The Canadian Investor - Big Tech Keeps on Delivering - Earnings Roundup

Episode Date: July 28, 2022

In this release of the Canadian Investor Podcast, we cover the following earnings and news: The Bank of Canada 100bps interest rate increase Canadian June CPI figures Shopify laying off 10% of its workforce Netflix Earnings Our live reaction as earnings from Google, Microsoft and Visa come out Tickers of stock discussed: GOOG, MSFT, V, NFLX Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Sign up to Stratosphere for free 🚀 our platform for self-directed stock investing research. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

Welcome back into the show. This is the Canadian Investor Podcast, made possible by our friends and show sponsor, EQ Bank, which helps Canadians make bank with high interest and no fees on everyday banking. We also love their savings and investment products like GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs on a regular basis to set money aside for personal income taxes in April of every year. Their GICs are perfect because the interest rate is guaranteed, and I know I won't be able to touch that money until I need it for tax time. Whether you're looking to set some money aside for a rainy day or a big purchase is

coming through the pipeline or simply want to lower the risk of your overall investment portfolio, EQ Bank's GICs are a great option. The best thing about EQ Bank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at eqbank.ca forward slash GIC. Again, eqbank.ca forward slash GIC. This is the Canadian Investor, where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Belanger. The Canadian Investor Podcast. Today is July 26th, 2022. My name is Brayden Dennis, as always joined by the one, the only Simon Belanger. Simon, we're back, baby. I missed you. What's going on? It's been, I feel like it's been forever since I've seen your face.

Yeah, it's been a while. It's been a couple of weeks since we recorded. I hope people enjoyed the shows that came out. We worked really hard end of June, early July to pre-record some shows. So we had some content flowing in, even though Brayden was enjoying the heat of Portugal. So Braden was enjoying the heat of Portugal. Dude, there was one day. Okay, there was one day. You'd hope that a wine tour through the Douro Valley of Portugal, the only place they make port wine, would be a wonderful experience. Wait till it's almost 47 degrees. The thing said 46.7 degrees. No AC to be found. just you just can't escape it

and then they're like here drink this warm port wine you're like mmm yummy like just give me a glass of water man preferably with some ice in it yeah good, good thing you're young. That's like a recipe to just pass out if you're not in good health. Yeah, yeah. But no, it was a wonderful time. I'm glad to be back, but it was, yeah, what can you say? It's a trip through Europe. It's a good time. But we're back.

Quick things to note here. Have you guys tuned in? Well, two things, actually. If you turn into The Real Estate Show yet, If you haven't, tune into the real estate show. The Canadian real estate investor on your podcast player, Nick and Dan are doing well. Hey, congrats to them. They've done really well on this start here. If you haven't checked out joinTCI.com, that's to support the show. We have some shout outs here. Daryl, Mark, Mark again, Wayne Vitalik. Thank you for supporting the show at join TCI.com. You get our monthly portfolio updates, rate

and subscribe the show. With all of that out of the way, Simone, today we have a fun show because, well, there's stuff for us to catch up on, but later in the show, you are going to get us live on the podcast reacting today, right now. It is 3.57 p.m. In just a few minutes, we are going to have the likes of Microsoft, Google, Visa, and some others report their earnings. So, Simon, we're going to go off the cuff. We probably won't go too in deep, but we'll go at least on the press releases. It's not something we've done before, but it just lined up. So, here we are. It should be fun. Yeah, I think it should be fun. We have some things that we definitely prepared for, but this will be our fresh reactions on what's going on. I'll be especially interested on the earnings from Google, especially following the news of Snap that basically brought everything ad-based down

last week. As it does every time Snapchat reports their crappy results. Yeah, exactly. So that one is the one I'll be really interested in. I'm anticipating Microsoft to chug along, maybe slightly below expectations. That's where I'm thinking. And the last one was Visa, right? We'll be looking at. Yeah, I think Visa will probably be just fine, but maybe this is a bold take. They may lower their guidance a little bit,

