Aiera Investor Event Recap — Week of November 15, 2021
Notable Tonal Sentiment Highlights from the past week (with videos) from Kohls, Walmart, Cisco, and Target. Plus, Nvidia talks about the “Omniverse.”
Notable Tonal Sentiment Highlights
Responding to a follow-up question about Women’s out of stocks and the corresponding revenue impact, CFO Jill Timms and CEO Michelle Gass both exhibited a negative tonal sentiment score against a neutral to positive text sentiment score as they discussed the softness they are seeing. In response to these comments, shares of KSS fell ~6% mid-call.
Walmart (Q3 2022 Earnings Call)
While discussing the Walmart Plus membership program and the company’s efforts to add items to their ecommerce marketplace, CEO Doug McMillon spoke confidently (positive text and tonal sentiment score) about Walmart’s progress in both areas over the last year.
After CEO Chuck Robbins detailed how Cisco’s business model transition toward subscription has helped the company move towards steadier and more predictable revenue streams, CFO Scott Heren followed with comments that scored positively on both text and tonal sentiment. Specifically, CFO Heren mentioned the company’s $15.9bn of Remaining Performance Obligations (RPOs), the visibility that provides, and the linear strength in order flow they saw during the quarter.
Target (Q3 2021 Earnings Call)
Target COO John Mulligan exhibited a negative tonal score despite a positive text sentiment reading when discussing the company’s current labor situation in the company’s stores and DCs.
And now, more notable moments from the past week…
Retail-Heavy Earnings Calendar Provided the Latest Update on Supply Chain Disruption
“There is no question that pressures on global supply chains increased over the last 18 months. That being said, we could not be more pleased with how our cross-functional teams responded. The teams took a number of decisive actions to secure more product for our customers while continuing to find new and different ways to flow that product. Beginning in the second quarter of last year, our merchant inventory and supply chain teams leveraged tools and analytics and worked with our vendor partners to adjust our assortments, and in some cases, introduced alternative products. The teams also built depth in job lot quantities and high-demand products. We improved our in-stock levels in the back half of last year, and we’ve been able to sustain, and in some cases, improve our levels, even as home improvement demand remains elevated. In addition to the challenging supply chain environment, we are also seeing rising cost pressures across several different product categories. Our seasoned teams of merchandising, finance and data analytics associates are working with our supplier partners to manage through these pressures. We have effectively managed inflationary environments in the past, and we feel good about our ability to continue managing through the current environment while being our customers’ advocate for value.”
- Edward P. Decker, President & COO, The Home Depot, Inc. | Q3 2021 Home Depot Inc Earnings Call, Nov 16th, 2021
“Like all companies, we are not immune to the ripple effect from these short-term and long-term delays. Our immediate and decisive responsiveness, our strong long-term vendor relationships and our scale have all minimized production and delivery delays relative to our competition. And as a result, approximately 85% of our holiday receipts have already been received. First, as you know, we sourced a sizable amount of inventory out of Vietnam, which was recently shut down for 3 months.This country has since reopened, but is experiencing significant backlog across factories as they ramp up. Second, given the ongoing strong demand we are seeing across our business and the impact of the Vietnam delays, we do not expect full recovery of our inventory levels until the middle of 2022.”
- Laura J. Alber, President, CEO & Director, Williams-Sonoma, Inc. | Q3 2021 Williams-Sonoma Inc Earnings Call, Nov 18th, 2021
“Sure, Bob. First, I am really excited about the Walmart program we launched just over a year ago with some really core values for the customer, which include unlimited delivery, primarily from stores, but that doesn’t include e-commerce. The program also offers fuel discounts and Scan&Go. And then most recently, we offered early access to customers, Plus members who are shopping on our holiday events. So our Plus members now have about a 4-hour window to be able to access products ahead of the market, and certainly seeing great results on that.”
- C. Douglas McMillon, President, CEO & Director, Walmart Inc. | Q3 2022 Earnings Call, Nov 16th, 2021
“We continue to work aggressively to address the situation, but acknowledge that the supply chain challenges will likely continue to present a headwind… Like many, our business has been impacted by extended transit times, resulting in inventory receipt delays and significantly higher transportation costs. The most visible evidence of this can be seen in our inventory level at the end of Q3, down 25% on a 2-year basis. While we planned inventory to be down this year as compared to 2019 aligned with our strategy to drive margins and turnover, our levels remain below that original plan…While it will take time for our inventory to rebuild, I am confident that the team is doing everything they can to mitigate the supply chain challenges as effectively as possible…As a result of these actions, we are well positioned for the holiday season with fresh receipts continuing to flow to support anticipated customer demand.”
- Michelle D. Gass, CEO & Director, Kohl’s Corporation | Q3 2021 Kohls Corp Earnings Call, Nov 18th, 2021
“Finally, turning to our full year outlook, which now includes the benefit from WSS and atmos. We believe we are well positioned for the holiday season in terms of both strong customer demand and inventory levels to support that demand. Like other companies, we expect global supply chain constraints, including factory shutdowns and port congestion to continue to be a headwind through the fourth quarter and into 2022. As such, we remain appropriately cautious in the near term.”
- Andrew E. Page, Executive VP & CFO, Foot Locker, Inc., | Q3 2021 Earnings Call, Nov 19th, 2021
Forget the Metaverse, We’re On To The Omniverse.
