Paramount Global kicked off today’s pre-market movers, posting earnings that significantly missed expectations. 🎬
Its adjusted earnings per share of $0.08 and its revenue of $8.13 billion missed the $0.08 and $8.17 billion expected.
The company pointed to several headwinds impacting results. Secular trends like a competitive market streaming market and cable cord-cutting remain persistent. Meanwhile, cyclical headwinds include the global slowdown in advertising activity and inflation pressures impacting consumers’ discretionary spending. Total ad revenue was down 5% YoY, and cord-cutting drove a 4% decline in its affiliate and subscription revenue. 🌬️
Regarding its streaming business, Paramount+ subscriber net additions of 9.9 million were in-line with estimates. It now has 56 million users, as Top Gun: Maverick, 1923, Criminal Minds: Evolution, NFL Sunday games, and other hit content drove engagement. Global Pluto monthly active users (MAUs) rose by 6.5 million to 79 million and beat the 77 million estimate. 📺
Despite its direct-to-consumer (streaming) business meeting engagement expectations, its 2022 loss of $1.82 billion missed its $1.8 billion guidance. However, ad revenue in this business segment rose 4% YoY, and the company looks to narrow its losses further by increasing the prices of its streaming service by one to two dollars, depending on the tier selected.
Executives expect the company to return to earnings growth in 2024. They also plan to merge the Paramount+ and Showtime streaming services into one as they further integrate their cable television and streaming offerings. This could reduce costs and consumer friction further. However, they did also disclose a potential $1.5 billion write-down from its Showtime integration. ✂️
On a related note, a new regulatory filing indicated Buffett’s Berkshire Hathaway boosted its stake in the company by $40 million in the fourth quarter. It now owns more than 93 million shares.
$PARA shares fell 9% on the news but recovered to close down 4%. 🔻
Datadog reported better-than-expected fourth-quarter earnings but issued soft guidance. Its adjusted earnings per share of $0.26 and revenue of $469 million beat the $0.19 and $450.2 million expected. Slowing growth among its cloud computing partners remains a headwind for the monitoring and analytics platform company. Its current-quarter and full-year revenue forecasts of $468 million and $2.08 million fell short of expectations. $DDOG shares fell 7% on the news. 🐶
Shake Shack reported an adjusted loss per share of $0.06, beating the $0.11 consensus estimate. Revenue of $238.5 million and its same-store sales increase of 5.1% were in line with estimates. Last October, the company raised menu prices by mid to high single digits to offset high food and paper inflation. The company told analysts it would protect its margins but does not expect further menu price increases anytime soon. It expects to open 40 U.S. locations and license 25 to 30 locations in 2023. $SHAK shares initially fell close to 7% but recovered to close -3.44%. 🍔
WeWork posted a wider-than-expected fourth-quarter loss and issued weaker-than-expected first-quarter revenue guidance. Its adjusted loss per share was $0.59 (vs. $0.43 expected), and revenue was $848 million (vs. $847 million expected). For the first quarter, it expects $830 to $855 million in revenue, well below the $880 analyst forecast. $WE shares initially dropped more than 10% but managed to close down 3%. 🏢
Nestle, the world’s largest food group, posted a rare earnings miss as rising costs pressured profits. The company says rising input prices drove its gross margin down by 2.60%, even after accounting for the price increases it made in 2022. It expects pricing pressures to continue this year, saying it needs to repair its gross margin while balancing the costs it pushes to consumers. As such, further price increases will be very targeted and only implemented where input cost inflation justifies the increase. The company’s $2.1 billion writedown of the peanut allergy therapy it invested in two years ago also impacted results. Additionally, it forecasted organic sales growth of 6% to 8% in 2023. $NSRGY shares were down 3% today. 🍫