Earnings Call Digest 2017.11

Facebook (Q3 2017 Results) – Earnings Call Transcript

Our community continues to grow, now with nearly 2.1 billion people using Facebook every month and nearly 1.4 billion people using it daily. Instagram also hit a big milestone this quarter, now with 500 million daily actives.

The reason I’m talking about this on our earnings call is that I’ve directed our teams to invest so much in security on top of the other investments we’re making that it will significantly impact our profitability going forward, and I wanted our investors to hear that directly from me. I believe this will make our society stronger, and in doing so will be good for all of us over the long term. But I want to be clear about what our priority is. Protecting our community is more important than maximizing our profits.

Over the next three years, the biggest trend in our products will be the growth of video. This goes both for sharing, where we’ve seen Stories in Instagram and Status in WhatsApp grow very quickly, each with more than 300 million daily actives, and also for consuming video content.

In messaging, today already more than 20 million businesses are communicating with customers through Messenger. Now we’re starting to test business features that make it easier for people to make the same kinds of connections with businesses through WhatsApp.

We’re now using machine learning in most of our integrity work to keep our community safe. When Hurricane Maria hit Puerto Rico, we used AI to look at satellite imagery and identify where people might live and need connectivity and other resources. Progress in AI can unlock a lot of opportunities.

Facebook has over 6 million active advertisers, and we recently announced that Instagram has over 2 million advertisers. The vast majority of these are small and medium-sized businesses, which are a major source of innovation and create more than half of all new jobs globally. These businesses often have small ad budgets, so the ability to reach people more effectively is really valuable to them.

Video is exploding, and mobile video advertising is a big opportunity. Until recently, ads were only eligible for Ad Breaks if they also ran in News Feed. But in Q3, we gave advertisers the option to run ads in videos alone. We’re seeing good early results, with more than 70% of Ad Breaks up to 15 seconds in length on Facebook and Audience Network viewed to completion, most with the sound on.

I would say not all time spent is created equal. That’s why I tried to stress up front that time spent is not a goal by itself here. What we really want to go for is time well spent. And what the research that we found shows is that when you’re actually engaging with people and having meaningful connections, that’s time well spent, and that’s the thing that we want to focus on.

I do think your point is right that not all kinds of content can be supported by ads, no matter how effective we make that. That said, the current model that we have for at least getting some of the lighthouse content onto the platform is to pay up front. And what we would like to transition that more to over time and what an increasing amount of the content is, is revenue shares for ads shown in the videos. And as we do better and better on the monetization there, that will support people with higher production costs and doing more premium production and bringing their content to the platform. And we’ve certainly found on the Internet and YouTube and in other places that there are whole industries around creators with different cost structures than traditional Hollywood folks who can produce very informative and engaging content that a lot of people like and enjoy and that builds communities and that helps people connect together in a way that definitely can be supported by this ad model.


Apple (Q4 2017 Results) – Earnings Call Transcript

Turning to Services. Revenue reached an all-time quarterly record of $8.5 billion in the September quarter. A few quarters ago, we established a goal of doubling our fiscal 2016 services revenue of $24 billion by the year 2020, and we are well on our way to meeting that goal. In fiscal 2017, we reached $30 billion, making our Services business already the size of a Fortune 100 company.

The reason I’m so excited about AR is I view that it amplifies human performance instead of isolates humans. And so as you know, it’s the mix of the virtual and the physical world and so it should be a help for humanity, not an isolation kind of thing for humanity…Apple is the only company that could have brought this because it requires both hardware and software integration, and it requires sort of making a lot of – or giving the operating system update to many people at once. And the software team worked really hard to make that go back several versions of iPhone so that we sort of have hundreds of millions of enabled devices overnight.

But in terms of price elasticity, I think it’s important to remember that a large number of people pay for the phone by month. And so if you were to go out on just the U.S., since that tends to be more of the focus of this call, you look at the U.S. carriers, I think you would find you could buy an iPhone X for $33 a month. And so if you think about that, that’s a few coffees a week. It’s let’s say less than a coffee a day at one of these nice coffee places…In terms of the way we price, we price to sort of the value that we’re providing. We’re not trying to charge the highest price we could get or anything like that. We’re just trying to price it for what we’re delivering.


Alibaba Group (Q2 2018 Results) – Earnings Call Transcript

In the 18 years since Alibaba was founded, China’s per capita GDP grew by a compounded annual rate of 14%. By comparison, the per capita GDP of the United States grew 3% during the same period. We all understand the magic of compounding. When you compound at 14% rate over 18 years, which is the life of Alibaba, the average Chinese citizen is 10 times better off today than in 1999 with per capita GDP growing from $870 to $8,100.

Today, China’s per capita GDP is still only 1/7 of the per capita GDP of the United States. Based on the track record of sustained income growth over the past years as well as on the backbone of a modern Internet infrastructure and productivity gains from technology, I’m very optimistic that China will continue to experience real income growth for years to come. This will translate into a rising middle class characterized by ever-increasing and higher-quality consumption. And this long-term secular trend bodes well for Alibaba.

Our cloud computing business continues to defy gravity. Revenue increased by 99% year-over-year. We continue to multiply our product portfolio, including the introduction of a new relational database and a state-of-the-art server developed in-house that serve the needs of large enterprise customers.

Mobile MAUs on our China retail marketplaces reached 549 million in September, an increase of 20 million over June quarter. Annual active consumers on our China retail marketplace reached 488 million, a net add of 22 million from the 12 months period ended June.

And the key thing is that the data-driven logistic network, actually we are – Cainiao is not going to be a logistic company and we are not interested into building another logistics company. Instead, we will work with a lot of logistic companies, delivery companies to build a network across the world.


Live Nation Entertainment (Q3 2017 Results) – Earnings Call Transcript

Our concerts business is our flywheel, attracting over 30 million fans to shows globally in the quarter, which then drove record results in our onsite ticketing and advertising business. Through October, we have sold 80 million tickets for concerts in 2017, up 20% year-on-year. Digging deeper into concerts, strong global demand for concerts through the third quarter drove a 16% increase in attendance to 65 million of fans at our 20,000 shows in 40 countries.

With the success of the concert flywheel, we’re promoting more shows for more fans, more effectively pricing and selling tickets and delivering a better experience than ever. As a result, we will spend over $5 billion producing concerts this year, making Live Nation far and away the largest financial partner to musicians.

With over 1,000 sponsors across our onsite and online platform, Live Nation is a global leader in music sponsorship, providing brands with opportunities to reach our core audience.

There is no artist that’s dying to put tickets on a secondary platform as a solution. That isn’t how they build their brands with their fans. What they want to do is figure out how to price it right and then make sure their fans actually have a shot to buy the ticket, not deliver it to the on-sale, have the scalper buy it, and their fan in Boston ends up paying 3 times the price.

We think Fan Verified and then you add on presence from the digital perspective are a real important combination for these artists of the future, who now believe they have some shot at controlling and delivering to their fans the price point at the exact price they want. And so, we think this is a pivotal product – suite of products that we’ve developed in Ticketmaster. It’s under a new division within Ticketmaster called Artist Master where we have a new leadership team waking up every day, making sure that we can deliver artist products, so the artists can deliver their tickets to their fans at better pricing and at the price they want.


Tesla (Q3 2017 Results) – Earnings Call Transcript

In fact, there’s 10,000 unique parts, so to be more accurate, there’re tens of thousands of processes necessary to produce the car. We will move as fast as the least competent and least lucky elements of that mixture. So while the vast majority are going incredibly well, there are some problem areas.

The primary production constraint really, by far, is in battery module assembly. So a little bit of a deep dive on that. There are four zones to module manufacturing it goes through four major production zones. The zones three and four are in good shape, zones one and two are not. Zone two in particular, we had a subcontractor, a systems integration subcontractor, that unfortunately really dropped the ball, and we did not realize the degree to which the ball was dropped until quite recently, and this is a very complex manufacturing area. We had to rewrite all of the software from scratch, and redo many of the mechanical and electrical elements of zone two of module production.

The ramp curve is a step exponential, so it means like as you alleviate a constraint, the production suddenly jumps to a much higher number. And so, although it looks a little staggered if you sort of zoom out, that production ramp is exponential with week over week increases.

There’s vastly more automation with Model 3. Now the tricky thing is that when one automation doesn’t work, it’s really harder to make up for it with men and labor. So with S or X, because a lot less that was automated, we could scale up labor hours and achieve a high level of production. With Model 3, it tends to be either the machine works or it doesn’t or it’s limping along and we get short quite severely on output.

I think that we will be able to achieve full autonomy with the current hardware. The question is, it’s not just full autonomy, but full autonomy with what level of reliability, and what will be acceptable to regulators. But I feel quite confident that we can achieve human level – approximately human level autonomy with the current computing hardware. Now regulators may require some significant margin above human capability in order for a full autonomy to be engaged. They may say, it needs to be 50% safer, 100% safer, 1000% safer, I don’t know. I’m not sure they know either.



Qualcomm (Q4 2017 Results) – Earnings Call Transcript

We are very excited about the increased momentum in 5G around the world. We are leading the industry and are accelerating the commercial launch of 5G across millimeter wave and sub-6 gigahertz in early 2019. We recently announced the world’s first 5G data connection achieved on the Snapdragon X50 modem chip set, and our leading 5G 3GPP standards development, ongoing prototype efforts and are supporting global 5G new radio trials.

