Nothing Changes Sentiment Like Price

Earnings season is in full swing, which means a lot of reports to look through each day. This morning investors received some “sweet” news from three companies who delivered their results. 😊

First up was Roblox, which has struggled to deal with its post-pandemic growth slowdown over the last year. 😬

The company’s fourth-quarter loss per share of $0.48 beat the $0.52 expected. And revenue (bookings) of $899.4 million was up 17% YoY and exceeded the $881.4 million consensus estimate.

Its engagement numbers also impressed investors. The company reported 58.8 million average daily active users (+19% YoY) and said users spent more than 12.8 billion hours engaged in Roblox during the quarter (+18% YoY). However, its average bookings (revenue) per daily active user fell 2% YoY to $15.29. 🕹️

$RBLX shares were up roughly 26% on the positive news.

Next is Krispy Kreme, which inspired the title of this post. 🍩

The company reported adjusted earnings per share of $0.11, narrowly beating the $0.10 estimate. Its net loss per share was $0.02 but was driven by noncash charges associated with closing unprofitable restaurants.

Revenues were up nearly 10% YoY to $404.6 million, topping the $395 consensus estimate. It attributed part of its “scary good” results to the success of its Halloween and winter holiday specialty doughnuts. 🎃

Its e-commerce business also registered its best quarter since the pandemic’s start, growing 23% YoY. Helping drive that was expanding the company’s Insomnia Cookies chain delivery range to 10 miles. Executives believe that the brand “will be the next Krispy Kreme” and plan to expand into the U.K. and Canada this year.

Meanwhile, the Krispy Kreme brand continues to make its global push, expanding into five to seven new countries this year. That’ll bring it to thirty-five countries worldwide. 🗺️

Executives’ upbeat outlook included adjusted earnings per share of $0.31 to $0.34 and revenues of $1.65 billion to $1.68 billion in 2023. This forecast was mainly in line with consensus estimates.

$DNUT shares were up roughly 7% on the day but have remained in the middle of a wide trading range since coming public. 🤷

And last but not least is Analog Devices, whose shares hit a new all-time high after it reported results. 🤩

The chipmaker reported stronger-than-expected fiscal first-quarter earnings. Its adjusted earnings per share of $2.75 and $3.25 billion in revenue beat the consensus estimate of $2.61 per share and $3.15 billion, respectively.

Executives cited record automotive and industrial chip sales as the reason it handily beat expectations. In addition, its CEO, Vincent Roche, pointed to several secular trends, including AI, as tailwinds for the company and industry. He says the company is “…the bridge between the physical and digital worlds, is well-positioned to deliver breakthrough innovations that positively impact society and unlock long-term value for all stakeholders.” 🤖

Semiconductor stocks had a rough run since peaking in late 2021 but have recovered strongly since October. $ADI shares flexed their strength today, rising 7% to a new all-time high on the news.

It was a busy day on the economics front. So let’s review what you missed. 🕵️

Firstly, across the pond, the U.K.’s inflation eased to 10.1%. Prices fell for the third straight month from their October peak of 11.1% but remained well above its central bank’s target. Food prices continued to rise sharply, furthering an already difficult cost-of-living crisis. 🥵

Back in the U.S., the Commerce Department reported that retail sales rose 3% in January, higher than the 1.8% expected. The seasonally adjusted spending increase was the largest since March 2021, rebounding from two straight months of declines. Driving the increase was dining out, autos and parts, and furniture. A strong labor market and resilient consumer spending remain complex challenges for the Fed to tackle in its battle against inflation. 🛍️

U.S. industrial output was flat in January, falling short of the 0.4% gain expected. Additionally, output in December was revised down from -0.7% to 1.0%. Meanwhile, capacity utilization fell to 78.3%, its lowest level since September 2021. Today’s data confirms what we’ve seen elsewhere, that manufacturing activity is in contraction territory. 🏭

The National Association of Home Builders/Wells Fargo Housing Market Index saw its largest MoM increase in ten years. February’s number jumped to 42, which remains below the 50 “threshold” of pessimism/optimism. For context, it hit a low of 31 in December but was at a high of 81 last February. Recent declines in interest rates have buoyed housing demand and confidence, but the housing market remains soft(er)…just as the Fed wants it. 🏘️

Lastly, as discussed yesterday, Biden officially announced his new economic team. As expected, it’s being led by Federal Reserve Vice Chair Lael Brainard, where the veteran will help guide the administration through key elements of its economic agenda. 🧭

A busy earnings day continued after the bell, so let’s recap the biggest movers.

First is Twilio, which followed its layoff announcement with better-than-expected results and a major share repurchase plan. Its fourth-quarter loss per share was $1.24 on $1.02 billion in revenue. The company’s CEO, Jeff Lawson, said the company would purchase $500 million in stock over the next six months and that he plans to buy $10 million in stock during his next trading window. The company’s first-quarter guidance also exceeded expectations, causing $TWLO shares to rise more than 20% after hours. 😮

Roku reported fourth-quarter earnings that topped its previously lowered expectations. The streaming device and platform company saw revenues of $867.1 million (flat YoY) and a net loss per share of $1.70. Analysts had expected $801.69 million in revenue and a $1.73 loss per share. Executives focused on the positives, noting that Roku Channel reached U.S. households with an estimated 100 million people (+25% YoY). Operating expenses also rose 71% in Q4, but the company acknowledged that it’s adjusting its expense profile to prepare for the more challenging macro environment. $ROKU shares rose another 10% in extended hours, following a 12% regular-session gain. 📺

Cisco’s fiscal second-quarter results beat top and bottom-line estimates. Its adjusted earnings per share were $0.88, and revenues were $13.59 billion (+7% YoY). Executives noted that demand remains stable, but some sales cycles are taking longer than usual. Additionally, its public sector business outperformed its historical benchmarks, and product/service improvements in its service provider category helped boost results. The company raised its full-year fiscal 2023 guidance and now expects 9% to 10.5% revenue growth and $3.73 to $3.78 in earnings per share. $CSCO shares rose as much as 8% after-hours before settling up 3.5%. 🖥️

Zillow reported better-than-expected results. Its adjusted earnings per share of $0.21 and revenues of $435 million topped the expected $0.07 and $415 million. Its largest business segment, Internet, Media, and Technology, saw revenue decline 14% YoY to $417 million. Traffic to its mobile apps and websites was flat QoQ at 198 million average monthly unique users. Zillow’s rentals revenue rose 13% YoY to $68 million as it continues to see strong traffic and growth in multifamily properties. $Z shares added to their regular-session gains, rising 3% after hours. 🏘️

Shopify bucked the trend of positive results, surprising investors with a weaker-than-expected 2023 revenue outlook. Fourth-quarter earnings of $0.07 per share and revenues of $1.7 billion were mixed versus estimates. Analysts had expected a $0.01 per share loss and $1.65 billion in revenue. It now expects full-year 2023 revenue growth in the “high teens,” while analysts expected over 20%. $SHOP shares are down roughly 10% after hours. 🛒