TMTB: EOD Wrap; NOW IBM LRCX TSLA First takes
NOW -2% after cRPO for Q3 and guide came in near low end of what buyside was expecting. Other than that, headline numbers look fine
Q3 revs: $2.8B vs street at $2.75B
Q3 cRPO 23.5% cc vs buyside at 23.5%-24% vs street at 22.5%
Q4 cRPO guide: 21.5% vs buyside at 22%
Q4 sub growth $2.875-$2.88B vs street at $2.86
Q4 OPM a bit weaker at 29% vs street at 30.6%
NOW RESULTS: Q3
- ADJ revenue $2.79B, EST $2.75B
- Subscription revenue $2.72B, EST $2.67B
- Professional Services & Other revenue $82M, EST $79.9M
- ADJ EPS $3.72, EST $3.46
- ADJ gross profit $2.31B, EST $2.25B
- ADJ gross margin 83%, EST 82.1%
- Subscription adj. gross margin 85%, EST 84.1%
- Professional Services & Other adj. gross margin 7%, EST 11.3%
- Remaining performance obligations $19.5B
- Current remaining performance obligation $9.36B, EST $9.1B
- Free cash flow $471M, EST $351.4M
F/Y GUIDANCE
- Guides subscription revenue $10.655B to $10.66B, saw $10.58B to $10.59B, EST $10.59B
- Still sees Subscription adj. gross margin 84.5%, EST 84.6%
IBM -4.5% missed topline driven by miss in consulting revs, missed FCF, and reiterated FY FCF guide
IBM RESULTS: Q3
- Revenue $14.97B, +1.5% y/y, EST $15.05B
- Software revenue $6.52B, +9.7% y/y, EST $6.37B
- Consulting segment revenue $5.15B, -0.5% y/y, EST $5.22B
- Infrastructure revenue $3.04B, -7% y/y, EST $3.24B
- Financing revenue $181M, -2.7% y/y, EST $175.6M
- Other revenue $68M, -60% y/y
- ADJ gross margin 57.5% vs. 55.5% y/y, EST 56.6%
- Operating EPS $2.30 vs. $2.20 y/y, EST $2.22
- Free cash flow $2.06B, +23% y/y, EST $2.08B
F/Y GUIDANCE
- Still sees free cash flow above $12B, EST $12.25B
LRCX +5% as numbers better than investors were expecting given de-risking that has happened since the ASML print.
Q3 revenue/GM/EPS of $4.17b/48.2%/$0.86 vs. Street $4.06b/47.1%/$0.81
Q4 guidance: revenue/GM/EPS of $4.30b/47.0%/$0.87 vs. Street $4.24b/46.8%/$0.84
China 37% of total vs 39% last q. GM strong at 48.2% a 100ps beat.
Key for investors and the call will be how CY25 spending will look and what weaker INTC and Samsung EUV spend means for the industry…
TSLA +8% as revs missed slightly but GM OP and FCF came in significantly above street
TSLA RESULTS: Q3
- ADJ EPS $0.72, EST $0.60
- EPS $0.62
- Revenue $25.18B, EST $25.43B
- Gross margin 19.8%, EST 16.8%
- Operating income $2.72B, EST $1.96B
- Free cash flow $2.74B, EST $1.61B
- Capital expenditure $3.51B, EST $2.56B
Tesla: recognized our second highest quarter of regulatory credit revenues
Tesla: expect to achieve slight growth in vehicle deliveries in 2024, energy storage deployments expected to more than double year-over-year in 2024
TSLA: as energy storage products continue to ramp, vehicle fleet continues to grow, we expect continued profit growth from these businesses over time
Tesla: cybertruck production increased sequentially and achieved a positive gross margin for first time
EOD Wrap:
QQQs -1.53% on a day where consensus names came under pressure and AI names underperformed and tech led the market lower. Yields ticked up slightly; BTC - 1.7% ;ARKK - 3%. SPY/IWM - 90bps both outperformed. Let’s get to the recap…
Internet
Large cap hit by unwind today: META - 3.5%; NFLX -2%; AMZN -2.6% as Edgewater was mixed on NA retail saying Q3 finished below and October started weak with weaker Prime Day. Yip weekly data however showing opposite with slight uptick and Q4 trending ~1% above street…GOOGL - 1.4% fared the best - not surprising given the least owned
RBLX -30bps as M-sci said bookings accelerated in Q2 and ads picking up steam after self-serve ads launched in Q2
SNAP +1.7% as JMP upgraded to buy saying simple Snapchata nd sponsored Snap launch sohuld drive improved engagement after their checks showed strength in DR
EBAY +60bps/ETSY +60bps as Needham initiated both at buy
W -3% as Clev was mixed saying Q3 finished below and Q4 tracking in line but driven by promotions (Wayday)
CVNA flat as Wells raised tgt to $250 from $175
PTON +11% after M-sci was positive saying they were taking share and Einhorn pitched it on CNBC saying it was “significantly undervalued”
UPWK +26% after announcing results and job cuts; FVRR +5% in sympathy
Housing names weak as rates continued to tick up: RDFN -3%; OPEN -3%; Z - 2%
Travel names gave back some of recent outperformance: BKNG -1.5%; EXPE - 2%; ABNB - 3%
Semis
TXN +4% after inline print and lower guide although investors liked autos being up led by China +20% q/q and non-industrial end markets bottoming. Bearish pushback is why stock is a buy at 30x FCF.
Other analog names in sympathy: ON +2% / NXPI +2% outperformed given auto exposure; ADI +1%; MCHP flat
QCOM -3.8% after Bloomberg reported ARM will scrap their chip design license as fued escalates. Sell-side generally said it was negotiating tactic with Citi saying minimal impact but possible drawn out fight with ARM
AI names generally weaker: AMD - 80bps; AVGO -3%; MU - 2.5%; NVDA - 3%; MRVL - 2%; VRT - 3%
Software
MSFT -70bps as Clev was positive on Azure although they said net new win rates tended to narrow on new projects
SAP +1% with some follow through after yesterdays print
Security names weak - got a lot of questions here but no answers other than some of the most crowded longs in the space: PANW - 5%; CYBR - 3.5%; CRWD -3%; ZS - 3%
HUBS flat as Jefferies made it a top pick
Elsewhere
T +4.6% after a relatively in line print as investors anticipate buyback announcement and investor day in Dec.
DIS -50bps after M-sci was positive on OTT saying churn near lows, DIS+ subs strong, and parks outperforming
COST +60bps after MS said they could have their own NFLX password sharing moment
AAPL -2% as TheInformation reported they significantly scaled back Vision Pro production
