Earnings Report: May 9th, 2023

 Earnings Report: May 9th, 2023

    Today marks a pretty busy day when it comes to my holdings reporting earnings. I have 6 holdings set to report earnings and 5 of them coming this afternoon. I have a final exam this evening, so I will try my best to get this report out in a timely manner. I will go over the company’s earnings release, followed by my opinion on the company and where it stands.

DigitalOcean Holdings, Inc. (DOCN)- DigitalOcean reported earnings before the market opened this morning. The company is seeing an uprise in the stock price, despite a miss on the EPS portion. The company beat top line estimates, and missed by one cent on the bottom line. DigitalOcean is in the business of simplifying cloud computing for software companies. The services the company provides is beneficial because it allows the software companies to spend more time on creating software that will change the world. The CEO left some strong remarks on the quarter and reiterated the simplicity of the use of its products. The CFO commented on the balance of the growth and profitability, and the buybacks to deliver shareholder returns while improving cash flow and margins. This quarter looks great for the company as they were able to grow revenues by 30%. The cash flow looked solid as well with $36 million in Operating and $26 million in adjusted free cash flow. Shareholders saw a nice return of $266 million as the company bought back 8 million shares. This is a testament to the company's willingness to continue growth and a bright future. The future looks promising and lets hope that they keep up the solid performance. 

My Thoughts: A quarter like this leads me debating if I should add more. I think this company has proven to be vital for many of the software companies out there. The results keep growing at a nice pace and the stock is beaten down from the overall rising of interest rates. The financials look healthy and I am overly impressed by the cash flow. The business is also reinvesting in itself and returning value to shareholders. I think this could be a good entry point for new investors to tech and a good spot to add shares. The company has some upside if they keep delivering results like this. It has proven it can hang with the big guns like Azure and AWS. Time will only tell us the scale to which they can grow their business. Overall really impressed with the companies results and look forward to see how they perform in the coming quarters. 

Airbnb, Inc. (ABNB)- Airbnb reported earnings after the market closed this afternoon. The company beat on both the top and bottom line. The stock is sliding by over 10%, after the guidance was weak. The weak guidance could be a sign that travel demand may be easing in the US. The earnings were really solid with revenue growing 20% and free cash flow growing 32%. I think the business is cyclical and slows down during certain times of the year. With this quarter only really consisting of spring break, I was surprised to see results this low. I think this next quarter is going to be slow because travel is slower during this period, but should pick up in the later half. The company continues to strive on its three goals which are to make hosting mainstream, perfect the core service, and expand beyond the core. I think the share price decline is an overreaction, as the results were actually pretty solid. We have seen four straight quarters with bookings declining and the business has still performed well with that metric. 

My Thoughts: These are some pretty strong results, in my opinion. The bookings has been on the decline for the past year or so, but I think the guidance was light due to the uncertainty of the demand on travel. I think this is going to be a strong summer for travel, so later Q2 and Q3 will show some strong results and we will see investor sentiment skyrocket there. I am a little upset to see the stock get hit this hard, because I think the company is doing well and free cash flow looks good. Sure, we have heard talks about hosts taking things into their own hands and eliminating the middleman (Airbnb). However, I think the platform that Airbnb has to offer and services they provide are too beneficial to the hosts. I think guidance was pretty light and it may lead to a beat next quarter, if they are able to keep the momentum they are currently carrying right now. Airbnb is a solid company and is still a cash cow, so it looks to have a long future and will hopefully come through with its goals. I would wait to see how the stock plays out after the earnings and then evaluate whether to add or buy into the stock. I think the thesis is still plausible and they can achieve what they want, in terms of their long-term goals. Great company!

My Thoughts:

Axon Enterprise, Inc. (AXON)- Axon reported earnings after the market closed this afternoon. The stock price is declining a tiny bit, even though the company beat estimates on both the top and bottom line. Axon is a global leader in public safety, the company produces tasers and also has a software business. The cloud grew its revenue by 51% and ARR grew by 49%. The company raised guidance for the full year to 22% growth and 20$ EBITDA margin. Axon saw revenue growth of 34% as the company launched two new products in this quarter. The demand has stayed strong for the products that the company already produces. Although the company is focused on law enforcement, they are looking to expand into the other government sectors and make their products available to a wider variety of users. I think this is more focused on its cloud business, but you have to give them credit. I love the aspirations of this company and they yet dominated another quarter. Props to Axon for all of their hard-work and this looks like a stock that is poised for a wonderful future. To be honest, I can't tell you the exact reason as to why the stock is declining, but at any decline they have would be a decent chance to buy. 

