GMT EIGHT - Financial Report

Financial Report Outlook | Chip Revival Cycle Begins Micron Technology (MU.US) Can it "Add Fuel" Again?

The largest storage chip manufacturer in the United States, Micron Technology, Inc. (MU.US), will announce its first quarter earnings for the 2025 fiscal year after the U.S. stock market closes on Wednesday (early morning on December 19, Beijing time). Wall Street predicts that Micron's revenue for this quarter will reach $8.72 billion, an 84% increase compared to the previous year, with profits reaching $1.84 billion, or $1.58 per share, while the company had a loss of $1.23 billion, or $1.12 per share in the same period last year. Upward cycle in the chip industry quietly begins Micron's performance in the last quarter and its performance outlook data indicate that the company has endured the worst period of the entire chip industry cycle and is now moving back towards profitability, especially with the surge in spending on artificial intelligence (AI). Micron's CEO, Sanjay Mehrotra, pointed out that there is exceptionally strong demand for high-end storage chips in data centers to assist in developing AI software/applications. Analysts expect that this quarter, the revenue for the DRAM business will reach $5.92 billion, showing a potential 72.9% increase year-on-year; and the revenue for the NAND business will reach $2.6 billion, a significant 111.5% increase year-on-year. Data released by Counterpoint shows that in the third quarter of 2024, the global semiconductor industry saw a 17% year-on-year revenue growth, reaching $158.2 billion, primarily driven by demand for AI technology and the recovery of the memory industry. NVIDIA Corporation and AMD have experienced significant growth in the field of AI and have become major beneficiaries. This trend is expected to continue in the fourth quarter of 2024, particularly driven by the launch of new products. Receiving $6 billion in federal grants A week before the earnings announcement, Micron Technology, Inc. received a federal government grant of up to $61.65 billion for producing semiconductors in the U.S. based on the 2022 "Chip and Science Act". The U.S. Department of Commerce stated that this funding will support Micron's "twenty-year vision" to invest approximately $100 billion in New York state and $25 billion in Idaho, to establish new factories and create around 20,000 jobs.

16/12/2024

Broadcom Inc. (AVGO.US) Q4 FY2024 Conference Call: AI revenue grew by 220% this year, and semiconductor business is expected to recover.

