Mentions of Russia and Ukraine spiking in recent days. Plus, new online gambling jurisdictions bring big marketing budgets with them, and crypto players offer short-term vs. long-term outlook.
“Just on the sanctions question, I mean there's obviously a couple of different avenues that we could be impacted by, that we focus on. Firstly, is obviously the direct credit exposure that could arise either in direct exposures or in securities form. And the second, which I think probably gets to your point about Swift, is where we might have Nostro or Vostro exposures. So money is due or from Russian banks. And obviously, that could either be direct with them or where we are using them as a clearing counterparty. I mean, fortunately, from our perspective, we've got very limited exposure to the Russian banking sector or indeed, Russia as a geography, full stop. But so we're clearly keeping it under close review.”
[QUESTION] “And obviously, a big part of the news today has been around the Russia-Ukraine conflict, and we were wondering with such a large part of your development team based there that is also handling the quality assurance of the network, how you are looking to handle the situation of further escalation or sanctions and ensuring that Five9s of quality and if you're potentially looking to shift any of this development to other countries instead.”
[ANSWER] “Thanks for the question. What I'd tell you is, first and foremost, about 12% of our revenue comes from outside of North America. And you can see that much of our sales presence is really outside the U.S. and the U.K., Europe and Australia. And then to your question around R&D, you can imagine we've got contingency planning in place for any eventuality. We're monitoring like everyone, I think, right now. We're monitoring what's happening in these regions and believe that the likelihood of any meaningful business impact is low because of our contingency planning. I appreciate the question.”
“However, we cannot currently estimate any impacts Russia's invasion of Ukraine may have on our business. We are planning for higher supply chain and vendor product costs throughout 2022. Additionally, in order to lock in international container capacity to support our growth for the second half of 2022, we are planning on international container costs to continue to grow throughout 2022. As Tom mentioned, it is our intention to pass along these cost increases and grow our gross margin rate throughout 2022 relative to the fourth quarter of 2021 when our gross margin rate was 38.8%.”
“It's a coincidence that our earnings call is today. So we haven't baked anything, any potential risk that might occur there into our guidance. We're going to be watching things closely because at this point, we don't know if there's any impact at all. We don't know if there is an impact, if it would be localized to Russia and the Ukraine specifically or whether or not it becomes a broader impact across Europe and beyond. It's just too early for us to tell.”
iGaming TAM Expansion: “We continue to see rapid expansion of the OSB and iGaming TAM in the U.S. This is being driven by both new jurisdictions legalizing OSB and iGaming as well as continued healthy growth in existing states. Overall, in 2021, 7 states enacted legislation for mobile sports betting, and we launched in 5 states last year with the other 2 states subsequently launching in 2022.”
“We think this is the most exciting growth opportunity this space has seen in 3 decades.”
CAC Investments Don’t Bear Fruit for 2-3 Years: “External marketing was higher in Q4 2021 versus the fourth quarter of 2020 due to the 5 additional states that went live in 2021, offset by declines in more mature states. The 5 new states represent 9% of the U.S. population and were in their first NFL season. As a reminder, we invest to acquire a player based on 2- to 3-year gross profit paybacks… As you think about the rest of 2022, please keep in mind that any states at launch have minimal to negative impact initially on the top line as we promote, and a negative impact on adjusted EBITDA and as we spend on external marketing, to drive early customer engagement at CACs that are consistent with our 2- to 3-year gross profit payback period target.”
DraftKings (-15.6% Since Close) Beats Q4 Revenue Estimates and Raises 2022 Guidance, but Posts Adjusted EBITDA Loss Far Greater Than Expectations of ~$570M: “For this year, including the 5 states representing approximately 11% of the population that we have launched since September and a return to mobile registration in Illinois, we expect our adjusted EBITDA to be between negative $825 million to $925 million.”
Caesars Entertainment (+4.35% Since Close) Posts Peak EBITDA Loss Due to New Markets: “So talk about what we've seen. New York was obviously an eventful launch for everyone. The volumes in New York were about 2x what we were anticipating, and our market share was about 2x what we were anticipating as well. So we have signed up about 0.5 million customers in New York since we launched. New York is approaching as large as the rest of the business in Caesars Digital combined. We're extremely pleased with how we came out of the box. But because of the launch of New York and Louisiana in the first quarter, you should anticipate that this current quarter is our peak EBITDA loss, that you're never going to see a quarter like this again, that the quarterly loss is going to be larger than it was in the fourth quarter…”
CZR Scales Back Marketing Spend, Effective Immediately, After Swift Entrance in the iGaming Space: “So what you're going to see from us as we move forward is you're going to see us moving toward profitability… You are going to see us dramatically curtail our traditional media spend effective immediately. We have accomplished what we set out to do. We set out to become a significant player, and it's happened significantly quicker than we thought. And I think most of you know me as someone who's not one to spend any money needlessly.”
Even FuboTV, a Sports-First Streaming Service, is Entering the Space: “Our wagering business also continues to evolve. Less than a year after we announced our intention to expand into sports wagering, we launched the first iteration of fubo Sportsbook in 2 states, Iowa and Arizona. We now have market access deals in 10 states, and we expect to launch fubo Sportsbook in additional markets soon. We believe entry into new markets will allow us to more effectively monetize our existing subscriber network. And we will create efficiencies in customer acquisition and retention and a deliberate, measured approach to growing our sportsbook with limited marketing spend. We believe the ability to watch and wager within a single ecosystem is a feature that only fuboTV has brought to market.”
