Aiera Investor Event Recap — Week of November 8, 2021
Notable tonal sentiment highlights from the week (with videos) as companies continue to contend with macro headwinds. Plus, more notable textual commentary from the week’s earnings calls.
Notable Tonal Sentiment Highlights
Opendoor (Q3 2021 Earnings Call)
In the wake of Zillow’s announcement that it would withdraw from the iBuying market last week, CFO Carrie Wheeler spoke confidently of the current state of the company’s inventory and resale pace.
PayPal (Q3 2021 Earnings Call)
Responding to a question from Evercore ISI Analyst David Togut about the softer-than-expected 4Q/2022 guide and their confidence that the cited headwinds are indeed short-term, both CEO Dan Schulman and CFO John Rainey scored positively on textual sentiment but negatively on tonal sentiment in their response.
RingCentral (Q3 2021 Earnings Call)
RingCentral CEO Vlad Shmunis spoke confidently (positive text and tonal sentiment scores) about the company’s enterprise business in the context of a broader shift happening to a hybrid work environment. In his response to the question, CEO Shmunis stated that the strength they are seeing is not just the result of a “COVID story” but rather a longer-term trend toward “work from anywhere.”
Wendy’s (Q3 2021 Earnings Call)
Wendy’s CEO exhibited a negative tonal score against positive text sentiment as he discussed seeing improved staffing levels, but still not to the level they would like. Additionally, CEO Penegor mentioned that the labor market is likely going to take a “little bit of time” to correct and in the meantime we will likely continue to see labor inflation that will cost “a little bit more.”
TripAdvisor (Q3 2021 Earnings Call)
TRIP CFO Ernst Teunissen spoke positively about the company’s Experiences business, which “roared back in October, doing really, really strongly.” During his response, CFO Teunissen displayed both positive text and tonal sentiment scores, supporting his confidence in the trajectory of that business and the broader travel recovery.
And now, more notable moments from the past week…
PYPL Falls Mid-Call After Guiding Below Street for 4Q / 2022
“As a result of this update to our full year guidance, we expect fourth quarter revenue to be in the range of $6.85 billion to $6.95 billion. This represents approximately 13% growth at the midpoint. We also expect $1.12 in non-GAAP EPS, representing 4% growth. While the impact from eBay’s payments migration came in consistent with our expectations for the quarter, Relative to the beginning of the year, the headwind increased significantly. Until recently, we believed we could absorb this additional pressure and still deliver on our prior guidance. And while we came within our revenue expectations for the third quarter, the contributors to our revenue growth were somewhat different than what we had expected going into the quarter. Toward the end of the quarter, we also began to see growth rates come in a little lower than planned. We’re off to a solid start in the fourth quarter, but growth rates still remain slightly below our prior expectations. In addition, retail supply chain and labor market concerns, which may impact the important holiday season, have led us to adopt a more cautious stance for the fourth quarter. That said, in recent days, we’ve seen improvement…At this point in time, it’s difficult to say definitively whether these stronger turns will persist throughout the quarter or if this improvement is a pull forward of consumer holiday activity.”
- John D. Rainey, CFO & Executive VP of Global Customer Operations, PayPal Holdings, Inc. | Q3 2021 Earnings Call, Nov 8, 2021
“On a preliminary basis, for 2022, we expect revenue growth in the high teens. If we had to put a point on it today, we’d likely anchor it at about 18%. It’s also important to appreciate our expected trajectory of revenue growth. Due to the cadence of eBay’s Payments migration, as well as the stimulus measures earlier this year, we expect the first quarter next year to have more difficult comps and be our lowest growth quarter. Our plans are for revenue growth to then accelerate through the year, and to exit 2022 at a revenue growth rate in line with or ahead of our medium-term guidance. Similar to 2021, we expect that our growth rates will exceed industry growth rates by a healthy margin. Given the ongoing planning that we’re still doing, we will guide EPS growth when we report Q4 results early next year.”
- John D. Rainey, CFO & Executive VP of Global Customer Operations, PayPal Holdings, Inc. | Q3 2021 Earnings Call, Nov 8, 2021
Disney Cautions on Further Suppressed Disney+ Sub Growth & Losses in 1H 2022
“Finally, as it relates to our expectations for Disney+. Looking at fiscal ’22, we are thrilled about the quality of the content coming in the first 3 quarters of the year, but we will not yet be at our anticipated steady-state cadence of content releases. The fourth quarter will likely be more indicative of what our slate could look like once we have tentpole content flowing steadily from all of our industry-leading creative engines. Q4 will be the first time in Disney+ history that we plan to release original content throughout the quarter from Disney, Marvel, Star Wars, Pixar, and Nat Geo, all in 1 quarter. This includes highly anticipated titles such as Ms. Marvel, Andor and Pinocchio. And as Bob mentioned earlier, we are also increasing our local content offerings in Asia, India, Europe and Latin America in fiscal 2022, with the majority of those titles also releasing in the back part of the year.”
