Kaushik
$TEAM
Q4 EPS $0.66 vs $0.56 Est
Revenue $1.13B vs $1.08B Est
GUIDANCE:
Q1 2025 revenue $1.149B-1.157B vs $1.6B Est
- Cloud revenue growth YoY is expected to be approximately 27.0%.
- Data Center revenue growth YoY is expected to be approximately 35.0%.
- Other revenue growth YoY is expected to be approximately 13.0%.
- Gross margin is expected to be approximately 81.0% on a GAAP basis and approximately 83.5% on a non-GAAP basis.
- Operating margin is expected to be approximately (7.0%) on a GAAP basis and approximately 19.0% on a non-GAAP basis.
Fiscal Year 2025:
- Total revenue growth YoY is expected to be approximately 16.0%.
- Cloud revenue growth YoY is expected to be approximately 23.0%.
- Data Center revenue growth YoY is expected to be approximately 20.0%.
- Other revenue growth YoY is expected to be approximately 5.0%.
- Gross margin is expected to be approximately 81.0% on a GAAP basis and approximately 83.5% on a non-GAAP basis.
- Operating margin is expected to be approximately (6.0%) on a GAAP basis and approximately 21.5% on a non-GAAP basis.
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$TEAM
Q4 EPS $0.66 vs $0.56 Est
Revenue $1.13B vs $1.08B Est
GUIDANCE:
Q1 2025 revenue $1.149B-1.157B vs $1.6B Est
- Cloud revenue growth YoY is expected to be approximately 27.0%.
- Data Center revenue growth YoY is expected to be approximately 35.0%.
- Other revenue growth YoY is expected to be approximately 13.0%.
- Gross margin is expected to be approximately 81.0% on a GAAP basis and approximately 83.5% on a non-GAAP basis.
- Operating margin is expected to be approximately (7.0%) on a GAAP basis and approximately 19.0% on a non-GAAP basis.
Fiscal Year 2025:
- Total revenue growth YoY is expected to be approximately 16.0%.
- Cloud revenue growth YoY is expected to be approximately 23.0%.
- Data Center revenue growth YoY is expected to be approximately 20.0%.
- Other revenue growth YoY is expected to be approximately 5.0%.
- Gross margin is expected to be approximately 81.0% on a GAAP basis and approximately 83.5% on a non-GAAP basis.
- Operating margin is expected to be approximately (6.0%) on a GAAP basis and approximately 21.5% on a non-GAAP basis.
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Kaushik
$AAPL PT Raised to $261 at Rosenblatt, Maintains Buy, 'Decent Warm Up Before the Big AI Show'
iPhone -- The iPhone installed base was said to have “grown to a new all-time high in total and in every geographic segment.” iPhone was the top seller in the US, urban China, the UK, Germany, Australia and Japan. Customer satisfaction was said to be 98%, as per 541 Research.
China -- Greater China sales slipped 6.5% Y/Y reported, or less than 3% constant currency. The installed base was said to be at a record, with Mainland China, which also reportedly set a record for "upgraders." iPhone 15 was said to be outselling iPhone 14 in China at comparable time from launch. iPhones had the top 3 selling models in urban China. As for Apple Intelligence, and the need for Apple's AI to be licensed by the government, CEO Tim Cook revealed little except to say Apple was "constructively engaged."
Guidance/Estimates -- Apple is saying Sept. quarter sales growth will be similar to the June quarter's +5%, with services double-digit growth continuing. We assume 5.9% Y/Y consolidated sales growth, with iPhone swinging to up 3%, and accelerating from there, trending toward an AI-fueled mid-teens in F2026. The 5G transition with iPhone 12 drove 39% growth at its peak, and we think this could have comparable platform change dynamics.
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$AAPL PT Raised to $261 at Rosenblatt, Maintains Buy, 'Decent Warm Up Before the Big AI Show'
iPhone -- The iPhone installed base was said to have “grown to a new all-time high in total and in every geographic segment.” iPhone was the top seller in the US, urban China, the UK, Germany, Australia and Japan. Customer satisfaction was said to be 98%, as per 541 Research.
China -- Greater China sales slipped 6.5% Y/Y reported, or less than 3% constant currency. The installed base was said to be at a record, with Mainland China, which also reportedly set a record for "upgraders." iPhone 15 was said to be outselling iPhone 14 in China at comparable time from launch. iPhones had the top 3 selling models in urban China. As for Apple Intelligence, and the need for Apple's AI to be licensed by the government, CEO Tim Cook revealed little except to say Apple was "constructively engaged."
Guidance/Estimates -- Apple is saying Sept. quarter sales growth will be similar to the June quarter's +5%, with services double-digit growth continuing. We assume 5.9% Y/Y consolidated sales growth, with iPhone swinging to up 3%, and accelerating from there, trending toward an AI-fueled mid-teens in F2026. The 5G transition with iPhone 12 drove 39% growth at its peak, and we think this could have comparable platform change dynamics.
