Amazon 3Q15 Earnings Call Notes

2.1B AWS revenue 25% OM

“In the Amazon Web Services segment, revenue grew 78% to $2.1 billion. Amazon Web Services segment operating income was $521 million, a 25% operating margin, compared to $98 million in the prior-year period. AWS segment operating income includes $78 million of favorable impact from foreign exchange.”

Customers really like Prime Now

“On your comment about the economic drivers of Prime Now, what I’ll say is customers really value it. It’s not our entire selection, it’s tens of thousands of items that they may need on a daily basis. We think it’s an interesting part of the selection offer for Prime and it’s, in many ways, something that we can do that others can’t, because it’s a natural evolution of our 20-year effort to grow our fulfillment center network and our scale quite frankly makes it possible to even offer this to customers.”

India doesn’t have fulfillment options built, we view that as an opportunity

“India is a different market and does not have a lot of the same ready fulfillment options that some other countries did. We see that as an opportunity, an opportunity that we can build and we can bring to sellers.”

Pandora 3Q15 Earnings Call Notes

Pandora Media’s (P) CEO Brian McAndrews on Q3 2015 Results

The impact of Apple music on our listening hours was muted

“I am pleased to say that, given the scale of press and consumer attention on this launch, the impact on our active users and listening hours was muted and was, in fact, consistent with what we experienced during the launch of Apple’s radio service in 2013.”

Bought Ticketfly

“Founded in 2008 by Ticketfly CEO Andrew Dreskin, a pioneer in online ticketing, Ticketfly has become a major force in the live events industry. This year, Ticketfly was named one of Fast Company’s “Most Innovative Companies in Music” with an average of 14 million people visiting Ticketfly.com and its network of client sites each month.

In 2014, Ticketfly sold 16 million tickets to more than 90,000 live events, generating more than $500 million in gross transaction value and crossing the $1 billion mark in cumulative gross transaction value. Ticketfly provides ticketing and marketing software for approximately 1,200 leading venues and event promoters across North America and powers more than 600 websites on behalf of its clients, making it the leading provider of website technology to the live events industry.”

Consumers try new technologies in an evolving marketplace

“In an evolving marketplace, consumers try new technologies and experiment with other services, and we would naturally expect ebbs and flows in active users and hours as we grow our category leadership.”

Launched brand campaign including on TV

“we also launched our new brand campaign with the theme “the next song matters” across multiple media channels, including, for the first time, television. We view our direct marketing as an investment to engage current and lapsed listeners, as well as attract new listeners in the short-term.”

The competitive landscape has changed a lot in two years

“the landscape is very different this year than it was two years ago when iTunes Radio launched. There are more players in the market and more people offering free music and free trials and discounted trials and all kinds of stuff”

Alphabet 3Q15 Earnings Call Notes

10 years from now everything will be different again in ways no one can predict

“computing transforms people’s lives, we’ve gone from the PC revolution to the Internet revolution to the mobile revolution. And 10 years from now, everything will be different again in ways no one can predict. ”

Now indexing information that lives within apps

“We have now indexed more than hundred billion deep links within third-party apps. So if you’re looking for information that lives within an app will surface it as a result, and even give you an install link if you don’t already have it. ”

Our mission statement is incredibly broad

“I think we are fortunate to have an incredibly broad mission statement. Organizing the world’s information turns out to be something that has a lot of room ahead, we are still in the early days.”

In technology incrementalism leads to irrelevance

” one of the many very important statements from the founders that explains this framework is when they said in the letters some years ago and repeated since, incrementalism in technology leads to irrelevance and thus innovation is critical.”

There’s an appreciation that there needs to be prioritization of resources

“I think after a period of big expense buildup, there was an appreciation that we needed to manage the cadence of spend. And that’s what we’re doing and collectively we’re locked arm-in-arm to make sure that there’s resource prioritization.”

Alphabet allows for greater insight into Google

“Alphabet it gives us the opportunity to then provide some greater insight into the extraordinary operating performance within Google and breakouts you can see the investments that we’re doing and we’re working very tightly as a senior team here as we make that next step into this new environment in Alphabet.”