Gigabit LTE is the first step in network operator’s transition to 5G, and there are now 41 operators in 24 countries supporting Gigabit LTE. We have demonstrated download speeds of greater than 1 gigabits using our X20 LTE modem in the U.S. with both Ericsson and Verizon, as well as Nokia and T-Mobile. Most leading device-makers are rapidly adopting Gigabit LTE into their device portfolios.

In the premium tier, our gigabit-enabled Snapdragon 835 now has more than 120 designs launched and in development, including recent flagship devices like the Samsung Galaxy Note 8, Pixel 2 and Pixel 2 XL, LG V30, and the Xiaomi Mi MIX 2. We have also introduced new high-tier and mid-tier Snapdragon products to further expand our competitive position in China across all tiers.


Trupanion (Q3 2017 Results) – Earnings Call Transcript

Lifetime value of a pet grew to $701 in the quarter, reflecting improvements in retention and in optimizing our cost-plus pricing strategy by subcategory. As lifetime value increases, we are able to increase our allowable tax spend and invest more aggressively in testing of new acquisition initiatives, with a goal of understanding whether they can meet our internal rate of return targets over time.

Total enrolled subscription pets increased 15% year-over-year to approximately 359,000 pets as of September 30. Monthly average revenue per pet for the quarter was $52.95, an increase of 9% year-over-year. Average monthly retention was 98.61%, consistent with the prior year period.

We want to be cash flow positive. The other guardrails are internal rate of return. And for any significant investments that we’re making, we are targeting internal rates of return of greater than 30% and hopefully, closer to 40%. When we’re doing some different testing or some long-term initiatives, maybe they’re a little bit lower, but on a blended basis, we want to be over 30%, internal rate of return closer to 40%. So those are probably the guardrails that we’re using. When I talk about how much more we’ve learned, it’s really driven around increasing the velocity of hospitals in our same-store sales initiatives. And order of magnitude may be we’ll invest an additional $2 million or $3 million next year than we otherwise would have anticipated. So definitely inside of our guardrails, but long term and foundational.

Well, the biggest opportunity, this is the overall market. I mean, we’re still in a very low underpenetrated market. And I’ll be saying this for the next 5 years. If you look at the number of pets that have some form of medical insurance, we’re over 1%, but we’re still under 2%. We want to try to grow the category growth. When we think about how to do that, it’s all around veterinarian first and making it normal and key. We have historically been growing the company by adding stores. Over the next few years, we feel it will become important for us to work on the same-store sales.

So as a reminder, our goal is to eliminate a slow cumbersome reimbursement model, where a pet owner fills out a bunch of paperwork and puts it in the mailbox and wait for 2 to 3 weeks to see if they are going to get paid. We think the problem we’re solving for pet owners is making it easier for them to budget for if and when their pet become sick or injured. And part of solving that problem is being able to pay hospitals directly at the time of invoice. Part of that solution is being able to integrate with practice management software in a way that makes the process very quickly. Our goal is to pay these invoices in under 5 minutes from the time those created. We like the results that we’re getting. But we want to speed up the velocity of the – number of places that we’re rolling it out now that we’re better at it. And we’re still in relatively early days to learn how to speed up the velocity, now that we like the results we get on a per hospital basis.


Tucows (Q3 2017 Results) – Earnings Call Transcript

The General Data Protection Regulation, or GDPR is a piece of legislation passed by the European Union to enforce tougher more consistent guidelines on organizations that operate across the region and particularly, global Internet companies and deals with customer data and product deployments. These guidelines impact the millions of domain names that we have registered to European end-users. So, we need to comply along with everyone else by May 25, 2018. This will require a significant investment in engineering. However, its work that needs to be done by everyone across our industry and across many industries and it plays to our engineering strengths. Also, other governments are starting to the EU’s lead and pass their own legislation. So, while the work will cause some pain in the short-term if we do it well better and faster than others, it could create some opportunities in the future.

This deal gives us access to the Otono eSIM platform. eSIM allows mobile users to choose and switch between networks without needing to insert and activate traditional SIM cards. In coming quarters, eSIM should allow Ting to support high-profile smartwatches and other exciting new connected devices. In coming years, eSIM should allow Ting customers to move seamlessly between networks on almost any device imaginable.


Chegg (Q3 2017 Results) – Earnings Call Transcript

In just four years the results have been dramatic, which Chegg now serving nearly ten million visitors in a month according to ComScore and we expect to have around four million paying customers in 2017. Further, we expect to have more Chegg Services subscribers than textbook customers for the first time in our history. Our Chegg Services revenue has grown from just $25 million in 2012 to what we expect will be over $180 million in 2017.

And given our new adjusted EBITDA guidance today, we will go from a company who was losing $16 million in adjusted EBITDA right before our IPO, to a company that is now forecasting nearly $45 million in adjusted EBITDA for 2017. This turnaround has helped us go from a company using over $100 million in cash each year to support a slow growth textbook business to a high growth, high margin learning company that now produces free cash flow. It’s been a successful transition and we feel like we’re just getting started.

As powerful as Chegg Study is already, we believe the service will become even more relevant to an increasing TAM, as we continue to expand its content and capability. To that end, we recently announced the acquisition of Cogeon, developer of the app Math 42, an adaptive A.I.-driven Math application, which has been downloaded over 2 million time. Math is the universal need and unfortunately a universal problem as 64% of U.S. students are not prepared for college level math, and over 40% of U.S. students take at least one remedial math course.

Even though students look to A.I.-driven tools to help augment their learning, we know that one-on-one human help will continue to be critical in the learning process, which is why we continue to invest in Chegg Tutors. In the third quarter, we saw the time students spent on the site increase, with an average student now spending 188 minutes in tutoring sessions throughout the semester in key subjects like computer science, calculus, statistics, finance and accounting.

The magic of what we are building is the ability to have access to millions of millions of millions of students and their records and their history, all the data about them it’s in our proprietary student graph, and then the ability to do matching based on that uniquely done by how we are capable of doing it versus others. So, we met with all the players in the space. Obviously, everybody would like access to this Chegg audience, but we believe what working on is going to be special and unique and has the opportunity to be huge.

So, we don’t see a reason with such high gross profit margins to change the price. But we do know we have significant pricing power, given the fact of not only the test results which you can just look at the usage. We have record usage in terms of how often they use it, how many pages they consume, what they use for the number of questions that they’re asking, the number of the subjects that they’re asking it in. I mean Chegg Study has become a beast, and we just — what we want to do is be able to grow as big as we can and invest in as much as we can and continue to increase the TAM. So we don’t have to think about pricing at this point, but we do know we have pricing power.

We actually believe and we try to say this on the last couple of calls which is the more we invest in the product, the more content, the more formats that we deliver that content, the more subjects, the greater the Q&A that we add. That the TAM is probably two to three times the size just in the U.S. alone about original number we gave out. And that’s because, it will cover the other 50% of subjects that we don’t cover. And it will go deeper in the subjects that we do cover. So we want wide at first now we’re going deeper. So we’re freshmen all the way through the seniors on key majors and that was not a year ago, the plan.


Workiva (Q3 2017 Results) – Earnings Call Transcript

…our ability to integrate Wdesk with more than 100 cloud, SaaS, and on-premise applications including Oracle ERP Cloud has expanded our TAM to $16.2 billion.

We continue to gain market share in the SEC compliance market, where Wdesk is considered a best practice. We’re also seeing more demand for Wdesk from foreign private issues that use IFRS taxonomy because they’ll be required to submit their SEC filings with XBRL tagging starting December 15.

We finished Q3 with 2,991 customers, a net increase of 295 customers from Q3 of 2016, and a net increase of 83 customers from Q2 2017. Our subscription support revenue retention rate excluding add-ons was 96.5% for the month of September 2017, compared with 96.1% in June 2017, and 95% in September 2016. Customers being acquired or ceasing to file SEC reports, accounted for a majority of the revenue attrition, consistent with our experience to date. With add-ons, our subscription support revenue retention rate was 108.6% for the month of September 2017, compared with 106% in June 2017, and 108.7% in September 2016. Increased subscription revenue on non-SEC use cases from existing customers continues to be the primary driver of our add-on revenue retention rate.

 

Earnings Call Digest 2017.10

Taiwan Semiconductor Manufacturing Company (Q3 2017 Results) – Earnings Call Transcript

10-nanometer process technology contributed 10% of total wafer revenue during the third quarter, up from only 1% in the second quarter. The combined revenue from 16 and 20-nanometer accounted for 24% and 28-nanometer was 23%. Advanced technologies, defined as 28-nanometer and more advanced, accounted for 57% of total wafer revenue, up from 54% in the second quarter.

New advanced technologies such as voice recognition, on-device AI, AR, VR, 4G to 5G, et cetera, are driving silicon content for smartphone to continue to increase. We also see those high-end features continuously proliferate to mid, low-end smartphones.

The AI will be a fast growth, because in the datacenter it is a closed ecosystem. Once it goes to the client edge, it’s an open system. So innovators will come in easily, so has higher growth potential.


Fiat Chrysler Automobiles (Q3 2017 Results) – Earnings Call Transcript

On the FCA, BMW, Intel, et cetera partnership, we’re contributing both capital, resources. We’re a full participant in the venture. So it’s going to cost us some money, it’s built into our R&D plan. But it’s the safest bet, the safest way for us to get into that market. We’re doing it with a reputable organization and there are reputable suppliers at the table too. So, I think we’ve put that issue to bed.

And there was a big issue. I’ve read a couple of the comments that people continue to make which I think probably reflect a very poor understanding of the state of the industry. But we’re not laggards here, we had just chosen our spots very carefully before we started playing, because I think that you can destroy a lot of value by chasing your tail in autonomous driving. We wanted to make sure that we did it with the right people.