My Thoughts: AXONNNN!!! I can't say enough about this stock. This may be one of my favorite companies that I am invested in. The mission is so great and the moat is amazing. This company is in control of the market and they are growing like crazy still. They have a wonderful purpose of keeping the community safe and always put people first. The business model is so good though, they serve law enforcement and working with government turns into gold sometimes. If you watch any footage of any dash-cam or body-cam, you will notice the Axon logo on the screen. They pretty much service all of the police departments and government authority that deal with anything police related. The even better part is that they developed a cloud that stores all of the footage on. In terms of when an arrest is made and footage is needed as evidence the court has to access the cloud provided by Axon to obtain the footage. Talk about a company that basically runs the whole process. This last little excerpt is exactly why I love the company and will ride with them forever. This is a wonderful stock and I think it will continue to perform as long as the police force is around (forever).

Darling Ingredients Inc. (DAR)- Darling Ingredients reported earnings after the market closed this afternoon. The stock is moving higher this afternoon, after the company beat estimates on both the top and bottom line. The company turns edible by-products and food waste into sustainable products. They are also a leading producer in renewable energy. The CEO left some remarks on the quarter and labeled it solid. The volumes of the raw materials were in line and the collagen and gelatin business remained robust. The believe that the Diamond Green Diesel expected to gain momentum in the second quarter as the lower fat prices will boost renewable diesel margins on expected higher margins. The company repurchased $43.8 million in shares during the quarter as it follows through with its share repurchase program. Overall, the quarter looked pretty solid and the company looks to be on a good path. 

My Thoughts: This is another one of my new holdings, I really invested into it for its Moat that is carries. As being one of the biggest companies for renewable energy with recyclables, I like it for the future the earth is headed for. With increasing demand for clean energy and pushes by the government to sustain the earth and stop destroying it, this company looks solid. As a company the financials look pretty good, the debt is definitely toward the high side, and I would like to see them alleviate that a tad bit. However, I am impressed with the earnings for the first quarter and look forward to a lot of growth in the future of this company. I like that they are already repurchasing shares of the company and look forward for them to continue to produce renewable energy. Go Green!

Masimo Corporation (MASI)- Masimo reported earnings after the market closed this afternoon. The stock is taking a slight slide in after-hours trading. The company beat on both the top and bottom line. Masimo makes technologies for the medical field industry, they focus on automation and connectivity solutions. The CEO said that the company had solid performance in the quarter. The company had some new hospital wins and the brain monitoring systems they develop were the main reasons for the growth. The consumer health strategy is building momentum with new products available for pre-order. The innovation is off the chart for Masimo, as the company continues to grow and develop some high-end products. I can't really find the exact reason that the company was trading lower, I think it may have something to do with guidance that looks to be steady. I can definitely tell that the company has invested a lot this year with expenses rising. I think the company continues on its track as innovation and is in hyper-growth mode. Overall, the quarter looked pretty good and it is looking optimistic for a bright future.

My Thoughts: I have recently invested into this company with some optimism for growth. The company has a diverse business covering a lot of different health needs. They have a luxury audio unit already established and are innovating all sorts of things. With the company being in growth mode, I am okay with profitability fluctuating. They have to create products that are going to be significant and take over market share, and creating these products involves a lot of capital up-front. With this being my first quarter owning the stock while reporting earnings, I think the CEO had some great things to say. I am stoked to see where this company is headed as far as growth goes and all the products they are creating. I like they are winning new hospitals and products are getting pre-ordered. This is a buy and hold stock while in growth mode and it should reward you. 

Upstart Holdings, Inc. (UPST)- Upstart reported earnings after the market closed this afternoon. The stock is soaring in the after-hours after the company beat both top and bottom line estimates. The company operates as an AI lending platform that partners with banks and credit unions to give access to affordable credit. With the situation all of the small banks are facing, the company is struggling mightily. As credit tightening seems to be looming in front of us and more regional banks in question of staying afloat, Upstart could really struggle. The company did get ahead of the ballgame in terms of AI, but has seen some troubling quarters that has damaged both the stock price and reputation. The CEO is pleased with the progress the company has made with the respective goals he set out last year. The company has secured multiple long-term funding agreements that are expected to deliver more than $2 billion to the platform in the coming year. The guidance was high and shows that the company may be on track to better things. Only one shareholder could hope that would be the case. 

My Thoughts: Man this company had a lot of optimism at the time that I bought in. Things were making the company look like the next best thing in the financial sector, but then came the troubles with the economy. Interest rates rose and shot this company down, then banks started to fail and caused a lot of uncertainty in this business. The tide has changed from when I first started following this company and I am going to take a major hit when I do come to terms of selling this business. I am just hoping and praying that a turnaround is coming. The revenues have been on a major decline and just nothing good is happening to the business. I think at one point it was the most shorted stock on the market. I like the fact that they aren't giving up and that they are securing funding agreements. I am cheering for the stock to rally and hopefully they live up to the guidance because that will steer the stock on the right path. For now, I would avoid this and keep it far away. Things are not clear with this business and the balance sheet is not healthy at all. If any recovery is going to happen, it is going to take years. 

Thank you for reading!

All information was pulled from the companies earnings releases.