Mobile will eventually blend with desktop

“mobile is a computing paradigm is eventually going to blend with what we think of his desktop today as well. So overall it’s a shift in a computing paradigm, it’s not just form factors. And so overtime we see all of this is together. ”

Ad blockers are not new. It’s important to understand that ads fund all services that people use

“On the ad blocker stuff, it’s not a new phenomenon. I think it’s important to understand that ads today fund almost all the services which people use, including products like Google Search, Google Maps many, many third-party products. For publishers, it represents the majority of the revenue and I think users are okay with the contract and we need to make sure it works well. It’s also clear that that are areas where the ad experience is getting in the way, it affects performance, and so we as industry need to collectively do all that better. And so we are going to work hard to do that.”

We’re just scratching the surface on deep linking

“we’re beginning to scratch the surface in terms of how we get it information within apps. What’s been exciting to us is all of the indication show that when we provide these deep links. Users respond to them the same way they’ve done with links to websites and the model is working well.”

How do we broaden the nature of issues that we’re able to address?

“within other bets we have a pretty broad array of challenges, opportunities that are being tackled, as you know well from life sciences to driverless cars to what we’re doing in access and energy. And those we’re funding, we’ve got a very rigorous disciplined approach to looking at the metrics against which they’re performing and growing. But you used a term, when do they move into Google. And I wouldn’t assume that, that’s the plan. What we’re really looking at is how do we continue to broaden the nature of issues that we’re able to address.”

We want alphabet to be a magnet for entrepreneurs

“What we want with Alphabet is to be an extraordinary magnet, the best magnet for entrepreneurs, and to be an accelerant for their development. And to give them that the kind of environment where we can continue to thrive, and therefore build great businesses that generate tremendous returns as well for our stakeholders on top of solving big problems.”

The progress in machine learning has been dramatic in the last two years

“Machine learning is core transformative way by which we are rethinking everything we are doing. We’ve been investing in this area for a while. We believe we are state-of-the-art here. And the progress particularly in the last two years has been pretty dramatic. And so we are – we are thoughtfully applying it across all our products, be it search, be it ads, be it YouTube and Play et cetera. And we are in early days, but you will see us in a systematic manner, think about how we can apply machine learning to all these areas.”

Cisco FY 4Q15 Earnings Call Notes

New CEO

“It’s an honor today to lead this call as the CEO of Cisco. While this is only my third week officially in the CEO role, we’ve really hit the ground running since my appointment was announced on May 4”

11B in FCF

“For the full year, we generated strong operating cash flows of $12.6 billion and free cash flow of $11.3 billion. We returned $8.3 billion to our shareholders through share buybacks and dividends, which represented 73% of our free cash flow.”

Switching benefitting from customers connecting everything

“We continue see strength based on, frankly, customers connecting everything, IoE, collaboration. As we continue to drive our collaboration portfolio, all of those video end units require switching ports. Security is driving an element of that, as is the transition we see in wireless.”

[analyst comment] Doesn’t seem to be too impressed with switching performance

“I want to go back to the question on switching because I’m trying to understand. This is a major upgrade, and still we don’t see the numbers picking up materially. The sequential growth we’re seeing is below what we’ve seen the last two years, and I’m wondering. Can you go over what’s offsetting the growth in Nexus 3000 and Nexus 9000? Why are the numbers not showing much greater increase given the magnitude of the cycle?”

Strength in commercial is because shifted selling morion to align with business issues. Commercial customers tend to be early adopters

“I think the key is that we have really shifted both our solutions and our technology as well as our selling motion and our services capability to be much more tightly aligned with how the technology aligns to our customers’ business issues. And I think we’re doing that very well in the enterprise, and I think the teams have done a really good job of that in commercial. And those commercial customers, those midrange customers, we see it time and time again. They tend to be the early adopters of our new technology because they view it as a way to accelerate their business, to drive their competitiveness, and they just always seem to adopt early.”

Chinese performance actually the best in 8 quarters

“if you look at the emerging markets, I would tell you that story in Q4 was quite similar to the story in Q3. If we go through the five BRICM countries, Brazil actually was negative 45%. Russia was negative 38%. China was negative 3%, which actually was the best performance we’ve had in eight quarters. And we had some bright spots. India was plus 5%. Mexico was plus 26%, and Mexico had just a tremendous year in general.”

