Happy Wednesday!
This will be my final “Company Earnings” post this week, as there are no companies I wish to cover tomorrow. Next week will see the regular Tuesday-Thursday posts, while the week after is likely to see much less (if any) as earnings season winds down to a close.
Today, I’ll be covering Roblox Corporation, Shopify, Roku and Hargreaves Lansdown.
Roblox Corporation (RBLX) – Q4 Earnings
Despite a generally struggling gaming sector due to the reopening of economies following the Covid-19 lockdowns, Roblox came in with very strong earnings last quarter. Revenue and earnings beat analyst expectations, as did the number of daily active users and their respective total hours engaged on the platform.
Unfortunately, though, Roblox is still very much a money-losing business. This is largely due to continued reinvestment into its own infrastructure and hiring, but it is something investors are cautious of. Thankfully, Roblox still has a lot of cash available, so it has plenty of wriggle room.
Key Points:
- Revenue of $579m, up from $569m (+1.8%) a year ago
- On a constant-currency basis, revenues rose ~3% year-over-year
- Total bookings (including deferred revenue) came in at $899m, up 17% year-over-year. On a constant-currency basis, bookings rose 21% year-over-year
- Gross profit of $437m, up from $417m (+4.7%) a year ago
- Operating loss of ($302m), worse than the operating loss of ($140m) a year ago
- Loss before tax of ($288m), compared to a loss of ($147m) a year ago
- Loss after tax of ($290m), compared to a loss of ($143m) a year ago
- Basic loss per share of ($0.48)
- While the company doesn’t give explicit guidance, they reported that in January 2023, daily active users rose significantly to 65 million, up 19% year-over-year. Hours engaged for January also rose 19% year-over-year. Finally, the company estimates that in January, revenue came in at between $213m and $216m, up 22%-24% year-over-year
- Free cash flow came in at ($38m), paving the way to being cash flow positive
- Roblox has over $2,977m in cash and cash equivalents, putting the company in a good position to weather any economic turbulence throughout 2023
- Average daily active users for Q4 2022 rose to 58.8 million, up 19% year-over-year, while total hours engaged rose by 18% year-over-year
Shopify (SHOP) – Q4 Earnings
A mixed set of earnings for Shopify, which beat on revenue and adjusted earnings, but provided weak guidance for the year ahead compared to expectations, as well as providing a wider loss on a GAAP basis. This loss was largely due to severance and real-estate charges.
However, the company did unexpectedly report a non-GAAP profit for the quarter, which will please many investors.
Key Points:
- Revenue of $1,735m, up from $1,380m (+25.7%) a year ago
- Subscription solutions revenue rose to $400m, up 14.0% year-over-year
- Merchant solutions revenue rose to $1,335m, up 29.7% year-over-year
- Gross profit of $799m, up from $693m (+15.3%) a year ago
- Gross profit margin fell to 46%, compared to 50% a year ago. This is due to a 36% increase in cost of sales
- Operating loss of ($189m), compared to an operating profit of $14m a year ago
- Loss before tax of ($615m), compared to ($489m) a year ago
- Loss after tax of ($602m), compared to ($371m) a year ago
- Basic loss per share of ($0.49)
- Revenue guidance for Q1 2023 is for a year-over-year growth in the high-teen percentages, while gross profit margin is to increase slightly from Q4’s 46%
- Cash and cash equivalents of $1,649m, down from $2,503m a year ago
- Shopify announced in January that they will be increasing the price of their subscription plans by over 30% for each plan (excluding any offers/promotions). This will either increase subscription revenue in 2023, or cause an exodus of users to cheaper platforms, such as Squarespace
Roku (ROKU) – Q4 Earnings
An interesting report from Roku. The company beat expectations on both revenue and earnings despite its caution in the previous quarter. In Q3, it was evident that the advertising space was going to continue its downtrend. But, unsurprisingly, Roku have ended Q4 relatively unscathed compared to other businesses that rely on advertising revenue. It’s not all good news, though, as the company warns that it likely won’t return to positive non-GAAP figures until 2024. As such, Roku will be reliant on its (fairly significant) cash reserves to get through a challenging 2023.
Key Points:
- Revenue of $867m, up slightly from $865m (+0.2%) a year ago
- Platform revenue increased to $731m, up 4.6% year-over-year
- Devices revenue decreased to $136m, down 18.4% year-over-year
- Gross profit of $364m, down from $380m (-4.0%) a year ago
- Operating loss of ($250m), compared to an operating profit of $21m a year ago
- Loss before tax of ($238m), compared to a profit of $23m a year ago
- Loss after tax of ($237m), compared to a profit of $24m a year ago
- Basic loss per share of ($1.70)
- Guidance for Q1 suggests revenue will come in at around $700m, with gross profit of around $310m. By the end of 2023, the company expects operating expenses will see growth in the single-digits, compared to 40% expenses growth in Q1. This will allow Roku to better weather what is expected to be a difficult year
- Cash and cash equivalents sit at $1,962m, compared to $2,146m a year ago
Hargreaves Lansdown (HL) – H1 2023 Earnings
A tough report for HL. The company reported solid revenue and profit figures while also continuing to add new customers. However, the result was largely due to the positive impact higher interest rates are having on the company’s cash accounts. In fact, if net interest revenue remained stable compared to last year, HL would have reported a revenue decline on the scale of around 18%!
With investors being extremely cautious at the moment, resulting in much lower trading volumes, high interest rates will likely continue to be the main force propping up HL’s top and bottom line.
Key Points:
- Revenue of £350m, up from £291m (+20.2%) a year ago
- Fund revenue (platform fees) decreased to £117.9m, down 11.5% year-over-year
- Shares revenue (commission and holding charges) decreased to £70.2m, down 31.0% year-over-year
- Cash revenue (net interest) increased to £121.6m, up 976% year-over-year
- HL fund revenue (management charges) decreased to £27m, down 14.0% year-over-year
- Other revenue decreased to £13.3m, down 0.7% year-over-year
- Operating profit of £190m, up from £151m (+25.4%) a year ago
- Profit before tax of £198m, compared to £151m a year ago
- Profit after tax of £157m, compared to £122m a year ago
- Basic earnings per share of 33.2p
- Dividend of 12.7p per share announced, to be paid on 31st March 2023
- Guidance for the second half of 2023 is vague, but suggests a similarly strong set of results despite the difficult macroeconomic environment. This is largely due to increased interest rates boosting net interest revenue significantly
- The company said: “In the second half of our financial year, the current uncertain economic environment and market conditions are likely to continue to impact investor confidence and in turn, net new business and dealing volumes.”
- If the macro environment eases and investor confidence is boosted, HL could well see a significant beat in the second half of the year. Conversely, if things continue to look bleak, they could underperform
- Net new business of £1.600m, less than the £2,300m seen in H1 2022
- Active clients rose 31,000, to 1,768,000. This is less than the 48,000 net new active clients seen in H1 2022
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!
