MAYDAY MAYDAY, WE’VE GOT EARNINGS TO REPORT!
In what has been one of the busiest weeks for earnings in my memory, I’m going to take a quick look at the results reported last night from some of our favorite companies here at MyWallSt.
“If you’re a shareowner in Amazon (NASDAQ:AMZN), you may want to take a seat, because we’re not thinking small”.
In a thinly-veiled threat to standing desk owners across the globe, Amazon has announced big plans for Q2, most pertinently that it plans to spend all of its profits next quarter, estimated to be a sum of approximately $4 billion, on a response to the coronavirus. The funds will go toward testing for employees and bolstering its delivery network in the face of increased demand.
Playing second fiddle to this blockbuster announcement was the actual results of the report. Bezos & Co announced earnings per share (EPS) of $5.01 and revenue of $75.45 billion, compared to analysts’ expectations of $6.25 on $73.61 billion. Amazon Web Services also topped $10 billion for the first time in a quarter, posting revenue of $10.22 billion. It gave guidance for Q2 of revenue falling between $75 and $81 billion, representing a year-over-year increase of 18%-28%, with earnings to fall between a $1.5 billion loss and $1.5 billion profit due to the $4 billion spent on a coronavirus response. The stock was down in after-hours trading.
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Cash rules everything around me, or C.R.E.A.M. for short. That’s the new mantra for Tim Cook and Apple (NASDAQ:AAPL), who have found themselves sitting on a whopping $192 billion in cash. So much that Apple has increased its dividend by 6% and announced an additional $50 billion going toward its share repurchase program.
The iPhone maker delivered strong results, posting EPS of $2.55 on $58.3 billion in revenue, beating expectations of $2.26 on $54.54 billion soundly, with $28.96 billion coming in the form of iPhone sales, a 7% decrease year-over-year, while its services section grew 16% to $13.34 billion
However, as we’ve mentioned many times in the buildup to this earnings season, past results are far less important than the guidance issued by these companies. With a global recession looming, investors are looking toward the horizon, and Apple failed to deliver here, issuing no official guidance for Q2. The stock was down in after-hours.
A darling of the MyWallSt platform for quite a while, Atlassian (NASDAQ:TEAM) is a crowd favorite amongst our staff and subscribers alike. They reported a mixed bag after the bell last night, perhaps a victim to increased expectations thanks to being one of the few stocks that may actually benefit from stay at home orders.
They posted EPS of $.25 on revenue of $411.6 million, representing increases of 19% and 33% year-over-year respectively. In very reassuring news to investors, the company announced over $2 billion in cash and investments on the balance sheet, as well as free cash flow for the quarter of $140.3 million, showing its ability to weather the current storm.
They were also one of the few companies not to withdraw its guidance which may have cost them. Expectations of $0.17 – $0.22 a share on $400 – $415 million in revenue fell below analysts’ expectations and the stock fell after hours.
Perhaps the most talked-about pharmaceutical company ever, Gilead Sciences (NASDAQ:GILD) announced its earnings for the first quarter of 2020. The stock is up almost 30% year to date on the back of hopes of the drug redemsivir and its potential for coronavirus treatment. The company posted EPS of $1.68 a share on $5.5 billion, beating out expectations of $1.57 on $5.4 billion. Revenue increased slightly year-over-year while EPS was down.
Of more interest to investors was the company’s comments around redemsivir. Gilead plans to donate 140,000 treatments of the drug and costs involved in ramping up production could top $1 billion. It went on to say that “the total investments in remdesivir, primarily to expand manufacturing production, throughout 2020 could be material, but the amount, timing and accounting for the investments as well as the potential to recoup Gilead’s at-risk investments at some point in the future are dependent on clinical trial and regulatory outcomes.”
The words did not soothe investors, and the stock traded down after hours.
United Airlines Earnings
In the midst of “the most disruptive global crisis in the history of aviation”, United Airlines (NASDAQ:UAL) posted a $1.7 billion loss for Q1 of 2020. Believe it or not, this wasn’t actually that bad, in the context of the most disruptive global crisis in the history of aviation that is. Just eleven days previous, United warned of a potential $2.1 billion loss for the quarter. In an impressive feat of goalpost-moving, the airline posted a loss of $6.86 a share on revenue of $7.9 billion, down from earnings of $1.09 a share on $9.6 billion last year.
The company announced it has access to $9.6 billion in liquidity and expects a cash burn of $40 – $45 million a day for Q2. Shares are down in pre-market trading.
If you’re looking for a representation of consumer spending globally, the biggest credit card company in the world is probably a good place to start. Visa (NYSE:V) posted earnings of $1.39 a share on revenue of $5.9 billion, beating out estimates of $1.35 on $5.75 billion. However, the company is withholding guidance. The stock is down slightly in pre-market trading this morning.
Perhaps more interesting for us investors was some of the information Visa released on last night’s call. The credit card company also released data past which included the first four weeks of April that indicated the effects of the global pandemic on consumer spending. Here are some highlights:
- U.S. payment volumes were down 19% through April 28
- E-commerce payments were up 18%
- Payment volumes in large stores like Walmart (NYSE:WMT) and Target (NYSE:TGT) are up 20% for the month
- Fuel, travel, restaurants, and entertainment were all down at least 50% in March
Visa’s main competitor Mastercard (NYSE:MA) indicated a similar slowdown in spending in its earnings call on Wednesday.
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in Visa. Read our full disclosure policy here.
Content Manager at MyWallSt
Michael's first and favorite stock is Square, which he sees becoming a massive player in the payments industry and a leader in the war on cash.