top of page

Portfolio Update - 29 January 2023

📢 Portfolio Update 📢

19 January 2023 | Netflix

- EPS: 12 cents vs 45 cents per share, according to analysts expectation.

- Revenue: $7.85 billion $7.85 billion, according to analysts expectation.

- Global paid net subscribers: 7.66 million adds, compared to 4.57 million subscribers expected, according to analysts expectation.

Netflix added millions more subscribers in the fourth quarter than analysts expected.

The company also disclosed that co-CEO Reed Hastings would be stepping down from his position and transitioning to the post of executive chairman. Greg Peters, the company’s chief operating officer has been promoted to co-CEO alongside the already established Ted Sarandos.

Netflix’s EPS missed largely due to a loss related to euro-denominated debt, but its margins of 7% still topped analysts expectation expectations. The depreciation of the U.S. dollar compared to the euro during the fourth quarter isn’t an operational loss.

During the company’s prerecorded earnings call, Netflix said that it has seen comparable engagement from its new ad tier members as it has seen with its regular consumers. Additionally, it noted that it has not seen a significant number of people switching plans. So, those who subscribe to its premium and more expensive offerings are rarely bumping down to the cheaper ad-supported model.

“We’re over $30 billion in revenue, almost $32 billion in revenue, in 2022 and we wouldn’t get into a business like this if we didn’t believe it could be bigger than at least 10% of our revenue.”

Going forward, Netflix will no longer give subscriber guidance, although it will still report those numbers in future earnings reports. The rationale is that the company is growing its focus on revenue as its primary top line metric instead of membership growth.

“2022 was a tough year, with a bumpy start but a brighter finish,” the company said in a statement. “We believe we have a clear path to reaccelerate our revenue growth: continuing to improve all aspects of Netflix, launching paid sharing and building our ads offering. As always, our north stars remain pleasing our members and building even greater profitability over time.”

The company predicts that revenue growth in the first quarter 2023 will rise 4%, higher than the 3.7% analysts are currently projecting. Netflix says this growth will be driven by more paid memberships and more money per paid membership.

24 January 2023 | Microsoft

- Earnings: $2.35 per share, vs. $2.30 per share as expected by analysts.

- Revenue: $50.12 billion, vs. $49.61 billion as expected by analysts.

With respect to guidance, Microsoft reported $52.35 billion to $53.35 billion in revenue for the fiscal second quarter, which implies 2% growth at the middle of the range. Microsoft’s implied operating margin for the fiscal second quarter was about 40%.In the fiscal first quarter, total revenue grew 11% year over year.

Cyclical trends are affecting Microsoft’s consumer business, CEO Satya Nadella said on a conference call with analysts.

Net income fell by 14% to $17.56 billion. Microsoft had a $3.3 billion tax benefit in the year-ago quarter. But the company lengthened the useful lives of servers and networking equipment to six years from four years, resulting in an $859 million bump to net income in the fiscal first quarter. Still, the company’s gross margin.

Microsoft’s Intelligent Cloud business segment generated $20.33 billion in quarterly revenue. That’s up 20% and slightly less than the $20.36 billion consensus among analysts.

Azure revenue grew 35% in the quarter compared with 40% growth in the previous quarter. Growth in Azure consumption continued to moderate, and higher energy costs in the quarter hurt the gross margin of Azure.

The Productivity and Business Processes segment that contains Microsoft 365 productivity software subscriptions (the company is in the midst of rebranding the bundle from Office 365), LinkedIn and Dynamics, posted $16.47 billion in revenue, up 9%.

Revenue from the More Personal Computing segment totalled $13.33 billion. The segment includes Windows, as well as Xbox, Surface and advertising from the Bing search engine.

For the first time, revenue in the quarter from the Microsoft Cloud metric, encompassing Azure, commercial Office 365 subscriptions, commercial parts of LinkedIn and Dynamics 365, exceeded 50% of overall company revenue.

“In this environment, we’re focused on helping our customers do more with less, while investing in secular growth areas and managing our cost structure in a disciplined way,” Nadella said in the company’s earnings statement.

25 January 2023 | Boeing

- Adjusted loss per share: $1.75 vs. expected earnings per share of 26 cents.

- Revenue: $19.98 billion vs. $20.38 billion expected.

For the full year, Boeing had a loss of $5 billion despite a 7% increase in revenue to $66.6 billion.

Boeing posted a $663 million loss for the fourth quarter as supply chain issues weighed on results despite a rebound in aircraft sales and deliveries that drove up revenue.

Airlines and aircraft manufacturers have benefited from a sharp recovery in air travel, one of the most affected industries from the Covid pandemic. But Boeing’s leaders have been hesitant to ramp up aircraft production until the supply chain has stabilized.

The company is producing 31 of its 737 jets a month and plans to increase that to about 50 per month in 2025 or 2026. It said it would raise what has been low production rate of the 787 Dreamliners to five each month toward the end of the year and to 10 per month in 2025 or 2026.

Its commercial aircraft unit generated $9.2 billion in sales in the fourth quarter, up 94% from a year earlier as deliveries jumped, but it still produced a loss due to abnormal costs and other expenses such as research and development, the company said.

“We’re proud of how we closed out 2022, and despite the hurdles in front of us, we’re confident in our path ahead,” CEO Dave Calhoun said in a memo to employees. “We have a robust pipeline of development programs, we’re innovating for the future and we’re increasing investments to prepare for our next generation of products.”

26 January 2023 | LVMH

Luxury giant LVMH said China’s wealthy consumers have started returning to stores after the country’s reopening and it remains optimistic about the year ahead.

LVMH reported its second straight year of record sales and profits, with 2022 revenue up 23% to 79.2 billion euros, or about $86.2 billion. Profits grew 17% to 14 billion euros, or about $15.2 billion.

The return of the Chinese luxury consumer is the key question for the global luxury industry in 2023, as the U.S. and European economies slow. "If they resume travel and they head for the countries that attract them, they will probably come to France, and we are ready to receive them,” Arnault said.

There are already signs that the U.S. market is slowing. LVMH said revenue grew 7% in the U.S. during the fourth quarter, a sharp deceleration from growth of 26% and 22% in the first two quarters of the year. The declines are largely due to favorable comparisons in the first two quarters and the surge in Americans taking advantage of a strong dollar to buy luxury goods in Europe over the summer.

“We have every reason to be confident, indeed optimistic on China,” LVMH CEO Bernard Arnault said during the company’s earnings presentation. Arnault added that if the “green shoots” the company sees in China continue to grow, “it will be an excellent year.”

📅 Earnings Reports for the following update 📅

01 February 2023 | Meta

02 February 2023 | Alphabet

02 February 2023 | Amazon

02 February 2023 | Apple

Thank you

Guillaume Serdan

bottom of page