the apparel brand saw a surge in demand for its footwear and workout gear.
The customer service software company rounded up a busy Thursday by surpassing expectations, as revenue increased 24% to $262 million. The company claims that the initial shock of COVID is now behind it, causing a rise in customers who need more elegant customer service solutions, considering that many staff are now working remotely.
The (Not So) Bad ?
It was a mixed quarter from the online education platform as it posted a smaller than expected loss and a revenue beat of $201.1 million — up 30.7% YoY. Q4 revenue guidance impressed too, coming in the range of $760 to $775 million.
For the quarter ended September 30, the gaming giant reported revenue of $1.95 billion with earnings per share of $0.78.Overall monthly active users fell to 390 million, however, down from 428 million this time last year which sent stock down in after-hours trading.
Despite strong Mac and iPad sales, Apple’s earnings disappointed as iPhone revenue of $26.44 billion missed estimates, while EPS of $0.73 on overall revenue of $64.7 billion barely beat the Street. Analysts worry that increasing financial uncertainty among consumers is causing a slowdown in iPhone sales, but Apple remains optimistic that iPhone 12 sales will perform strongly through the holiday season.
Following a year in which its share price has almost doubled, digital education leader Chegg reported EPS of $0.17 on revenue of $154 million, up 64% YoY. CEO Dan Rosensweig gave strong guidance for the coming year: “the momentum we are experiencing globally gives us the confidence to raise our guidance again for 2020 and provide our initial outlook for 2021”.
Worrying signs for ‘the social network’ after it reported a decline in North America users of 2 million users, though the July #StopHateForProfit ad boycott does not appear to have hurt, with revenue up 22%. Facebook still managed to post an earnings beat of $2.71 cents per share on a revenue total of $21.47 billion, though it warned of flat user growth due to earlier heights reached this year relating to COVID lockdowns.
IDEXX announced earnings per share of $1.75 on revenue of $721.8 million, surpassing analyst expectations. According to its statement, high revenue growth was supported by sustained strong global recovery in the pet healthcare market.
Microsoft got the ball rolling for Big Tech on Tuesday after reporting expectation-beating earnings of $1.82 on revenue of $37.15 billion. However, guidance for the current quarter disappointed at between $39.5 and $40.4 billion, causing shares to fall on Wednesday.
The famous coffee maker beat the analysts in Q3 with revenue of $6.2 billion and EPS of $0.51, despite net sales falling 8% quarter-over-quarter (QoQ). Starbucks cited strong rebounds in its two largest markets, the U.S. and China, as the cause of its revenue beat as the company adapts to COVID restrictions and reopens stores, albeit in a limited capacity.
Not something that every restaurant chain can boast right now, Texas Roadhouse reported Q3 net profit of $29.2 million, or $0.42 per share, on total revenue of $631.2 million, topping estimates. However, comparable restaurant sales decreased 16.0% at domestic company restaurants and 16.8% at domestic franchised restaurants, thanks to the ongoing pandemic.
The Ugly ?
The telecom real estate trust had a mixed bag after missing expectations on EPS of $1.04 while revenue of $2.01 billion beat the $1.97 billion expected. Even though costs related to 5G installation grew, the company was optimistic: “Looking forward, as 5G deployments in the U.S. accelerate and as wireless technology evolves globally, we believe that our macro tower-oriented footprint is well-positioned to generate consistent, recurring growth and attractive returns.”
Despite beating sales expectations with $1.8 billion, overall sales declined 4% YoY for Hasbro, sending its stock plummeting 10% on Monday. Revenue suffered from its acquisition of eOne entertainment, as well as the absence of any film release which the company usually makes toys for, while the U.S. and Canada remained its only growth markets, albeit small.
As was expected, cinema chain IMAX reported a loss of $47.2 million thanks to the coronavirus, compared to a year-earlier $9 million profit. It wasn’t all gloom though, with CEO Richard Gelfond stating: “With continued box office revenues from our strong local language slate and revenues from theater installations, the company estimates our average monthly cash flow will be approximately break-even through the first quarter of 2021.”
Shares in Mastercard fell Wednesday after the payments leader missed estimates with EPS of $1.60 on revenue of $3.84 billion, down from the $4.47 billion posted in Q3 2019. The company disclosed that cross-border volume fell 36%. “We are seeing encouraging progress in the trajectory of domestic spending, while travel spending remains a challenge,” Chief Executive Ajay Banga said in a release.
Retail Opportunity Investments Corp
The real estate investment trust firm posted $6.5 million of net income for Q3, or $0.06 per diluted share, far below the $17.9 million, or $0.16 per diluted share posted a year ago. Despite pandemic-related issues, CEO Stuart Tanz was optimistic, stating: “We intend to continue making the most of the demand, with the goal of achieving a solid finish to 2020.”
The Swedish music streaming leader missed expectations across the board with losses per share of $0.68 on revenue of $2.31 billion. Total monthly active users hit 320 million, however. CEO Daniel Ek cited growth costs as one of the main reasons for thinner margins but reiterated that the company was seeing impressive user growth, especially in podcasts.
The social blogging site may have beaten estimates with EPS of $0.19 on revenue of $936 million, but declining user growth — just 1 million net additions in Q3 — sent the stock falling immediately after its report. The company cited uncertainties surrounding the upcoming presidential election as a reason for erratic user behavior.
Bet you didn’t know
If you stroke Jack Dorsey’s beard and say ‘quirky’ three times in a row, it’s said that he will grant you 3 wishes, fully payable in Bitcoin — don’t fact check us on this one…
Hmm, a donut deal… It may not be as delicious as a Homer Simpson inspired 2-for-1 donut offer, but Dunkin Brands are apparently in preliminary discussions to be acquired by Inspire Brands. The Arby’s parent is reportedly coughing up for an $8.8 billion purchase, which would work out at buying each share for $106.50. The ‘America Runs on Dunkin’ company previously went private back in 2005 before going back public again in 2011 (do-nut change your mind again folks!) The two brands are not sugarcoating the agreement, both declining to comment until the transaction is agreed upon. Dunkin’ dropped ‘Donuts’ from its name in 2018 to focus on serving coffee on-the-go along with different types of food, branding, advertising, and remodeled restaurants. Going private gives the company the opportunity to reposition itself and allow it to make the required changes to its business model, helping it beat Starbucks in the running to become the biggest coffee chain in the world.
Donuts, Go Nuts on TikTok!
The king of donuts is trying out new marketing techniques and named a drink ‘The Charli’ after 16-year-old Charli D’Amelio last month, who is currently the most followed person on TikTok with 90 million viewers watching her dances. The icing on the donut? Dunkin’ reported earnings on Thursday that beat estimates, with earnings of $0.93 per share on revenue of $361.54 million, while same-store sales just shy of 1%.
Bet you didn’t know
It’s not unusual for wedding ceremonies to take place in Dunkin Donuts, the donut chain even held a ‘Hole-y Matrimony Contest’ in 2004 where two lucky couples tied the knot at their local Dunkin store.
The Week In Numbers
U.S. GDP growth far surpassed expectations in Q3, it was announced this week.
will be the monthly price of Starlink internet services, the satellite program run by Elon Musk-founded SpaceX.
$34.4 billionis the amount Chinese financial-technology giant Ant Group Co. raised in a record-shattering IPO this week which spans the Hong Kong and Shanghai stock exchanges.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above Read our full disclosure policy here.