claiming there's a recession coming up. That might be something that they'll talk about. So I could see that happening or it could be totally fine. I could see, I would give it 50-50 for Visa. Yeah. That's why, you know, and we'll talk about, we have some prepared remarks here from Walmart and Shopify and some of these companies that have already came out and said, yeah, things aren't looking that good. And, you know, like while I was gone, it looked like we had a couple rallies, like we had a little rally and then now it's like, oh wait, the economy still looks pretty grim. So back to reality, especially when these companies are reporting like, yeah, like kind of just what you talked about. It's like, well, the next few months look tough from a

landscape perspective. And of course, highlighted by that I word, the inflation. And that's a good segue to your first segment about the Canadian CPI and the Bank of Canada raising rates. There's some important takeaways here while we were gone over the last two weeks. Yeah, big news while we were gone, like you said. And if people are interested in getting a take from a bit more of a real estate perspective, definitely visit the Canadian Real Estate Investor with Dan and Nick. They had a great episode on it. There is a link to the Spotify and Apple podcast show for them directly in our show notes. So just have a look. I added it there. Well, it's been a few weeks of course since the bank of canada increased the overnight rate by 100 basis points so 100 basis

point that's just one percent it's a sign of how seriously the bank of canada is trying to slow down inflation if i remember incorrectly it's the highest increase in 24 years and how long will this approach last i think it's a really good question clearly the Bank of Canada doesn't really know itself what it will be doing a year down the line if we just look back at just a year ago their discourse was completely different to what it is right now so most experts were predicting 75 basis point increase although i think the range was either 50 to 100 that wasn't out of the question and a lot of people mentioned that the morning of the release of the bank of canada the u.s actually came out with their cpi figures

and it was higher than expected at 9.1 percent And from what I've read for a lot of people, and I know Dan was saying that essentially that probably sealed the deal for the Bank of Canada. Personally, I think every investor should at least take note of this. Everyone knows we have a long-term approach when we invest. However, rapid increases like this can really impact the cost of capital for businesses and make financing more difficult. That's twofold because debt becomes more expensive and can become harder to get. If they manage to get it, obviously because investors tend to not favor high growth sectors as the economy is potentially going into recession but interest rates are increasing so high growth stocks like we've seen come out of favor so if you have a company that's relying

on financing for their operations whether it's debt or share issuance and their shares are way down and they can't really finance through that you're looking at more dilution here so it's debt or share issuance and their shares are way down and they can't really finance through that you're looking at more dilution here so it's definitely something to be aware of it will definitely impact some businesses more than the others so i'm not saying to panic with your stocks but just be aware of the business that you own and whether they can just sustainably operate without requiring any financing or they do require financing for their operations or for growth. Yep. Good with all that. I think that it's important for us to keep governing because this is what everyone's talking about. And we're going to see a lot of it on the earnings calls, on these conference calls over the past, or sorry, over the next few weeks. We already have this week over the last two days.

It's that word. It's that word that's hot, inflation. No one knows. Everyone's just guessing, but it's here and it's not going anywhere. Yeah, exactly. On that topic, CPI increased 8.1% in June in Canada. So the Consumer Price Index, the official government metric for measuring inflation, it was another massive increase in the year over year cost of living. Food was up 8.8%, shelter 7.1%, gasoline was up 55%. The good news here, here though is that we've seen gas prices go down recently so the sequential increase so the basically the increase from May to June was around in the six percent range so it did increase but it'll be interesting to compare the June over

July of this year because there's definitely been a reduction in gas prices so I wouldn't be surprised to see on a sequential basis a reduction but keep in mind when the official metrics come up they'll definitely be comparing versus last year so it will be still a large increase year over year and again clothing and footwear keeps bucking the trend here with only an increase of only 2.7%. That one I've been mentioning for a few times now, and it seems to never go over 3%. It's always in that 1.5 to 2.5, 2.7 range. I went to the mall on Sunday for the first time and what feels like forever because one, my style has just been absolutely brutal. And two, and two, well, I mostly just don't give a shit, but two, I am really bad at losing clothes. Do you have this problem? Like you're like, oh, that shirt that

I bought that I really liked. I haven't seen it and I have no idea where it is. From time to time. Is this just a me problem? It happens from time to time. I would say mostly that my biggest issue is socks. I get like orphan socks and then- And they just disappear and there's no real like, there's like a gnome that steals them. I'm convinced of it.