FUBO Differentiates from Other Sportsbooks, Focuses on Casual & Incidental Betters: “We think that if we can nail down the product and focus on casual betters, the goal here is not to focus on the same cohort of users that Caesars and DraftKings and Fanduel all focus on. But this is event driven. When you have 800,000 concurrents that are streaming that product, and they're watching the Georgia game and you say, hey, we know you love Georgia, put $5 down on this game, we think that that's going to create a lot of value, a lot of entertainment value, and that we think is going to prove to be game-changing when the time is right.”
Molson Coors Reported Annual Revenue Growth for First Time in a Decade, Citing Diversification Beyond Beer with More Premium Beverages: “Folks, in 2021, Molson Coors grew the top line for the first time in a decade… Today, our top line is growing fast for the first time in 10 years. Our core brands are growing net sales revenue for the first time in years. Our portfolio is premiumizing to levels never before achieved. We are moving to scale beyond beer and are busy making tangible progress towards achieving the goals of our revitalization plan. We are set up for a strong 2022.”
AB InBev Also Cites Premiumization in Tandem with Pricing Action and On-Premise Recovery: “So let's start with our operating performance. We are very pleased with our performance in both the fourth quarter and full year 2021. In the fourth quarter, we delivered top line growth of 12.1%, with 3.6% volume growth. Revenue per hectoliter accelerated in quarter 4 '21 to 8.1% driven by the implementation of pricing actions across some of our key markets, ongoing premiumization and continued recovery of the on-premise.”
Premium & Beyond Beer: “Our premium portfolio delivered over 20% revenue growth in full year '21 and now represents approximately 1/3 of our total revenue… Finally, we continue to expand the category with our Beyond Beer offerings. Our global Beyond Beer business grew by over 20%, contributing $1.6 billion of revenue in full year '21.
“And we have a strong pipeline. You just think about the U.S., for example, what came to life now this year with hard sodas and seltzers with O carb in Bud Light with our brands in Beyond Beer continue to power and innovate.”
Seltzers are Key Driver of Growth Through Diversification: “We transformed Truly into a very strong #2 player and a $1 billion brand amidst an unprecedented flurry of competitive activity and innovation for many well-resourced competitors… Hard seltzers have generated tremendous growth for the beer industry over the last 5 years, and we believe they will remain a very important beer industry category in the future. Hard seltzers were 10.4% of total beer dollars for the full year 2021, up from 8.9% during the same period in 2020. And much like the energy drink category, we believe that the top 2 players will continue to represent about 70% of total share in the segment as they have from the beginning, despite significant attempts from hundreds of brands to enter the category.”
Ebay: “Starting with active buyers. We ended 2021 with 147 million active buyers on a trailing 12-month basis, representing a 9% year-over-year decline. The expected decrease in active buyers was primarily driven by low-value buyers, which fell 9% versus Q4 of 2019.”
Wayfair: “Turning to Q4 KPIs at the consolidated level. In the trailing 12 months, we had more than 27 million active customers, 12.5% lower than last year. Order frequency over the last 12 months was 1.89, a slight decline year-over-year.”
Alibaba’s 10% YoY Revenue Growth is Slowest Since 2014 US Listing: “This quarter, revenue was around CNY 242.6 billion, up 10% year-over-year. Our top 3 revenue contributing segments were China commerce, cloud and international commerce, which grew by 7%, 20% and 18% year-over-year, respectively. While our China commerce segment may be impacted by slowing macro and increased competition, our cloud and international commerce segment maintained solid growth and are expected to become increasingly important growth drivers in the future. These 2 segments will continue to contribute to diversification of our revenue base.”
“Now one in four US households, according to some third-party research, now own crypto.”
“We noted in our letter that Q1 is trending softer than Q4 and this is driven by lower crypto asset prices and lower volatility than we saw last quarter, both of which are significantly correlated with our monthly transacting users and our trading volumes… In terms of subscription and services revenues, we do anticipate the price effects, i.e. lower crypto prices, will drive lower revenue in Q1 as compared to Q4.”
Are We Entering a Crypto Winter? Coinbase Weighs In: “I don't think we're entering a crypto winter. In fact we don't really think about it like that anymore. I think early on in crypto's history, there was this trend of going through summers and winters. And the thing is crypto is kind of working now and so I don't expect it to be anything quite that pronounced over time. I think we basically have no idea what's going to happen in the next quarter, the next couple of quarters, at any moment in our history with crypto. It's like trying to predict what the S&P 500 is going to be next quarter or something like that. And so what we do in the absence of that is we just consistently build great products and grow the business because long term we're incredibly bullish about the potential of this industry. I mean, I think we're just in the very earliest days of this industry and it has a massive potential TAM.”
Coinbase on Web 3: “Our fundamental belief is that crypto is not just going to be an investment although that's a massive use case and first pillar of our strategy. It's not just going to be a new financial system, which is the second pillar of our strategy, and we have lots of products helping make that happen. It's also going to be the new default way that people build applications on the Internet. It's the new application platform. That's what people are calling Web 3 and they're going to be building all kinds of applications, not just financial service applications.”
Square’s Growing Crypto Projects: “2021 was a busy year for us… And we announced 2 new hardware projects to advance bitcoin as a native currency for the Internet, a noncustodial hardware wallet and a bitcoin mining system. In Cash App, we saw strong engagement and adoption from both new and existing customers. In the fourth quarter, we added to the peer-to-peer functionality that has made Cash App so popular with an update that lets customers send fractional shares and bitcoin from their Cash App balances to friends and family.”
Embedding Crypto as a Means of Driving Engagement: “The strongest and greatest thing about Cash App that we found is how it creates network effects… And a lot of it creates even more opportunity for people to keep their money with us. And as we see people keeping their money with us, we see them doing more activities that we offer, such as bitcoin or stocks or the Cash Card.”
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