Roku Surpasses Wall Street’s Q4 Expectations

As top market players report their Q4 2020 results, they seem hopeful for stronger economic recovery in 2021. Let’s look at how each of them performed amid the COVID-19 pandemic.

Last week, major companies reported their fourth-quarter earnings for 2020. The results reported by these companies provide a window to gauge their performance as quarterly results serve as early indicators of the company’s progress towards its projected yearly profit targets. Here are the Q4 earnings reported by some of the top companies.

Roku Surpasses Wall Street’s Q4 Estimates

Last week, streaming video platform Roku surpassedOpens a new window Wall Street’s sales and earnings targets for the fourth quarter. The analysts expected Roku to lose 5 cents a share on sales of $617.7 million. However, the company earned 49 cents a share on sales of $649.9 million in December. San Jose-based Roku had lost 13 cents a share on sales of $411.2 million in the year-earlier period.

In after-hours trading on the stock market on FridayOpens a new window , Roku’s stock alternated between gains and losses before turning solidly positive. In recent trades, it was up 2.4%, near 464. During the regular session, the stock slid 0.9% to 452.99.

In the fourth quarter, the average revenue per user increased 24% year over year to $28.76.

Roku’s Stock
Source: Investors’ Business DailyOpens a new window

Looking at the first quarter (2021), Roku expects to generate a revenue of $485 million, up 51% year over year while analysts expect it to earn $463 million.

Dropbox Exceeds Expectations

Dropbox reportedOpens a new window better-than-expected fourth-quarter financial results on Thursday and surpassed $2 billion in annual recurring revenue for the first time. The cloud-based file-sharing company delivered a net loss of $345.8 million or 84 cents a share on revenue of $504.1 million, up 14%. The non-GAAP earnings were 28 cents per share.

Wall Street expected earnings of 24 cents a share with revenue of $498 million. The company noted that it recorded impairment charges of $398.2 million in Q4, emerging from the ‘virtual first’ policy concerning permanent remote work. The company is observed to sublease a portion of its office spaces and settle charges for right-of-use and other lease-related assets. Besides, shares of Dropbox were up around 2% in after-hours trading. 

According to sources, paying users now sits at 15.48 million, compared to 14.31 million for the same period last year. The average revenue per paying user was $130.17, up from $125 per user for the same period last year. 

Looking ahead, analysts expect Dropbox to report first-quarter earnings of 22 cents per share on revenue of $503.69 million.

Walmart’s Rare Earnings Miss

Walmart showed a rare earnings miss on Thursday, despite significant gains in its ecommerce business. The company said that its fourth-quarter U.S. ecommerce sales increased 69%, while same-store sales increased 8.6%. Walmart’s online grocery business significantly contributed to this increase, where pickup and delivery services experienced high sales volumes.

Nonetheless, Walmart reportedOpens a new window a net loss of $2.09 billion, or 74 cents per share, compared with earnings of $4.14 billion, or $1.45 share, a year earlier. Wall Street was expecting earnings of $1.51 per share on revenue of $148.5 billion. Shares of Walmart were down over 5% in early trading.

Walmart had leveraged its scale and supply chain to ramp up ecommerce operations and rapidly expand its food business during the pandemic. Walmart’s online grocery and ecommerce strategy relied heavily on the chain’s enormous physical footprint, as well as recent additions, such as the launch of Walmart+Opens a new window and fuel perks for customers. But the retailer had to spend more to run its business throughout the pandemic, with operating costs climbing more than 20%. According to the company, it had $1.1 billion in pandemic-related costs in the fourth quarter. 

Walmart CEO Doug McMillon saidOpens a new window that the company is adding to the investments to keep pace with the dynamic retail environment, thereby raising the hourly wage for U.S. employees above $15 per hour. Walmart also plans to invest around $14 billion this year in supply chain and automation improvements.

Shopify’s Consistent Revenue Growth

Shopify reportedOpens a new window better-than-expected fourth-quarter results. As countries roll out COVID-19 vaccines and consumer spending shifts more offline, the company expects growth rates to slow down.

Shopify reported revenue of $977.7 million in the fourth quarter, up 94% from a year ago. Subscription solutions revenue was $279.4 million, up 53% from a year ago, with merchant solutions up 117% to $698.3 million.

Shopify reported a net income of $123.9 million, or 99 cents a share, in the fourth quarter. Non-GAAP earnings were $1.58 a share. Wall Street was looking for Shopify to report fourth-quarter revenue of $910.2 million with non-GAAP earnings of $1.26 a share.

For 2020, Shopify reported revenue of $2.93 billion, up 86% from a year ago. The company reported $319.5 million, or $2.59 a share. The non-GAAP earnings were $491.3 million, or $3.98 a share.  

Shopify’s Consistent Revenue Growth
Source: ZDNetOpens a new window

The company said it would invest in its fulfillment network, app and point-of-sale technology, and international expansion in 2021. Shopify’s outlookOpens a new window highlights how some of technology’s big winners during the COVID-19 pandemic will see slowing growth as consumers get vaccinated in 2021and retail’s new normal emerges. This more normalized growth comes amid big revenue surges in 2020.

Twilio’s Strong Q4 Results

Twilio deliveredOpens a new window better-than-expected fourth-quarter financial results on Wednesday. The cloud communications-as-a-service provider reported a net loss of $1.13 per share on revenue of $548.1 million, up 65% year over year. Its non-GAAP earnings were 4 cents a share.

Wall Street was expecting a loss of 8 cents a share on revenue of $454.7 million. However, Twilio reported non-GAAP earnings of 23 cents a share on revenue of $1.76 billion for the full year. The company’s share price was up as much as 14% in after-hours trading.

“Twilio’s 65% year-over-year total revenue growth in the fourth quarter continued the strength and momentum we saw throughout an outstanding year of results in which we delivered $1.76 billion in revenue,” said Twilio CEO Jeff Lawson. “These results reinforced that we are addressing a generational opportunity, and with our acquisition of Segment and strong traction with Flex, we are building the leading customer engagement platform to improve every interaction that businesses have with their customers.”

Twilio says it now has 221,000 active customer accounts, up from 179,000 at the end of 2019.

Analysts expect Twilio to report a net loss of two cents per share on revenue of $492 million for the current quarter. To this, Twilio responded with revenue expectations between $526 million to $536 million with an adjusted earnings loss of 12 cents to 9 cents.

Palantir Technologies Q4 loss

Palantir Technologies reportedOpens a new window an adjusted profit of 6 cents per share while revenue climbed 40% to $322 million. The data analytics software provider said its government revenue jumped 85% to $190 million, but commercial revenue edged up only 4%. For full-year 2021, Palantir expects revenue growth of 30%, slowing from 2020’s 47% growth vs. estimates of 31% growth to $1.406 billion. On Friday, Palantir’s shares plunged but slashed losses. 

In conclusion

Now that the COVID-19 vaccines are out, the retail market might as well undergo another shift in its operational dynamics. Therefore, it remains to be seen if companies perform well or show signs of slowing growth in the first quarter of 2021, as more and more consumers are expected to get vaccinated, and retail’s new normal may soon come to the fore. 

Do you think the rapidly changing retail market will affect the Q1 2021 earnings of these companies? Comment below or let us know on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We’d love to hear from you!