Yeah, or I just end up finding them like randomly under the couch like two years later after i threw out the solo song or i just end up mixing and matching one or the other my whole family roasts me because i just lose clothes and it sounds ridiculous but like i don't know where it goes like i have no idea i think because i'm always on the move and living out of a duffel bag all summer going to and from the cottage, it just gets lost. Anyways, went to the mall in a roundabout way and certain stores that I've noticed have gotten popular have really flexed pricing power though. The ones that have gotten kind of more popular, like post-COVID winners have really, like, I was like, holy, this shirt is 80 bucks now.

Like, I swear it cost 40 before, like last time I went to the mall in like 2014. So I have no, I think just some brands are just winners and losers. This also comes back to investing in fashion is impossible. And the mall reminded me of that. Yeah, no, definitely. I've gone to the mall a few times recently. And I think some of the brands I like, like Lululemon, their prices are definitely not low.

But some other brands... Have you tried the shoes yet? No, I haven't. But I think... I think it's only women's. Yeah, I was going to say, yeah, I'm pretty sure it's only women's. As soon as I said that, I was like, yeah, the guy's like, oh, but we have men's slides. Okay. I'm like, only women's. Yeah, I was going to say, yeah, I'm pretty sure it's only women's. As soon as I said that, I was like, oh yeah, the guy's like, oh, but we have men's slides. Okay.

I'm like, oh, okay. That's all right. I'll go for the cheap stuff when it comes to that. Yeah. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission

free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Here on the show, we talk about companies with strong two-sided networks make for the best

products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some extra income. But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and guests. It's a win-win since you make some extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at airbnb.ca forward slash host. That is airbnb.ca forward slash host.

Yeah, all right. Let's talk about Shopify. I see your face. Oh. Yeah, it was not a great day for Ottawa, I'll say that. Yeah, yeah. No, seriously, when you say that, like, I don't know what percentage of the workforce is in Ottawa,

but quite a few. And Toby, the CEO and founder, released a statement today. He released an open letter and that went out to the whole company, but also posted a blog on news.shopify. And it is like a blog post and it is called changes to Shopify's team. It's like, okay, I'm going to read it all because it's important. And then I'll make some quick hot takes. I'll try not to make this too long. Cause this is what it is. Team. I'm sitting down to write this email not far from where I sat down to write the first few lines of

code for Shopify itself. Those lines of code started a company and sent it on a fascinating journey full of wonderful toil, success, failure, ambition, and above all else, camaraderie. Camaraderie. I don't know. What's the right way to say that. Being on a journey surrounded by great teammates doing difficult things, it's what it's all about. All this makes this email so much harder to write. The next part of the journey will involve fewer teammates than we have picked up along the way. Shopify has to go through a reduction in workforce that will see about 10% leave by the end of the day. So this is today. Most of the impacted roles are in recruiting, support, and sales. And across the company, we're also eliminating over-specialized and duplicate roles, as well as some groups that were convenient to have, but far removed from

building product. Emails will go out in the next few minutes that will clarify if your role was affected. Those impacted will then have a meeting with a lead in their team. If you work at Shopify, I'm sure there are people listening to this that work at Shopify. I'm actually positive. If this is affecting you, I'm very sorry to hear that. This is the crap part. This is the not so fun part of when companies don't perform well in tougher times or they overestimated how well they could do. The stock is down 15%. Let's see what happens tomorrow with the results. It's obviously not the growth trajectory that Toby was predicting. It's not the growth trajectory that I was predicting,

you was predicting, or the market was predicting. That's why the stock is down 80%. You and I sat here week after week and said, I ain't buying this stock. It's way too expensive. It goes down 50%. And we're like, hey, this could be our chance. And clearly it's gone down more and more. There's just no catalyst for these things to rally, right? There's just absolutely no catalyst. My final thoughts are, obviously, they have a huge opportunity ahead of them. They have a great product and I think they have a pretty shot, like awesome ecosystem of apps, plugins, developers, et cetera.