December 12, Broadcom Inc. (AVGO.US) held its FY2024Q4 financial report conference call. CEO Hock E. Tan stated that the combined net income for the 2024 fiscal year was $51.6 billion, a 44% year-on-year increase. Excluding the impact of VMware's consolidation, the 2024 fiscal year was still able to achieve 9% organic growth. The strong performance this year was mainly due to growth in two areas. First, the acquisition of VMware was completed in the first few weeks of the 24 fiscal year, and VMware's focus was shifted to its leading position in data center virtualization technology. The integration of VMware is almost complete. Revenue is on a growth trajectory, and by 2024, the operating profit margin will reach 70%. Steady growth in adjusted EBITDA is being achieved and will significantly exceed the initial announced acquisition price of $8.5 billion. The goal is to achieve this target earlier than the original three-year target. The second driver of 2024 was artificial intelligence. Artificial intelligence revenue from custom AI accelerators or XPUs and networking strength grew by 220%, from $3.8 billion in fiscal year 2023 to $12.2 billion in fiscal year 2024, accounting for 41% of semiconductor revenue. This brought semiconductor revenue in 2024 to a record $30.1 billion. Before summarizing and providing guidance for the first quarter of the 2025 fiscal year, let's take a long-term perspective on the development of the semiconductor business over the next three years. With a wide-ranging semiconductor business portfolio, non-AI business reached a cyclical bottom in the 2024 fiscal year at $17.8 billion, and non-AI-related semiconductor business is expected to recover from this level at a mid-single-digit historical growth rate. Overall, it is expected that first-quarter consolidated revenue will be approximately $14.6 billion, a 22% year-on-year increase, which is expected to drive first-quarter adjusted EBITDA to approximately 66% of revenue. CFO Kirsten Spears stated that consolidated revenue for this quarter was $14.1 billion, a 51% year-on-year increase. Excluding VMware's contribution, Q4 revenue increased by 11% year-on-year. This quarter's gross profit margin was 76.9%. Research and development expenses were $1.4 billion, and consolidated operating expenses were $2 billion, a main reason for the year-on-year increase being the consolidation of VMware. Operating profit for the third quarter was $8.8 billion, a 53% year-on-year increase, and the operating profit margin was 63% of revenue. Excluding transition costs, operating profit was $9.1 billion, with an operating profit margin of 65% of revenue. Adjusted EBITDA was $8.2 billion, 63% of revenue. This figure does not include $156 million in depreciation. Regarding the Q1 guidance, consolidated revenue is expected to reach $14.6 billion, with semiconductor revenue at $8.1 billion and software revenue at $6.5 billion, and adjusted EBITDA is expected to be around 66%. For modeling purposes, it is expected that the consolidated gross margin will increase by approximately 100 basis points month-on-month, due to the higher revenue share of the high-margin combination of software business and intra-semiconductor products. [Analyst Q&A session] Q: Can you provide more detailed information on the growth trends of ASIC business and Ethernet business in next year's Q1 AI revenue? A: Both are growing, but at different rates. In the second half of this year compared to the first half, the Ethernet trend is growing faster. We believe this trend will continue in the first half of next year, but as 3nm XPU starts shipping in the second half of next year, this trend will change. Q: In the guidance for AI-related scale reaching $60-90 billion by 2027, can you break down the share between ASIC and network? A: First, it needs to be clarified that this is not our revenue volume, but our forecast market size. The network side accounts for approximately 15-20% share. Q: How do you evaluate your competitors for NVIDIA Corporation's Rack-level products? Can you also provide rack-level solutions? A: When you scale from a cluster of thousands of cards to 100,000, 500,000, or even a million, engineering-wise, it's a completely different problem. So, a rack-level solution will be the method necessary for the next step in scaling up. There's also scale out, which is still a continuously evolving engineering problem. But I think all of our ultra-scale customers are well aware of how to achieve this at this point. Therefore, the roadmap will progress from 100,000 XPU clusters to over a million. Over the next three to four years, we expect to see more and more similar architectures being built. Q: How do you view the match between cloud provider capital expenditures and the growth rate of your AI revenue? We expect the Capex spending of the four major cloud providers in the 25 fiscal year to increase by around 35-40%. Considering Ethernet taking share from InfiniBand and ASIC growing faster than GPU, can we assume that your growth rate will be faster than this? A: I don't think these two can be matched. I think large enterprises often provide you with a total capital expenditure number. I'm not sure whether they really differentiate between AI and non-AI, but clearly, AI spending exceeds non-AI spending, even in terms of capital expenditure. Q: In the next quarter, due to the