And I don’t want to start chasing rainbows here, because if you chase rainbows, you’re going to fall off the cliff. And I’ve seen enough ridings now, I’ve seen enough sort of accusations of being behind in this rat race. The reality is that this is going to require a lot of discipline and a lot technical knowhow, which will take time and it will take dedication and perfect execution to get to an answer. Don’t believe the fluff, let’s just stick to the knitting and deliver an outcome, there is no shortcut to this.

Certainly in the case of Alfa Romeo the question of getting distribution because we have very little on the ground. So I think there’s a huge amount of work that needs to go on to get coverage, geographical coverage in China. And that started, it’s underway, and I think it is going to require – certainly it’s a multi-year project as it is here in the United States because this thing is starting from nothing. We haven’t had sort of the ability to work ahead of the curve in the U.S. The China is behind in that development, but I think we will – it will quickly catch up.

There is – the question that you’ve asked about whether demand is matching our expectations in China. The answer is fundamentally, yes. We need to be very, very careful that this distribution exercise, that we don’t end up creating either perceived or actual oversupply in the market that will depress pricing. That is something that we cannot afford to do.


Amazon.com (Q3 2017 Results) – Earnings Call Transcript

I think over time, you’ll see more cooperation and working together between AmazonFresh, Prime Now, and Whole Foods as we can explore different ways to serve the customer.

The head count grew 77% year-over-year in the quarter. That includes the impact of the Whole Foods and Souq acquisitions. Without those, without that head count, the base Amazon grew 47%, which is still up from 42% in Q2. So a lot of the additional pickup in Q3 was tied to our ramp for the holidays. We continued to hire a lot of software engineers. We continued to hire a lot of sales reps and it’s tied directly to our major investment areas of AWS, Prime Video and devices.


Alphabet (Q3 2017 Results) – Earnings Call Transcript

YouTube now has over 1.5 billion users. On average, these users spend 60 minutes a day on mobile. But this growth isn’t just happening on desktop and mobile. YouTube now gets over 100 million hours of watch time in the living room every day, and that’s up 70% in the past year alone. YouTube Red, our first foray into the subscription market, is on track to release over 40 original shows this year and YouTube TV, our live TV subscription service, continues to expand into new markets. It now covers two-thirds of U.S. households and is available in 15 metro areas.

While mobile has given rise to an unprecedented amount of data and complexity for advertisers, we think that machine learning will help it make – will help make it easier for advertisers to reach consumers. But even as we give advertisers incredible scale and reach across our ad platforms, we know consumer attention is scarce. That’s why we are pleased YouTube ads continue to deliver the highest viewability rates in the industry. YouTube now has a 95% ad viewability rate, which is significantly higher than the average 66% viewability rate of other video ads. We continue to see the industry shift to six second bumper ads and so greater adoption this quarter.


Intel (Q3 2017 Results) – Earnings Call Transcript

Early in the quarter, we closed the Mobileye transaction a full four months ahead of schedule. So far this year, Mobileye has won 14 ADAS [Advanced Driver Assistance Systems] designs across 14 automakers, a pace well ahead of the 12 wins they recorded all of last year. These designs provide for typical features like automated emergency braking, lane keeping, and adaptive cruise control. But several also include next-step functionality like highway autonomous driving. We’re also winning marquee designs for Level 3 and higher levels of autonomy, including our strategic partnership with BMW and Fiat Chrysler.

Most recently, we announced that Waymo’s newest vehicles, the self-driving Chrysler Pacifica Hybrid minivans, feature Intel-based technologies for sensor processing, general compute, and connectivity. With 3 million miles of real-world driving, Waymo cars with Intel technology inside have already processed more self-driving car miles than any other autonomous fleet on the U.S. roads.

Intel and Mobileye provide the auto industry with unmatched product breadth, the architectural flexibility to support open and closed implementations, and technology leadership. Our progress in just a few short months illustrates the benefits of our combination. And together, we can deliver the promise of autonomous driving in a safer, collision-free future.

In Q3, Microsoft announced that it would use our 14-nanometer Stratix 10 FPGAs for its accelerated deep learning platform that’s code named Project Brainwave. And as part of a broadening engagement between our companies, Alibaba is using Intel FPGAs to power the acceleration of the service of Alibaba Cloud. We’ve made tremendous progress in AI and advanced computing technologies over the last few months. In addition to our FPGAs and autonomous driving wins, we launched the Movidius Myriad X, the world’s first vision processing unit with a dedicated neural compute engine to deliver artificial intelligence capabilities to the edge in a low-power, high-performance package.


Microsoft (Q1 2018 Results) – Earnings Call Transcript

We now have 120 million monthly active users of Office 365 Commercial. We have more than 530 million LinkedIn members. Dynamics 365 customers grew 40% year over year. Azure Compute usage more than doubled this quarter and revenue grew 90%, and Windows 10 Commercial monthly active devices grew 90% year over year.

Microsoft 365 is our core offering to address this $500 billion-plus market. We are bringing together Office 365, Windows 10 and Enterprise Mobility + Security as a complete integrated solution for organizations of all sizes. It represents a profound shift in the way we design, build and deliver our productivity solutions, moving to a people-centered approach, spanning all their devices to unlock creativity and inspire teamwork while simplifying security and management.

We’re seeing record levels of engagement. LinkedIn is on target to surpass 21 billion sessions this calendar year and has seen its fourth consecutive quarter of 20%-plus sessions growth. Engagement across the platform is strong, with 65% year-over-year growth in jobs, visitors across mobile and desktop, 60% growth in feed update views and nearly 40% growth in messages sent, driven by more ubiquitous messaging.

Azure Cosmos DB is the first globally distributed multimodal database that enables developers to write apps for IoT and other event-based serverless applications. We’re accelerating our innovation to help every developer be an AI developer with approachable new tools from Azure Machine Learning Studio for creating simple ML models to powerful Azure Machine Learning Workbench for the most advanced AI modeling and data science.

Our ongoing data center expansion brings Azure to 42 regions globally, more than any other cloud provider and 69 compliance offerings and the most comprehensive compliance coverage in the industry. And new Azure availability zones provide new levels of resiliency for high-availability apps within a region and across regions.


Oaktree Capital (Q3 2017 Results) – Earnings Call Transcript

I think Howard Marks describes it best in his recent cautionary memo There They Go Again, Again, which portrays the current investment environment as excessive and ripe for a correction due to the following reasons. It’s an environment where the uncertainties are unusual in terms of number, scale and insolubility, where prospective returns are just about the lowest they have ever been, where asset prices are high across the board and where pro-risk behavior is commonplace. It’s impossible for us to predict what will catalyze the market’s correction, how severe it might be and when it will occur. We are not however waiting around for fat pitches and we continue to look for attractive investment opportunities in select areas including industries experiencing stress or competitive issues.

Management fees in the third quarter declined by $8 million or 4% from the same period a year ago and were down 6% year-to-date. As was the case in the first two quarters of the year, these declines were driven by our closed-end funds where we have been a net seller of assets given the current investment climate. In this environment, our management fees have been pressured by realizations reducing the cost basis and therefore management fee basis of funds in liquidation, and slower deployment impacting the management fees of funds that charge on drawn capital and delaying the start of the investment period for funds that charge on committed capital. However, this same environment provides an attractive backdrop for growing the value of our net accrued incentives and our balance sheet investments, which bodes well for future distributable earnings.

Earnings Call Digest 2017.08

Apple (Q3 2017 Results) – Earnings Call Transcript

Services revenue hit an all-time quarterly record of $7.3 billion representing 22% growth over last year. We continue to see great performance all around the world with double digit growth in each of our geographic segments. Over the last 12 months, our services business has become the size of a Fortune 100 company, a milestone we’ve reached even sooner than we had expected.

Sales of Apple Watch were up more than 50% in the June quarter and it’s the number one selling smartwatch in the world by a very wide margin.

We’re also seeing incredible enthusiasm for AirPods with 98% customer satisfaction based on Creative Strategy’s survey. We had increased production capacity for AirPods and are working very hard to get them to customers as quickly as we can, but we are still not able to meet the strong level of demand.

We are very focused on autonomous systems from a core technology point of view. We do have a large project going and are making a big investment in this. From our point of view, autonomy is the mother of all AI projects. And the autonomous systems can be used in a variety of ways and a vehicle is only one.

The App Store was a major driver of this performance. And according to App Annie’s latest report, it continues to be by a wide margin the preferred destination for customer purchases, generating nearly twice the revenue of Google Play. Revenue from our Apple Music streaming service and from iCloud storage also grew very strongly. And across all of our Services offerings, the number of paid subscriptions reached over 185 million, an increase of almost 20 million in the last 90 days alone.


Square (Q2 2017 Results) – Earnings Call Transcript

One of the drivers of our results is our work on automation, which I mentioned is an area of increased focus for us this year. Automation has always been a core differentiator for us. We’ve used machine learning and data science to manage risk since the beginning of Square. We’re constantly looking for ways to make our services more automated and more self-serve and machine learning is perfect for that.

First, automation allows us to give more people access to the financial system. More than 90% of sellers are automatically approved and self-onboard to process payments, and we’re able to onboard individuals to Square Cash with just a zip code and an e-mail address or phone number. We’ve extended this approach to risk management in Square Capital to provide financing to the underserved.