But things got a little too ahead of itself. Their assumptions for growth, the market's assumptions of growth, people's assumption for the e-commerce market to keep taking share away post-pandemic, all of those things I just mentioned were wrong. And that happens. It doesn't mean that the story, the long-term story is wrong, but in the short term and the assumptions that were made were wrong. And that's just is what it is. Yeah, I totally agree with what you said here and i think it's just the perfect storm for them too so you're having a a tough overall you know macro environment which puts even more pressure on these type of companies and i think yeah they're not growing

as fast as they thought they would be post pandemic and you know i'm with you i thought they would not necessarily be able to keep the And, you know, I'm with you. I thought they would not necessarily be able to keep the pace that they had during the pandemic, but keep a pretty high pace. And they clearly overhired a little bit during the pandemic. And now they're making some corrections. I'd rather see them making those corrections right now. And again, I convey the same sentiment as you. I feel bad if your job was impacted, but at the end of the day, they have to make sure that they set themselves up for the future. Oftentimes, that means taking some- And try to protect the other 90% of the place.

Yeah. That means making really hard decisions right now. Thankfully, for those who are affected, it's overall still a very strong labor market. hopefully they're able to land back on their feet and find something else yeah true yeah what a weird scenario right like there's all these layoffs in tech but unemployment's so low and the demand for those skilled workers is so high so you know no one seems to be too upset when this happens, like just anecdotally from my experience is that they're like, oh, it's okay. I already got five offers from companies X, Y, and Z this morning. And obviously not everyone's in that situation, but these skilled developers that work at Shopify, you know, like they're going to be good. It's just such an in-demand talent, right?

Yeah, no, exactly. Now we'll move on to another large tech company. This one, everyone knows as well, Netflix, they released their Q2 2022 earnings. The stock was actually quite up on those earnings release. I looked at it. To me, I guess it can really be explained in one way. If expectations are low enough, even a bad quarter can look good. I mean, it was not a great quarter. Like, I'll be straight up honest here because the expectations were low. I think that's the market just expected something worse here. So they lost 970,000 subscriber, but it was less than the 2 million they had projected they would lose this quarter.

they would lose this quarter. Earnings were up 6.5% to $1.44 billion, but they were only positive by $10 million on a free cash flow basis. So let's say they're breaking even there. Earning per share was up 7% to $3.20. They did mention they are facing headwinds when it comes to their revenues because of the strong US dollars compared to other currencies. And keep in mind here, international revenue represents about 60% of Netflix revenue. So this has a real effect on the results when there's high fluctuations for currency, and especially when they fluctuate in a bad way. In this way, because they report in US dollars and the other currencies are losing value versus the US dollar so they can't necessarily counteract that with increasing

prices they are currently working on their lower cost ad supported offering which is expected to be launched in early 2023 and as some of you may know Microsoft will be its partner in the ad supported offering. I was surprised that Microsoft was the partner. What about you? I just that would not have been the first one that came to mind. I was shocked, to be honest. Like, yeah, I was surprised to say. I would have seen more.