- Christine Mary McCarthy, Senior EVP & CFO, The Walt Disney Company | Q4 2021 Earnings Call, Nov 10th, 2021
“As we’ve discussed before, we don’t anticipate that sub growth will necessarily be linear from quarter-to-quarter. So putting this all together, and also taking into consideration the timing of our planned international launches in 2022, we expect Disney+ subscriber net adds in the second half of fiscal 2022 will be meaningfully higher than the first half of the year. Additionally, we now expect that Disney+ will reach its peak year of losses in fiscal 2022 instead of in fiscal 2021 as better-than-expected revenue and lower content expenses due to production delays contributed to lower-than-expected losses in 2021. As Bob mentioned, we are increasing our overall long-term content expense for Disney+, and we believe we are well positioned to achieve the subscriber target of 230 million to 260 million by fiscal 2024 that we laid out at last year’s Investor Day. And we also remain confident in our expectation that Disney+ will achieve profitability in fiscal 2024.”
- Christine Mary McCarthy, Senior EVP & CFO, The Walt Disney Company | Q4 2021 Earnings Call, Nov 10th, 2021
Disney Parks Trends Continue to Strengthen Amid Ongoing Re-opening
“Attendance trends continued to strengthen at our domestic parks, with Walt Disney World Q4 attendance up double digits versus Q3 and Disneyland attendance continuing to strengthen significantly from its reopening in the third quarter. Guest spending at our domestic parks also continued its strong trend with per caps in the fourth quarter, up nearly 30% versus fiscal 2019. Our forward-looking demand pipeline for domestic guests at Walt Disney World and Disneyland Resort remains strong, demonstrating our brand strength as well as more normalized consumer behavior. Additionally, we are looking forward to the return of international attendance at our domestic parks and resorts. However, Keep in mind that due to longer vacation planning lead times, we don’t expect to see a substantial recovery in international attendance at our domestic parks until towards the end of fiscal 2022.”
- Christine Mary McCarthy, Senior EVP & CFO, The Walt Disney Company | Q4 2021 Earnings Call, Nov 10th, 2021
Opendoor Reports Strong Q3 Results, Confident Guide in Wake of Zillow’s iBuying Exit
“I would just say that the value proposition is resonating. And it resonated before Zillow within the category, and it will continue to resonate as we expand nationwide and drive deepening market share within our existing cities. In fact, we see the option happening is as we get to scale within cities, our marketing becomes quite efficient.”
- Eric Chung Wei Wu, Co-Founder, CEO & Chairman, Opendoor Technologies Inc. | Q3 2021 Earnings Call, Nov 10th, 2021
“Yes, inventory grew a lot in the last quarter. That’s a function of us growing. It’s a good thing, and we feel good about where we own right now in the pace of our resale. Our resale pace is going to be slower or faster, depending on the market environment we’re in and certainly time of year. There’s 1 consideration there. I mean people don’t love moving during the holiday. So Q4 may be slower. Q1 a little bit faster, et cetera. We factor our resale expectations into how we price and how we manage our inventory. And I’d say that Q4 reflects that resale pace and where we’re at right now against what continues to be a very healthy housing market. Nothing fundamentally has changed really about our holding period.”
- Carrie A. Wheeler, CFO, Opendoor Technologies Inc. | Q3 2021 Earnings Call, Nov 10th, 2021
“I think what we’ve seen is that if we can meet customer expectations and deliver, again, on a simple and fast transaction that people will say yes to Opendoor. And while there are cases where people are cross-shopping, we’re investing heavily in the experience, our operational capabilities to lower the cost and our pricing accuracy to win the trust of our customers. Again, conversion is north of 35%. So cost shopping hasn’t at all impaired our ability to grow. And in fact, there is, in our perspective, too much demand for our product.”
- Eric Chung Wei Wu, Co-Founder, CEO & Chairman, Opendoor Technologies Inc. | Q3 2021 Earnings Call, Nov 10th, 2021
Consumer Perceptions of Sports Gambling Are Changing, No Longer a Brand Risk
“…[W]e do believe that sports betting is a very significant opportunity for the company. And it’s all driven by the consumer. It’s driven by the consumer, particularly the younger consumer that will replenish the sports fans over time and their desire to have gambling as part of their sports experience. It’s not necessarily a lean back. It’s a little bit of a lean forward type experience that they’re looking for. And as we follow the consumer, we necessarily have to seriously consider getting into gambling in a bigger way. And ESPN is a perfect platform for this. We have done substantial research in terms of the impact to not only the ESPN brand, but the Disney brand in terms of consumers’ changing perceptions of the acceptability of gambling. And what we’re finding is that there is a very significant installation gambling does not have the cache now that it had, say, 10 or 20 years ago. And we have some concerns as a company about our ability to get in it without having a brand withdrawal. But I can tell you that given all the research that we’ve done recently, that is not the case. It actually strengthens the brand of ESPN when you have a bedding component, and it has no impact on the Disney brand. therefore, to go after that demographic opportunity plus the, of course, not insignificant revenue implications. That is something that we’re keenly interested in and are pursuing aggressively.”