delay of software customer orders, the gross margin rate will increase, but will this impact gradually diminish after Q2? Will the gross margin be under pressure after Q2? A: This part of the order volume is very small, just a temporary delay, and it will not have a profound impact on the gross margin after Q2. Q: Regarding the AI related scale reaching $60-90 billion in 2027, is this an accumulated value or an annual market size? How much of a market share do you expect to have in this market? If you also consider the other two potential customers, how much additional market size will it bring? A: It is just the market size for the fiscal year 2027. If potential customers become actual customers, our market share would be better than anticipated and additional market size would be significant.Progress has indeed been made, but I do not want to discuss this issue in depth at the moment.Q: How is the free cash being used? A: It is mainly used to reduce debt leverage. Considering the amount of debt we are currently carrying or have carried since the acquisition of VMware, we do intend to use a portion of the 50% of free cash flow not used for dividends towards our own deleveraging. Q: How do you view the AI market size for 2024, in order to understand your current market share in the AI market? How do you anticipate your future market share changing? Also, as your AI revenue in semiconductor solutions increases, how will your gross margin evolve? A: This is a very insightful question. In regards to the first question, we talked about a baseline of $600-900 billion within three years and specified our three clients. I estimate the AI reachable market size for 2024 to be below $200 billion, around $150-200 billion. As for profit margins, do not worry too much about gross margins, you are correct that the gross margin in semiconductors may dilute, but please note that our operating leverage will increase significantly, leading to an improvement in operating profit margins compared to our current levels. Q: What is the ratio between ASIC and networking spending? How much networking spending corresponds to $1 in ASIC spending? Are there sovereign customers interested in ASIC? A: Sovereign nations are more like enterprise customers, as they do not have the capability to complete full-stack hardware and software development. The ratio relationship between ASIC and networking is constantly changing. With the expansion of clusters, the demand for Scale-up and Scale-out will increase. So we believe that the current network ratio may be around 5-10%, but as clusters expand to 500,000 cards or even 1 million cards, this ratio will rise to 15-20%. Q: Considering the guideline of a $600-900 billion market size, could you talk about your expectations for the entire TAM of AI? For the parts you are not involved in, do you think it will be absorbed internally by cloud vendors, or will there be a second supplier, or is it low-margin business that you do not want to pursue? A: We are not clear about the overall TAM of AI. Our calculation of our TAM is this: I find customers, I try to figure out how many roadmaps the customers have, not just products, technologies, but also what they are building and how they consume, that's how we create our SAM. In a way, it is bottom-up, then top-down. Therefore, apart from our closely serviced and collaborated clients, I do not know how much TAM exists in other areas. What we need to do is get our fair share. Today, we are in a very advantageous position, with the best technology, and so far, we have one of the best combination technologies for making XPU and connecting these XPUs, which is why we are in a favorable position with these three clients. Q: With the explosion of AI revenue, will interest in M&A diminish in the future? A: No, it will not. We always maintain an open attitude, and whenever we come across very high-quality technical patented products, we actively add them to our business structure, whether it is software or hardware, as long as they meet our quite stringent standards, we are always willing to acquire these assets and add them to our portfolio. Q: Based on your recent figures, with a TAM of $175 billion this year, you hold approximately 70% of the share. So assuming 70% share will continue to 27 years, your AI revenue in fiscal year 27 should be around $500 billion. So, do we have good expectations for fiscal year 26, showing a fairly good growth momentum? A: I do not have the appropriate information to share with you in this regard. Considering that we will only provide guidance for AI and non-AI businesses in the future, for the non-AI business part, they are already stable and mature, with a high probability of mid-single-digit growth in the future. However, for non-AI revenue, we cannot give you a clear linear guidance, as the deployment pace of each client will vary, and we expect differences between quarters. So, my best answer to you is that besides what I have provided so far, I cannot give you any clear information. Q: For the other two potential clients, when do you think their revenue growth will begin? A: First, we must obtain orders to start production before we can discuss the start of revenue growth. Their software stack is not yet complete, they still need validation, so right now I am not sure, but it will definitely happen within the next three years.

