Today - Sunday, December 21, 2014
Friday, December 19, 2014
- While Red Hat's (NYSE:RHT) revenue rose 15% Y/Y in FQ3 and its deferred revenue balance 16%, its billings proxy (based on cash flow) was up 19%, notes Barclays (Overweight). "Underlying momentum in the core business, emerging product groups, and better large deal activity reinforce our positive view on the stock."
- BofA/Merrill (Buy) observes billings growth doesn't fully reflect Red Hat's public cloud growth (+50% Y/Y), given public cloud solutions (offered via partners) are billed "one month in arrears instead of one or more years in advance." It also likes the fact over half of all public cloud clients are SMBs, many of whom weren't prior Red Hat customers, and believes interest in version 7 of Red Hat Enterprise Linux (RHEL) is stronger than for prior versions due to a bevy of new features.
- Citi (Neutral) is more cautious on account of valuation. "Upside beyond $70 (20x+ FCF) likely requires sustained high teens billings growth which looks like a stretch. We continue to like VMW best in infrastructure software due to discount versus peers and 2015 catalysts (notably vSphere 6).”
- On the CC (transcript), Red Hat stated app development and emerging technologies revenue (covers middleware, cloud, and storage software) rose 45% Y/Y, and was 14% of total revenue. 62% of bookings came from the Americas, limiting forex pressures a bit.
- Shares rose 10.6% in regular trading, easily taking out their post-Dot.com bubble highs.
- Prior Red Hat earnings coverage
- NQ closed slightly above $4 a day after finally releasing its Q1-Q3 results, providing cautious Q4 guidance, and announcing it has signed an MOU to do a reverse merger for its FL Mobile unit with apparel retailer Tack Fiori.
- During the CC (transcript), long-time nemesis Carson Block (the founder of Muddy Waters) managed to jump in by telling the operator he was NQ investor Jim Oberweis, Jr. Block was cut off while asking whether recently-departed co-CEO Henry Lin is in jail, given media speculation to the effect due to Lin's ties to ex-CCTV anchor Rui Chenggang (detained on corruption charges).
- Omar Khan, still a co-CEO, would only reiterate Lin's departure was for "personal reasons," and not due to "anything related to the company."
- Khan also mentioned the NQSky enterprise mobility management (EMM) unit is now targeting larger customers, and that his shift is affecting near-term sales due to longer deployment times. He reiterated NQ's long-term revenue targets, but added the company isn't providing 2015 guidance for now.
- In response to a question about the proposed FL Mobile deal, VP Matt Mathison suggested NQ isn't too interested in Tack Fiori's existing businesses. "This has to do with FL Mobile ... This is the greatest way for us, for experiencing certainty and the most cost effective approach to achieve our objectives of one, unlocking value and two, enabling FL Mobile to continue to expand and grow and benefit from having their own public currency."
- Deja vu: Three months after gradually moving higher after posting an FQ2 revenue miss and EPS beat, BlackBerry (BBRY -1.4%) is doing the same after delivering a similar FQ3 performance.
- An improving gross margin contributed to the EPS beat: GM rose to 51.7% from 46.4% in FQ2. GM was at -106% a year ago (the result of a massive phone inventory charge).
- Cost cuts also helped: GAAP R&D spend fell 17% Q/Q and 48% Y/Y to $154M; SG&A spend fell 12% Q/Q and 68% Y/Y to $538M. BlackBerry "continues to target sustainable non-GAAP profitability some time in fiscal 2016." The FY16 (ends Feb. '16) EPS consensus is at -$0.20.
- Hardware was 46% of revenue, services 46%, and software/other 8% - the same as FQ2. End-user phone sales fell to 1.9M from 2.4M in FQ2 and 4.3M a year earlier. BlackBerry has said it needs to sell 10M phones annually to break even on hardware.
- Cowen (Market Perform) likes BlackBerry's margin improvement and BES license growth - ahead of the BES12 launch, BES10 licenses roughly doubled Q/Q to 6.8M, aided by the EZ Pass migration program (to be ended soon). "Software growth remains the critical driver of the long-term turnaround."
- S&P (Hold): "We are encouraged by a return to positive cash flow, reflecting margin improvement from cost cutting efforts. We see BBRY growing its mobile device management business ... We anticipate BBRY focusing on growing its software offerings and expect its hardware business to remain at depressed levels." MDM software rival MobileIron (MOBL +6.6%) is up strongly.
- FQ3 results, details
- Carnival (CCL -0.4%) reports net revenue yield improved 2.8% to in FQ4.
- Passenger ticket revenue +1.8% to $2.745B.
- Onboard revenue +1.3% to $941M.
- Gross cruise costs were down 5.3% during the quarter with lower fuel expenses an obvious boost.
- Carnival expects FQ1 EPS of $0.07-$0.11 vs. $0.10 consensus.