“I think that largely they’re largely macro and geopolitical issues. We have adjusted our cost structure where needed and we’ve invested in areas where we’ve seen growth, as you would expect. “

Alibaba FY 1Q16 Earnings Call Notes

Part of everyday life of the Chinese consumer

“Our growth was driven not only by an increase in the number of consumers coming to our marketplaces to shop, but also the frequency and breadth of their consumption activity across more and more product categories. This reflects our ability to deliver excellent customer experience and demonstrates that our platform is truly a part of everyday life of the Chinese consumer. We also experienced robust growth in mobile and encouraging progress in mobile monetization.”

Next day delivery in 41 cities

“Consumers now enjoy next-day delivery services in 41 cities, including Beijing, Shanghai, Guangzhou, Shenzhen and Hangzhou, and this will be extended to 50 cities by the end of this year. We have also launched same-day delivery of groceries, initially starting with Beijing and Shanghai, which has been very successful.”

Market leader in cloud in China

“Next, I’d like to discuss our cloud computing business, which had a triple-digit growth in the June quarter. We are the number one market leader in cloud computing services in China, and we are beginning to reap the results of years of investment in this business.”

Revenue: 20B RMB

“Year-on-year, our revenue grew 28% to RMB20.2 billion, primarily driven by increase in new active buyers. The lower year-on-year revenue growth was due to three factors: number one, the suspension of the online lottery business in late February 2015; a decrease in revenue from the SME loan business that were transferred to Ant Financial; lower pricing for ads on Juhuasuan, a change we made in April to acquire high quality merchants.”

No insights on the Chinese economy

“We closely monitor the Chinese economy and consumer behaviors. But as we always said, we manage our business and we execute our growth strategy for the long-term, and short-term movement won’t affect our long-term strategy.”

Zillow 2Q15 Earnings Call Notes

CFO going to a biotech company

“I want to start by thanking our outgoing CFO, Chad Cohen, for his nine years of contributions to Zillow, and I wish him all the best in his new role as CFO at a Life Sciences biotech company.”

Zillow is 32nd largest web property in the US

“Our Zillow audience continues to grow and our advertising is working. Not only did the Zillow brand alone represent nearly half of the real estate category in market share of visitors, but Zillow Group now represents the 32nd largest web property in America.”

Dual share class

“Last week, we announced that we’ll execute a change in our capital structure related to our long-term focus. Later this month, we will issue a class of non-voting Class C stock that our shareholders approved last December. Each Zillow Group holder of Class A or Class B shares will receive two Class C shares, basically a three-way stocks split. C shares will trade under the symbol Z, and A shares will trade under the symbol ZG. For Zillow Group extending our dual class structure through the issuance of C shares allows us to continue our focus on long-term growth and innovation.”

Some agents spending 60k per year

“If you just do some napkin math on someone spending $5,000 a month, they’re probably – they’re spending $60,000 a year, they’re probably generating $600,000 a year in commissions from us, they’re probably doing about 100 signs (37:09) a year. So, that’s not an individual agent, right? That’s probably one agent – one agent’s credit card standing in front of four or five other agents on that agents’ team, maybe as many as 5 or 10.

So, it’s very hard for us to tell, what the right TAM is of the total number of agent advertisers and quite frankly, we don’t really care all that much. What we do know is that, we’re at $456 million annualized of Premier Agent revenue and a year ago, we were at $349 million of Premier Agent revenue annualized. So the way I look at it is we have 72% share of mobile only visitors and agent spend $456 million a year advertising, in front of the company that has 72% mobile share.”

Facebook 2Q15 Earnings Call Notes

1.5B people using facebook now each month

“We’ve continued to make good progress in the growth of our community with 1.49 billion people now using Facebook each month and more than 1.3 billion people using Facebook on mobile. We’ve also continued to make gains in engagement. More than 968 million people worldwide now use Facebook daily, and 65% of our monthly actives are daily actives.”

People now spending 46 minutes per day on Facebook properties

“when it comes to time spent across Facebook, Messenger and Instagram, people are now spending more than 46 minutes per day on average, and that doesn’t include WhatsApp.”

43% y/y revenue growth

“This quarter, our total revenue is more than $4 billion for the first time, and advertising revenue grew by 43% year-over-year. ”

40m small businesses using pages on Facebook

“There are now more than 40 million small and medium-size businesses, using pages on Facebook. So we have a big opportunity to create value for communities all over the world, and Sheryl is going to talk more about this in a moment.”

