Aiera Investor Event Recap — Week of November 1, 2021
Notable tonal sentiment highlights from the week (with videos). Plus, read commentary on the slowdown in the education industry, advertising outlook, and the future of video games.
Notable Tonal Sentiment Highlights
Electronic Arts (Q2 2022 Earnings Call)
Despite acknowledging some softness in mobile games in the preceding quarter as it relates to user acquisition (stemming from IDFA), EA CEO Andrew Wilson speaks optimistically about the outlook for the company’s mobile game portfolio.
Peloton (Q1 2022 Earnings Call)
In response to a question about the company’s variable costs and longer term margin structure, CFO Jill Woodworth exhibited high textual and tonal scores by alluding to potential fixed cost leverage as Peloton comes out of the pandemic and looks to strategically leverage 3PLs.
Zillow Group (Q3 2021 Earnings Call)
CFO Allen Parker exhibited a negative tonal score (in contrast to a positive text sentiment score) when answering a question from Zelman Analyst Ryan McKeveney about the challenges the company faced within its iBuying home flipping business in 2H 2021. Specifically, CFO Allen Parker discusses how the significant deceleration in HPA increases relative to Zillow’s internal forecast resulted in the company overpaying for properties.
Etsy CEO & President Josh Silverman speaks confidently about his company’s place in an ecommerce ecosystem where users are consolidating shopping behavior to fewer and fewer sites all trying to sell “commoditized” products. Meanwhile, he argues Etsy is well-positioned to be the “leading alternative to that commoditized habit.”
Lamar Advertising (Q3 2021 Earnings Call)
Lamar CEO & President Sean Reilly displays positive tonal and textual sentiment as he gives an early look into the company’s 2022 outlook, calling the setup “as good as [he’s] ever seen in [his] career at Lamar.”
Interested in trying it for yourself? Join Aiera’s Tonal Sentiment Beta Program today!
And now, more notable moments from the past week…
Chegg Falls 35% Citing Recent “Slowdown” in Education Industry
“However, in late September, it became clear to us that the education industry is experiencing a slowdown that we believe is temporary. This industry-wide dynamic was unanticipated and is a direct result of the COVID-19 pandemic, a combination of variants, increased employment opportunities and compensation, along with fatigue, have all led to significantly fewer enrollments than expected this semester. And those students who have enrolled are taking fewer and less rigorous classes and are receiving less graded assignments. We believe this is a post-pandemic impact that will affect this school year but is not sustainable for higher education long term. Learning sites and apps, both free and paid in the U.S. and Canada, have experienced significantly reduced traffic since the fall semester began.”
- Daniel Lee Rosensweig, Co-Chairman, CEO & President, Chegg, Inc. | Q3 2021 Earnings Call Nov 1st, 2021
“Students didn’t go physically to schools, schools weren’t ready, online schools weren’t prepared. So enrollment went down last year. Nobody could have anticipated just the robust nature of the low-end economy where our kind of students, community college students, 4-year students and schools that most of you don’t know about, chose to go earn an income or stay home with their child versus go back to school this semester. And it was completely unanticipated and it will come back. But the reality is that’s a large part of our student base or students that need the most help. And they just didn’t come back to school. It became clear to us in mid-September towards the end of September, that they just weren’t going. And then our research shows that if those that did go, 16% of them are taking pass/fail. Significant percentages of them are not taking their required classes, they’re taking easier classes. Professors are assigning less. And on average, they’re taking fewer courses. Obviously, this is not sustainable. This is a post-COVID hangover of mental exhaustion, an opportunity to earn more money, a reassessment of their lives, not unlike what you hear going on in the corporate workplace. It just all came together at one time. We didn’t see it happening, and it happened.”
