Aiera Investor Event Recap — Week of October 18, 2021
Airlines continue to see a bumpy recovery, and supply chain challenges continue to persist across industries. Read more below.
Airlines Continue to See a Bumpy Recovery, Yet Easing Travel Restrictions Point to Further Improvement
“So our third quarter started out very strong. Our domestic business revenue, which has climbed from 27% of our 2019 levels in March to 52% in June, jumped even more in July. It actually jumped to 64%, as companies began to return to work and their employees began to return to the skies. And as a result, we at American produced a profit in the month of July. But in the spur of Delta variant led to a rebound in pandemic fears, of course. Companies deferred return to work plans. And that domestic revenue — the domestic business revenues go back to 57% of 2019 in August and 47% in September. Now I know some people find that trend discouraging, but we actually think it’s encouraging. The spike in business revenue in the month of July shows that business travel does want to return. There is enormous pent-up demand. And once this pandemic is behind us, it should resume its prior rapid trajectory to recovery.”
- William Douglas Parker, Chairman and CEO, American Airlines | Q3 2021 Earnings Call, October 21, 2021
“We had terrific momentum at the beginning of the third quarter, especially leisure demand with traffic actually above 2019 levels. We were on a good trend on the corporate side as well. It was just off of a lower bottom. But resurging COVID cases cost the quarter about $300 million, and that aside, the quarter would have been solidly profitable. As cases have come down and subsided, booking trends have recovered nicely on both the leisure and the business front, and booking trends for the holidays are in line with 2019. As you know from the release, the key headwind for the fourth quarter, aside from just inefficiencies as we continue to ramp up, is a significant increase in jet fuel prices.”
- Robert E. Jordan, EVP, Southwest Airlines | Q3 2021 Earnings Call, October 21, 2021
Intel Falls Despite Earnings Beat, Lowers Gross Margin Guidance as Capital Investment Ramps Up
“We see revenue in 2022 of at least $74 billion despite ongoing supply constraints. As supply normalizes and our investments add capacity and drive leadership products into the marketplace, we expect to see our revenue growth accelerate to a 10% to 12% CAGR over the next 4 to 5 years. For gross margin, with the impact of our investment in capacity and the acceleration of our process technology, we expect gross margins between 51% and 53% over the next 2 to 3 years before moving upward.”
- George Davis, EVP and CFO, Intel | Q3 2021 Earnings Call, October 21, 2021
Snap Plunges — Cites Apple Privacy Updates and Supply Chain Struggles
“While we are excited about the continuing growth of our business and improvement in our cost structure, we missed the lower end of our guidance by $3 million due to a few key factors, including changes to advertising, tracking on iOS and macroeconomic factors that have impacted our advertising partners. Our advertising business was disrupted by changes to iOS ad tracking that were broadly rolled out by Apple in June and July. While we anticipated some degree of business disruption, the new Apple provided measurement solution did not scale as we had expected, making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS. We have remained very focused on driving ROI for our advertising partners, and we continue to see strong, consistent performance on our ad platform based on first-party data and conversion lift studies, and are working on building flexible first-party tooling and measurement solutions to serve the diverse needs of our advertising partners. This impact was compounded by the ongoing macroeconomic effects of the global pandemic with our advertising partners facing a variety of supply chain interruptions and labor shortages. This, in turn, reduces their short-term appetite to generate additional customer demand through advertising at a time when their businesses are already supply constrained. The ongoing magnitude and duration of these global supply and labor disruptions are inherently unpredictable. And in the meantime, we are focused on supporting our partners in this uncertain environment. While it is difficult to predict the trajectory of these challenges, the growth of our audience, the adoption of our new products and platforms by our community and the underlying efficacy of our advertising products for performance advertisers gives us confidence in the future of our business and our ability to navigate this environment as we continue to invest in our long-term vision.”
- Evan Spiegel, Co-Founder, CEO & Director, Snap Inc. | Q3 2021 Earnings Call, October 21, 2021
And now, a look at the week ahead…
Monday, October 25th
Facebook (FB) — 5:00pm EDT — Link to Earnings Call
Q2 2021 Financial Recap
- Total Revenue of $29.1bn beat by 4.5%
- GAAP EPS of $3.61 beat by $0.52 (17%)
Intra-quarter Corporate Activity:
- Facebook Is Planning to Rebrand the Company with a New Name
- Coinbase to Power Crypto Custody for Facebook’s Novi
- VTEX Launches New Global Integration with Facebook to Ensure Better Conversion Rates in Ecommerce
Price Performance
- Q2 Earnings Call Price Reaction: -3.8%
- Intra-quarter Performance (since 7/29/2021): -4.9% vs. XLC -1.0%
Notable Topics from Q2 Call
- Advertising
- Reels
- News Feed
- iOS
Key Quotes from Q2 Call
“Looking ahead here, the next product release will be the launch of our first smart glasses from Ray-Ban in partnership with EssilorLuxottica. The glasses have their iconic form factor, and they let you do some pretty neat things. So I’m excited to get those into people’s hands and to continue to make progress on the journey towards full augmented reality glasses in the future.”
