Earnings, earnings, earnings! This earnings season seems to have been going on forever! But we’re now reaching the end. From what I can see, this is the last big week of reports.
I won’t bore you with a long intro, let’s just jump right in.
Today, I’ll be covering Zoom Video Communications, St Jame’s Place, Target and Rivian.
Zoom Video Communications (ZM) – Q4 (Fiscal Q4 2023) Earnings
Yesterday, Zoom released Q4 earnings that beat analyst expectations on both revenue and earnings. While the company have provided fairly mute guidance for 2023, with negligible revenue growth, investors seem to be taking the news on the chin. Presumably, they expected the guidance to be much worse.
Zoom reported its first net loss since 2018, largely due to increased stock-based compensation. Adjusted earnings are still positive and are expected to be positive for the foreseeable future, particularly when taking into account the recently-announced headcount reduction.
Key Points:
- Revenue of $1,118m, up from $1,071m (+4.3%) a year ago
- Gross profit of $823m, up from $814m (+1.2%) a year ago
- Operating loss of ($130m), compared to an operating profit of $252m a year ago
- Largely due to an increase in stock-based compensation, costing $518m for the quarter. This compares to just 161m in the year-ago quarter
- Loss before tax of ($40m), compared to a profit of $139m a year ago
- Loss after tax of ($104m), compared to a profit of $491m a year ago
- Basic loss per share of ($0.36)
- Revenue guidance for Q1 (Fiscal Q1 2024) of between $1,097m and $1,102m, while yearly revenue is expected to come in between $4,458m and $4,478m. This implies just 1.1% year-over-year growth
- The company now has around 213,000 Enterprise customers, up 12% year over year. Of these, 3,471 customers have contributed more than $100,000 over the past 12 months, up 27% from the same quarter last year
Target (TGT) – Q4 Earnings
As seems to be the theme in this earnings cycle, Target announced revenue and earnings that beat analyst expectations, while providing muted guidance for 2023, with minimal growth expected. The effects of inflation and the increased cost-of-living is continuing to have an impact on the consumer, forcing retailers to slow – or even stop – price increases. Instead, focusing on efficiencies will be crucial to maintain current margins.
Key Points:
- Revenue of $31,395m, up from $30,996 (+1.3%) a year ago
- Gross profit of $7,449, down from $8,235m (-9.5%) a year ago
- Operating profit of $1,159m, down from $2,095m (-44.7%) a year ago
- Profit before tax of $1,043, compared to $2,017m a year ago
- Profit after tax of $876m, compared to $1,544m a year ago
- Basic earnings per share of $1.90
- Dividend of $1.08 per share, to be paid on 10th March 2023
- Guidance for Q1 2023 is set at a large range, with revenue to either fall slightly year-over-year, or increase slightly, while both GAAP and adjusted EPS are expected to come in at between $1.50 and $1.90
- Company share repurchases have been paused until higher free cash flow is achieved
- The company acknowledges that the customer is less willing to spend money on discretionary items. As such, they intend to spend between $4,000m and $5,000m in 2023 to remodel around 175 stores, build 20 new ones, launch ore expand over 10 private-label brands. Target will also aim to introduce new product lines and services, including curb-side delivery, meaning shoppers won’t need to leave their cars when collecting orders
- This investment is actually less than in 2022, meaning Target will need to be more creative with less investment, if they wish to achieve a higher number of sales as a result
Rivian (RIVN) – Q4 Earnings
Despite rave reviews from their customers, suggesting their products are of a premium quality, Rivian continues to struggle to ramp vehicle production and bringing down costs. The company reported a better-than-expected loss, but revenue came in much lower than analysts had hoped. To make matters worse, production guidance for 2023 came in lower than expected, citing continued supply chain constraints.
Rivian continues to burn cash at an incredible rate, but thankfully, they have enough cash available to continue its unprofitable operations for 18-24 months. Is that enough time to reach profitability? Only time will tell.
Key Points:
- Revenue of $663m, up from $54m (+1,127%) a year ago
- Gross loss of ($1,000m), compared to a gross loss of ($383m) a year ago
- Rivian are currently spending ~$205,000 to manufacture each vehicle, while selling each vehicle at just ~$82,000
- Operating loss of ($1,795m), compared to a loss of ($2,454m) a year ago
- Loss before tax of $1,723m, compared to ($2,461m) a year ago
- Loss after tax of ($1,723m), compared to ($2,461m) a year ago
- Basic loss per share of $1.87
- For 2023, Rivian expects to produce around 50,000 vehicles, missing analyst estimates of 60,000. Additionally, the company expects to continue reporting a negative gross profit margin across 2023, but narrowing the gap and getting closer to profitability
- As of 31st December 2022, Rivian had cash and cash equivalents of $11,568m, down from $18,133m a year earlier. This provides a cash runway of around 2 years, assuming costs come down slightly
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!
