We’re almost at the end of another busy earnings week. Things begin to slow down somewhat from here, but there’s still a lot of companies to get through over the coming weeks.
In this post, I’ll be covering AstraZeneca, PepsiCo, PayPal and Cloudflare.
AstraZeneca (AZN) – Q4 Earnings
A mixed earnings report from AstraZeneca, missing on revenue but beating on earnings. While the company saw a decline in revenues, the core business outside of Covid-19 sales are still growing strong.
Admittedly, I can’t pretend to know much about AZ’s product portfolio, so I’ll be light on the details here. Before next earnings season, I’ll do some digging and provide better insights.
Key Points:
- Revenue of $11,207m, down from $12,011m (-6.7%) a year ago
- Largely due to a decline in Vaxzevria, AstraZeneca’s Covid-19 vaccine. Excluding this drug, the company saw year-over-year growth of 17% on a constant-currency basis
- Gross profit of $8,307m, up from $7,386 (+12.5%) a year ago
- Cost of sales came in at $2,900m, down from $4,625m (-37.3%) a year ago
- Operating profit of $1,094m, compared to an operating loss of ($292m) a year ago
- Profit before tax of $778m, compared to a loss of ($636m) a year ago
- Profit after tax of $902m, compared to a loss of ($346m) a year ago
- Basic earnings per share of $0.58
- Dividend of $1.97 per share, to be paid on 27th March 2023
- Guidance provided at a constant-currency basis. AstraZeneca suggests revenue will see low-to-mid single-digit growth in 2023. Excluding Covid-19 products, revenue will see low-double-digit growth
- The company expects its Covid-19 products to continue their decline in 2023
- Sales in China are expected to grow slightly in 2023
PepsiCo (PEP) – Q4 Earnings
PepsiCo reported revenue and earnings above analysts’ expectations, despite a small decline in sales volumes. This was largely helped by the multiple price increases introduced over the past year. The company projects a slightly lower-than-expected net income for 2023, but this was negligible. They also announced that there are no plans to increase prices further, at least for the foreseeable future.
Key Points:
- Revenue of $27,996m, up from $25,248m (+10.9%) a year ago
- Gross profit of $14,576m, up from $13,118m (+11.1%) a year ago
- Operating profit of $815m, down from $2,562m (-68.2%) a year ago
- Profit before tax of $506m, compared to $1,588m a year ago
- Profit after tax of $518m, compared to $1,322m a year ago
- Diluted earnings per share of $0.37
- Dividend of $1.15 per share announced, to be paid on 31st March 2023. The company also announced it will be raising its dividend by 10% from June 2023
- Guidance suggests a 6% increase in organic revenue for 2023, with a $1,000m share buyback also expected
- Sales volumes fell 2% year-over-year, but this was offset by price hikes throughout 2023. Very little pushback was received for said price rises, largely due to their “duopoly” with Coca-Cola, allowing both companies to raise prices together
- While PepsiCo expects inflation to still cause problems in 2023, it also anticipates that the consumer will remain resilient, expecting sales volumes to rise despite the cost-of-living rising
PayPal Holdings (PYPL) – Q4 Earnings
PayPal roughly met analyst expectations on revenue, while beating on earnings. These results will likely have softened concerns around the company’s performance over the past 12 months, showing that options for growth are very much still on the table. It was also announced that the current CEO will be exiting the company (while remaining on the board of directors) at the end of 2023.
Key Points:
- Revenue of $7,383, up from $6,918m (+6.7%) a year ago
- On a constant-currency basis, revenue grew around 9% year-over-year
- Gross profit of $4,059m, up from $3,966m (+2.3%) a year ago
- Operating profit of $1,244m, up from $1,050m (+18.5%) a year ago
- Profit before tax of $1,110m, compared to $706m a year ago
- Profit after tax of $921m, compared to $801m a year ago
- Basic earnings per share of $0.81
- Guidance for Q1 2023 suggests revenue growth of around 7.5% year-over-year, or roughly 9% on a constant-currency basis. For 2023, earnings per share are expected to rise to $3.27, compared to $2.09 in 2022
- Long-time CEO Dan Schulman, who joined PayPal in 2014, will retire at the end of 2023. No successor has been announced
- 6 billion payment transactions were made, up 13% year-over-year
- 2.9 million net new customers during the quarter, bringing PayPal’s total customer base to 435 million
- Venmo accounted for around 17.5% of PayPal’s total payment volume (TPV) for the quarter and continues to grow
Cloudflare (NET) – Q4 Earnings
Once again, Cloudflare have surprised analysts by beating on revenue, earnings and guidance. The company’s growth shows no signs of slowing, even despite the difficult macroeconomic backdrop with many businesses trying to cut costs. Though still a money-losing company, Cloudflare reported record free cash flow in the quarter.
Key Points:
- Revenue of $275m, up from $194m (+41.9%) a year ago
- Gross profit of $207, up from $151m (+36.9%) a year ago
- Cost of sales increased to $68m, up from $42m (+59.5%) a year ago
- Operating loss of ($51m), up from ($41m) a year ago
- Loss before tax of ($45m), compared to a loss of ($57m) a year ago
- Loss after tax of ($46m), compared to a loss of ($78m) a year ago
- Basic loss per share of ($0.14)
- Revenue guidance for Q1 2023 of between $290m and $291m, while revenue for the whole of 2023 comes in at between $1,330m and $1,342m, signalling that revenue will likely reach between $350m and $400m per quarter by the end of 2023. Interestingly, this guidance is assuming the macroeconomic environment does not improve compared to today
- The board are still optimistic of its goal to reach an annualised revenue rate of $5,000m per year in 5 years time
Do you invest in any of these companies? Have these earnings changed your view about the company’s prospects in any way? Let me know in the comments!