We’re getting 1 of every 5 minutes spent on a smartphone

“We continue to get more than one out of every five minutes on smartphones in the U.S. and mobile usage is driving our growth globally as well. We believe we have the best performing mobile ad product in the market and video’s making it even better. With so many consumer videos being watched on Facebook, video ads are a natural part of the News Feed experience. For marketers, video has always been a compelling format. Now Facebook enables mass reach and cross device targeting and measurement abilities far superior to what other platforms offer. ”

Instagram, messenger and WhatsApp have a ton of users on their own

“We also saw strong growth in our next generation of services with Instagram, Messenger and WhatsApp now exceeding 300 million, 700 million and 800 million MAU respectively.”

Dollar had 300m impact on revenue

“The strengthening of the U.S. dollar has continued to have an unfavorable impact on our revenue. Had foreign exchange rates remained constant with Q2 2014 levels, our total revenue this quarter would have been approximately $330 million higher.”

Employees up 50% y/y

“We ended the quarter with 10,955 employees, up 52% compared to last year. With 873 additional employees, Q2 was one of our strongest quarters in terms of hiring, and the majority of the new employees were added in R&D.’

We expect y/y revenue growth rates to continue to decline

“Since the first quarter of 2014, we have seen year-over-year advertising revenue growth rates decline each subsequent quarter. We expect this trend to continue in Q3 and Q4 as we continue to grow off a much larger base and face currency headwinds due to the strong dollar. ”

$3B of stock comp expense, half of which related to WhatsApp

“We continue to expect stock-based compensation in 2015 to be in the range of $3 billion to $3.3 billion, approximately half of which is related to our prior acquisitions, most notably WhatsApp.”

Ramping CapEx v 2014

“we are ramping CapEx versus 2014. The guidance is $2.5 billion to $3 billion, and that’s up from $1.8 billion last year. We’ve got a lot of infrastructure investment that we’re making across data centers, servers, network. We are clearly investing for the growth of both Facebook at its core and then also the additional services that we’re bringing on.”

VR comes after video for ways that people want to share and consume thoughts and ideas

“there’s always a richer way that people want to share and consume thoughts and ideas and I think that immersive 3D content is the obvious next thing after video.”

In terms of engagement, news feed is continuing to do very well

“I think in terms of engagement the product is having, the biggest impact is News Feed continuing to do very well. So News Feed at the core is proving to be just a great experience for users. It’s getting better. We continue to invest in that. As people spend more time with News Feed, we get better about understanding what they like and getting the content that they care about in front of them. ”

The bet on Whats App is enabling people to have organic interactions with businesses

“the long term bet is that by enabling people to have good organic interactions with businesses, that will end up being a massive multiplier on the value of the monetization down the road when we work on that and really focus on that in a bigger way. So we’d ask for some patience on this to do this correctly, and the game plan will be more similar to what we did in Facebook with News Feed.”

I don’t believe this third person exists…

“Two out of three smartphone users check their phone as soon as they wake up in the morning.”

E-commerce is one of our top categories of advertisers

“So e-commerce is one of our top categories of advertisers, and we are already driving a lot of product sales through Facebook but importantly, our e-commerce initiatives are really about connecting consumers with marketers so that they can buy from companies. They’re not buying through us. We are testing a buy button in the new shop section on pages, but again, that buy button is letting people buy directly from their advertisers, not from us. It’s pretty early days. We’re excited by what we see in the e-commerce vertical and we’re going to continue to invest in growing that vertical as part of our ads business.”

Akamai 2Q15 Earnings Call Notes

Over the top TV viewing could mean an explosion of data across the internet

” the world’s major broadcasters and Internet companies are working to create over-the-top, or OTT, services and packages for popular video content. This has the potential to create an enormous amount of traffic on the Internet. Typical subscribers watching OTT video delivered across the Akamai platform could consume 10 megabits per second or more of traffic while they’re watching. This means that an audience size of only 5 million users, which is the equivalent of about four Nielsen points, could generate 50 terabits per second of demand, far more than we deliver today for all of our customers combined. And if OTT becomes commonplace, the demand could increase by an order of magnitude or more. This is why we are investing in growing the capacity of our platform and why we are working on new technologies to decrease the cost of delivering large volumes of video.”

