Q1 2021 Earnings Season Recap — Week of May 24, 2021
Recapping another week of notable investor Events — This week, retailers addressed labor shortages & supply chain constraints, SaaS companies continue to beat expectations, major topics surfaced at the JPMorgan TMT conference, and much more.
Labor Shortages and Supply Chain Constraints Creating Challenges for Consumer Discretionary Names
[There] continues to be significant congestion in domestic freight networks, all modes of transportation. This congestion is affecting both the speed that we’re able to move merchandise along with the cost. And the third area where we’re impacted is in supply chain, particularly supply chain wages. In the areas of our country where our distribution facilities are located we’ve seen some significant labor shortages. We’ve talked about this previously. Starting late last summer, we began to aggressively raise wages and wage incentives to track and to retain the workers that we need. It’s provided the stability that we need, but these pressures haven’t totally gone away.
- John Crimmins, CFO, Burlington Stores | 1Q21 Earnings Call, May 27th, 2021
And additionally, we expect pressure on wages due to the current shortage of workers available for our stores and distribution centers. And like most retailers, we are currently faced with higher freight costs, both international and domestic, worker shortages and uncertainty related to inflation.
- Kevin S. Wampler, CFO, Michael A. Witynski, President, CEO, Dollar Tree | 1Q21 Earnings Call, May 27th, 2021
The distribution supply chain has been and continues to be very, very competitive and very challenging to hire into. We have made some changes most recently to invest into the overall distribution centers, being all 3 of them at this point and offering sign-up bonuses as well to the associates, which appears to be catching some traction, and it appears to be working.
- John Swygert — CEO, Ollie’s Bargain Outlet Holdings | 1Q21 Earnings Call, May 27th, 2021
So as we’re looking out to the rest — the second half of the year, there’s things around wages, store labor, some upward pressure in fuel and transportation costs. And then we’re going to do some more advertising in the back half of the year than what we had initially planned to make sure we take advantage of the environment and make sure we really maximize market share gain opportunities in this environment.
- Scott Settersten — CFO, Ulta Beauty | 1Q21 Earnings Call, May 27th, 2021
SG&A a percentage of sales was 22%, an increase of 152 basis points. This increase was driven by expenses that were greater as a percentage of net sales, the most significant of which were store occupancy costs, disaster expenses related to winter storm Uri, retail labor and depreciation and amortization.
- John Garratt — CFO, Dollar General | 1Q21 Earnings Call, May 27th, 2021
I can’t think of the name of the county, [but] there are 300,000 people 10 miles to the north, and there are 150,000 miles to the south. There’s plenty of labor. Now we’re having trouble right now with labor at that plant, that’s because of the federal unemployment benefits. But we know the labor is there, plenty of labor. And so I’m not going anywhere where there’s not a lot of labor. We’re always going where there’s labor.
- Joe Sanderson, CEO, Sanderson Farms | 2Q21 Earnings Call, May 27th, 2021
Beef & Poultry Price Increases Offer Further Evidence of Inflation
Some inflationary sound bites, if you will. Price increases on items shipped across the ocean with suppliers paying up to double for containers and shipping. Price increases of pulp, paper goods, some things up 4% to 8%, plastic and resin increases from trash bags to plastic cups, plates, et cetera, and plastic wraps. Metals, aluminum foil, mid-single-digit cost increases also cans for sodas and other beverages. Higher import prices on cheeses, the combination of the product itself as well as some FX strength of some foreign currencies as well as freight, anywhere from 3% to 10% increases on certain apparel items, not all. In terms of fresh, higher protein prices, for example, meat overall year-over-year is up 7%. Beef in the last month has been up as much as 20%. Some of that is due to feed labor and transportation costs as well as restocking some of the additional increased demand coming now from institutional needs as restaurants start to reopen. And the list could go on and on. Now all this being said, I was asked back on our March 4 — second quarter call. At what level we felt inflation was running overall at that time with our goods. I stated that our best guess was somewhere in the 1% to 1.5% range. As of today, we guess that overall price inflation at the selling level, and excluding our gasoline sales, would be estimated to be probably more in the 2.5% to 3.5% range.
- Richard A. Galanti, Executive VP, CFO & Director, Costco | 3Q21 Earnings Call, May 27th, 2021
Yes. I don’t think it’s short-lived, but what I do think is there is a limit to everything at some point. A $3.25 wings, somebody’s going to figure out some way to substitute for that. But $2 breast, I don’t think is a big — I think people can buy that and make money. Tenders, I think people can buy that and make money on it. $2 boneless dark meat, I think people can buy that and make money on it. Particularly in light of the price of pork and beef. Those prices are very — are relatively higher right now compared to where they were a year ago. So chicken prices are not that high compared to our competing proteins.
- Joe Sanderson, CEO, Sanderson Farms | 2Q21 Earnings Call, May 27th, 2021
I’ll take that. We have no plans to do that [increase prices]. We’ve tended to be pretty conservative on price, because to your point we took just over 2% inflation increase in the middle of December last year, which I think is in line with what we’ve done over the past few years. The only addition to that was the 5% increase on the third party delivery providers I mentioned earlier. So look, there’s obviously a moment around labor, a moment around beef and chicken and all those types of things that we all see. We don’t feel it’s the right time to lead with price, we have the optionality to do that given our conservatism to date. But we are still a young brand, and we need to enter a lot of new markets. We want to be seen as entering those markets with maximum value… and leverage the price when it’s appropriate.