- Daniel Lee Rosensweig, Co-Chairman, CEO & President, Chegg, Inc. | Q3 2021 Chegg Inc Earnings Call, Nov 1st, 2021
Peer Comments Support a Broader Disruption Across Academia
“In addition to these challenges that have been building up for decades, I want to refer to an article that came out on October 26. Enrollment at U.S. colleges and universities is on track to fall by another — nearly 500,000 undergraduate students this fall, continuing a historic drop that began with the start of the coronavirus pandemic according to new data out Tuesday… If these preliminary numbers hold up (inaudible), the last 2 years of undergraduate decline totaling more than 6%, it would be the largest 2-year decrease in at least half a century. This fall, the [broad] undergraduate enrollment is spread across all sectors, but numbers are worse at community colleges, public 4-year colleges and private for-profits. While schools that are primarily online saw gains last year during the height of the pandemic, those positives turned to negative this fall, with enrollment dropping by 5.4% for undergrad programs and 13.6% for graduate programs.”
- Brian E. Mueller, Chairman, President & CEO, Grand Canyon Education, Inc. | Q3 2021 Grand Canyon Education Inc Earnings Call, Oct 28th, 2021
“However, revenue per student continues to be negatively impacted by a number of factors. Revenue per student associated with the GCU contract is being negatively impacted by a decline year-over-year in days in class for its online students. As we have discussed previously, we saw a significant increase in days in class during the last 9 months of 2020 and the first few months of 2021, as students took far fewer breaks between courses than previous years. Beginning at the tail end of the second quarter and continuing into the third quarter of 2021, days in class returned to pre-COVID levels, as students decided to take breaks between classes. Second, GCU continues to see a mix shift to less accelerated programs that generate less revenue on a daily basis. Additionally, beginning with the summer 2021 semester and continuing into the fall 2021 semester, Orbis partners have experienced a decline in revenue per student caused by some students delaying their scheduled clinical courses due primarily to vaccine mandates at hospital partners.”
- Daniel E. Bachus, CFO, Grand Canyon Education, Inc. | Q3 2021 Grand Canyon Education Inc Earnings Call, Oct 28th, 2021
“Yes, I think versus 3 months ago, things are not as good today as they were 3 months ago. And what’s changed is the uneven opening of the country. I’m saying 3 months ago, schools were opening in August and September. Hospitals were a lot more accessible because of, in some cases, decreased nurse demands in hospitals, counseling centers and those things. And we’ve — in certain cases, it’s gotten harder. September and October, it didn’t open as fast as we were hoping. And so that 30%-plus that we get from that outside activity didn’t pick up as fast as we were hoping.”
- Brian E. Mueller, Chairman, President & CEO, Grand Canyon Education, Inc. | Q3 2021 Grand Canyon Education Inc Earnings Call, Oct 28th, 2021
“[R]ight now with so many jobs being available, if you’re a 28-year old and you’ve got your choice of jobs, does it really pay to go back and earn an undergrad with a degree in business (inaudible)? That’s seriously being questioned. But if you want to be a counselor, you’ve got to be licensed. You’re not allowed to be counsel — provide counseling without a license. Same with social work, same in teacher education, same thing with nursing. And so those 2 things that we pivoted to a number of months ago are going to allow us to recover from this transitional period, and I think we will be in a very strong position when we come out.”
- Brian E. Mueller, Chairman, President & CEO, Grand Canyon Education, Inc. | Q3 2021 Grand Canyon Education Inc Earnings Call, Oct 28th, 2021
“While no market data for the fall back-to-school period is available as of yet, our own internal analysis and channel checks indicate that weighted enrollments have likely declined close to mid-single digit with particular weakness at community colleges. We believe that this has been driven by a surge in the Delta variant over the summer months as this graphic shows, spiking dramatically in July and continuing through the key back-to-school period in August which, combined with the strengthening of the U.S. labor market, appears to have resulted in fewer enrollments, particularly as I mentioned, in community colleges.”