Second, automation helps us scale as we grow. For example, we currently automate risk assessment for more than 99.95% of transactions. We’re also able to make improvements to our manual handling; our fraud models have already allowed us to resolve 40% more cases every week, compared to beginning of the year.

And third, automation allows us to help our sellers grow. You can see this in our unique suite of CRM tools. We leverage our deep understanding of the customer to build marketing and loyalty programs that are easy to use, measurable and effective. Our loyalty programs are tracked and managed by Square point-of-sale and our technology automatically recommends programs optimized for the seller’s particular business.

Subscription and services-based revenue nearly doubled on a year-over-year basis as Instant Deposits, Caviar and Square Capital all benefited from stronger adoption, both within our installed-based and for bringing new customers to the Square ecosystem.


Tesla (Q2 2017 Results) – Earnings Call Transcript

What we have ahead of us, of course, is an incredibly difficult production ramp. Nonetheless, I think we’ve got a great team, and I’m very confident that we will be able to reach a production rate of 10,000 vehicles per week towards the end of next year. And we remain – we believe on track to achieve a 5,000 unit week by the end of this year.

So, if you can sort of see where we came from, the Roadster – we were making only 600 units a week where the non-powertrain portion of the car was made by Lotus. And we did the powertrain and final assembly of the car, and then we went from that to 20,000 units a year of the Model S, a far more complex car, where we did the whole thing. And then with Model 3, we are more vertically integrated. I think people should really not have any concerns that we will reach that outcome from a production rate.

…We’re also thinking hard about, where do we put Gigafactorys three, four, five and six? We expect to keep the majority of our production in the U.S., but it’s, obviously, going to make sense to establish a Gigafactory in China and Europe to serve the markets there, because it’s not to build cars in California and truck them halfway around the world, particularly when you’re trying to make things as affordable as possible – that really hurts. We really want to make our cars as affordable as possible. And so that does require some amount of local market production, particularly for the mass market vehicles in order to make it as accessible as possible.

Model Y, or our compact SUV – it’s called Model Y. It may or may not be – would be a totally new architecture. Upon the council of my executive team – thank you. Thanks, guys – who reeled me back from the cliffs of insanity – much appreciated – the Model Y will in fact be using a substantial carryover from Model 3 in order to bring its market faster. Yes. So that will really accelerate our ability to get to Model Y to market faster, because fundamentally people prefer a sedan, people prefer an SUV. And in fact, the SUV market is larger. It’s the biggest single product I believe in the world.


Tableau Software (Q2 2017 Results) – Earnings Call Transcript

With subscription, our customers get the full power and simplicity of Tableau but with lower risk and a lower initial investment. And the move to subscription also creates recurring revenue streams, generates more predictable results over the long-term and expands the overall market.

For example, this quarter TransUnion, a credit reporting and global risk information provider that serves over 45,000 companies and more than 500 million customers, standardized their analytics on Tableau across multiple areas from credit reporting to health care and auto lending, amongst many others. By signing a subscription agreement, TransUnion will be able to flexibly scale their deployment as they grow and build out their analytic solutions…We continue to believe that subscription is the right long-term decision for all of our stakeholders and will only help us to sharpen our commitment to our customers on a daily basis.

Our passionate customer base is not just a U.S. phenomenon; it’s global. And it’s been incredible to see our community thrive around the world, across various user groups, training groups and conferences. For example, in the UK, Jet2.com, a leading British leisure airline and package holiday specialist, recently chose Tableau to visualize complex data that was difficult to analyze and access within Excel. With Tableau, Jet2 is now able to better analyze a range of data to attain faster speed to insight.

And in APAC, Mercedes-Benz expanded their self-service analytics capabilities with Tableau in their China Financial Services Group. Now the company, including the most senior management has real-time visibility on the organization’s auto financing, leasing and insurance performance and now makes daily strategic business decisions from a single source of truth through Tableau.

Turning now to customer momentum in the cloud, we’re seeing strong demand from customers who want to be able to run their analytics in the cloud. And with Tableau, customers can deploy on their choice of cloud, whether it be AWS, Azure or Google or a fully managed SaaS solution via Tableau Online. That flexibility and choice has already attracted thousands of customers running on Tableau Online and thousands more running Tableau on the public cloud. In fact, over one-third of our Tableau server trials today are deployed in the public cloud.

Turning now to product, I want to focus on two important areas: giving our customers choice with how they connect to their data and enriching our smart analytics offering via machine learning recommendations. Tableau now has over 65 native data connectors from on-premises databases like Oracle and SAP, Hadoop systems like Cloudera and Hortonworks, and cloud databases like Amazon Redshift and Google BigQuery.


IAC/InterActiveCorp (Q2 2017 Results) – Earnings Call Transcript

…it is a very – the SVOD market is very crowded and cost were skyrocketing.

In terms of new M&A, the thing that worked well for us are this concept of product – the scale improved the product, not just the price. That is the way – the way we think about network businesses or marketplace businesses and that’s what we’re looking for.

…there is again a natural tailwind today are in terms of the online migration, in terms of video being more relevant in a lot more places than it used to be, to a lot of businesses than it used to be, to lot more individuals than it used to be.


Activision Blizzard (Q2 2017 Results) – Earnings Call Transcript

We invest in creative and commercial excellence in order to expand reach, deepen engagement and provide more opportunity for player investment which then allows for reinvestment in creative and commercial excellence and for the growth cycle to continue.

Let’s start with audience reach, which was 407 million monthly active users this quarter. Blizzard did not have any new full game releases this quarter, yet a strong stream of content updates across Blizzard franchises drove an all-time MAU record of 46 million, up 38% from last year and up 12% from the last quarter. Blizzard’s community has now more than doubled in MAUs since early 2015, underscoring the ability to grow audience reach across the portfolio of platforms, regions, genres and business models.

As illustrated by the frequency with which players reengage each month, it remains at an all-time high. To put this in perspective, the time spent per player per day inside King franchises is 35 minutes, higher than that of Instagram or Snapchat.


Workiva (Q2 2017 Results) – Earnings Call Transcript

A large regional bank is using Wdesk for its call reports which are quarterly filings required by the FDIC. A large sporting-goods company is now using Wdesk for corporate performance management. The company will use Wdesk to consolidate spreadsheets into a linked workbook, thereby reducing manual data entry. The treasury department of a private electrical products manufacturer is using Wdesk for debt compliance reporting.

We remain focused on our leadership in the SEC compliance market. We continue to add new customers at both large and small public companies, because we believe that Wdesk is widely regarded as the best practice for SEC reporting and XBRL. In the first quarter of 2017, Wdesk was used to file 53% of all XBRL facts with the SEC. So as you can see, we have room to grow in this market. Customer press releases this quarter reported that a multinational agri business is achieving an ROI of 266% and reaping more than $677,000 in total savings and benefits over 3 years by using Wdesk to streamline its management reporting.

We finished Q2 with 2908 customers, a net increase of 286 customers from Q2 2016 and a net increase of 83 customers from Q1 2017. Our subscription and support revenue retention rate, excluding add-ons, was 96.1% for the month of June 2017 compared with 95.1% in both March 2017 and June 2016. Customers being acquired or ceasing to file SEC reports accounted for a majority of revenue attrition, consistent with our experience to date. With add-ons, our subscription and support revenue retention rate was 106% for the month of June 2017 compared with 106.6% in March 2017 and 110.2% in June 2016. Increased subscription revenue on non-SEC use cases from existing customers continues to be the primary driver of our add-on revenue retention rate.


Etsy (Q2 2017 Results) – Earnings Call Transcript

There has been much speculation about the size of the market for handmade. But handmade is not a purchase occasion nor is it representative of all of our 45 million listings. Etsy is about so much more than handmade. Buyers come to us when they want something special. And being the destination for something special is powerful because special can’t be commoditized.

But how big is the market for special? We believe the market for special is huge. Etsy shines specifically in three types of purchase occasions. Celebrations, gifting and style. If you think about it, these types of occasions happen regularly throughout the year. These occasions drive purchases across six primary categories, clothing and accessories, home and living, jewelry, craft supplies, art and collectibles, and paper and party supplies. Not surprisingly, these are also Etsy’s top six categories based on GMS.

First, we are building trust and reliability throughout the buyer experience. Trust is essential for any marketplace but is even more so for one that’s both on original and unbranded goods. Our goal is to bolster trust not just in the item and the seller, but in the Etsy brand.


NVIDIA (Q2 2018 Results) – Earnings Call Transcript

Data center is a very large market, as you know, and the reason for that is because the vast majority of the world’s future computing will be largely done in data centers. And there’s a very well accepted notion now that GPU acceleration of servers delivers extraordinary value proposition. If you have a data-intensive application, and the vast majority of the future applications in data centers will be data intensive, a GPU could reduce the number of servers you require or increase the amount of throughput pretty substantially. Just adding one GPU to a server could reduce several hundred thousand dollars of reduction in number of servers. And so the value proposition and the cost savings of using GPUs is quite extraordinary.

Cryptocurrency and blockchain is here to stay. The market need for it is going to grow, and over time it will become quite large. It is very clear that new currencies will come to market, and it’s very clear that the GPU is just fantastic at cryptography. And as these new algorithms are being developed, the GPU is really quite ideal for it. And so this is a market that is not likely to go away anytime soon, and the only thing that we can probably expect is that there will be more currencies to come. It will come in a whole lot of different nations. It will emerge from time to time, and the GPU is really quite great for it.

