Q4 earnings insights across ridesharing, foodservice, streaming, vaccines, and home exercise.
Lyft: “Revenue per active rider in Q4 reached a new all-time high of $51.79. This is an increase of 14% versus Q4 '20, reflecting a larger mix of longer, higher revenue rides and improving service levels. The airport use case continued to recover with airport rides in Q4 '21, more than doubling year-over-year.”
Uber: “I think generally, the trends that Lyft talked about during their call are fairly consistent with our trips. So for example, we saw airport GBs up about 200% year-on-year, about 175% in the U.S. In December, rides tend to get longer holiday rides, et cetera. So we saw similar trends in terms of length of trip, et cetera, which certainly is encouraging.”
[QUESTION] “With the Car Next Door acquisition, could you discuss the rationale? And do you expect to enter additional markets with that type of offering?”
[ANSWER] “As far as Car Next Door goes -- you'll hear more about this in Investor Day tomorrow. But we're essentially -- we want Uber Rides to be a complete mobility solution. And that means essentially being there for you on any occasion where you need a car to ultimately replace first, your second car, but ultimately, car ownership. And Car Next Door allows us to have relevancy for those situations where you need a car for over a weekend, et cetera. We have partnerships with Avis, Hertz, etc., part of the magic of Uber is P2P, is managing a supply and demand kind of 2-sided marketplace. Car Next Door is a two-sided rental marketplace, great business in Australia. Australia is a spectacular market for us in both mobility and delivery. So it's coming into a market with a lot of strength. And yes, our ambition is absolutely to go global. And we have an audience here, like this is the playbook that we run with new verticals, we're going global with Eats, we went global -- and I think with peer-to-peer car rentals, yes, we'll go global. We'll make sure we do it in the right way.”
“One last thing is that as you think about the future with autonomous vehicles, this is a really important building block. And what I love about what we're doing with the business is that we can build phenomenal products for drivers, whether that's the mapping software, whether that's vehicle services or fleet management. And then we could position those for the consumer, the rider and then ultimately the autonomous vehicle to make sure we optimized for cost of operations as well as revenue per mile. So it all adds up to both helping in the near term and for the long term.”
Sysco: “As I mentioned, operational expenses within our supply chain were above expectations due to the challenges that COVID is presenting to our labor environment and our transportation costs. But we remain confident these incremental expenses driven by labor costs are near-term challenges that will improve over time.”
Tyson (Labor and Inflation): “We're also making sure that our pricing incorporates inflationary cost pressures on our business. In the quarter, our cost of goods sold was up 18% relative to the same period last year. We are seeing higher costs across our supply chain, including higher input costs, such as feed and ingredients. We're also managing higher cost of labor, transportation due to strong demand and limited availability. With these higher costs, we work closely with our customers to achieve a fair value for our products.”
Tyson (Labor and Supply Chain): “Still, customer demand continues to outpace our ability to supply products. So we have targeted actions in each segment to improve volumes. This is key to delivering on our commitments. To realize our volume goals, we must be able to fully staff our plants across the company. We continue to take meaningful action toward becoming the most sought after place to work. For example, we provided our hourly team members with more than $50 million in bonuses during the first quarter. We are piloting subsidized and on-site childcare and we are adjusting schedules to flex with workforce needs. These actions are bearing fruit as we see some improvement on the labor front. And while we have seen some labor challenges during the Omicron surge, we are generally seeing lower turnover in absenteeism.”
Aramark: “As previously discussed, in many cases, the company has brought back operating and above-unit support costs in advance of full revenue recovery. We anticipate that as COVID-impacted volumes recover, this transitional impact on profitability will unwind, with an expected incremental margin of 15% to 20% on the returning volumes. As revenues improved during the quarter, we continued to control what we could control by effectively leveraging our variable cost-based operating model and proactively addressing inflation and wage pressures through supply chain initiatives; ongoing efforts to drive operating efficiencies; and lastly, through account pricing.”
Sysco: “Lastly, as I mentioned, Omicron negatively impacted our top line performance, starting the weekend after Thanksgiving. Our business in Europe was impacted first with the reintroduction of major restrictions on our customers… These types of restrictions impact our customers' performance and ordering patterns. As a result, we expect the top line impact from Omicron to continue into the third quarter. The speed of the return to pre-Omicron levels is uncertain, but we are seeing signs of progress in Europe as restrictions have begun easing.”
Tyson: “But because of our vaccination position, we've now moved past the surge of the Omicron spike, as we call it, which occurred predominantly in the first 3 weeks of January, and we're back to normal levels. We think our vaccine mandate served us well and making that commitment and really making our team members' health and safety and their families and communities our highest priority has served us through the new variant.”
Aramark: “Organic revenue in U.S. food and facilities increased 61% year-over-year. Key drivers across each sector included education kicking off the economic year with nearly all clients holding in-person learning, while managing through some COVID-related delays in specific geographies. In Higher Ed, students largely resided on campus with meal plans intact.”
