🗞 6 Most Impressive KPIs from Q3

Happy Sunday!

Here’s what’s on the docket for this week’s newsletter:

• 📊 6 Most Impressive KPIs in Q3

• 📉 Fast-Food Free Fall

Let’s dive in!

Featured Story #1

6 Most Impressive KPIs This Earnings Season

FinChat tracks more company-specific Segments & KPIs than any other financial platform globally.

So when earnings season comes around, FinChat’s team of data analysts always find a few KPIs that truly stand out.

Here are 6 of the most impressive ones the team found this quarter:

1.) Reddit - Daily Active Users

From 2021 to 2023, Reddit’s daily users were essentially static. However, after Google made some changes to its search algorithm, Reddit’s domain visibility ranking went from #68 to #5 in about a year. This has helped power a rapid acceleration in active user growth throughout 2024.

2.) Carvana - Gross Profit per Vehicle

Carvana is the largest online used car retailer in the United States. After the spike in interest rates last year, demand for Carvana’s vehicles sputtered. With a heavily levered balance sheet at the time and continuous losses, investors feared for bankruptcy which sent Carvana’s stock spiraling down 99% from its highs.

However, between some combination of rejuvinated demand, restructuring its debt, and greater cost controls, Carvana’s unit economics have improved substantially. Carvana’s Retail Gross Profit per Unit jumped 25% compared to a year ago helping the company deliver its 3rd consecutive quarter of GAAP profitability. Carvana’s stock is now more than a 60-bagger since its 2023 lows.

3.) Deckers Outdoor - HOKA Brand Revenue

Deckers, the 3rd largest footwear company in the world by market cap, is home to several brands including Ugg, Teva, and most notably HOKA.

HOKA is an athletic footwear brand that has been growing like a weed over the last 5 years. In fact, this quarter, HOKA surpassed more than $2 billion in trailing 12-month revenue, which is up nearly 20-fold from its 2017 figures.

To put the growth figures in context here, over the last 3 years, Nike’s Footwear Revenue has declined by 3%. HOKA’s revenue, on the other hand, has grown by 171%.

4.) Phillip Morris International - Zyn Volume

Over the last decade, Phillip Morris International has successfully pivoted away from relying on its legacy portfolio of cigarette brands to being the category leader among reduced-risk nicotine products.

And its 2023 acquisition of Swedish Match was another big step in the right direction. Swedish Match was the parent company behind the burgeoning oral nicotine brand, Zyn.

While Zyn was already the largest oral nicotine brand in the US prior to the acquisition, Phillip Morris has helped supercharge growth. Since closing on the deal, Zyn’s US sales volume has already doubled in just a year and a half.

5.) Lyft - Active Riders & Revenue per Active Rider

Over the last 5 years, Lyft has struggled to keep pace with its largest competitor Uber. With Uber processing more than 10x as many rides as Lyft each quarter, the market became justifiably skeptical about whether or not Lyft could sustain demand and eventually turn the corner to profitability.

Well… this quarter certainly helped put some of those worries to rest. Lyft’s active riders and Revenue per Rider both hit an all-time high, helping the company deliver a 16% free cash flow margin for the quarter, up from just 1% a year ago.

6.) Alphabet - Google Cloud

The parent company behind the world’s largest internet search provider reported a strong quarter across the board. From Search ads to YouTube revenue and even progress at Waymo, Alphabet seems to be firing on all cylinders.

However, there was one division that stood out above all the others, Google Cloud. Google Cloud accelerated its revenue growth from 29% last quarter to 35% this quarter. While at the same time, expanding its operating margins from 11.5% to 17.5%.

The outstanding results from this division has helped Alphabet add more than $130 billion to its market cap since the report.

Featured Story #2

📉 Fast-Food Free Fall

Last week, we reported some concerning figures coming out of some of the world’s largest quick service restaurant brands.

Well, this week, those concerning numbers persisted. Restaurant Brands International and Yum! Brands — two of the largest fast-food companies worldwide — both reported earnings this week and both saw sequential declines in their comp store sales.

Restaurant Brands International, which is home to brands such as Tim Hortons, Burger King, and Popeyes, characterized the shifting environment well on their conference call when addressing the weak quarter it experienced under its Popeyes banner: “In a more value sensitive environment this quarter, Popeyes calendar was missing some of the offers consumers were looking for and this resulted in softer comps.”

With the Q3 earnings season nearing a close, here’s a non-exhaustive list of every quick service restaurant brand that has seen sequential declines in their comp-store sales figures.

- McDonald's: -1% to -2%

- Burger King: 0% to -1%

- KFC: -3% to -4%

- Taco Bell: 5% to 4%

- Pizza Hut: -3% to -4%

- Tim Horton's: 5% to 2%

- Popeye's: 1% to -4%

- Starbucks: -3% to -7%

- Chipotle: 11% to 6%

- Wendy's: 1% to 0%

- Domino's: 5% to 3%

Meme of the week

It has now been nearly 2 weeks (and a 50% drawdown) since Ernst & Young resigned as SuperMicro Computer’s auditor due to being “unwilling to be associated with the financial statements prepared by management”.

However, while most people might look at the situation and feel for SMCI investors, it’s the index investors that have truly gotten the short end of the stick. SMCI’s stock is still more than a 10-bagger over the last 5 years, but since being added to the S&P 500 index on March 18th (10 days away from the all-time high), the stock has dropped a whopping 75.5%.