Volta was a giant leap. It’s got 120 teraflops. Another way to think about that is eight of them in one node is essentially one petaflops, which puts it among the top 20 fastest supercomputers on the planet. And the entire world’s top 500 supercomputers are only 700 petaflops. And with eight Voltas in one box, we’re doing artificial intelligence that represents one of them. So Volta is just a gigantic leap for deep learning and it’s such a gigantic leap for processing that – and we announced it at GTC, if you recall, which is practically right at the beginning of the quarter.

A neural net in terms of complexity is approximately – not quite, but approximately doubling every year. And this is one of the exciting things about artificial intelligence. In no time in my history of looking at computers in the last 35 years have we ever seen a double exponential where the GPU computing model, our GPUs are essentially increasing in performance by approximately three times each year. In order to be 100 times in just four years, we have to increase overall system performance by a factor of three, by over a factor of three every year.

And yet on the other hand, on top of it, the neural network architecture and the algorithms that are being developed are improving in accuracy by about twice each year. And so object recognition accuracy is improving by twice each year, or the error rate is decreasing by half each year. And speech recognition is improving by a factor of two each year. And so you’ve got these two exponentials that are happening, and it’s pretty exciting. That’s one of the reasons why AI is moving so fast.

The second major component is our self-driving car platforms, and a lot of it still is infotainment systems. Our infotainment system is going to evolve into an AI cockpit product line. We initially started with autonomous driving. But you probably heard me say at GTC that our future infotainment systems will basically turn your cockpit or turn your car into an AI. So your whole car will become an AI. It will talk to you. It will know where you are. It knows who’s in the cabin. And if there are potential things to be concerned about around the car, it might even just tell you in natural language. And so the entire car will become an AI.

The next revolution of AI will be at the edge, and the most visible impactful evidence will be the autonomous vehicle. Our strategy is to build a ground-up deep learning platform for self-driving cars, and that has put us in pole position to lead the charge.


The Walt Disney (Q3 2017 Results) – Earnings Call Transcript

It’s been clear to us for a while with the future of this industry will be forged by direct relationships between content creators and consumers. Given our incomparable collection of strong brands that are recognized and respected the world over, no one is better positioned to lead the industry into this dynamic new era, and we’re accelerating our strategy to be at the forefront of this transformation.

With this strategic shift, we’ll end our distribution agreement with Netflix for subscription streaming of new releases beginning with the 2019 calendar-year theatrical slate. These announcements marked the beginning of what will be an entirely new growth strategy for the company, one that takes advantage of the opportunities the changing media and technology industries provide us to leverage the strength of our great brands.

But we’ve already begun the development process at the Disney Channel and at the Studio to create original TV series and original movies for this service. So if the Studio makes, let’s call it, roughly 10 films a year or distributes 10 films a year – that includes Marvel and Pixar and Star Wars and Disney-branded and Disney Animation. We’ve commissioned them to make, to produce more films with the incremental films being produced very, very specifically and very exclusively for this service. So this will represent a larger investment in Disney-branded intellectual property, both TV and movies.

I think there are forces, whether they’re technological in nature or sociological or economic in nature, out there that are changing the way media is consumed in general, and I don’t think this is either going to hasten them or exacerbate things in any way. What it does do, though, is a couple of things. First of all, it gives us the ability to leverage the strength of our brands, which a lot of our peers and competitors do not have. Secondly, it gives us what we’d call optionality. It’s a word I’ve not used very much in my life, but it gives us the flexibility, really, to move our product to the consumer in many new ways, ways that we’ve not been able to do before, because of just how strong this platform is that we bought control of.


TripAdvisor (Q2 2017 Results) – Earnings Call Transcript

We have large app penetration and a great ability to offer attractions to our users, so marketing efficiency, but then just operational efficiency as well. So initially, a lot of manpower going into both site development as well as supply expansion and we’re now reaping some of the leverage benefits from that going forward. So you are right, we are managing the business not for profitability. We’re managing it for growth. There’s just tremendous opportunity in terms of the TAM of this – particularly the attractions market space. We feel we have an early lead and we continue to invest aggressively to capitalize on that advantage. So, we’re not seeking margin expansion, and going forward, we will continue to emphasize revenue growth. But the way the business has evolved has allowed us to see some margin expansion this year.

In terms of the monetization, there’s likely to be always a delta between monetization on desktop and on the phone. It is just more plausible that you book a larger trip, a multi-day, multi-destination trip on your desktop in the comfort, obviously, on your big screen and more detailed photos and skew the more immediate purchases to the phone.

As we are working on our conversion improvements, they’re all aligned with matching our advertising campaign and matching our value proposition that delivering to travelers of helping them save money on this trip. We’re so well known for reviews, which is wonderful, incredible differentiator. It’s hard to imagine anyone could ever make a serious inroad to us in terms of being a competitor in that space. But as we move the product, the display, the visibility and the impression of TripAdvisor on the part of our travelers, to view us as that review site, that review site that actually saved me a ton of money because it offered me a great value hotel that I wouldn’t have otherwise find with a better price or it helped me find the best place to actually reserve a room at this hotel that I want to go at, and that’s kind of a new piece and so part of the site redesign was clarity. Part of the site redesign was easier shopping experience, but one of the things that we love the most from our testing that we’ve achieved in this redesign is that we are educating our users, our travelers that we’re helping to save them money, that we’re finding them great prices. And we see that come through in our surveys, we see that come through in those anecdotes in the stories, and that matches, of course, the big message in our brand campaigns.


MakeMyTrip (Q1 2018 Results) – Earnings Call Transcript

The latest estimates from IAMAI, the Internet and Mobile Association of India, indicates that India now has roughly 420 million mobile Internet users and this base is expected to keep growing rapidly.

Large opportunities for new user growth will likely come from the non-urban parts of the country where penetration levels are estimated at 16%. Affordable smartphones and data plans are easily available via the recent disruptive offers from the telecom players led by Reliance Jio.

Additionally, a significant government initiative which can facilitate online penetration is the unified payments interface app called BHIM, which creates a common nationwide payments platform for simple and quick transfer of money.

Indian carriers collectively have already placed more than 1,300 new orders, with 250 planes expected to be put into service over the next two to three years. Furthermore, demand for air travel is expected to increase with the launch of the government’s regional air connectivity program called Udan by operationalizing up to 100 regional airports out of a total 400 unserved or underserved domestic regional airports by fiscal year 2019.


DISH Network (Q2 2017 Results) – Earnings Call Transcript

I think each carriers offer a little bit different strategy today. I mean, obviously AT&T is getting more heavily into the content side of the business. Verizon’s got more of a small cell strategy and T-Mobile is just taking away a lot of the pain points that are out there. So each have strategies that those guys are a lot more knowledgeable about the wireless business than I am, so each of the – there’s no reason that each of those strategies can’t work.

So, all those things are going to happen. The only thing I know for sure is that if you’re born today in the United States, you’re probably not going to have one second of your life you’re not connected. And you’re going to use a lot of data during your lifetime. And there’s going to be – and that’s just people. And every microprocessor and every light and every other thing is going to have a sensor that’s going to be connected. And that’s just – it’s going to make us more productive. And it’s going to save companies money. And so there’s going to be very large companies coming out of the connectivity business on a big scale, and we hope to play a part in that.

You can’t have all the profits going to three or four companies and have the guys that are – the companies that are providing them the raw material to make that money, not get wake up one day and get a little smarter. That’d be my guess, but I don’t know if that’s going to happen. But at some point, all the money going one direction, a lot of people are enabling that. They’re going to wake up and say maybe they should get – I’ve been through this business long enough to know that the money ebbs and flows between distribution and content. It’s probably going to continue to do that today. And a lot of the content companies, probably the distribution guys, probably are going to be in position to get a more of it. Then it may go the other direction.

The average smartphone probably consumes, I don’t know, 5 gigs a month. Use cases that are being discussed around 5G that will start to materialize in the early 2020s, they’re going to dwarf that in terms of the amount of data consumed whether that be drone network or autonomous vehicles or healthcare or massive connectivity. So to look at the marketplace in terms of today’s four big competitors and the new entrants, I think you have to really think about how the market will get redefined in the next five years to seven years to ten years.


The Home Depot (Q2 2017 Results) – Earnings Call Transcript

We’ve had obviously a protracted recovery here, and it has been clearly driven from housing which has been a steady but slow recovery in the market. You know we continually look at months of supply, there is 4.3 months of supply in the market of housing availability against a historical norm of six, that clearly is helping to drive improvement in home value appreciation, but housing starts haven’t returned to their norm yet either. The only thing that’s kind of run on an historical averages is housing turnover. So, we see this housing favorability continuing as we look forward. And I think the watch out for us is, you wouldn’t want to see affordability become an issue, but that at this point doesn’t seem to be a concern for us at all.

Right. As we look at the affordability index, it stands at 153%, so long ways to go before that would be a watch out for us. And recovery is a difficult thing to put your arms around. But if you look at simply PFRI dollars they’ve only recovered 70% of the loss. The other thing that’s really interesting to us is the age of the housing stock. We’ve talked to you a lot about 66% of the housing stock being older than 30 years. Did you know that 51% of the house stock is older than 40 years and as houses age, well, they need more of repair.


TJX Companies (Q2 2018 Results) – Earnings Call Transcript

Our key pillars for growth remain driving comp sales and customer traffic and our global store expansion. Our consistently strong performance tells us that our strategies to drive customer traffic and comp sales are working. Further, we see enormous global store growth potential for TJX. We have plenty of white space or markets to fill in throughout our current countries. Long-term, we see the opportunity to open 5,600 stores with just our current banners and that’s about 1,700 more stores than we have today. We continue to see store openings as an attractive investment and a very good use of capital. We are convinced that these growth drivers will allow us to continue to capture additional market share both in the U.S. and internationally.