“What we are very confident in is as the restrictions on our customers ease, vaccines, passports and things like that mask mandates that impact people's psychology tied to going out. As those things ease, we see fast recovery from our customers, and we're prepared from an inventory perspective, we're prepared from a staffing perspective, we're prepared from a service level perspective to be able to serve when our customers are ready, and we expect to continue to pull away from the market from a growth versus the industry perspective.”
“We added 4.1 million paid domestic Disney+ subscribers, including a benefit of approximately 2 million incremental subscribers from our strategic decision to include Disney+ and ESPN+ as part of a Hulu Live subscription. In international markets, excluding Disney+ Hotstar, we added 5.1 million paid subscribers, primarily driven by growth in Asia Pacific and European markets. I'll note that growth in Asia included the benefit of new market launches in South Korea, Taiwan and Hong Kong in the quarter. Finally, we were able to resume growth in Disney+ Hotstar markets with 2.6 million paid subscriber additions in the quarter.”
How Operation Lightspeed Changed Pfizer: “Our success in leading the fight against COVID-19 has not only made a positive difference in the world, I believe they have fundamentally changed our company and our culture forever. To that end, we are applying the Lightspeed principles developed for our COVID-19 work to our other therapeutic areas to make sure we continue to move at the speed of science for the benefits of all patients.”
Impact on Population: “While Comirnaty is having a significant positive impact on Pfizer's financial performance, it is the tremendous impact that COVID-19 vaccines have had on society that it is most important. In the U.S. alone, the COVID-19 vaccination program is estimated to have saved more than 1 million lives and prevented more than 10 million hospitalizations, according to a December 2021 Commonwealth Fund report.”
Impact to GDP: “The economic impact is equally astonishing, astounding. According to December 2021 Heartland Forward report, the rapid deployment and wide availability of COVID-19 vaccines in the U.S. created an estimated economic savings of $438 billion in 2021 alone, which amounted to U.S. GDP being 2.3% higher than it otherwise would have been, 2.3 points. I'm proud to say that Pfizer contributed significantly to these benefits, given that approximately 6 out of 10 doses administered in the U.S. as of February 6, 2022, were Comirnaty. This is the value of our science, what our culture has enabled and what drives our people.”
Full Virus Eradication Unlikely: “Let me start with the COVID-19 pandemic. Our scientists continue to monitor the SARS-CoV-2 virus and believe it is unlikely that it will be fully eradicated in the foreseeable future. They believe this for several reasons. The global distribution of the virus makes it difficult to contain. The virus has shown an ability to mutate often, making it difficult to stay ahead of it. And the data appear to show that natural infections do not lead to the type of durable protection needed to prevent all transmissions and viral mutations. As a result, people can become reinfected by the same or different strains over time. That said, we now have the tools in the form of vaccines and treatments, that we believe will help enable us to not only better manage the pandemic, but also help countries move into an endemic phase. In other words, we believe these tools will help allow us to go back to normality and spend time with family and friends, travel, attend indoor dining and concerts and enjoy many other activities, while lowering the risk of overburdening hospitals and health care systems around the world.”
Foley “Owns” Missteps, Discusses Restructuring: “I'd like to start by stating I love Peloton. I love the role we play in connecting the world through fitness… But we also acknowledge that we have made missteps along the way. To meet market demand, we scaled our operations too rapidly, and we overinvested in certain areas of our business. We own this. I own this, and we are holding ourselves accountable. That starts today… Once fully implemented, we expect these [restructuring] initiatives to yield at least $800 million of annual run rate cost savings through operating expense efficiencies and material improvements in our Connected Fitness gross margin.”
Restructuring Areas: “Over the last several months, our executive management team has worked diligently to identify the areas in need of adjustment. The restructuring program we announced today includes a (1) meaningful reduction in the size of our teams across nearly all of our business operations from corporate functions to manufacturing, to logistics and R&D and at nearly all levels… Beyond this, we are taking significant structural actions to align our business and build margin back into our hardware economics. This includes optimizing our logistics footprint by (2) reducing our owned and operated warehousing and delivery network as well as generating efficiencies across procurement and manufacturing. We've also made the decision to (3) wind down the development of Peloton Output Park.
Restructuring Objective & Benefit Timeline: “The restructuring we announced today will help accelerate decision-making, increase accountability, create a more efficient and flexible supply chain, reduce capital intensity and ensure we are optimizing our spend to support profitable growth… We expect this program to generate at least $300 million run rate savings within Connected Fitness COGS by the end of fiscal '24… We also expect a $500 million run rate reduction to annual operating expenses. While some of these expense reductions will take time to complete, we can capture most of the run rate savings in fiscal '23.”
Softer Revenue Guidance: “Now on to our outlook. We are reducing our fiscal '22 outlook as we extrapolate trends that we have seen in the first half of the fiscal year continuing into the second, namely the continued reduction in traffic. We are reducing sales and marketing expenses meaningfully in the back half of the year as we intend to use the seasonally slower months in late Q3 and Q4 to better understand our baseline post-COVID demand… Based on these factors, we now project $3.7 billion to $3.8 billion of revenue for full year fiscal '22.”
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