mid-week earnings update: 11/15/2021

Expensify (EXFY)

This Oregon-based company founded to “develop a platform for expense information collection, management and payments for businesses and individual users” plans to raise $234 million this week through an IPO.

The company generated $80.4 million of revenue in 2019, $88.1 million in 2020, and is on track to rake in $130.1 million of revenue this year – with roughly 76% gross margins. Sales and marketing as a percent of revenue has fallen from 34% in 2019 to only 10.7% in 2021 – incredible.

Expensify also seems to be printing cash – with their cash flow from operations increasing 4X during the last 2 years.

Yes, this company has competitors – including Bento, Brex, Divvy, Coupa, and others.. but they’re also operating in a massive total address market with several secular growth trend tailwinds (gig economy, creator economy, etc). They’ve got my attention.

Key Earnings Announcements:

This week is an important week to pay attention to the market – as a lot of our portfolio companies are reporting their quarterly financial results.

November 8: PayPal (PYPL), Roblox (RBLX), The Trade Desk (TTD)

November 9: Coinbase Global (COIN), Nio (NIO), DoorDash (DASH), Palantir (PLTR), Upstart (UPST)

November 10: Disney (DIS), Affirm (AFRM), SoFi Technologies (SOFI), OpenDoor Technologies (OPEN), Marqeta (MQ)

November 11: Coupang (CPNG)

November 12: Bakkt (BKKT), Warby Parker (WRBY)

Especially excited to see Coinbase, Opendoor, and Marqeta report their earnings – companies who have been top stock ideas for about a month now. Oh – and of course Upstart!

Hoping to also get more clarity on the Affirm Debit+ Card during their earnings release on Wednesday.

Investor Events:

Nancy Pelosi’s favorite company is hosting their annual technology conference this week.

November 9: Jensen Huang, CEO of Nvidia (NVDA), presents at the Nvidia GPU Technology Conference (GTC)

1 AI Conference | GTC Nov 2021 | NVIDIA

Nvidia’s GTC is packed with breakthroughs in AI, graphics, accelerated computing, data center, and more. Anyone can choose from 500+ sessions that deep dive into a wide range of industry use cases – from self-driving cars to medical research – and explore the most transformative technologies of our time.

More topics include:

AI Strategy for Business Leaders

Cybersecurity

Deep Learning

Fintech

Game Development

Healthcare

IoT, 5G, & Edge

Manufacturing

3D Design

Major Economic Updates:

The all-important monthly inflation update is coming soon.

November 8: US Inflation Rate (annualized) for October 2021 from the Bureau of Labor Statistics

November 12: US Job Openings (JOLTs) Report for September 2021 from the Bureau of Labor Statistics

All eyes on inflation – hopefully to be cooling down soon. This will certainly impact the market’s performance this week.

Big thank you to Lucky Karthik for mentioning that the DraftKings (DKNG) earnings was left out of the Week in Review post published last night – totally forgot to include them.

Earnings: -$0.82 per share vs. -$0.55 expected

Revenue: $213 million, an increase of +60% YoY

Monthly Unique Payers (MUP): 1.34 million, an increase of +31% YoY

Average Revenue per MUP: $47, an increase of +38% YoY

Guidance: FY21 revenue to come in around $1.26 billion and FY22 revenue to come in around $1.8 billion – equating to a +43% growth rate YoY

Press Release Callout

“Fundamental user acquisition, retention and engagement trends in the third quarter were outstanding across all of our online gaming products. We delivered $213 million in third quarter revenue which represents a 60% year-over-year increase.

Our key performance indicators also continued to grow, as Monthly Unique Payers increased by 31% and Average Revenue Per Monthly Unique Payer grew by 38%. We are increasing the midpoint of our 2021 revenue guidance and introducing 2022 revenue guidance which points to another year of strong growth in existing states for DraftKings.”

My Takeaway

+60% revenue growth for the quarter – fueled by higher retention rates and engagement. This was all during a stretch of bad luck with NFL games throughout the quarter – stating revenue could have been $40 million higher. Sure, their stock traded down on release, but Wall Street sees past the volatility – several banks have all raised their revenue expectations and price targets on the company ($68 / share on average, with some even calling for $105 / share). This company remains on my ‘favorites’ list.