It’s not easy to get the data over the networks

“making OTT successful involves a lot more than just capacity and scale. The quality of the viewing experience is also critically important. Delivering broadcast quality video over the Internet at scale is a lot harder than most people realize, especially considering the diversity of video formats, devices, operating systems, browsers, video players, DRM and ad insertion technologies, encoders, and carrier equipment in the ecosystem. And that’s just for the landline Internet.

The problem is even harder when you try to deliver high-quality video over cellular networks. That’s because cellular networks were originally built for voice, and voice uses about 1,000 times less capacity then video.”

Growing momentum for OTT

“It’s really hard to predict the rate of adoption and when new OTT services will become available. But we are in conversations with the country’s leading broadcasters, in fact, several global broadcasters and major Internet companies, and there’s a lot of buzz out there and a lot of interest in bringing major video content online over-the-top.”

Increasing our CapEx to prepare for OTT

“There is the possibility that it could have a significant impact on our financials next year. We are taking risk in doing this because there’s always a chance that the offerings will be delayed or there won’t be as much uptake among the users and subscribers as people are hoping for, but we’re willing to take that risk. The downside there is that if we just deploy the CapEx a little early we’ll be using it within a year anyway, but we really want to be ready if OTT takes off as a lot of people think it might.”

Most major media brands already use Akamai so potential is substantially more traffic from existing customers

“most of the major media brands already use Akamai. So I think less of new customers, more of new service and substantially increased traffic from our existing customer base”

Capex impacting gross margins via increased depreciation

“so year-over-year GAAP gross margins were down two points. Cash gross margins were down I think about a point. Certainly a point of that is depreciation. And as we mentioned, we’ve been doing some pretty substantive build-out of the network, so you can account for half of that. And as you can imagine, we’ve been doing very large build-out in the first half.”

A lot of big media companies will try to do this in house, but many have realized it’s better to just partner with Akamai

” We’ve got a lot of competitors. The very biggest media companies will have a do-it-yourself effort in-house. Pricing is always important, very competitive there. The only I’d say major change has been over the last few years we’ve developed much closer and better relationships with many of the world’s leading carriers, some of whom had large competitive or do-it-yourself efforts in the past and now have abandoned those efforts and decided to partner with Akamai.”

Want to do $5B in revenue by 2020

“I would say that we have certainly talked about a long-term model for the company is that we believe that we have an ambition to hit $5 billion by 2020. And if you do the math on that, it means you need to grow the company around 17% on a compound annual growth rate. “

Twitter 2Q15 Earnings Call Notes

stumbles are unacceptable and we’re not happy about it

“product initiatives we’ve mentioned in previous earnings calls like instant timelines and logged out experiences have not yet had meaningful impact on growing our audience or participation. This is unacceptable and we’re not happy about it.”

We need to do three things to right the ship

“Over the past few weeks, I’ve had a chance to get a deeper understanding of where I need to focus our team. We need to do three things. One, we need to ensure a more disciplined execution. Two, we need to simplify our service to deliver Twitter’s value faster. And three, we need to better communicate our value.”

What should you expect twitter to be?

“You should expect Twitter to be as easy as looking out your window to see what’s happening. You should expect Twitter to show you what’s most meaningful in the world to live it first before anyone else and straight from the source. And you should expect Twitter to keep you informed and updated throughout your day.”

MAUs grew just 12% y/y

“We reached 304 million MAUs in Q2, excluding SMS Fast Followers, compared to 302 million MAUs in Q1 for a growth rate of 12% on a year over year basis. Total average monthly active users, which as a reminder includes SMS Fast Followers, reached 316 million for the quarter, reflecting year over year growth of 15%.”

Twitter remains too difficult to use

“we have not delivered on meeting the new potential user’s expectations of Twitter when they try the product. Simply said, the product remains too difficult to use. As Jack mentioned, we need to simplify the product so everyone get value from Twitter faster. In short, we have not communicated why people should use Twitter, nor made it easy for them to understand how to use Twitter. This is both a product issue and a marketing issue.”

Ad load 1/3 of potential

“ad load, as measured by total ad impressions divided by total tweet impressions is approximately one-third of what we see as the long-term potential.”