- Adam Bird, CEO & Director, Pearson Plc | Q3 2021 Pearson PLC Trading Statement Presentation, Oct 15th, 2021
“Employers are rapidly digitizing work processes and automating jobs that are repeatable and predictable. The rapid pace of this digital transformation impacts everyone, and the need for change has never been more urgent. Businesses know that they must upskill, reskill and benchmark their talent to remain competitive in a changing economy. Governments understand that most at-risk jobs are typically held by lower-wage workers, which threatens to leave millions of workers unprepared for the digital future. Campuses realize that they must enhance their offerings, as increasing competition from alternative credentials and substitution effect of a strong labor market drives them to teach students skills for the future and deliver stronger employability outcomes. And individuals need to keep learning through their life, requiring access to flexible and affordable education to stay relevant in a fast-changing labor market.”
- Jeffrey Nacey Maggioncalda, CEO, President & Director, Coursera, Inc.| Q3 2021 Coursera Inc Earnings Call, Nov 2nd, 2021
Roku Sees Ad Spend Double Y/Y from Top 10 Cable TV Advertisers
“Since day one, we’ve been building Roku not just for TV streaming but also for TV streaming advertising. Roku is a primary beneficiary as advertisers follow viewers who are moving to TV streaming from traditional pay TV. According to Nielsen, in Q3 ratings for adults 18–49 on traditional TV fell 19% year-over-year, creating supply shortages and increasing ad prices. As a result, the top 10 cable TV advertisers doubled spend on the Roku platform year-over-year.”
- Roku Letter to Shareholders, Q3 2021 Earnings Press Release
Activision Warns of Softer 2022 Due to Overwatch/Diablo Launches Being Pushed Out
“Specifically, in recent months, we have taken actions that resulted in the departure of a number of individuals across the company. Additionally, we have seen increased competition in the market for our talent and higher voluntary turnover that has partly offset our success in hiring. As we have worked with new leadership on Blizzard and within the franchises themselves, particularly in certain key creative roles, it’s become apparent that some of the Blizzard content plan for next year will benefit from more development time to reach its full potential. While we are still planning to deliver a substantial amount of content from Blizzard next year, we are now planning for a later launch for Overwatch 2 and Diablo 4 than originally envisaged. These are 2 of the most eagerly anticipated titles in the industry, and our teams have made great strides towards completion in recent quarters. But we believe giving the team some extra time to complete production and continue growing their creative resources to support the titles after launch, we’ll ensure that these releases delight and engage their communities for many years into the future. These decisions will push out the financial uplift that we had expected to see next year, but we are confident that this is the right course of action for our people, our players and the long-term success of our franchises.”
- Daniel I. Alegre, President & COO, Activision Blizzard, Inc. | Q3 2021 Earnings Call, Nov 2nd, 2021
Video Game Franchises Have Grown “Beyond the Game”
“Apex has grown beyond the game as well. It was one of the most watched titles on Twitch during the quarter with more than 130 million hours of Season 10 content watched to date, up nearly 40% from the previous season. As the success of Apex Legends continues, it demonstrates how we are building long-term ecosystems in and around our biggest franchises. At its core is outstanding gameplay, embedded in an immersive world of law and characters that continues to expand. Seasons of new content and in-game events like the recent collection events keep the experience fresh for new and returning players. We’ve introduced new experiences like the squad-based arenas and recently added a ranked mode. The Apex Legends esports ecosystem is growing as well, with the second year of Apex Legends Global Series now underway. Apex is moving from strength to strength, and we will add to that when we bring Apex Legends to mobile platforms later this year.”
- Andrew Wilson, CEO & Director, Electronic Arts Inc. | Q2 2022 Electronic Arts Inc Earnings Call, Nov 3rd, 2021
EXPE, UBER, LYFT All Speak to an Improving Travel Environment, Particularly in Heavily Affected Categories like Corporate & International
“And — but as we got through August and into September, the Delta fears, particularly in the U.S. began to wane, and we ended stronger in the back half of September. And that has continued through into the fourth quarter with even greater strength. We’ve seen improvement across all segments, really. Well, leisure and domestic have led. Even those segments, which have been harder hit like corporate and international travel, have been coming back. Cities have been returning as well. And so all in all, it’s been a broad-based recovery.”