13/12/2024

Under the strong demand driven by AI, Broadcom Inc. (AVGO.US) exceeded profit expectations in Q4, with huge opportunities expected in the next three years.

After the US stock market closed on Thursday, Broadcom Inc. (AVGO.US) announced its fourth quarter earnings for fiscal year 2024. Due to better-than-expected fourth quarter profits and forecasts of a surge in demand for its artificial intelligence chips, as of the time of writing, Broadcom Inc. saw a nearly 16% increase in its stock price after hours on Thursday. The financial report shows that Broadcom Inc.'s Q4 revenue was $14.054 billion, a 51% increase from the previous year, slightly lower than the market's expectation of $14.08 billion. By segment, the semiconductor solutions department revenue was $8.23 billion, a 12% increase year-on-year; infrastructure software department revenue was $5.824 billion, a 196% increase year-on-year. Under Non-GAAP accounting standards, net profits were $6.995 billion, a 45% increase year-on-year; adjusted earnings per share were $1.42, better than the market's expectation of $1.38. Looking ahead, Broadcom Inc. forecasts revenue of $14.6 billion for the first quarter of fiscal year 2025, a 22% increase from the previous year, which is in line with market expectations; they expect that EBITDA as a percentage of revenue in the first quarter will be 66%. During the financial report conference call, the company predicted that revenue from AI products would increase by 65% in the first quarter of fiscal year 2025, much faster than the overall semiconductor sales growth of around 10%. The company also forecasted that by fiscal year 2027, the potential market size for AI components designed for data center operators could reach $90 billion. CEO Hock Tan emphasized during the call, "The opportunity for AI chips in the next three years is significant." Like NVIDIA Corporation, Broadcom Inc. is also a major beneficiary of the AI spending boom, which has prompted investors to buy shares in Broadcom Inc. In the recently ended fiscal year 2024, Broadcom Inc.'s AI revenue increased by 220% to $12.2 billion, surpassing the market's expectation of over $10 billion, mainly due to its leading AI XPU and Ethernet networking product portfolio. Data center operators rely on Broadcom Inc.'s custom chips and networking chips to build their AI systems. The company also sells components for cars, smartphones, and internet access devices. Additionally, the company is expanding into the software field, including large computers, network security, and data center optimization products. Some analysts believe that as companies double their investments in generative AI infrastructure, the demand for Broadcom Inc.'s networking chips is also increasing, as these chips help transmit large amounts of data used in AI applications like ChatGPT. Despite facing fierce competition from NVIDIA Corporation's Ethernet-based Infiniband products, Broadcom Inc. is still benefiting from the expansion of AI data centers as one of the largest providers of advanced networking equipment. Hock Tan stated that his company has won two new mega-scale customers - the largest data center operators. Through a series of acquisitions, Hock Tan has built one of the most valuable companies in the chip industry. The company's influence in the industry also makes it a barometer of demand for the entire tech industry. It is worth mentioning that there are reports that Apple Inc. (AAPL.US) will start using its own wireless chips in new products set to be released in 2025, including switching from Broadcom Inc.'s supplied chips for iPhones and home wireless devices to their own products. In response to this, Hock Tan stated during the financial report call that the company has had a longstanding partnership with Apple Inc. for several years. Hock Tan also mentioned that Broadcom Inc. remains open to acquisitions, as it has been a core part of their company's strategy and business model for the past decade.

13/12/2024

Costco (Cost.US) Q1 Results Exceed Expectations, Resilience of Wealthy Customers' Spending

After the U.S. stock market closed on Thursday, Costco (COST.US) announced its financial results for the first quarter of the 2025 fiscal year ending November 24, 2024. Costco's quarterly profits exceeded market expectations, indicating that this large retailer has not been affected by the tightening of consumer spending. The data shows that the company's Q1 revenue was $62.15 billion, an increase of 7.5% year-on-year, better than market expectations; earnings per share were $4.04, higher than market expectations. Costco stated that the performance includes a $100 million tax benefit related to stock compensation. Costco reported that membership numbers increased in the first quarter, with around 90% of existing members renewing their services. On a same-store basis, foot traffic increased, but the number of transactions remained flat. These results solidify Costco's unique position among U.S. retailers, as its affluent customer base is willing to pay annual membership fees, which helps the company maintain robust performance. Costco reported that sales and foot traffic have grown in recent months. Food sales have been good, and non-essential items like jewelry and home goods have sold well. Comparable sales, excluding gasoline and currency impacts, increased by 7.1% in the first quarter. Online sales also grew. Costco is one of the last U.S. retailers to report its 2024 performance. After years of high inflation rates, consumers remain picky and seek the best deals. However, they are still willing to open their wallets and buy new, affordable goods. Costco CEO Ron Vachris said during the earnings call, "This year, consumer spending is very focused on essential needs." Seasonal products have sold well so far, and furniture has been a driver of e-commerce sales this holiday season. Executives also added that consumers have shifted spending from restaurants to food and groceries. Consumers also prefer high-end and low-priced goods. Costco, which operates over 800 stores, raised membership fees earlier this year. The company also installed more membership card scanners in more locations, partly to prevent shoppers from sharing membership cards. Additionally, Teamsters Union President Sean M. O'Brien warned on Thursday that Costco is "heading into dangerous waters," after this retail giant rejected 98% of the union's demands. The Teamsters Union represents 18,000 Costco employees nationwide. The current contract was approved in October 2022 and is set to expire in 7 weeks, with negotiations underway for paid family leave, bereavement policies, sick leave, safeguards against surveillance, and key terms regarding qualifications in the contract. If Costco does not present a collective bargaining agreement by January 31 next year, union members will go on strike. As of the time of writing, Costco's stock price fell 0.02% after hours, to $988.20. The stock has risen over 50% since the beginning of the year.