We see our treasure hunt shopping experience as an advantage. As today shopper spends more on personal experiences, particularly millennials they constructed dollars further in our stores in both our apparel and non-apparel categories. We are very pleased that across our major divisions we continue to capture a broad age demographic with new shoppers skewing towards younger customers. We see this as a great indicator for our future.

In closing I would like to emphasize that the key advantages that I have discussed today are all built on our 40 years plus of experience in building, developing and refining our off-price retail model. While we were trying to keep our business simple and focused, the ability to operate and highly integrate international – to operate a highly integrated international off-price retail business doesn’t happen overnight and we believe would be extremely difficult to replicate. We have decades of experience to build international teams and infrastructures that we see as key advantages. We believe our buying organization of more than 1,000 associates is best-in-class. We have great longevity among our buyers which we attribute to our very strong corporate culture. Our worldwide vendor universe also took us decades to build. We see ourselves as a global sourcing machine. Our processes, systems and logistics are all built to support our off-price opportunistic buying. Further, we have been operating internationally for well over two decades and are the only major international off-price apparel and home fashions retailer.


Tencent Holdings (Q2 2017 Results) – Earnings Call Transcript

We have been investing heavily in AI but relatively quietly, as we view AI as an essential capability that enhances user experience and empowers us to capture the new exciting opportunities to grow our businesses for the future. We’re confident that our existing strength in computing power, data, engineering, technologies as well as use cases coupled with our proactive build-up of AI content — talent will give us a favorable position in this strategic initiative. Especially a wide and diversified business scope creates a variety of use cases for AI research and application across a range of AI fundamental research areas, such as machine learning, computer vision, speech recognition and natural language processing. We will be persistent but patient with our AI investment, because we believe it is a long-term initiative, and we do not necessarily require a research to generate revenue directly in the short-term. On the other hand, AI will significantly benefit all of our existing products, services and businesses in many ways.

There is a lot of usage, more and more people are watching online video at longer and longer time, on a daily basis. But at the same time — and at the same time, advertising revenue has been increasing, and there is also an increasing willingness from consumers to pay. So, the subscription number as well as revenue has been increasing quite rapidly. On the other hand, the flip side of this is the cost of content has been increasing, even faster. So, what we see is that over time, we believe the content will continue to increase, but the rates would probably be lower. And the subscription, as we continue to increase, would deliver higher revenue per active user. So, we will get closer to a more equilibrium between cost and revenue at some point in time. But I think unfortunately at this point in time, the net loss of the business is still increasing.

It’s a little bit tough to make advertising revenue from that because we usually — these video are relatively short; and depending on how aggressive you are in terms of balancing user experience and monetization, I think if you really care about user experience and the trends of putting advertising on these short videos are more limited.

In terms of the advertising, I think most of the growth has actually been from the click-through rates as well as the improvement in targeting technology. As a result, the pricing achieved has been higher. There is some help from the other two factors, which is slight increase in terms of the inventory and an increase in terms of the general traffic. But, I think from the inventory angle, we have achieved a second ad for some cities, but within a 24-hour period, not everybody is seeing two ads. So, compared to our international peers, I think the amount of inventory is relatively small. And at the same time, the traffic increase has been most significant around Moments. Then, if you look at our performance ads, it’s across pretty large number of different properties. So, the traffic growth in the other areas might not be as great as the Moments traffic increase.

At this point, my guess is that the big advertisers have a certain budget for television and then for online video and then they have a separate budget for social and a separate budget for search and so forth. And then, the migration between those buckets happens relatively slowly, typically at the beginning of each year rather than happening on a month-by-month basis.

In terms of providing AI-as-a-service, I think this is definitely a one direction that we are going into in our cloud business already and we are seeing a lot of demand on that. And we have been able to sign up a lot of customers because of our ability to offer them AI capability. And that’s just the beginning. Over time, I think we will do much more on that.

In terms of games and targeting, if you look at games playing globally, particularly on the personal computer, it’s moved from being media driven to being increasingly community driven. 20 years ago, people discovered new games on the PC in the U.S. and Europe through computer magazines; now, they’re discovering them through reddit, through Twitch, through those kinds of more communal venues. And some of the same trends are underway in China. And what we’re trying to do is working with the game developers to make sure that we target their games to the users who are likely to be most receptive.


Alibaba Group (Q1 2018 Results) – Earnings Call Transcript

The macro way of looking at the landscape is e-commerce accounts for 15% of total retail in China. The retail segment in China is about $5 trillion economy in value. 15% of e-commerce still leads, 85% of retail that is offline.

In this new world of consumption expectations, the distinction between online and offline would disappear.

Mobile Taobao is the Chinese consumers’ leading destination for online shopping and the total MAU for mobile apps with access to our China retail marketplaces has grown to 529 million. No other commerce app in the world compares to mobile Taobao’s consumer engagement and user stickiness. Our user stickiness measured by the DAU divided by MAU ratio continues to remain above 40% due to our relentless focus on more content and community-driven engagement on the approximately, allowing consumers to enjoy the fun of discovery and exploration. We not only satisfy existing user needs but more importantly we’re able to stimulate new demand as user experiences have become more content-driven by community of consumption-related content generators, such as influencers and key opinion leaders have emerged alongside buyers and sellers in the ecosystem.

What unifies the businesses in the Alibaba economy is our mission, to make it easy to do business anywhere. We believe the path to value creation becomes extremely clear when we focus on a single mission. In the next 5, 10, 15 years, you will see an unfolding of how we execute the new retail strategy as it becomes an integral part of the Alibaba economy. Shareholder value will follow when we create value for our customers. So, understanding this is important to understanding a long view of Alibaba.

Our cloud computing business continues to enjoy high growth at scale with annualized revenue growth well exceeding $1 billion, while paying customers surpassed 1 million. An important milestone in a landscape where every industry is seeking to migrate to the cloud, we believe 1 million is merely a starting point.

Regarding 30-minute delivery, as an example of where new retail can be very disruptive to existing ecommerce. Consumer demand is generated from an in-store experience and then that consumer says, well, I am going to a movie, so I don’t want to a carry bag with me, so I am going to have it delivered to my home within a very short period of time. That’s where logistics — your traditional e-commerce logistics infrastructure can be disruptive because you’ll need to fulfill out of that retail location as opposed to out of a warehouse that is not even in the city center. So, the expectation becomes 30 minutes and not overnight or 24 hours. So, that’s going to be very, very disruptive to existing infrastructure and investments that have been made.

Earnings Call Digest 2017.07

Taiwan Semiconductor Manufacturing Company (Q2 2017 Results) – Earnings Call Transcript

AI is indeed getting to smartphone. That’s for sure. And that is — actually, AI is going to every segments in our growth sectors. AI is getting to mobile. AI is getting to high-performance computing like deep learning. AI will go into automotive, which is ADAS and so forth. And AI will go to simple IoT, MCU also. So this AI is a general application driver of momentum — put this way, one of the driver — driving momentum, and it is ubiquitous.

Our top 10 customers account for 64% in 2015. And that number went up to 69%, as you can see from our annual report. This is mainly because there are consolidations among customer base. For this year, we expect the concentration will come down a little bit. But I want to say that people may feel customer concentration is not a good thing. But we feel the other way. It’s not really a bad thing, because when you have a bigger customer, that means the dependency for them to TSMC as the customer and for us to then as the supplier needs to be stronger, the relationship collaboration needs to be stronger, which is in favor of a foundry business model. So we view that as a positive thing.


Netflix (Q2 2017 Results) – Earnings Call Transcript

I think we’re just seeing that the rewards of doing great content focused on the quality of the service are paying off.

You ask about how we prioritize? Generally, when we see success, we try to add on to that until we reach a point of diminishing returns. And so, if we’re going to see success in some markets, we may up the content budget in those markets.

We’re such a small player in our viewing compared to linear TV, compared to YouTube. So we’ve got a long way to go to have more and more content to please more and more members and continue to grow.

…matching the program into local taste is really the key and we’ve seen it in our expansion through Latin America, our expansion into Europe. And as we look to Asia, we have to get better and better matching those tastes. And those tastes are not as easily aligned with Western tastes. So we’ll invest more time and energy in Asia putting some people on the ground in Asia that we haven’t historically, but well within how we’ve looked at the size of the teams generally but locating them more likely outside of the U.S. as we continue to grow for local audiences in Asia and throughout the rest of Europe.

I think Internet television is an enormous space and there’s going to be lots of competition. And as they come in, they’re going to bid up the cost of the best stuff which is great. It’s great for consumers, because more things get made. And it’s great for creators because they’re more buyers at the table. So we expect the content cost to go up on the top premium things, but I think, as I said, I think that’s a good result for everybody.


International Business Machines (Q2 2017 Results) – Earnings Call Transcript

The cognitive opportunity is a global one, it’s not centered in New York or Boston or Silicon Valley; but you can’t just look and listen in those places. In healthcare alone, you’d miss that this quarter the first healthcare provider in Latin America is deploying Watson for oncology, and Baheal Pharmaceutical Group is bringing Watson for genomics to clinicians across China. In fact, 80% of the hospitals who’ve adopted Watson for oncology are outside of the U.S., and that’s just healthcare, we have Watson deployed with other leaders like Berdasco [ph], Honda and Vodafone as well. So across industries and around the world our clients realize that data, in fact their own data is the route of competitive advantage for all companies.

