August 21, 2023

Nvidia Lifts Tech Ahead Of Earnings

Nvidia shares led the tech resurgence ahead of its earnings report on Wednesday. Meanwhile, the last bit of earnings continues to roll in this week. Let’s see what else you missed. 👀

Today’s issue covers why Palo Alto Networks is soaring, Zoom’s better-than-expected results, and more from the day. 📰

Check out today’s heat map:

5 of 11 sectors closed green. Technology (+1.91%) led, and real estate (-0.88%) lagged. 💚

Fears about China’s economy continue to rise, with the country’s central bank reducing its 1-year rate by 10 bps but keeping its 5-year rate unchanged. Meanwhile, as energy prices moderated, Germany’s producer prices fell for the first time in over 2.5 years. 🔻

In the U.S., a tight labor market continues to yield results for unions, with American Airlines’ pilots receiving a new contract with a 21% immediate pay increase. 🧑‍✈️

Broadcom and VMware shares gained today after U.K. regulators cleared the $61 billion takeover deal, leaving China as the last major obstacle. 🤝

Shares of electric vehicle maker Nikola fell 23% after announcing plans to offer $325 million in senior convertible bonds in a registered direct offering. ⚡

Earthstone Energy shares jumped 17% on news that Permian Resources will buy it in an all-stock transaction valued at $4.5 billion. 🛢️

Napco Security Technologies plummeted 45% after discovering errors in its financials that will require it to restate its last three quarterly results. ⚠️

And Goldman Sachs extended its August slump on news that it’s considering selling part of its wealth management business as it reassesses its longer-term strategy. 💰

Other symbols active on the streams included: $AMC (-23.72%), $TTOO (-6.13%), $MULN (-3.44%), $NVOS (+33.61%), $S (+16.16%), $EBET (-10.27%), and $GNS (+4.24%). 🔥

Here are the closing prices:

S&P 500	4,400	+0.69%
Nasdaq	13,498	+1.56%
Russell 2000	1,856	-0.18%
Dow Jones	34,464	-0.11%

Earnings

Palo Alto Networks’ Earnings Jump

As tech stocks rebounded today, Palo Alto Networks was the Nasdaq 100’s best performer. 🤩

The security software vendor reported better-than-expected fourth-quarter results on Friday after the close. Adjusted earnings per share of $1.44 topped the $1.28 expected. However, revenues of $1.95 billion were a mere $0.01 shy of analyst estimates.

Here are some key metrics from the report:

Operating margin of 28.4% (+760 bps YoY)
Total billings of $3.16 billion (+18% YoY)
Remaining performance obligation of $10.6 billion (+30% YoY)
Adjusted free cash flow of $388 million (+46% YoY)

Strength in cybersecurity and an unexpected rebound in hardware helped fuel recent results. Looking ahead, executives forecast fiscal-year 2024 results of:

Total billings of $10.9 to $11 billion (+19-20% YoY)
Total revenue of $8.15 to $8.2 billion (+18-19% YoY)
Diluted non-GAAP EPS of $5.27 to $5.40 (+19-22% YoY)
Adjusted free cash flow margin of 37-38%

$PANW shares rallied 15% on the day, nearing all-time highs once again. 📈

Earnings

Zoom Looks To Restart Growth

Shares of video communications company Zoom were floating near all-time lows ahead of today’s earnings report. A lack of growth in a competitive market and investors favoring profit-focused companies has weighed on the stock. 😢

However, investors were pleasantly surprised today after it reported better-than-expected results.

Adjusted earnings per share of $1.34 on revenues of $1.14 billion topped the expected $1.05 and $1.12 billion. YoY revenue growth of 3.6% is up marginally from last quarter but still hanging out near its historical lows. 🔺

The company saw 1% YoY growth in enterprise customers (218,100). That resulted in Enterprise revenue growth of 10.2% YoY to $659.5 million. And the number of customers contributing more than $100,000 in trailing on-year revenue jumped 17.8%.

On the margin side, Zoom’s non-GAAP operating margin came in at 40.5%. Meanwhile, its second-quarter operating cash flow of $336 million rose 30.6% YoY as it focused on cutting costs. ✂️

Current quarter guidance was short of expectations, but executives raised their full-year forecast marginally. The slightly positive news for a change helped $ZM shares bounce about 10% after hours before settling back down to +3%.

As investors digest the new information, we’ll see how the stock trades in the days ahead. 👀

Bullets

Bullets From The Day:

🚀 Axiom Space raises $350 million as the space race continues. Saudi-owned Aljazira Capital and Korean healthcare investment firm Boryung led the company’s latest fundraising round. The U.S. company flies private and government astronauts on missions to the International Space Station using SpaceX launches. Longer-term, it’s developing technologies like a commercial space station and a lunar spacesuit, accumulating $2 billion in customer contracts so far. CNBC has more.

🚢 New ships will test wind power at sea. A Cargill chartered dry bulk ship is making its first trip since being fitted with special sales that study how harnessing wind power can cut emissions and energy usage in the shipping sector. The maritime industry accounts for roughly 3% of global CO2 emissions and has faced significant pressure from environmental groups and other stakeholders to “clean up” their operations. This is the first live test to see if these changes can be economical too. More from Reuters.

🏢 Meta unveils new ‘in-person time policy’ as workers avoid office. Mark Zuckerberg was once a champion of fully remote work but is doubling down on his company’s return to office policy during his “year of efficiency.” The company laid out an “in-person time policy” that will mandate employees to be back in the office three days a week or expect an impact on their performance review. This harsher policy is in response to the lack of employee compliance with a more lax policy outlined in June. Yahoo Finance has more.

🎶 YouTube is working on a plan to compensate artists for AI music. The platform’s copyright claim system is already one of the industry’s most robust. Still, it is getting even more complicated as it adjusts to a world of artificial intelligence (AI)-generated content. It’s launching a product called the YouTube Music AI Incubator to help inform its approach to AI by working with artists, songwriters, producers, and other stakeholders to ensure everyone’s rights and claims are handled appropriately. More from TechCrunch.

💾 Massive employee data leak at Tesla caused by insider. The company revealed that personally identifiable information on over 75,000 workers was leaked last May in an apparent breach by two former employees. This isn’t the first time Tesla employees have mishandled internal data. Several workers viewed and shared private videos recorded by customers’ Teslas in April. As always, the most challenging element of security to master is the human element. The Verge has more.