Google now trading futures. Let's take a look at company reports., for which we had investments, - including problematic ContextLogic.
Disclaimer: when we talk about, that something has grown, we mean a comparison with the same quarter a year earlier. Since all issuers are from the USA, then all results in dollars. When creating the material, sources were used, inaccessible to users from the Russian Federation. We hope, Do you know, what to do.
“More transactions - more profit, guys!»: Google is now dealing with futures
Google has entered into an agreement with financial holding CME Group (NASDAQ: CME): now the cloud division of Google will deal with the processing of operations of the CME marketplaces - the contract is concluded for 10 years. Google has also invested $1 billion in CME stock..
For CME, the meaning of this contract is to reduce costs, optimizing the operation of their trading systems, And, which is also important, this will help facilitate the process of registering new users.
CME will also work with Google to create new financial risk management tools - analytical software.
The agreement did not come out of nowhere.: since 2019, data on futures and options from CME platforms has been stored in the Google cloud. So the new agreement, in fact, develops already existing. Google's biggest financial deal ever.
This deal is beneficial for both companies: CME will be able to squeeze even more out of their business, using the latest technological advances. Google will be able to develop its cloud division: under conditions, when its core advertising business comes under attack from antitrust regulators, it is quite reasonable to strengthen the cloud part of the business.
CME is a major customer, and a successful experience with it will strengthen the reputation of Google, and its cloud division will be awaiting new large contracts from other companies, working in finance. So against this background, the lack of information about the cost of services for CME is not so important.. In a similar case with Amazon the status of the client was much more important than the amounts: new clients will be attracted by, that such a solid customer is served in the specified cloud service. Moreover, so far Google's cloud division is unprofitable, and the path to breakeven lies through attracting a huge mass of customers.
However, this agreement also carries certain risks for both companies. Cloud computing is a fragile area, and malfunctions, for example, if the Google servers fail to cope with the load during the auction or are hacked, can result in huge losses for the CME and, Consequently, to enormous reputational damage for Google itself.
Time to collect stones: how the companies we know reported
Let's analyze the latest company reports, on which we made investment ideas or reviews.
ContextLogic e-commerce platform (NASDAQ: WISH) reported on the results of the last quarter - and these results are not very. Revenue fell by 39%. The decline was in all segments: the main business of the online platform suffered the most - minus 52%, but the logistics segment got off easily - the decline was only 3%. Certainly, losses decreased - from 99 up to 64 million, - but only at the expense of lower revenue: total margin decreased from minus 16 to minus 17%. The number of sellers on the platform has also decreased — in general, all indicators fell.
The causes of these problems do not need to be looked for: the removal of the lion's share of coronavirus restrictions in the economy has dampened the interest of users in online commerce, but also, which is much more important, affected by logistic problems, which crippled the activity of sellers on the company's platform in China, where most of the company's sellers are located.
The holiday season can breathe new life into the company's business - although you shouldn't really hope for it., that logistic problems will soon dissipate.
In general, ContextLogic unpleasantly surprised: investors are ready to forgive unprofitable startups everything in exchange for revenue growth. But when there is no growth or - even worse - instead of growth there is a fall, then investors can be extremely ruthless.
However, quotes may be affected by recent personnel changes in the company's management. Think, the management of the company may come out in desperation with some statement about the blockchain, metaverse or some other complex word and this will allow you to pump up quotes. Or will there be some other positive news.
Surprisingly, on the sad news about the last quarter, quotes rose, because even this result turned out to be better than investors' expectations.
From the manufacturer of 3D printers 3D Systems (NYSE: DDD) revenue increased from 136.2 to 156.1 million, and operating loss of 67.604 million decreased to 17.208 million. Important to consider, what to compare with 2020, when the company has suffered damage from the loss of the value of intangible assets. Technically, the past quarter was profitable, because 3D Systems sold part of the assets, but, in fact, the company is still unprofitable. If you forget about the loss of the value of 3D Systems assets in 2020, then, in general,, operating result was the same.
The company's gross margin fell from 43.1 to 41,2%, which led to the sale of shares, as the company's quarterly result was above expectations. The main reasons for the decrease in margin: rising cost of raw materials and problems with logistics.
IT consulting company Genpact (NYSE: G) reported an increase in revenue 9%, and the profit increased by 20%. The company also raised its revenue forecast for this year.. The results were better than expected, but it didn't affect the quotes..
From e-commerce software maker BigCommerce Holdings (NASDAQ: BIGC) revenue increased by 49%, and losses more than doubled. But the investor's heart is a mystery, so quotes for unknown reasons flew into the stratosphere.
Software makers from Dun & Bradstreet Holdings (NYSE: DNB) delighted investors with news of revenue growth on 21,9% - and the company also made a profit. But since investors' expectations were indecently high, stocks did not rise on such news, because the company has not exceeded analysts' expectations by much.
At the German industrial company Covestro (ETR: 1COV) things are going very well: revenue increased by 55,9%, and profit more than doubled. The company also raised its forecast for this year's results for the third time.. In this regard, Covestro shareholders can modestly hope for an increase in the company's dividend payments..