80% of the worlds data is owned by enterprises, it’s not searchable on the worldwide web, it’s customer data, and patient data, clinical data, supply chain data, transaction data and companies want to unlock and exploit that data; and so that’s why enterprises will move to cognitive on the cloud with someone they trust who has leading tools and industry expertise and a data model and business model consistent with their goals, that is the IBM cloud plus Watson.


Qualcomm (Q3 2017 Results) – Earnings Call Transcript

The pending NXP acquisition will provide us greater scale in automotive IoT security and networking with their highly complementary product and world class sales channel, serving the long tale of customers that are driving growth. The combined company will be a technology and semiconductor leader with future annual revenues projected to be more than $30 billion.

ASPs probably a moderating even the ASP declines are moderating even more than we expected meaning the declines are less than we would have expected going into the year. And that’s largely being driven by strength in China as well as increasing ASPs by many of the Chinese OEMs as they build their businesses outside of China, which are couple of the important trends that we highlighted starting 2 or 3 years ago of why we believe we would see long term growth in the market. So again, if you wrap that all up end market will continue to grow, we think it can continue to grow meaningful.


Microsoft (Q4 2017 Results) – Earnings Call Transcript

Azure revenue accelerated this quarter, growing 97% year-over-year. CIOs and Business Decision Makers increasingly prefer Azure as they make decisions about their cloud strategy. They value our hybrid consistency, developer productivity, AI capabilities, and trusted approach. And we keep investing in cloud computing to create broader economic benefit and opportunity, as we’ve done with our South Africa datacenter expansion, bringing Azure to 40 regions globally – more than any other cloud provider.

The core currency of any business going forward will be the ability to convert their data into AI that drives competitive advantage. It all starts with having support for the comprehensive data estate spanning Azure Database, Cosmos DB, Data Warehouse, Data Lake, combined with SQL Server. Azure Cosmos DB is the industry’s first globally distributed database service. It enables customers to securely and reliably power data-intensive applications at unprecedented scale and performance from IoT to AI to mobile and much more.

Retailer Jet.com is using Azure Cosmos DB to process trillions of transactions every day. Customers are infusing AI into their products & services using Azure AI infrastructure and services such as Bot Framework and Cognitive Services. Sabre, a leading technology provider to the global travel industry, is piloting AI-powered solutions for travel agencies to better serve customers. And Dixons Carphone is using Azure and our Cognitive Services to boost customer engagement and provide a more consistent, seamless experience across online and in their stores.

If you look at some of the most exciting things that are happening in the cloud, is cloud applications that actively require an edge Azure IOT, or Azure Stack are becoming the runtimes of the edge where you do need not only the ability to do compute and storage, but to run the AI inference and the edge. So to me that’s what we’re building to. It’s actually a big architectural shift from thinking purely as a migration to some public cloud to really thinking of this as a real future distributed computing infrastructure and applications, but I quite frankly feel very, very good about leading and so in that context our server license revenue will fluctuate based on what the macro is and these transitions and mix shifts, but from a forward-looking perspective, I want us to be very, very clear that we anticipate the edge to be actually one of the more exciting parts of what’s happening with our infrastructure.


Alphabet (Q2 2017 Results) – Earnings Call Transcript

The increase in both Sites TAC as a percentage of Sites revenues, as well as Network TAC as a percentage of Network revenues, continues reflects the fact that our strongest growth areas, namely mobile search and programmatic, carry higher TAC. Total TAC as a percentage of total advertising revenues was up year-over-year as a result of an increase in the Sites TAC rate, driven by the shift to mobile, which was again partially offset by a favorable revenue mix shift from Network to Sites, which carries lower TAC.

One focus area for us this quarter has been enabling our machine learning algorithms to learn and improve our products much faster. One such research initiative auto ML enables us to pursue approaches to automate the design of machine learning models. Our ability to rapidly deploy the best machine learning in all of our products enabled us this quarter to launch all sorts of new smart features, to help moderate comments, suggest smart replies in Gmail and improved translations. We rolled out new machine learning features in Google Maps, YouTube, Gmail and Google Photos, which now has more than 500 million monthly users who backup 1.2 billion photos and videos every day.

YouTube now has 1.5 billion monthly viewers and people watch on average 60 minutes a day on their phones and tablets. That’s incredible and it helps 1000s of passionate video creators make money. The fastest growing stream for YouTube is in the living room. YouTube watch time on TV screens has nearly doubled year-on-year.


Corning (Q2 2017 Results) – Earnings Call Transcript

When announcing Valor at the White House last week, Merck’s CEO, Ken Frazier, said biologic medicines and vaccines remain on the leading edge of scientific innovation, and Valor Glass represents a similar advancement in materials science, a glass that is purpose-built for medicines and vaccines. Merck plans to convert several injectable products to this exceptional new glass packaging solution, pending appropriate regulatory approvals.

And Pfizer’s CEO, Ian Read, stated we believe that our collaboration with Corning is a game-changer. The glass industry represents about $4 billion in expenditures for the pharmaceutical industry. But subsequent issues, potential shards or breakages require strong quality control to ensure that it doesn’t get through to patients. The subsequent costs are multiples of the glass cost, to ensure that we deliver a high-quality product to patients. So Valor is a major innovation, a major way that we can be more competitive.

Valor also provides a powerful example of what happens when our focused and cohesive portfolio meets a customer opportunity. We started out with major customers from our life science vessels platform. We reapplied our expertise in glass science, optical physics, vapor deposition, precision forming and extrusion to develop a breakthrough product that we believe has the potential to power Corning’s growth for the next decade and beyond.


Facebook (Q2 2017 Results) – Earnings Call Transcript

This quarter we reached an important milestone for our community. 2 billion people now use Facebook every month, and more than 1.3 billion people use it daily.

For the past decade, we focused on making the world more open and connected. We have a lot more to do here to give people a voice and help everyone stay connected with their family and friends, but now I believe we have a responsibility to do even more. Our new mission is to bring the world closer together. A big part of this mission is building communities.

…a quick update on what we’re building over our three time horizons: making our existing services more useful now; building new ecosystems over the next five years around our products that a lot of people already use; and creating foundational technologies to achieve our mission over the next ten years.

Instagram Stories now has more than 250 million people using it daily, and WhatsApp Stories also now has more than 250 million people using it daily.

We’re finding AI is both delivering consistent improvements to many of our systems, like News Feed, search, ads, security, and spam filtering and more. But more than just improving these existing experiences, I expect AI to change the way that we do business in some important ways. So for example, today to keep our community safe, we rely on people flagging content that might violate our community standards for us to review. In the future, AI will be able to help flag more of this content faster before people have even seen it.

On the business side, we’re seeing a large shift in the way that marketing works. In the first wave of marketing, people would buy ads and media they thought their customers might watch like a TV show that had similar demographics, but they wouldn’t know who saw their ads. The Internet gave people the power to target their messages to people who actually might be interested and to measure results much more precisely, and that was a big improvement. And now AI is taking this a step further. Now you can put a creative message out there, and AI can help you figure out who will be most interested. A lot of the time you don’t even need to target now because AI can do it more precisely and better than we can manually. This makes the ads that you see more relevant for you and more efficient for businesses.

Messenger and WhatsApp both have large communities, and they’re growing quickly, with 1 billion people now using WhatsApp daily. It is still early on the monetization side here, although we have started showing ads to a small number of people on Messenger.

Given the size and engagement of our audiences, Facebook and Instagram are the best platforms to reach people and drive business results. We have over 70 million businesses on Facebook, and I’m excited to announce today that we now have more than 1 5 million business profiles on Instagram.

People consume content faster on their phones, and marketers are increasingly recognizing that this behavior is different from other media. This means that developing short-form snackable content is a big opportunity on mobile. We’re working hard to help marketers adopt mobile-first video ad strategies for Facebook and Instagram.

We’re focused on growing the user base, first and foremost. And then secondly, it’s about building organic connections between businesses and consumers. And then third, it’s about how do we build monetization around those relationships.

I would really just point to the overall dynamics of the system. And again, what we’re seeing is with slower supply growth, that’s going to play out to higher pricing. And again, are we effective? And we’ve been effective at delivering good return on investment for our advertisers and getting better at converting what we have as inventory into what they care about as outcomes. And that from a systemic point of view is what’s playing through there.


Cimpress (Q4 2017 Results) – Earnings Call Transcript

(July 2017 Letter to Investors)

Well, we really like the team at Albumprinter. Several of the key executives now in Cimpress overall came from Albumprinter. It’s a great business, we believe, with a strong future for the team that’s taking it out with a private equity purchase. As much as I’d like to say, it’s been a great success. We think this is a – it hasn’t been a big failure for us financially, but it hasn’t been a great success. We basically, depending if you’re looking at euros or dollars, are floating around our 8.5% cost of capital. And that’s not a success in terms of deployment of capital.

Now, we wish we could’ve done better. Now, I think, why not continue in that and improve the business? Because obviously with the competitive process and we had multiple people bidding, and the buyer believes that they can create great value going forward. So, I guess, what’s the question you’re bringing up is, why do we believe we shouldn’t have kept that and achieve those returns that the PE firm believes they can make in the future.

I think, the reality is that when we look at our strengths of where we are as a business, I’ll just take in the European market where Albumprinter plays, it is very strong in the Benelux and Nordics market. But there are very strong players in – particularly two large players, one in Germany and other parts of Europe and one more in France and the U.K. So we don’t believe that we would ever become the clear market leader in Europe, and it’s a business where we never found a way to bring it into the United States.

