We’re at the end of another earnings week. Looking into next week, this should be my last mid-week earnings post until April.
Today, I’ll be covering earnings from Docusign, Darktrace, The Restaurant Group and Legal & General Group.
Docusign (DOCU) – Q4 Earnings
Docusign posted earnings which beat analyst expectations on both revenue and earnings. However, despite this positive report, the company’s 2023 outlook worries investors due to the continued slowing of revenue growth. To add fuel to the fire, a second executive in just 12 months will be leaving the company, spooking investors further.
Key Points:
- Revenue of $660m, up from $581m (+13.6%) a year ago
- Gross profit of $522m, up from $449m (+16.2%) a year ago
- Operating loss of ($0.3m), an improvement on a loss of ($25m) a year ago
- Profit before tax of $5m, compared to a loss of ($29m)
- Profit after tax of $5m, compared to a loss of ($30m) a year ago
- Basic earnings per share of $0.02
- Revenue guidance for Q1 2023 of between $639 and $643. Revenue guidance for the full year is expected to be between $2,695 and $2,707
- Cash and cash equivalents as at 31st January 2023 of $722m, compared to $509m a year ago
- The Chief Financial Officer (CFO), Cynthia Gaylor, will leave the company this year. This is less than a year since the previous CEO also left the company. This has concerned investors somewhat
Darktrace (DARK) – H1 2023 Earnings
A relatively strong first-half for Darktrace. The company did announce a revision down for revenue just a few months ago, but have still maintained impressive revenue growth and continued to increase net new customers, all the while retaining existing customers.
Profit took a hit in the first half for various reasons, but the company expects this to ‘normalise’ in the second half of the year.
Key Points:
- Revenue of $259m, up from $191m (+35.8%) a year ago
- Gross profit of $233m, up from $170 (+36.7%) a year ago
- Operating profit of $0.6m, down from $7m a year ago
- Profit before tax of $1.9m, compared to $6m a year ago
- Profit after tax of $0.6m, compared to $4m a year ago
- This reduction is largely due to higher employer tax charges, as well as higher share-based compensation in the period
- Basic earnings per share of ~$0.00
- For the full fiscal year 2023, the company’s revenue is expected to grow between 29.5% and 31.0%
- Cash and cash equivalents as at 31st December 2023 of $375m, compared to $367m a year earlier
- Customers grew to 8,178, up 24.4% year-over-year
- On the topic of ChatGPT and how it may affect cybercrime, the company said “The launch of ChatGPT has also ignited a conversation about the implications of generative AI for cyber security. Darktrace does not believe that ChatGPT has yet lowered barriers to entry for threat actors significantly, but it does believe that it may have helped increase the sophistication of phishing emails, enabling adversaries to create more targeted, personalised, and ultimately, successful attacks.”
- The company notes that the number of customer wins has seen a significant slowdown, but the company’s retention of existing customers is high
- To address the concerns of activist investors, the company announced an independent audit of its finances, to be completed by EY. No specific timeline was given in terms of issuing the results. This is also being done in an attempt to push back against huge short-selling attacks in recent months
Restaurant Group (RTN) – FY 2022 Earnings
I’ll only cover this report briefly, as, quite honestly, the presentation was diabolical. This seems to be a common thing for UK companies. So, I’m going to have to wait until the official accounts are released at the end of March/early April.
While the report looks bleak, The Restaurant Group (TRG) have actually fared better than most of their competitors. The hospitality sector was hit brutally hard over the pandemic, with additional pressure now due to high energy prices and the need to increase wages. TRG has returned to an adjusted net profit, which is a good start.
Key Points:
- Revenue of £883m, up from £636.6m (+38.7%) a year ago, largely thanks to the reopening of the economy following the pandemic
- Adjusted operating profit of £72.7m, up from £37.1m (+96.0%) a year ago
- Adjusted profit before tax of £30.7m, compared to a loss of (£8m) a year ago
- No revenue guidance given, but the company suggests that costs cutting and efficiency measures will be put in place to improve margins
- Net debt increased slightly to £186m, compared to £172m a year ago
- The company announced it will close 35 Chiquito and Frankie & Benny’s restaurants to cut costs; presumably, these venues did not recover adequately from the pandemic
- TRG faces huge pressure from activist investors at the moment, who are displeased with the debt levels. The activist investors are demanding that a branch of restaurants are sold off to pay down the debt, while also threatening to remove the CEO if improvements are not made quickly
Legal & General Group (LGEN) – FY 2022 Earnings
As above; L&G’s earnings report are no easy read. US reporting rules are much more consistent. I’ll come back and edit this once the official accounts are released.
But generally, L&G seems to have performed well in 2022 despite a deteriorating investing environment. While its investment segment saw a decline, its other segments (retirement, insurance and retail) continue to grow.
Key Points:
- Operating profit of £2,523, up from £2,262 (+11.5%) a year ago
- Legal & General Capital operating profit increased to £509m, up 10% year-over-year
- Retail operating profit increased to £825m, up 33% year-over-year, in part due to the release of provisions following a change in mortality assumptions
- Legal & General Investment Management operating profit decreased to £340m, down 19% year-over-year
- Profit before tax of £2,659, compared to £2,488m a year ago
- Profit after tax of £2,291, compared to £2,050m a year ago
- Basic earnings per share of 38.33p
- Dividend of 13.93p per share announced, to be paid on 5th June 2023
- Cash generation increased to ~£1,900m, up 14% year-over-year
- Solvency II ratio rose to 236%, compared to 187% a year ago, showing the company’s resilience to a volatile financial market
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!