- Peter Maxwell Kern, CEO & Vice Chairman, Expedia Group, Inc. | Q3 2021 Expedia Group Inc Earnings Call, Nov 4th, 2021
“Given the continued volatility of the recovery, we also want to provide additional monthly detail on our total lodging bookings net of cancellations. That, of course, includes both hotel and Vrbo. And those were down approximately 17% in July, approximately 25% in August, 19% in September and further improved to down — negative 2% in October. And again, that September was also down, of course. The trends in October that we saw, again, that was negative 2%, they did improve throughout that month, so we exited at a much improved rate relative to the start of that month.”
- Eric Hart, CFO & Chief Strategy Officer, Expedia Group, Inc. | Q3 2021 Expedia Group Inc Earnings Call, Nov 4th, 2021
“Now a bit on demand recovery. After a period of soft demand driven by the Delta variant, the Mobility recovery has reignited with Mobility gross bookings expanding 18% over September — over the September and October period. While several markets around the world, including the U.K., Brazil, Germany, Spain, Taiwan and Hong Kong, are up against 2019, we hit another milestone last week. Our global Mobility business posted its first few days of growth versus 2019. In fact, this year’s Halloween weekend eclipsed 2019, demonstrating consumers’ excitement to get out and move again. We believe volumes would return to the trend line outside of holiday periods, but the underlying trend line continues to get better and better. Notably, airports are beginning to show meaningful activity, with U.S. airport trips up more than 20% and business airport trips growing nearly 60% over the past 2 months.”
- Dara Khosrowshahi, CEO & Director, Uber Technologies, Inc. | Q3 2021 Uber Technologies Inc Earnings Call, Nov 4th, 2021
“I would say, in general, we wanted to play offense in Q3. We sort of beat the industry to profitability in Q2, which is a big milestone, and we decided we were going to actually play offense. So we’re very pleased that we were able to invest. And I think you can see it in terms of the results, in terms of the supply position now going into Q4. I think, in general, if you look at third-party data, you can see that there were some states which sunset federal unemployment earlier. In general, supply came back sooner. Prices came down relatively more in those markets. I think that’s probably an early indication. But generally, I mean, the market is pretty efficient. It will balance pretty quickly. So I think that’s probably the most I can share in terms of, all the use cases are coming back. Everything that we refer to as party hours, which is sort of the late night rides, commute, off-peak, airport rides, like we’re seeing volume of all of those categories of rides increase.”
- Brian Keith Roberts, CFO, Lyft, Inc. | Q3 2021 Lyft Inc Earnings Call, Nov 2nd, 2021
Despite Ongoing Recovery, Visa Admits NTM Outlook Remains Unclear
“Looking ahead to fiscal year 2022. Our business has been on a recovery track for the past 3 to 4 quarters. However, we are not back to normal yet globally. There are many factors to consider as we project the trajectory of the recovery. Debit and e-commerce have outperformed and stayed resilient even as credit recovers and in-store shopping returns. The full impact of stimulus payments and support programs ending remains to be seen. Cross-border travel is recovering well, but still well below pre-COVID levels with a pace of recovery dependent on cross-border on border openings. Asia has not reopened to the degree the rest of the world has. The timing of reopening in key countries across Asia, both domestically and for cross-border travel is a key variable. Most importantly, COVID variants are still with us and vaccination rates remain low in large parts of the globe. With these factors as the backdrop, forecasting the trajectory of the return to normalcy remains difficult. Visibility 4 quarters out, while improved, is still not great.”
- Vasant M. Prabhu, Vice Chairman & CFO, Visa Inc. | Q4 2021 Earnings Call, Oct 26th, 2021
Note: All excerpts, highlights, and insights in this email were generated entirely using the Aiera platform.
Learn more about Aiera’s event access & real-time transcription here.