13/12/2024

Financial Report Outlook | Non-AI Business Recovery Drives Growth, Wall Street Bullish on Broadcom Inc. (AVGO.US) Q4 Better-Than-Expected Performance.

Broadcom Inc. (AVGO.US) is expected to announce its fourth-quarter performance report after the market closes on Thursday, December 12. The market generally expects the company to show positive growth, driven mainly by the recovery of its non-artificial intelligence semiconductor business. Wall Street analysts expect Broadcom Inc. to achieve earnings per share of $1.39 and revenue of $14.06 billion, a 51.2% increase from the same period last year. As Broadcom Inc. prepares to announce its fourth-quarter performance, Citigroup has reiterated its "buy" rating on the company and raised its target price. Analyst Christopher Danely stated in a report that he expects Broadcom Inc.'s performance to exceed expectations, thanks to the recovery of its non-artificial intelligence semiconductor business and better-than-expected gross margin prospects due to improvements in its software portfolio. Although JPMorgan also believes that Broadcom Inc.'s fourth-quarter performance will exceed expectations, it anticipates a potential revenue downgrade for the next quarter due to seasonal trends in its core semiconductor business. JPMorgan analysts stated in a report, "Overall, for the 2025 fiscal year, we see no revenue risk, in fact, we expect full-year revenue and earnings per share to increase, with strong demand expected to continue for their AI products." Broadcom Inc.'s performance has consistently exceeded market expectations, with its revenue and earnings per share surpassing expectations 100% of the time over the past two years. The company's AI-centric strategy has paid off this year, with its stock price rising over 58% year-to-date, outperforming the S&P 500 index's 26% increase. Financial estimates for Broadcom Inc. have been revised over the past three months, with earnings per share estimates being raised seven times and lowered twice, while revenue estimates have been raised six times and lowered twice. Although Broadcom Inc.'s performance forecast for the previous quarter was below expectations, causing disappointment for some investors, the company expects fourth-quarter revenue to be $14 billion, with adjusted EBITDA accounting for around 64% of total revenue, indicating that its financial situation remains stable.

12/12/2024

Employee's report on delivery fees dragging down Macy's, Inc. (M.US) lowers full-year profit guidance.