Slowing growth rate in users, constrains ad supply growth

“because our growth rate in users is slowing quite dramatically. We’re giving you a sense in our load factor that there are scenarios where we can have a significant increase in daily revenue demand and specific mix shift towards one particular type of ad category. And if that happens, we could be more constrained than we have been in the past from a supply standpoint.”

The number one reason people don’t use Twitter is because they don’t know why they need it

“The number one reason from our market research that users don’t use Twitter because they don’t understand why to use Twitter. They don’t understand the value that Jack and I both talked about and we need to clearly communicate what that value is.”

We don’t have any update on the CEO search

“I know this is a trending topic on Twitter around the CEO search, but unfortunately we do not have an update to provide today. The search committee does feel the urgency of the search, but it is doing its work to make sure that we arrive at the best answer. And we’ll have updates when there is something meaningful to share. My focus is entirely on raising the bar of our execution and making sure that we’re focused on the right things. And as I said in my prepared remarks, it’s really around simplifying our service and making sure that people can get in and get to the value of Twitter faster and in a more immediate way”

Need to allow our teams to “ship product” faster

“focus has to be around not just particular individuals, but the best team dynamic. And great teams love shipping products to people who will use them on a daily basis And our focus is entirely around making sure that we unblock our team from shipping products faster, in a better way..So we definitely need to do a better job in ensuring an execution discipline to allow for people, enable people to ship faster. And I think our shipping cadence has improved over the past six months and we will continue to show improvements there.’

We need to provide a graceful entrance for people to get value from Twitter

“We need to make sure that we provide a really graceful and unfolding path to get to more value faster for anyone that comes into the service. And that means they don’t have to consider what Twitter is, they just have to consider what they are there for.”

Yelp 2Q15 Earnings Call Notes

This year hasn’t gone as smoothly as anticipated

“While this year hasn’t gone as smoothly as we anticipated, I am as confident as ever about our future, particularly about the success of our apps and local advertising products. With the strength in our core business, we continue to believe that we can be a $1 billion revenue company by the end of 2017.”

30% reach on smartphones

“Recent comScore report show that Yelp had, as of 2015, approximately 30% reach among the U.S. smartphone users. While this suggests that Yelp is the definitive leader among local search and discovery apps, it also means that we have significant room to grow.”

Exiting direct brand advertising

“Direct brand advertising sales is in decline, while programmatic advertising has its own challenges with privacy implications, ever declining CPMs, and lower ad quality. For example, ads that play video or audio intrude upon the consumer experience increasing load times and data usage on smartphones. We believe that prioritizing the consumer experience while delivering highly relevant native local advertising will provide us with the strategic long-term advantage. Given that our brand advertising as a percent of total revenues declined from 25% in 2010 to 6% in the second quarter of 2015 now is the right time for us to reallocate those resources to our highly differentiated core business.”

Max Levchin stepping down

“Before I turn the call over to Rob, I would like to take a moment to thank Max Levchin, Chairman of Yelp who has decided to step down from the board to pursue other interests. Given the demands on his time, we have mutually agreed this is the right time for him to transition off the board. Max provided the seed capital to start Yelp and I am forever grateful for all of his contributions and wish him all the best going forward.”

Website traffic down with SEO changes, but app traffic does continue to grow

“Now, website traffic internationally is down, that’s right, we mentioned 3% decline in website traffic and that is mostly a function of SEO and things that effectively we see Google having done with their algorithm there. The good news is that as with the rest of our business we do see app traffic growing very nicely in all of our markets. And given that, that is now majority of all kind of user activity, the good news is that their app traffic does continue to grow for us in cities all over the world not just domestically.”

The unicorn bubble is affecting us

“As to the unicorn bubble question and we certainly are feeling those impacts. What are we doing? I think we are trying in general take that Goldilocks approach we have always talk of trying to maintain a high-quality bar on hiring and retention and promoting from within. And we have been really delighted by general strength in our ranks across the sales force in the product and engineering group. And I think for the most part, it is something that we just have to ride out. That having said, you can see the cost in a couple of these areas have gone up, in particular, product and development as a percentage of revenue continued to creep up and that’s a function of compensation in the marketplace. So, we will do what we can to kind of hold the dam on that whole thing and not ride it out, as you said.”