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Kaushik
$AMZN Piper - For Top Pick AMZN, 2Q was a mixed quarter. On the positive, AWS is solidly in reacceleration mode with growth at 19% and exceeding the Street outlook. However, retail revenue was light and the guide weak for 3Q revenue and profit. We still think retail margins are improving, but wish we didn’t have the distraction of the science experiments. We move on from the quarter and reiterate OW; PT to $215 from $220
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$AMZN Piper - For Top Pick AMZN, 2Q was a mixed quarter. On the positive, AWS is solidly in reacceleration mode with growth at 19% and exceeding the Street outlook. However, retail revenue was light and the guide weak for 3Q revenue and profit. We still think retail margins are improving, but wish we didn’t have the distraction of the science experiments. We move on from the quarter and reiterate OW; PT to $215 from $220
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Kaushik
$MELI PT Raised to $2,025 at BTIG
MELI delivered the goods, literally and figuratively, in 2Q24. Riding the fastest growth in items sold (+29% y/y) in over 3 years, MELI generated GMV of $12.7B, easily topping the $11.8B consensus. GMV strength was broad-based with local FX growth of 36% in Brazil vs. our 24%, 30% in Mexico vs. our 23%, and 252% in Argentina vs. our 215%. The robust performance in Brazil is especially impressive given MELI already controls an estimated ~40% of the market. Unique buyers rose by 3.1MM q/q, the largest non-Holiday quarter growth since the pandemic and items per buyer of 7.4 also rose to a new non-Holiday high, per our records. Fintech results were no slouch either. TPV of $46.3B bested the Street's $44.7B and Acquiring TPV accelerated in all three key geographies while growing 75% overall in local FX. Fintech take-rate expanded 3 bps q/q and, more importantly, MELI captured 110 bps of gross margin expansion from credit & fintech funding. All of these positives led to revenue of $5.1B, soundly above the Street's $4.6B and our $4.7B. Adjusted EBITDA was $880MM vs. the Street's $812MM and our $769MM. Impressively, Argentina's direct contribution margin improved nearly 800 bps q/q and is already nearly back to pre-devaluation levels. One spoiler is FX, which will weigh on upcoming quarters as major LatAm currencies have recently fallen vs. the dollar. As such, we are modeling GMV to decline sequentially to $12.4B, but that is still above the Street's $11.8B. At 2Q FX rates, our 3Q GMV estimate would be over $13B. While we take up our growth estimates, higher loss provisions and FX lead us to maintain our FY25 EBITDA estimate of $4.0B. Despite our EBITDA estimate staying intact, we raise our PT to $2,025 from $1,885 as we believe the stronger organic growth outlook warrants a higher target multiple.
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$MELI PT Raised to $2,025 at BTIG
MELI delivered the goods, literally and figuratively, in 2Q24. Riding the fastest growth in items sold (+29% y/y) in over 3 years, MELI generated GMV of $12.7B, easily topping the $11.8B consensus. GMV strength was broad-based with local FX growth of 36% in Brazil vs. our 24%, 30% in Mexico vs. our 23%, and 252% in Argentina vs. our 215%. The robust performance in Brazil is especially impressive given MELI already controls an estimated ~40% of the market. Unique buyers rose by 3.1MM q/q, the largest non-Holiday quarter growth since the pandemic and items per buyer of 7.4 also rose to a new non-Holiday high, per our records. Fintech results were no slouch either. TPV of $46.3B bested the Street's $44.7B and Acquiring TPV accelerated in all three key geographies while growing 75% overall in local FX. Fintech take-rate expanded 3 bps q/q and, more importantly, MELI captured 110 bps of gross margin expansion from credit & fintech funding. All of these positives led to revenue of $5.1B, soundly above the Street's $4.6B and our $4.7B. Adjusted EBITDA was $880MM vs. the Street's $812MM and our $769MM. Impressively, Argentina's direct contribution margin improved nearly 800 bps q/q and is already nearly back to pre-devaluation levels. One spoiler is FX, which will weigh on upcoming quarters as major LatAm currencies have recently fallen vs. the dollar. As such, we are modeling GMV to decline sequentially to $12.4B, but that is still above the Street's $11.8B. At 2Q FX rates, our 3Q GMV estimate would be over $13B. While we take up our growth estimates, higher loss provisions and FX lead us to maintain our FY25 EBITDA estimate of $4.0B. Despite our EBITDA estimate staying intact, we raise our PT to $2,025 from $1,885 as we believe the stronger organic growth outlook warrants a higher target multiple.
