Earnings Season Is ON

Sebastien Callebaut -

PayPal, Mercado Libre and Twilio Are Reporting Their Results

Offline, value and banking stocks are having their moment in the sun as strong earnings and investor optimism about the re-opening are lifting stocks. However, richly valued tech stocks still fail to reach higher and remain pressured.

Winners

  • Alteryx: Revenue for the first quarter of 2021 was $ 118.8m, an increase of 9% year-on-year. Reached $ 512.7m in annual recurring revenue (ARR), an increase of 27% year-on-year. Gross margins increased to 91%, up from 88% a year earlier

Paypal: Total Payment Volume (TPV) of $ 285B, growing 50% and 46% on an FX-neutral basis (FXN). Revenue of $ 6.03B and growing by 31% year-on-year

“[…] idea around establishing a digital currency and blockchain business unit inside PayPal […] And how can we be a shaper of that, a leader within that and not a reactor to how that's happening. And those conversations have gone well beyond my expectations” Paypal Q1 2021 Earnings Call

  • XP: Assets Under Custody grew 96% year-on-year and reached R$ 715B (USD$ 132B). Gross revenue grew 50% year-on-year and Adj. EBITDA grew 75% year-on-year. Adjusted Net Income grew 104% year-on-year to R$ 846m (USD$ 156m)
  • Bandwidth: First quarter total revenue of $ 113.5m, up 66% year-on-year. CPaaS revenue of $ 100.1m, up 69% year-over-year. Dollar-based net retention rate of 125%

Muted

Mercado Libre: Net Revenues of $ 1.4B, up 158.4% year-over-year on an FXN basis. $ 14.7B Total Payment Volume, up 129.2% year-over-year. $ 6.1B Gross Merchandise Volume, up 114.3% year-over-year. It is also gearing up in Mexico in an effort to fight off fresh competition from Sea Limited’s Shopee

“Mercado Libre will invest $1.1 billion to boost its Mexican operations by enhancing its financial solutions platforms and logistics as well as doubling the space of its warehouses and distribution centres.” By Graciela Martin for Business Of Fashion

  • Twilio: Revenue of $ 590.0 m for the first quarter of 2021, up 62% year-over-year, including $ 44.6 m from Twilio Segment. First Quarter Revenue Dollar-Based Net Expansion Rate of 133% versus 143% a year earlier. Operating Loss of $ 197m versus $ 93m a year earlier
  • Upwork: GSV increased by 41% year-over-year to $ 786.8m. Revenue grew 37% year-over-year to $ 113.6m. Marketplace revenue grew 40% year-over-year to $ 104.7m. Gross margin increased one percentage point year-over-year to 73%

Losers

  • Etsy: Consolidated GMS was $ 3.1B, up 132.3% year-over-year. Consolidated revenue was $ 550.6m, up 141.5% versus the same period of 2020. Net income was $ 143.8m, up 1,048.1% year-over-year. The company also warned of revenue growth deceleration going forward, as it will be hard to replicate the pandemic-boosted growth rates
  • Fastly: Sales grew 35% year-on-year to nearly $ 85m (including Signal Sciences). Gross margins down to 55.8% from 56.7%. Operating loss of $ 50m versus a loss of $ 12m a year earlier. DBNER stood at 139% compared to 143% in previous quarter
  • Skillz: First Quarter Revenue reached $ 84m, up 92% year-on-year. Paying Monthly Active Users Grows 81% year-on-year. Gross margin was 95% during the first quarter of 2021, 100 basis points higher than the prior year. Cash on balance sheet of $ 613m and no debt at the end of first quarter 2021

BENCHMARK’S TAKE

  • Current price action validates the assessment that most tech stocks are trading near the top of their range and may need a strong, external catalyst to push higher
  • We thus expect most richly priced technology stocks to remain pressured for some time as they valuation requires them to show that the consumers they attracted during the pandemic won’t go back to “offline suppliers” in the post-COVID world… Something we doubt
  • All while the Dow, banks and value stocks continue to outperform the Nasdaq

“The largest percentage gainer on the S&P 500 was oil field services firm Baker Hughes, which rose 8%. Apparel retailers also finished strong, with Gap Inc shares jumping 7.1% and Foot Locker Inc up 4.1%.” by Krystal Hu, Shreyashi Sanyal for Reuters

  • However, more reasonably valued growth stocks are doing well during this earnings season as expectations are lower and leave investors with a decent upside potential.

Disclaimer

Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products.

Credits

Photo by Nick Hillier on Unsplash.