- Mark Elliot Zuckerberg, Founder, Chairman & CEO, Facebook, Inc.
“Now the areas that I’ve discussed today: creators, commerce and the next computing platform, they’re each important priorities for us, and they each can unlock a lot of value on their own. But together, these efforts are also part of a much larger goal: to help build the metaverse.”
- Mark Elliot Zuckerberg, Founder, Chairman & CEO, Facebook, Inc.
“So what is the metaverse? It’s a virtual environment. We can be present with people in digital spaces. And you can kind of think about this as an embodied Internet that you’re inside of rather than just looking at. And we believe that this is going to be the successor to the mobile Internet. You’re going to be able to access the metaverse from all different devices and different levels of fidelity from apps on phones and PCs to immersive virtual and augmented reality devices. Within the metaverse, you’re going to be able to hang out, play games with friends, work, create and more. You’re basically going to be able to do everything that you can on the Internet today as well as some things that don’t make sense on the Internet today, like dancing. The defining quality of the metaverse is presence, which is this feeling that you’re really there with another person or in another place. Creation, avatars and digital objects are going to be central to how we express ourselves, and this is going to lead to entirely new experiences and economic opportunities.”
- Mark Elliot Zuckerberg, Founder, Chairman & CEO, Facebook, Inc.
Tuesday, October 26th
Advanced Micro Devices (AMD) — 5:00pm EDT — Link to Earnings Call
Q2 2021 Financial Recap
- Total Revenue of $3.85bn beat by 7%
- GAAP EPS of $0.58 beat by $0.10 (22%)
Price Performance
- Q2 Earnings Call Price Reaction: +1.2%
- Intra-quarter Performance (since 7/28/2021): +13.1% vs. SOX +1.2%
Intra-Quarter Corporate Activity
- AMD Reaffirms FY21 Guidance
- Microsoft and AMD Bring Powerful, Reliable Computing to Users with Windows 11 Powered by AMD Ryzen Processors and AMD Radeon Graphics
- Advanced Micro Devices Expands Collaboration With Google Cloud to Deliver Faster Application Performance and Elevate Business Productivity with AMD EPYC Processors
Intra-quarter Events:
Notable Topics from Q2 Call
- Graphics
- Server
- Supply chain
- GPU
- Semi-Custom
- Xilinx
- Radeon
Key Quotes from Q2 Call
We expect data center GPU revenue to grow in the second half of the year as we ramp production of our next-generation AMD Instinct accelerators and open-source ROCm software to support multiple leading-edge supercomputer wins including Frontier, LUMI and Pawsey.
- Lisa Su, President, CEO & Non-Independent Director, Advanced Micro Devices, Inc.
We are seeing very strong demand across our full server portfolio with second-gen EPYC processor revenue growing sequentially and third-gen EPYC processor sales more than doubling quarter-over-quarter. Third-gen EPYC processor revenue is ramping faster than the prior generation as customers and multiple third-party reviewers recognize the absolute performance and price performance leadership of our latest server processors. Cloud demand further accelerated in the quarter, led by growing internal workload adoption and nearly 50 new AMD-powered instances by AWS, Microsoft Azure, Google, Tencent and Alibaba.
- Lisa Su, President, CEO & Non-Independent Director, Advanced Micro Devices, Inc.
We expect data center revenue to continue growing faster than overall revenue based on the strength of our EPYC processors and Instinct accelerators and the significantly expanded engagements we have built with the leading OEMs and largest MDCs.
- Lisa Su, President, CEO & Non-Independent Director, Advanced Micro Devices, Inc.
We’ve been working on supply for the past couple of quarters. I think I’m actually quite pleased with the progress that we’ve made in terms of increasing our supply. And what I’ve said previously is, certainly, we do see some level of constraints, but we are making progress each quarter. And we made progress in the second quarter that enabled us to exceed the original guidance. And as we go into the second half of the year, we’re continuing to bring on extra supply each quarter, which is leading to the full year guidance raise that we have. So I think overall, we continue to make progress.
- Lisa Su, President, CEO & Non-Independent Director, Advanced Micro Devices, Inc.
Thursday, October 28th
Starbucks (SBUX) — 5:00pm EDT — Link to Earnings Call
FQ3 2021 Financial Recap
- Total Revenue of $7.50bn beat by 3%
- GAAP EPS of $0.97 beat by $0.20 (26%)
Price Performance
- FQ3 Earnings Call Price Reaction: -3.2%
- Intra-quarter Performance (since 7/28/2021): -7.0% vs. XLY +3.5%
Intra-Quarter Corporate Activity
Notable Topics from FQ3 Call
- China
- Digital / Rewards Program
- Americas
- COVID
- Average Ticket Size
- Inflation
- Channel Development
Key Quotes from FQ3 Call
“Now with customer mobility increasing, we are at the beginning of what we describe as the great human reconnection. The reopening of markets is translating to incredible increases in demand for Starbucks as people are again on the go, reconnecting and socializing with one another. Human connection is the very foundation of the Starbucks Experience. The differentiated experience we create for our customers, strengthened through the actions we’ve accelerated over the past year, enables us to meet our customers wherever they need us to be. That experience is core to who we are at Starbucks, and it drove significant momentum through Q3.”