- Robert A. Chapek, CEO & Director, The Walt Disney Company | Q4 2021 Earnings Call, Nov 10th, 2021
RBLX +33% After Beating Estimates, Citing Strong Engagement and Accelerating Monetization Curves in New Markets
“I’d say right now, we’re in the part of growth, internationally, where it’s very much driven by user growth. And over time, going back many years in our core markets, we’ve seen users — they retain on the platform, they spend a cumulative amount of time. Some percentage of them convert and become payers. Once they become payers and are retained as payers, they tend to increase their spending levels. I think that’s happening faster now in international markets for a whole variety of reasons primarily because you’ve just got a smarter creator base with better content. And so people are becoming payers faster and starting to increase their monetization faster.”
- David Baszucki, Founder, President, CEO & Chairman of the Board, Roblox Corporation | Q3 2021 Earnings Call, Nov 9th, 2021
“Yes. Hey, David. First week of November looks really good. It was basically a recovery back to where we had been. So we didn’t see — we were fortunate that we didn’t see any lasting impact on users. So we’re obviously happy to see that. As it relates to seasonality, Q4 is generally our biggest quarter. and it’s back-end loaded because of the holidays, so no great surprise. October and November, generally pretty similar. So that’s just sort of going back many, many years and looking at the to 2 months, we see a bunch of pickup, as you would expect, around Thanksgiving when people are home a little bit more. So yes, generally, I would say we had a good solid 27 days of October and good trends. And when we came back up, it looked like we — users came back with us in lockstep.”
- Michael Guthrie, CFO, Roblox Corporation | Q3 2021 Earnings Call, Nov 9th, 2021
“We were quite gratified to see the support of the Roblox community as we worked through it. And we’re also quite pleased to see when we came back live essentially no loss of users and continuation of our user trends.”
- David Baszucki, Founder, President, CEO & Chairman of the Board, Roblox Corporation | Q3 2021 Earnings Call, Nov 9th, 2021
BYND -19% As Numerous Factors Hurt Q3 Demand
“Unlike 2020, when Foodservice challenges led to a marked increase in retail activity, as Foodservice demand reduced, we did not see a corresponding increase in activity in retail, the the brand or category level during the third quarter. We believe the following broader behaviors and trends may be at play. This expectation is not intended to be exhaustive, and with time, we expect we will gain a fuller understanding of the drivers behind third quarter demand levels. One, consumers reported fewer and less frequent trips to the store; two, consumers reported being less open to trialing new products; three, consumers reported less interest in healthy options; four, the cancellation or reduced scope of our sampling programs as a Delta variant spread, limited new consumer exposure to our brand and category; five, to a much lesser extent than Foodservice, though still relevant, labor issues created complexity and possibly impacted demand retailers due to large shelf resets and less frequent restocking; six, with increased competition over the past 2 years, we’re seeing, as expected, some impact on our market share. However, in looking at the Q2 to Q3 SPINS market share data on a product mix neutral basis, it does not reveal competition to be a significant contributor to the aforementioned deceleration.”
- Ethan Brown, Founder, President, CEO & Director, Beyond Meat, Inc. | Q3 2021 Earnings Call, Nov 10th, 2021
“Accordingly, we were disproportionately impacted throughout the quarter as the Delta variant dampened consumer activity within the core of our Foodservice customer base. Further, within Foodservice, we believe the downward pressure exerted by the Delta variant was further exacerbated by labor shortage that drove reduced operating hours and menu rationalization. For our business, the extent that moving from test to fuller launches with our strategic QSR partners is an important contributor to our revenue build, the combined contribution of COVID’s long tail and related labor shortages has had a particularly disruptive impact that we expect transitory impact on our growth trajectory.”
- Ethan Brown, Founder, President, CEO & Director, Beyond Meat, Inc. | Q3 2021 Earnings Call, Nov 10th, 2021
“We began looking eagerly to the resumption of activities with our strategic quick-serve restaurant partners both in the U.S. and abroad, a key building block in our originally anticipated growth plan for 2021. Yet as a summer we’re on and the Delta variant too cold, we did not see a sustained recovery. And as you will recall, in Foodservice, COVID-19 disruptions in consumer behavior are particularly challenging for the segment of customers that we serve. Though our largest active chain in the U.S. that does offer drive-thru, we saw a meaningful uptick in velocity in the quarter. The majority of our customers today rely on in-store and in-venue consumption for sales.”
- Ethan Brown, Founder, President, CEO & Director, Beyond Meat, Inc. | Q3 2021 Earnings Call, Nov 10th, 2021
Note: All excerpts, highlights, and insights in this email were generated entirely using the Aiera platform.
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