So we think that be it Shutterfly or others as great companies in the U.S. who really own that market. So, it was really a question of the old adage. I think, going back to to be number one or two in a market or not be in the market. And we look at other places in the promotional product space, in the Upload and Print, in the Vistaprint space, in Mall where we’re investing and we believe that we have a stronger chance of really becoming the number one or two player in those markets.

And in a world of constrained capital, we go to where we think the biggest opportunity is, which is, in summary, why we came to the decision it would be best to divest the asset right now.

Now, we also obviously keep central those things which must be done central, this call and other types of things. But everything else we’ve decentralized. Now, does that mean we are going away from the economies of scale? No. Because, what it does mean is that, take the example of National Pen versus Vistaprint. They are both very, very strong in different types of mass customized products. And the scale of National Pen in customized writing instruments is vastly larger than Vistaprint and vice versa for component and products that Vistaprint does.

So, now, through the interface of the mass customization platform, Vistaprint and National Pen, as just two examples of many, can exchange value internally to Cimpress, but (30:50) between each organization. And the benefits of scale that National Pen have in the production, in the supply chain, in the product development, can be a benefit to Vistaprint. Those types of point-to-point connections happen between our Upload and Print businesses, between Vistaprint and Upload and Print, between – in any different direction.

So, we believe that this new structure, at the highest level, will allow us to get the majority or, potentially, the vast majority of the benefit of scale, yet, greatly mitigate or hopefully eliminate the vast majority of the cost of centralization. And by cost, it’s not just the dollars we spend on centralization, but it’s the cost of having to manage across a $2 billion plus revenue business and make decisions which, on average, may be right, but for each of the individual businesses, are not optimal.


Starbucks (Q3 2017 Results) – Earnings Call Transcript

The evidence is clear that the pace of retail transformation is accelerating with a common theme: extending the in-store experiences to include relevant digital scenarios. It is the driving force behind combinations including Walmart’s acquisition of Jet.com, the combination of PetSmart and Chewy.com, and last month’s announcement of Amazon’s intent to acquire Whole Foods. Each of these combinations demonstrate that pursuit of enhancing the physical retail experience with a relevant and complementary digital experience.

We will not shy away from expanding our presence in markets that evidence strong growth opportunities at scale. We entered China almost 18 years ago, and today recognized as among the most respected brands in that country; along the way, establishing relationships, relationships with millions of customers, tens of thousands of partners, and a meaningful presence in 130 communities. Starbucks’ opportunity for growth in China is unparalleled and our purchase of the remaining 50% of our East China JV is a significant milestone, reflecting our long-term commitment to China and our unwavering optimism about our future in that key long-term growth market. And we are just getting started.

Tea is a large fast-growing category and a key addressable market and core focus for us. Since acquiring Teavana, we have built the business into a well-recognized, super-premium global brand. We expect to sell over $1.6 billion of Teavana branded, handcrafted beverages through Starbucks stores around the world this year. Overall, our tea business has grown 40% since we launched Teavana in the U.S. five years ago, and it is up over 60% since launching in China and Japan roughly one year ago.

We continue to open roughly 500 new stores in China every year at a rate of new store growth that will accelerate over time. Our newest class of stores continue to outperform and deliver record AUVs, now nearly 700,000 per unit, and world-leading returns. In fact, given our performance and success in China and the momentum we are seeing across the country in both retail and CPG channels, we now see the opportunity for Starbucks in China being even greater than we originally thought.


Fiat Chrysler Automobiles (Q2 2017 Results) – Earnings Call Transcript

…if the market deteriorates, the market will come down from these peaks. It is not a single downturn, and we’ve seen indications of the market softening in the first half of 2017 and I think you will see softer market conditions…The fundamental difference between us and most of the other people is that we have not built inventory into the pipeline. We’ve been incredibly disciplined and it’s something that we continue to do in managing our position with the U.S. dealers. We have no intention of building excessive inventory that will ultimately translate into pricing pressures. We have shown, I think, a willingness to take that capacity if the market is not there, I think we will continue to do so.

I mean everybody knew that this market was going to come down and so we have made the right strategic choices in terms of exiting the passenger car market. We’re now left with the majority of our productive assets being concentrated on pickups and SUVs. And I think that’s what the market is and I think that we’ll play to our strengths. I think we’ll just write it out, but I think we’re, today, probably in the most enviable position of all U.S. automakers. It took us a while to get here, but I think it’s time for us to reap the benefits of that effort.

…one of the things that we need to come to grips with is whether all the activities that are currently within the FCA world are required to run a proper OEM. And if the answer is not, then I think we have an obligation to purify that portfolio. And if they’re viable enough and large enough and sufficiently capable of carrying on their activities is to give them a space in the sun on their own merits. Because from a valuation standpoint, I can tell you honestly, I’ve been in this business long enough, I have never seen an industry which is as little loved as being an OEM today. For a period of time I thought that banking had reached the bottom but I think we have now surpassed them in terms of dislike.

Let me carve out Ferrari from all this because – and I had this view right throughout my tenure at FCA, I’ve confirmed it now. Ferrari lives and breathes in a different type of atmosphere. And so for it – and there is not – with all due respect to the other alleged contenders to that market, there’s nobody else who lives and breathes the same air. We’re dealing with a completely different concept, level of exclusivity, which is unparalleled, and intimacy with the customer base, which is also unmatched. And it’s a way of life, which I think takes you 70 – I mean we’re celebrating 70 years for Ferrari this year. It will take you 70 years to try and emulate it.

 Ferrari, on the other hand, is a self-sufficient, probably in my view, one of the most technologically advanced manufacturers of a car in the world. It has knowledge which is old, it’s deep and wide. And that knowledge is
something that you don’t acquire overnight. And I think it gives it the legitimacy to make the statement that it makes today. I’m not sure that that’s common to everybody else.


O’Reilly Automotive (Q2 2017 Results) – Earnings Call Transcript

Our focus on maintaining an extremely high standard of customer service when business is soft allows us to build long-term relationships, ultimately reinforcing our industryleading position.

In the second quarter, we successfully opened 46 net new stores, bringing our year-to-date total to 1 05 net new stores. We’re well on our way to achieving our new store growth target of 190 stores for 2017. As we have for several quarters now, our store growth in the second quarter was spread across the country with openings in 23 different states. We remain pleased with the performance of our new stores which continue to open strongly as compared to both our historical averages and our internal expectations. We’re very confident in the strength of the long-term prospects for our business and in our strategy of investing capital in new store growth at a high rate of return for our shareholders. Our success in opening profitable stores in new diverse market areas, as well as continuing to fill out existing markets we’ve operated in a long time, is a confirmation of the success of our business model. Our ability to leverage our extensive distribution network to provide industry-leading inventory availability allows us to replicate our success and capture market share as we expand into new markets.

If a customer walks into our store and they are buying a product and they bring to our attention that Amazon or RockAuto or whoever it may be has it priced for less, obviously, they need the part that day and they want to buy it that day, or they wouldn’t be in our store. We work with them to come up with a price that makes sense for them to walk out of the store with the part. We don’t walk customers over pricing relative to Amazon and online pricing pressure.

75% of it is picked up in store, the remainder is bought online. So, I think we have a pretty seamless process now. When a customer orders a part, buy online, pick up in store, it works pretty slick. There’s not a lot we could do to make it work better unless we knew their license plate number and ran out and gave it to them when the pulled up or something, and we may do that someday. But right now, we’re not doing that. They come into the store. I might mention, the majority of our online business is actually B2B. We have a huge business in B2B where we’re integrated into the shop management systems. We have a great browser product that allows shops to order parts using a browser that we’ve deployed that allows them to see pricing and availability and get information that they might need to work on cars, and so forth. So, omni channel, both on the do-it-for-me side and DIY side, is a significant focus for us right now.


Intel (Q2 2017 Results) – Earnings Call Transcript

We expect to close the acquisition of Mobileye in the third quarter, several months earlier than expected. Autonomous driving is a massive compute workload that will disrupt industries and save lives and we are investing to win in this important segment. I’m excited to welcome the Mobileye team to Intel. Together, we expect to be the global leader in the $70 billion autonomous driving systems, data and services market opportunity by accelerating auto industry innovation and delivering cloud to car solutions faster and at a lower cost.

We’re executing well to our strategy to transform from a PC-centric company to a data-centric company that powers the cloud and billions of smart and connected devices. The PC TAM is down more than 1 5% versus four years ago. Despite that headwind, our revenue is up more than 15% and our operating profit has grown more than 30%. More than 40% of our revenue now comes from our datacentric businesses outside the PC sector. And those businesses together are growing at double-digit rates.


Amazon.com (Q2 2017 Results) – Earnings Call Transcript

…the biggest impact on the margin that you’re seeing in Q2 is really around the 71 % increase in assets acquired under capital leases. Most of that is for the AWS business. So we’ve really stepped up the infrastructure to match the large usage growth and also the geographic expansion. And that is showing up in tech and content.

Prime Now is now available in 50 cities across eight countries. We do learn. It’s something to do in every city and has different – slightly different shapes and sizes of those buildings and different density profiles. And so we are learning as we go, learn as we grow internationally as well. That is a service that customers love. That’s not an inexpensive service, though, and we also have – so we’re constantly working on our cost of delivery and our route densities. And again, we like what we see and we’ll continue to expand that and we’ll be working very hard on making that not only a valuable Prime offering, a Prime benefit, but also a lower-cost operation as well.