- CarMax (NYSE:KMX) reports used unit sales in comparable stores increased 7.4% in Q3.
- Wholesales vehicle unit sales improved 10.0% as increased appraisal traffic and the growth of the company's store base.
- Average selling prices: Used vehicles +2.3% to $19,914, New vehicles -1.4% to $27,056, Wholesale vehicles flat at $5,124.
- Gross profit per used vehicle +15.2% to $2,172.
- Gross profit per new vehicle +14.8% to $927
- FY2015 Guidance: Capital expenditure: ~$300M.
- KMX +6.39% premarket.
- Though Nike (NYSE:NKE) topped estimates for the 10th quarter in a row on strong sales growth across categories, a slower pace of futures orders is creating some concern.
- Futures orders for emerging markets came in at only 1% vs. 7% expected.
- On a conference call, execs with Nike pointed to its strong growth opportunities in China and with the women's merchandise business. They also noted that demand for the Lebron 12 and KD7 basketball shoes is robust.
- Nike coverage: FQ2 earnings, report highlights, earnings call transcript
- NKE -2.7% premarket.
- Finish Line (NASDAQ:FINL) reports comparable-store sales rose 4.5% in Q3.
- Gross profit rate -136 bps to 28.23%.
- SG&A expense rate +47 bps to 29.03%.
- Merchandise Inventory +10.58% Y/Y to $398.6M.
- Store count Y/Y: Finish Line -16 to 642; Branded shops +216 to 397; Running Specialty +19 to 66.
- FY2015 Guidance: Adjusted EPS: flat Y/Y; Comparable-store sales: a low to mid-single digits increase expected.
- FQ3 non-GAAP EPS of $0.01 vs. a loss of $0.02 the previous quarter.
- Normalized positive cash flow of $43M vs. cash use of $36M previously.
- No details on how the Passport is faring, but hardware revenue was about $365M, down 12% Q/Q. The company recognized hardware revenue on about 2M units, suggesting an ASP of roughly $182, down 27% Y/Y. 1.9M phones were sold through to end customers.
- Conference call at 8 ET
- Previously: BlackBerry beats by $0.06, misses on revenue
- BBRY -4.7% premarket
Thursday, December 18, 2014
- With its 2013 20-F filed in October, NQ Mobile has finally released its Q1 and Q2 results, to go with its Q3 numbers. Q1 revenue totaled $80M, and EPS -$0.03. Q2 revenue totaled $81.6M (below May guidance of $83M-$84M), and EPS -$0.22. Revenue fell slightly Q/Q in Q3 to $81.2M.
- Altogether, NQ's revenue rose 88% Y/Y over the first nine months of 2014 to $242.6M. Q4 guidance is for revenue of $82M-$83M, +2% Q/Q and +22% Y/Y at the midpoint. No analyst estimates exist.
- Over the 9-month period, enterprise mobility (NationSky) revenue rose 255% Y/Y to $104.5M. Ad services revenue rose 164% to $52.5M, and mobile value-added service revenue rose 7% to $81.7M.
- Gross margin tumbled to 32.6% from 64.1%, with gross profit falling slightly in absolute dollars ($79.1M vs. $82.6M). NQ attributes the drop to a mix shift towards low-margin enterprise device sales, and payouts to advertising and gaming partners. Q3 gross margin was 27.8%.
- GAAP opex for the 9-month period rose 70% to $140.2M, with $6.8M in "extraordinary costs" recorded. NQ ended Q3 with 159M average monthly active user accounts for its products.
- NQ also discloses two directors - James Ding and Xiuming Tao - have left the board. Roland Wu, formerly an exec at several Chinese companies, is joining the board.
- NQ now +5.8% AH. Q3 results, FL Mobile offer, PR.
- Red Hat (NYSE:RHT) guides on its FQ3 CC (webcast) for FQ4 revenue of $456M-$459M and EPS of $0.40-$0.41. Consensus is at $459.4M and $0.41. As is the case with many enterprise tech peers, forex is acting as a decent headwind.
- Red Hat also discloses Charles E. Peters, its CFO for more than ten years, plans to retire in the next 12 months, assuming "a suitable successor" has been found. CTO Brian Stevens resigned earlier this year.
- FQ3 results, details
- Nike (NYSE:NKE) reports a FQ2 profit increase of 25% Y/Y on broad sales strength.
- Revenue by brand: Nike +15% to $7.0B, Converse +24% to $434M.
- Global futures orders were up 7% to end a streak of double-digit growth. The mark improves to 11% if currency swings are backed out.
- Product growth breakdown: Footwear +18% to $4.27B, Apparel +11% to $2.29B, Equipment +3% to $380M.
- Gross margin +120 bps to 35.1%.
- Inventory +11%.
- SG&A expenses +17%.
- Conference call at 5:00 pm ET (webcast)
- NKE -1.6% after-hours.