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Kaushik
$AMZN BofA - AWS regaining strength, and retail growing margins; Buy PT $210
Retail revenues in 2Q missed expectations and stock was down 7% after-hours on likely upside expectation reset (despite AWS beat). However, we remain constructive on the two key stock drivers: 1) improving AWS trends (growth accelerated most vs. peers in 2Q, AI still early) & 2) retail margin growth still intact into holidays (3Q profit could grow q/q and expect 4Q margins to be up y/y). Amazon remains our top large cap stock given AWS acceleration and AI opportunity, though we lower our sum of parts PT to $210 (from $220) given slightly lower growth estimates (we lower 2025E sales by 1.8%) & comp multiples.
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$AMZN BofA - AWS regaining strength, and retail growing margins; Buy PT $210
Retail revenues in 2Q missed expectations and stock was down 7% after-hours on likely upside expectation reset (despite AWS beat). However, we remain constructive on the two key stock drivers: 1) improving AWS trends (growth accelerated most vs. peers in 2Q, AI still early) & 2) retail margin growth still intact into holidays (3Q profit could grow q/q and expect 4Q margins to be up y/y). Amazon remains our top large cap stock given AWS acceleration and AI opportunity, though we lower our sum of parts PT to $210 (from $220) given slightly lower growth estimates (we lower 2025E sales by 1.8%) & comp multiples.
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Kaushik
$MELI JPMorgan - Strong 2Q24 Top Line Across Segments Drives EBIT Ahead of Consensus
MELI reported a beat across the board in 2Q24, coming ahead of Bloomberg consensus on main lines, albeit more in line with JPMe on EBIT for “wrong” reasons: our numbers did not incorporate FX weakness in the quarter. Brazil e-commerce came particularly strong, with another quarter of acceleration, Mexico held up a strong pace and Argentina surprised to the upside, despite still weak.
Payments and Credit also kept a strong pace. Moreover, shipping subsidies declined q/q, despite expansion of fulfillment. We reiterate our OW on MELI.
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$MELI JPMorgan - Strong 2Q24 Top Line Across Segments Drives EBIT Ahead of Consensus
MELI reported a beat across the board in 2Q24, coming ahead of Bloomberg consensus on main lines, albeit more in line with JPMe on EBIT for “wrong” reasons: our numbers did not incorporate FX weakness in the quarter. Brazil e-commerce came particularly strong, with another quarter of acceleration, Mexico held up a strong pace and Argentina surprised to the upside, despite still weak.
Payments and Credit also kept a strong pace. Moreover, shipping subsidies declined q/q, despite expansion of fulfillment. We reiterate our OW on MELI.
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Kaushik
$NET PT Raised to $99 at RBC Capital
Cloudflare delivered an impressive quarter in what continues to be an uneven macro, highlighted by a revenue beat and FY raise of a higher magnitude. The GTM evolution continues to track positively and fundamental drivers remain compelling. While Cloudflare has not broken out contribution from GenAI-related revenue, we'd bucket NET as one of the few software companies seeing tangible benefit today joining the likes of MSFT & NOW. Overall, we are bullish on the LT thesis as NET remains one of our favorite growth ideas that is separating from peers
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$NET PT Raised to $99 at RBC Capital
Cloudflare delivered an impressive quarter in what continues to be an uneven macro, highlighted by a revenue beat and FY raise of a higher magnitude. The GTM evolution continues to track positively and fundamental drivers remain compelling. While Cloudflare has not broken out contribution from GenAI-related revenue, we'd bucket NET as one of the few software companies seeing tangible benefit today joining the likes of MSFT & NOW. Overall, we are bullish on the LT thesis as NET remains one of our favorite growth ideas that is separating from peers
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Kaushik
$TEAM Goldman Upgrades to Buy
We are upgrading Atlassian to Buy from Neutral with a $230 PT (vs $200 prior). We believe TEAM has passed the toughest portion of its cloud transition and can credibly deliver on a de-risked guide for Cloud growth, Data Center migrations, and margin trajectory. After a significant period of underperformance (TEAM -24% YTD vs. NASDAQ +16%), the Street seems to have adopted the narrative we outlined in May 2023 that suggested TEAM was likely to see an elongated cloud transition, choppy cloud growth (until visibility in the macro improves), and limited margin upside amid investments in growth. TEAM, -14% AH, seemed to reinforce these beliefs with an in-line revenue quarter with 100bps of OpM outperformance and 1300bps of FCF outperformance, while guiding FY25 revenue growth and OpM 200bps and 60bps below consensus, respectively. While management underscored their more conservative management philosophy and re-affirmed their FY27 financial targets, the stock is likely reflecting renewed skepticism that TEAM can deliver 20% CAGR and 25%+ OpM. We see the following dynamics supporting a constructive setup: 1) We are through the toughest portion of the cloud transition. Improving demand signals and conservative expectations (implied 1% increase in FY25 net new Cloud revenue vs. 8%/4% in FY24/FY23) contrast the Street's expectations for continued headwinds, 2) Normalizing Data Center growth post Server EOL, which can underwrite the company's total revenue visibility, and 3) Margin expectations now better reflect the business's multi-faceted investment needs, particularly as TEAM pivots from PLG to GTM, which should lead to gradual profit expansion and potential FCF upside. While a management transition and macro uncertainty still poses risk to the stock, we believe the risk/reward SKU is balanced to the upside. Coming out of Team '24 and entering FY25, we expect investor sentiment to improve as conviction is rebuilt around a steady execution narrative, which can drive a greater EV/Sales premium vs. peers."