Macy's, Inc. (M.US) announced its latest performance on Wednesday and lowered its full-year profit forecast after concluding an investigation into an employee's deliberate concealment of millions of dollars in expenses. In a statement released on Wednesday, Macy's, Inc. stated that the misreporting of delivery expenses will have an impact of $79 million on the full-year gross margin and adjusted earnings per share. Macy's, Inc. stated that the misreported expenses were related to a former employee intentionally concealing costs. The majority of the impact will be seen in the fourth quarter. As a result, Macy's, Inc. lowered its earnings per share forecast from $2.90 to $2.25 to $2.50. The company also lowered its gross margin forecast. Before the U.S. stock market opened on Wednesday, Macy's, Inc. stock price dropped nearly 10%. As of Tuesday, the stock has declined 17% year-to-date. Macy's, Inc. stated that the investigation concluded that there was "no material impact or restatement" to its previously submitted financial statements. The company reiterated that the investigation did not find evidence of missing cash or unpaid suppliers, but pointed out accounting errors by a former employee who concealed approximately $151 million in delivery expenses from the fourth quarter of 2021 to the third quarter of this year. CEO Tony Spring stated in a statement, "We have completed the investigation and are enhancing existing controls and implementing additional reforms designed to prevent this situation from happening again." In recent years, Macy's, Inc. has been focused on reducing delivery expenses and other costs to improve profitability. The company's CFO, since joining the retailer in 2020, has mentioned delivery expenses in all 16 of the quarterly earnings conference calls she participated in, except for one. According to sources familiar with the matter, the employee told investigators that errors initially occurred in calculating delivery expenses. The sources added that after the initial error, the employee deliberately made incorrect accounting entries to cover up the mistake. The retailer stated that the employee is no longer working at Macy's, Inc. In terms of third-quarter performance, the company reported total sales of $4.74 billion, a 2.4% decrease year-over-year, below the market's expectation of $4.78 billion. Net income decreased to $28 million, or $0.10 per share, compared to $41 million, or $0.15 per share, in the same period last year. Comparable store sales for Macy's, Inc.'s own and licensed businesses and online marketplace decreased by 1.3%. The company's namesake brand remains the weakest part of the business. Comparable store sales in this area (including own and licensed sales, as well as third-party marketplaces) decreased by 2.2% in the most recent quarter. However, Macy's, Inc. stated that sales trends are stronger in its higher-performing stores. By early 2027, the company will close approximately 150 Macy's, Inc. stores, meaning it will have about 350 Macy's, Inc. stores nationwide. The company has increased staffing and investments in the 50 stores that will continue to operate, known as the "top 50" stores. Comparable store sales in these stores increased by 1.9%. Comparable store sales at the upscale department store Bloomingdale's grew by 3.2%. Bluemercury's comparable store sales increased by 3.3%, marking the beauty brand's 15th consecutive quarter of comparable store sales growth. Macy's, Inc. also raised its full-year sales forecast, expecting net sales to be between $22.3 billion and $22.5 billion, higher than the previous expectation of $22.1 billion to $22.4 billion. Comparable store sales for own and licensed stores are expected to be flat to down 1% year-over-year. The company previously forecasted a 2% decline in this metric. The department store operator postponed the release of its full third-quarter earnings report after disclosing accounting issues last month, and instead released preliminary data. Pressure from Activist Investors Additionally, Macy's, Inc. is facing pressure from Barington Capital Group and Thor Equities LLC, who are urging the company to establish an independent real estate department while cutting capital expenditures. They also suggest Macy's, Inc. consider divesting its upscale department store Bloomingdale's and Bluemercury. Barington and Thor are seeking seats on Macy's, Inc.'s board and will encourage the retailer to create an internal subsidiary for its real estate, including all of its owned and leased properties, including its stores and distribution centers. Macy's, Inc. would then pay rent to the subsidiary. According to a regulatory filing on September 30, Barington owns 650,000 shares of Macy's, Inc., representing 0.2% of the shares. This is an increase from the 100,000 shares of Macy's, Inc. they owned as of June. Macy's, Inc. stated that it will maintain its current strategy, focusing on improving performance in its most profitable regions.

11/12/2024

GameStop Corp. Class A (GME.US) Q3 sales decreased year-over-year, but earnings exceeded expectations, causing the stock price to skyrocket after hours.