- Randy Garutti, CEO, Shake Shack | Cowen Digital Dining Summit: Revolution In Restaurant Innovation, May 27th, 2021
JPMorgan TMT Conference Wraps Up
After over 200 presentations at the JPM Conference this week, Aiera’s proprietary NLP extracted these top topics from all the events. Not surprisingly, COVID was a top topic with Azure, AT&T, Netflix, and Regulation also frequently discussed.
SaaS Earnings Off to a Strong Start — CRM, BOX, ADSK Report Top Line Beat and Raise
We’re grateful for the phenomenal quarter. It far exceeded our expectations. And I’ve just never seen a quarter like this…It was just incredible. It was beyond our expectation. It’s the — not just the best first quarter we’ve ever had. I think it’s the best quarter we’ve ever had. We delivered $5.96 billion in revenue. It was up 23% year-over-year. Just the customer velocity, the pipelines, the growth of the company, the ability for the teams to interact and have a huge impact, it was just awesome…Now for the fiscal 2022, I’m thrilled we are raising our revenue, our guide by $250 million to $26 billion. This is really one of the most — this is 1 of the largest raises we’ve really ever had. It represents 22% projected growth year-over-year. And we’re not just raising revenue. And again, thanks to Amy. We’re raising our operating margin to 18%. So that is incredible.
- Marc Benioff, Co-Founder, Chairman, and CEO, Salesforce.com | 1Q22 Earnings Call, May 27th, 2021
In Q1, we are pleased to have exceeded our guidance across all key metrics. Our acceleration in revenue growth, billings growth, RPO growth and operating profit clearly demonstrates the strong trajectory of our business. As a result, we are raising our full year revenue guidance. As our customers are increasingly adopting products with more advanced capabilities, 60% of our revenue is now attributable to customers who have purchased at least 1 additional product, up from 54% a year ago. In Q1, we closed 59 deals worth more than $100,000, up 48% year-over-year. Importantly, 49% of these 6-figure deals included one of our multi product suite offerings, a new record for us and up significantly from 28% a year ago.
- Dylan Smith, CFO, Box | 1Q22 Earnings Call, May 27th, 2021
The secular trends we have been investing in for years have accelerated during the pandemic: the digitization of AEC, the convergence of design and make and our expansion into adjacent verticals through organic investment and acquisitions are growing our total addressable market. The evolution of our business model, the value generated by the growing connectivity of our platform for new and legacy customers and the hardening of our systems to noncompliant users enables us to attract, retain more of that potential opportunity, growing our ecosystem and the usage and value we generate from it.
- Andrew Anagnost, President, CEO & Director, Autodesk | 1Q22 Earnings Call, May 27th, 2021
Record Setting Quarter for NVDA Across Verticals (Gaming, Data Center, Transportation, Crypto)
Q1 was exceptionally exceptionally strong with revenue of $5.66 million and year-on-year growth accelerating to 84%. We set a record in total revenue in Gaming, Data Center and Professional Visualization, driven by our best-ever product lineup and structural tailwinds across our businesses…We believe gaming also benefited from crypto mining demand. Although it’s hard to determine to what extent we’ve taken actions to optimize G4 GPUs for gamers while separately addressing mining demand with cryptocurrency mining processors or CMPs. Nvidia is helping to revolutionize the transportation industry. Our full stack software divided AV and AI cockpit platform spans silicon, systems, software and AI data center infrastructure, enabling over-the-air upgrades to enhance safety and driving throughout the vehicle’s lifetime.
- Colette Kress, CFO, Nvidia | 1Q21 Earnings Call, May 26, 2021
HP Softens Back-Half Expectations with Supply Chain Warning
It is important to note that these results are against the backdrop of industry-wide component shortages and supply chain challenges. Currently, there is not enough supply to keep up with the robust demand and the resurgence of COVID in Southeast Asia is creating additional pressure on our supply chain. We expect supply constraints to continue at least through the end of 2021.
- Enrique Lores, CEO, HP Inc | 2Q21 Earnings Call, May 27th, 2021
Okta Raises Guidance As Secular Tailwinds Strengthen Growth
The world is still in the early stages of modernizing its identity infrastructure. The secular trends I mentioned earlier that have been driving our business will continue to drive our business for years to come. With that as a backdrop, we’re establishing a new long-term financial target, which is a significant step-up from our prior FY ’24 framework. Given our market-leading position, unmatched technology portfolio and the massive market opportunity, we’re confident that we can grow our revenue base to achieve $4 billion in FY ’26. With growth of at least 35% each year, along the way, we will continue to invest in driving product innovation and our go-to-market initiatives while targeting a free cash flow margin of 20% in FY ’26. Of course, if we were to grow faster than these contributions to Okta. Over the 5-plus years, he was the Chair of our Audit Committee and for his leadership as CFO. And over the past several months, Mike has made a significant impact, especially with the acquisition of Auth0 and operational improvements that he’s already implemented. While he’ll be stepping down as CFO next week, we are grateful that he is staying on in an advisory capacity to assist with the transition. Mike will always be a friend and considered a member of the Okta family, and we wish him all the best in his future endeavors.
- Todd McKinnon, CEO, Okta | 1Q21 Earnings Call, May 26, 2021
Lordstown Motors Addresses Allegations of Misleading Investors
Parts of the short seller report our board of Directors established the special Committee of independent directors to investigate the allegations made by the short seller. The SEC has also commenced an investigation and has sought information from us and we are cooperating with that investigation. The special committee’s review is ongoing and we expect that the special committee will be, and are, positioned to report on the results of their review of the allegations and the short seller report prior to the end of the second quarter. Pending the release of those results neither of the special Committee nor of the company is and are positioned to comment further on the short seller report.
- Steve Burns, CEO, Lordstown Motors | 1Q21 Earnings Call, May 24, 2021
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