- Kevin R. Johnson, CEO, President & Director, Starbucks Corporation
“Our performance globally reflects the strength of our diverse portfolio and the benefits of scale as we once again exceeded our expectations for the quarter, despite inflationary pressures and ongoing pandemic-related restrictions in certain global markets. Our focus, combined with our unwavering commitment to innovating and elevating the Starbucks Experience as our key differentiator, has proven successful time and time again. All of this gives us confidence to raise guidance for the balance of the year and further positions the company for solid long-term growth.”
- Kevin R. Johnson, CEO, President & Director, Starbucks Corporation
“Not only have we posted incredible results as we emerge from the pandemic, our internal research also confirms Starbucks has gained meaningful market share in the U.S. And the momentum we have created is sustainable.”
- Kevin R. Johnson, CEO, President & Director, Starbucks Corporation
“In addition to beverage platform innovation, extending the in-store experience with digital customer relationships continues to extend our reach, deepen engagement and enhance the customer experience, further differentiating Starbucks and offering customers ever-increasing choice as to how they engage with the brand. We again added over 1 million new active Starbucks Rewards members in the quarter. With over 24 million active members now representing 51% of all spend in our U.S. stores and up 8 percentage points over pre-pandemic levels, our ability to engage has never been higher. More and more of these customers are embracing experiences that effortlessly fit their lifestyle. With drive-through representing 47% of transactions and mobile ordering for in-store pickup, delivery or curbside at 26% of transactions, we are leveraging all channels to better serve our customers.”
- Kevin R. Johnson, CEO, President & Director, Starbucks Corporation
“I’d start first with the inflationary pressures that we saw. So in Q3, we had outstanding performance. But within that, we covered headwinds in the Americas business of about 70 basis points. And we expect headwinds related to rising costs and inflationary pressures to continue into Q4, which is reflected in the guidance that we’ve given. Now some of the ways that we not only offset headwinds such as inflation, but also the investments we’re making are price. And we’ve always been very thoughtful and measured in the pricing actions we take so that we don’t inhibit growth. And I would say our pricing strategy hasn’t fundamentally changed. We’re very surgical in nature. We look on a store-by-store basis, and we leverage analytics and insights. And importantly, what our analytics and insights show us is that we do have pricing power. And we see that in the premiumization of our beverages, the gravitation towards our promotional offerings. And this is our opportunity to be able to leverage price in those ways, which is one of the reasons why we talk about our ticket continuing to stay elevated.”
- Rachel Ruggeri, Executive VP & CFO, Starbucks Corporation
Amazon (AMZN) — 5:30pm EDT — Link to Earnings Call
Q2 2021 Financial Recap
- Total Revenue of $113.1bn missed by 2%
- GAAP EPS of $15.12 beat by $2.96 (24%)
Price Performance
- Q2 Earnings Call Price Reaction: -6.9%
- Intra-quarter Performance (since 7/30/2021): -5.1% vs. XLY + 3.5%
Intra-Quarter Corporate Activity
- NXP Semiconductors Partners with Amazon.com Unit as Its Preferred Cloud Provider to Power Electronic Design Automation in Cloud
- BCE Unit Accelerates Customer Cloud Transformation with VMware Cloud on Amazon Web Services
- Warner Music Group And Twitch Announce First-Of-Its-Kind Partnership
- General Motors And Amazon Team Up To Offer OnStar Emergency Service At Home
- SAP and Amazon Business Partner to Expand Buyer Choice
- Tripadvisor Partners with Amazon.com Unit for the Launch of Integrated Travel Content
- Amazon Partners With Affirm To Deliver Pay-Over-Time Option at Checkout
Notable Topics from Q2 Call
- AWS
- COVID
- FBA
- Advertising
- Online Stores
- Fulfillment Centers
Key Quotes from Q2 Call
“Q2 of this year was a transition period for many of our customers. As the quarter progressed, people were at home less as restrictions and lockdowns eased in some of our largest geographies, including the U.S. and much of Europe. As a result, while Prime members continue to spend more with us, growth in Prime member spend moderated compared to spending seen during the peak of the pandemic.”
- Brian T. Olsavsky, Senior VP & CFO, Amazon.com, Inc.
“In Q2 of this year, we began to comp this high sales period from last year, and the year-over-year revenue growth rate has narrowed. It has also narrowed as vaccines become more readily available in many countries and people are getting out of their homes. Since May 15, again, excluding Prime Day, our year-over-year growth rate has dropped into the mid-teens. Our Q3 revenue guidance range of 10% to 16% growth reflects an expected continuation of this trend.”
- Brian T. Olsavsky, Senior VP & CFO, Amazon.com, Inc.
“While I’m not giving forward guidance beyond Q3 of this year, we do expect this pattern of difficult year-on-year revenue comps to continue for the next few quarters.”
- Brian T. Olsavsky, Senior VP & CFO, Amazon.com, Inc.
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.