US electronic game retailer GameStop Corp. Class A (GME.US) released its latest third quarter financial report, which showed a decrease in sales compared to the previous year and fell below Wall Street expectations. However, the company's adjusted earnings per share exceeded market expectations. Earnings per share: GameStop Corp. Class A reported an adjusted earnings per share of $0.06 for the third quarter, higher than the FactSet analyst expectations of a loss of $0.03 per share. Sales: Net sales were $860.3 million, lower than analyst expectations of $888 million. This represents a 20% decrease from the same period last year. Despite falling short of sales expectations, GameStop Corp. Class A stock price rose over 10% in after-hours trading due to the better-than-expected earnings. GameStop Corp. Class A stock price has risen 59% year-to-date, making it one of the best-performing years since the stock price surged 688% in 2021. In comparison, the S&P 500 has risen 27% this year. However, this strong performance is not solely driven by outstanding financial results. On September 11 of this year, the company's stock price dropped 12% due to disappointing second-quarter revenue performance. Part of the reason for the stock price increase this year can be attributed to the return of "MEME stock" celebrity Keith Gill (aka "Roaring Kitty") to social media in mid-May. His return sparked investor expectations for a similar trading frenzy in 2021. At that time, retail investors banded together on online forums to buy GameStop Corp. Class A stock, forcing short sellers to cover their positions, leading to a surge in the stock price. After Gill's return, the company's stock price rose by 74% on May 13 and 60% on May 14. However, the stock price is currently down by about 43% from the 52-week high of $48.75 reached on May 14. Analysts are cautious about the future prospects of GameStop Corp. Class A. Wedbush analyst Michael Pachter gave a "sell" rating with a target price of $10 in a research report on December 6. He noted that the company faces "insurmountable growth barriers," including a continuing preference for digital games among users and a lack of competitive advantage in its entry into the trading card market. GameStop Corp. Class A announced in October that it had become an authorized dealer of the Professional Sports Authenticator (PSA), providing authentication and grading services for trading cards. However, whether this attempt can significantly boost revenue remains to be seen. Additionally, inflation and high interest rates may impact the demand for video game consoles and other GameStop Corp. Class A products, posing potential risks to the company's business. While GameStop Corp. Class A's third-quarter financial report showed unexpected bright spots in earnings, the decline in sales and challenges to its business model remain concerning. The market expects that the company's stock price may experience significant volatility after the financial report is released. Based on historical data, companies in the S&P 400 MidCap Index (excluding GameStop Corp. Class A) have seen an average volatility of 5.5% in stock price after the past five financial reporting periods.

11/12/2024

Cloud computing business shows steady growth, Oracle Corporation (ORCL.US) Q2 financial report does not have any "big surprises".

Oracle Corporation (ORCL.US) announced quarterly revenue that was in line with market expectations, disappointing investors. In recent weeks, investors had driven Oracle Corporation's stock to record highs due to their enthusiasm for the company's cloud business. However, after the performance announcement, Oracle Corporation's stock price fell in after-hours trading. In a statement on Monday, Oracle Corporation reported second quarter revenue of $14.1 billion, a 9% year-over-year increase. Revenue from the highly anticipated cloud infrastructure business surged 52% to $2.4 billion, in line with market expectations. As of November 30th, remaining performance obligations (a measure of order bookings) were $97 billion, lower than the previous quarter's $99.1 billion. Earnings per share, excluding some items, were $1.47, compared to market expectations of $1.48. Total cloud revenue (including infrastructure and applications) was $5.9 billion, slightly lower than analysts' average estimate of $6 billion. For a long time, Oracle Corporation has been trying to establish itself in the lucrative computing and storage rental industry, a market dominated by much larger competitors such as Amazon.com, Inc.'s AWS and Microsoft Corporation. Oracle Corporation's recent success has been driven by the demand from AI companies to train their models, as well as from major clients like Uber Technologies, Inc. and TikTok. Oracle Corporation Chairman Larry Ellison has been particularly focused on the company's ability to provide hardware and integrated software for processing powerful AI workloads. Oracle Corporation CEO Safra Catz stated in the announcement that cloud revenue for the fiscal year ending in May will exceed $25 billion, matching Wall Street's estimate of $25.1 billion. Ellison stated in the announcement that Oracle Corporation's cloud has "trained several of the world's most important generative artificial intelligence models because we are faster and cheaper than any other cloud." He added that Meta Platforms has signed an agreement to use Oracle Corporation's cloud infrastructure to develop the Meta-based Llama model AI agent. Last week, the U.S. Federal Appeals Court upheld a law requiring the sale of TikTok. Oracle Corporation warned investors that the ban on TikTok could harm its financial performance. After the financial report was released, Oracle Corporation's stock price fell by 7.63% in after-hours trading. Prior to the financial report, there had been high expectations for Oracle Corporation, with its stock price having risen by 81% so far this year. Bloomberg Intelligence analyst Anurag Rana said, "Perhaps investors were expecting a very big surprise--but that did not happen." Rishi Jaluria, Capital Markets analyst at Royal Bank of Canada, described this quarter's performance as "mixed, going against overly high expectations."