“And I guess, not an Omniverse question, but I guess, Jensen, I’d like your commitment that you will not use Omniverse to target the sell-side research industry.”
- CJ Muse, Senior MD, Head of Global Semiconductor Research & Senior Equity Research Analyst, Evercore ISI | NVDA Q3 2022 Earnings Call, Nov 17th, 2021
“Initial market reception to Omniverse has been incredible. Professionals at over 700 companies are evaluating the platform, including BMW, Ericsson, Lockheed Martin and Sony Pictures. More than 70,000 individual creators have downloaded Omniverse since the open beta launch in December. There are approximately 40 million 3D designers in the global market.”
- Colette M. Kress, Executive VP & CFO, NVIDIA Corporation | Q3 2022 Earnings Call, Nov 17th, 2021
“Omniverse’s success will be defined by, number one, developer engagement, connections with developers around the world; two, applications being developed by enterprises; three, the connection of designers and creators among themselves. Those are the nearest term. And I would say that in my type of definition of success. Near term also should be revenues. And Omniverse has real immediate applications as I demonstrated at the keynote. And I’ll highlight a few of them right now. One of them, of course, is that it serves as a way to connect the 3D and digital design world. Think of Adobe as a world. Think of Autodesk as a world because revenue is a world. These are design worlds in the sense that people are doing things in it, they’re creating things in it, and it has its own database. We made it possible for these worlds to be connected for the very first time and for it to be shared like a cloud document. That’s not been possible ever before. And you can now share work with each other. You can see how this works, you can collaborate. And so in a world of remote working, Omniverse’s collaboration capability is going to be really appreciated. And that should happen right away…[T]hat drives, of course, more PC sales, more GPU sales, more workstation sales, more server sales.”
- Jen-Hsun Huang, Co-Founder, CEO, President & Director, NVIDIA Corporation | Q3 2022 Earnings Call, Nov 17th, 2021
“The second use case is digital twins. [W]e saw examples of how several companies… are using Omniverse to create a digital twin of a city so that they could optimize radio placements and radio energy use …You saw BMW using it for their factories. You’re going to see people using it for warehouse — logistics warehouse to plan and to optimize their warehouses and to plan their robots. And so digital twin applications are absolutely needed…But I demonstrate probably the — in my estimation, the largest application of robots in the future is avatars. We built Omniverse Avatar to make it easy for people to integrate some amazing technology from computer vision to speech recognition, natural language understanding, gesture recognition, facial animation, speech synthesis, recommender systems, all of that integrated into one system and running in real time….And the way that you would do that is, for example, the 25 million-or-so retail stores, restaurants, places like airports and train stations and office buildings and such, where you’re going to have intelligent avatars doing a lot of assistance. They might be doing check-out, they might be doing check-in, they might be doing customer support. And all of that could be done with avatars, as I’ve demonstrated. So the virtual robotics application, digital bots or avatars is going to be likely the largest robotics opportunity. [D]on’t forget that intelligent beings or intelligent users that can be connected to Omniverse will likely be much larger as digital bots than humans. So I’ve mentioned 40 million, but there are 100 million cars. And 100 million cars will all have — all these have the capability to have something like an Omniverse Avatar. And so those 100 million cars could be $1,000 per car per year. And in the case of the 25 million or so places where you would have a digital avatar as customer support or check-out, smart retail or smart warehouse, it’s smart whatever it is. Those avatars are also with — each individual will have a main account. And so they would be $1,000 per avatar per year. And so those are the immediate tangible opportunities for us, and I demonstrated the application now. And then, of course, behind all of that, the — call it, a couple of hundred million digital agents, intelligent agents, some of them human, some of robots, some of them avatars at $1,000 per agent per year. Behind it are NVIDIA GPUs in PCs, NVIDIA GPUs in the cloud and NVIDIA GPUs still on Omniverse servers. And my guess would be that the hardware part of it is probably going to be about half and then the licensing part of it will probably be about half of the time. And — but this was really going to be one of the largest graphics opportunities that we’ve ever seen.”
- Jen-Hsun Huang, Co-Founder, CEO, President & Director, NVIDIA Corporation | Q3 2022 Earnings Call, Nov 17th, 2021
“And the reason why it’s taking so long for this to manifest is because it requires 3 fundamental technologies to come together. I guess 4 fundamental technologies come together. First of all is video graphics. Second is physics simulation because we’re talking about things in a world that has to be believable so it has to obey the laws of physics. And then third is artificial intelligence, as I’ve demonstrated in several stages now. And all of it runs on top of an Omniverse computer that has to do not just AI, not just physics, not just computer graphics, but all of it. And so what long term people — why people are so excited about it is at the highest level, what it basically means is that long term, when we engage with Internet, which is largely 2D today, long term, every query would be 3D. And instead of just querying information, we would query and interact with people and avatars and things, places, and all of these things are in 3D. So hopefully, one of these days — and we will try to realize it as fast as we can — every transaction that goes over the Internet touches a GPU. And today, that’s a very small percentage, but hopefully, one of these days it will be a very, very high percentage. I hope that’s helpful.”
- Jen-Hsun Huang, Co-Founder, CEO, President & Director, NVIDIA Corporation | Q3 2022 Earnings Call, Nov 17th, 2021
Note: All excerpts, highlights, and insights in this email were generated entirely using the Aiera platform.
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