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$TEAM Goldman Upgrades to Buy
We are upgrading Atlassian to Buy from Neutral with a $230 PT (vs $200 prior). We believe TEAM has passed the toughest portion of its cloud transition and can credibly deliver on a de-risked guide for Cloud growth, Data Center migrations, and margin trajectory. After a significant period of underperformance (TEAM -24% YTD vs. NASDAQ +16%), the Street seems to have adopted the narrative we outlined in May 2023 that suggested TEAM was likely to see an elongated cloud transition, choppy cloud growth (until visibility in the macro improves), and limited margin upside amid investments in growth. TEAM, -14% AH, seemed to reinforce these beliefs with an in-line revenue quarter with 100bps of OpM outperformance and 1300bps of FCF outperformance, while guiding FY25 revenue growth and OpM 200bps and 60bps below consensus, respectively. While management underscored their more conservative management philosophy and re-affirmed their FY27 financial targets, the stock is likely reflecting renewed skepticism that TEAM can deliver 20% CAGR and 25%+ OpM. We see the following dynamics supporting a constructive setup: 1) We are through the toughest portion of the cloud transition. Improving demand signals and conservative expectations (implied 1% increase in FY25 net new Cloud revenue vs. 8%/4% in FY24/FY23) contrast the Street's expectations for continued headwinds, 2) Normalizing Data Center growth post Server EOL, which can underwrite the company's total revenue visibility, and 3) Margin expectations now better reflect the business's multi-faceted investment needs, particularly as TEAM pivots from PLG to GTM, which should lead to gradual profit expansion and potential FCF upside. While a management transition and macro uncertainty still poses risk to the stock, we believe the risk/reward SKU is balanced to the upside. Coming out of Team '24 and entering FY25, we expect investor sentiment to improve as conviction is rebuilt around a steady execution narrative, which can drive a greater EV/Sales premium vs. peers."
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Kaushik
$INTC Citi PT to $25
Yesterday after the close, Intel reported results and guidance well-below Consensus mainly due to weakness in its PC businesses (58% of 2Q24 sales) and higher manufacturing costs. While the results were disappointing, we believe Intel’s internal manufacturing plan remains on track, which is key to our rating. However, we continue to doubt the foundry business will work and we believe it is not in the best interests of shareholders.
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$INTC Citi PT to $25
Yesterday after the close, Intel reported results and guidance well-below Consensus mainly due to weakness in its PC businesses (58% of 2Q24 sales) and higher manufacturing costs. While the results were disappointing, we believe Intel’s internal manufacturing plan remains on track, which is key to our rating. However, we continue to doubt the foundry business will work and we believe it is not in the best interests of shareholders.
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Kaushik
$LULU Goldman Sachs Downgrades to Neutral
Following recent execution challenges, lackluster innovation launches, and rising evidence of more regular promotionality, we see a more balanced risk-reward for the stock. We had previously maintained our constructive thesis on LULU despite a slowdown in US sales growth and signs of visible execution missteps this spring. At the time, our thesis was that the company could drive a sequential reacceleration in 2H growth on the back of an improvement in assortment (colors / accessories / sizes) and a strengthening innovation pipeline (including new fabric launches in women's leggings). Despite some weakness in our quarterly checks earlier this month, we had previously believed trends were stable enough to maintain our more constructive view on the stock. PT to $286.
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$LULU Goldman Sachs Downgrades to Neutral
Following recent execution challenges, lackluster innovation launches, and rising evidence of more regular promotionality, we see a more balanced risk-reward for the stock. We had previously maintained our constructive thesis on LULU despite a slowdown in US sales growth and signs of visible execution missteps this spring. At the time, our thesis was that the company could drive a sequential reacceleration in 2H growth on the back of an improvement in assortment (colors / accessories / sizes) and a strengthening innovation pipeline (including new fabric launches in women's leggings). Despite some weakness in our quarterly checks earlier this month, we had previously believed trends were stable enough to maintain our more constructive view on the stock. PT to $286.
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