10/12/2024

"Hot stocks in AI software" C3.ai (AI.US) Q2 performance exceeds expectations, raises fiscal year revenue guidance.

C3.ai (AI.US) exceeded expectations in its second quarter and raised its revenue forecast for the fiscal year 2025, thanks to strong demand for the company's enterprise artificial intelligence software tools which help simplify workflows. According to data compiled by LSEG, Q2 revenue was $94.3 million, up 29% from the same period last year, higher than analysts' estimate of $91 million. After adjustments, the company reported a loss of 6 cents per share, while analysts had expected a loss of 16 cents per share. Subscription revenue grew by 22% to $81.2 million, while professional services revenue increased by 94% year-on-year to $13.2 million. The company now expects fiscal year revenue to be between $378 million and $398 million, up from the previous forecast of $370 million to $395 million. Analysts had previously predicted the company's annual revenue to reach $382.6 million. In addition, for the third quarter, C3.ai expects revenue to be between $95.5 million and $105 million, with the mid-point of $98 million slightly higher than analysts' estimate of $97.5 million. Based in Redwood City, California, the company provides software to enterprises for building and developing artificial intelligence applications in various industries including energy, manufacturing, financial services, and healthcare. C3.ai has benefited from the growing interest of enterprise customers in artificial intelligence, and the company has been introducing products with generative artificial intelligence. The company stated that this quarter it completed 15 trials focused on generative artificial intelligence, including trials with automaker Rolls-Royce and the U.S. Navy. Following the announcement of its performance, the company's stock price rose by 14.8% in after-hours trading. So far this year, the company's stock price has increased by over 45%, partially due to its expanding partnership with cloud giant Microsoft Corporation (MSFT.US). C3.ai will become the "preferred" provider of artificial intelligence applications on Microsoft Corporation's Azure cloud.

10/12/2024

Hello Group Inc. Sponsored ADR (MOMO.US) Net Revenue Exceeded Expectations in Q3, Momo's Paying User Numbers Decreased to 6.9 Million.

On December 9th, Hello Group Inc. Sponsored ADR (MOMO.US) announced its financial performance for the third quarter of 2024. The financial report shows that in the third quarter of 2024, Hello Group Inc. Sponsored ADR's net revenue was 2.6747 billion yuan (approximately 381 million US dollars), a decrease of 12.1% year-on-year, exceeding market expectations. Not measured according to US Generally Accepted Accounting Principles, the net profit attributable to Hello Group Inc. Sponsored ADR was 493.3 million yuan (approximately 70.3 million US dollars); diluted net profit per American Depositary Share (ADS) was 2.70 yuan (approximately 0.38 US dollars), exceeding market expectations. In September 2024, the monthly active users of the Tantan application were 12 million, compared to 15.7 million in September 2023; the number of paying users for Tantan in the third quarter was 900,000, compared to 1.4 million in the same period last year. In the third quarter of 2024, the total number of paying users for the Momo application was 6.9 million, compared to 7.8 million in the same period last year. Business Outlook For the fourth quarter of 2024, the company expects total net revenue to be between 2.56 billion yuan and 2.66 billion yuan, a year-on-year decrease of 14.7% to 11.4%.

09/12/2024

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