Another day, another batch of earnings!
Today, I’ll be covering Lloyds Banking Group, Nvidia, eBay and Etsy.
Lloyds Banking Group (LLOY) – Q4 Earnings
A solid set of earnings for Lloyds, beating on earnings for the quarter. Though, the pre-tax profit did come in slightly lower than expectations. Lloyds also posted a “disappointing” net interest margin projection for 2023, according to analysts. In my opinion, their net interest rate is great and arguably too high; they should be passing more of this onto the consumer.
While high interest rates can be an advantage to banks, this combined with the cost-of-living crisis poses a particular threat to Lloyds and their 2023’s earnings. As the UK’s largest mortgage lender, it’s more susceptible to the housing market. It’s also possible we’ll see a large spike in defaults this year. As a result, the company have put aside a large sum of money should such an event occur.
Key Points:
- Revenue of £5,003m, up from £4,122m (+21.4%) a year ago
- Profit before tax of £1,759m, compared to £968m a year ago
- Profit after tax of £1,520m, compared to £420m a year ago
- Basic earnings per share of 2.27p
- Dividend of 1.60p per share announced, to be paid on 23rd May 2023
- Revenue guidance for 2023 is vague, but Lloyds expects to see a banking net interest margin of around 3.05% in 2023. For Q4 2022, it was at 3.22%, but was below 3.00% in every quarter prior to this. Operating expenses in 2023 are expected to reach £9,100m
- The company announced up to £2,000m in share buybacks in 2023
- £1,500m was put aside throughout 2022 as a provision for bad debts (i.e., in case of defaults). While default rates are still low, it’s good to know this money is available. Should fewer-than-expected defaults occur in the coming years, this cash will be re-released and likely sent out to shareholders
Nvidia (NVDA) – Q4 Earnings
While Nvidia have had a rough 2022. However, in Q4, they reported revenue and earnings that beat analyst expectations, while providing an exciting outlook for their future growth, particularly in the AI, cloud and supercomputing sectors. The CEO even labelled the potential of AI an “iPhone moment”. The stock prise rose around 8% in after-hours trading.
Key Points:
- Revenue of $6,051m, down from $7,643m (-20.8%) a year ago
- Data centre revenue increased 11% year-over-year, but declined 6% quarter-over-quarter
- Gaming revenue decreased 46% year-over-year, but improved 16% quarter-over-quarter
- Professional visualization revenue decreased 65% year-over-year, but improved 13% quarter-over-quarter
- Automotive and embedded revenue increased 135% year-over-year, while improving 17% quarter-over-quarter
- Gross profit of $3,833m, down from $4,999m (-23.3%) a year ago
- Operating profit of $1,257m, down from $2,970m (-57.7%) a year ago
- Profit before tax of $1,289m, compared to $2,865m a year ago
- Profit after tax of $1,414m, compared to $3,003m a year ago
- Basic earnings per share of $0.57
- Dividend of $0.04 per share announced, to be paid on 29th March 2023
- Revenue guidance for Q1 2024 of $6,500m, plus or minus 2%, an improvement of almost $500m compared to Q4 2022
- Nvidia intend to double-down on its successes with AI, with Jensen Huang, Nvidia’s founder and CEO, stating that “AI is at an inflection point, setting up for broad adoption reaching into every industry… From start-ups to major enterprises, we are seeing accelerated interest in the versatility and capabilities of generative AI… We are set to help customers take advantage of breakthroughs in generative AI and large language models. Our new AI supercomputer, with H100 and its Transformer Engine and Quantum-2 networking fabric, is in full production.”
- The company stated that gaming is recovering from the slump it saw in 2022, noting that “Gaming is recovering from the post-pandemic downturn, with gamers enthusiastically embracing the new Ada architecture GPUs with AI neural rendering.”
eBay (EBAY) – Q4 Earnings
With a tough macroeconomic environment and an ever-weakening consumer, it’s no surprise investors reacted negative to eBay’s earnings report. While they reported better-than-expected revenue and guidance, they did miss on earnings and provided a very cautious note towards 2023, stating that a recovery is not guaranteed in the second half of the year.
Key Points:
- Revenue of $2,510, down from $2,613m (-3.9%) a year ago
- On a constant-currency basis, revenue fell ~1% year-over-year
- Gross profit of $1,829m, down from $1,919m (-4.7%) a year ago
- Operating profit of $565m, down from $688m (-17.9%) a year ago
- Profit before tax of $671m, compared to a loss of ($893m) a year ago (largely due to a one-off impairment charge)
- Profit after tax of $672m, compared to $1,969m a year ago (thanks to a large tax benefit/income)
- Basic earnings per share of $1.24
- Dividend of $0.25 per share announced, to be paid on 24th March 2023
- Revenue guidance for Q1 came in better than expected, with the company expecting revenue of between $2,460m and $2,500m, while earnings per share will fall to between $0.77 and $0.81
Etsy (ETSY) – Q4 Earnings
While 2022 has been a very tough year for many online marketplaces (like eBay, above!) due to the weakening macroeconomic environment, Etsy had an incredibly strong Q4 thanks to the holiday season. Etsy beat analyst expectations on revenue, but did miss slightly on earnings, while providing in-line guidance for Q1 2023. A bit of a mixed report, but investors seem happy, resulting in the stock jumping ~8% in after-hours trading.
Key Points:
- Revenue of $807m, up from $717m (+12.6%) a year ago
- Gross profit of $581, up from $508m (+14.4%) a year ago
- Operating profit of $139m, up from $142m (+2.0%) a year ago
- Profit before tax of $128m, compared to $144m a year ago
- Profit after tax of $110m, compared to $162 a year ago
- Basic earnings per share of $0.87
- Revenue guidance of between $600m and $640m in Q1 2023
- Active buyers fell slightly to 95,076, from 96,336 (-1.3%) a year ago. Active sellers also fell slightly to 7,470, from 7,522 (-0.7%) a year ago
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!