There's something there. More of like a trade desk would have made a whole lot of sense or like i understand why they wouldn't want ttd was down quite the trade desk was down a lot on that news okay i didn't check but you know i i get that google would probably not make sense just because they probably see them as a competitor with youtube so do you really want to help a competitor out even though google is way more than youtube so i can see that but I'm just surprised I didn't really see Microsoft as having that expertise per se but I guess they do and they mentioned that they are seeing increased competition in the streaming space and for the longest time

they were the only option obviously yes there was YouTube and a few smaller players but competition has really intensified in the last two years from various companies, obviously, including Disney. We've seen Peacock as well. There's been, well, other offerings with Disney as well under their umbrella. In Canada, we have Crave TV that has a bunch of offerings. You also have the new Discovery offering. So there's really a lot of competition. And I think we're starting to see a bit of a shift here. I think Netflix will still be important, but, you know,

it remains to be seen how they will do in the next couple of years now that these other players are entrenched and whether people go away from Netflix, come back to Netflix, I think it'll be a really interesting thing, especially with the ad-supported plan, how it works out going forward. Yeah, well put. This business is in a pivotal moment in its story. They're literally pivoting the biz model in a fairly substantial way, they have indicated. they're literally pivoting the biz model in a fairly substantial way. They have indicated they have reached saturation and user growth, like way faster than I thought they would. It's just a, I mean,

I don't own shares. I have no horse in this race, but it's an interesting one to watch because like, it's like, maybe not as extreme, but it's like Facebook where it's like, there are going to be books written about the next six to 12 months of these companies. Right. Like it's just such an important time for like hundreds of billions in market cap is all I have to say. Yeah. And I don't own shares either. And right now I wouldn't consider owning Netflix shares. shares, I'll be really honest. And for those considering personally, I would at least wait and see to see how their ad supported plan kind of works out. Give it a couple quarters after the ad supported plan, because one of the big risks here is they actually cannibalize some of their

own business with people who are paying, who now would prefer the cheaper option and are okay with ads, right? I think that's always a risk. I mean, I personally would not because I get annoyed with ads. But you know, especially if people are tied for money, it's an easy way to save if you can slash your costs by let's say 10 bucks, I don't know what the cost will be, and just have some ads and you're willing to live with that because you're actually reducing your expenses. So I think it's really tricky. Like you said, it's a pivotal moment. It'll be interesting to watch for me on the sidelines. I hope it works out for them. I have no idea how it's going to go. I think it could go either way. Two things. One, I have, while you were talking, pulled up every

single press release for Google, Microsoft and visa microsoft yeah while you were talking you saw it okay so what i'll even do is i'll just like share my screen here live on the call and we can chat about it for people on the podcast but we'll get to that so you got to keep listening we'll keep going through here another thing i said two things so the second thing is anecdotally i went to a dinner party with my co-founder and our significant others for his birthday. And we had in the background, those YouTube mixes that people like make hour long song playlists and they just keep shuffling through and they'll have like beautiful scenery in the back. My dad listens to this with like smooth

jazz while he's reading. Like people love this stuff, right? Okay. And she said, again, this is an anecdotal one. She goes, I'm thinking about canceling Netflix because I only use YouTube and I am a very happy YouTube premium subscriber. And I think it's so worth it. And I look at my like viewing preferences and I watch way more YouTube than Netflix. Like some of the creators on YouTube are just making amazing content. Like it's actually mind blowing. You know, I love like digging into these like documentaries and stuff. People are making these elaborate 45-minute investigations on certain things on YouTube. These are like crack for me. I love a good documentary. But yeah, that's my two cents there. And we'll talk about YouTube shortly with Google's results.

As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense, and with them, you can buy all North American ETFs, not just a few select ones, all commission-free, so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with

Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some extra income. But there are still so many people who don't

even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and guests. It's a win-win since you make some extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at Airbnb.ca forward slash host. That is Airbnb.ca forward slash host. Simon, I'm looking here on the next two topics. Do we want to save these and go to big tech or do you want to do them this is this is this live yeah let's go to big tech and these are something we can always talk about them next week i don't think they're super urgent one was about twitter and musk so i'm sure there's going to be new new information by the time we talk yeah it'll be outdated by the

time it freaking comes out yeah exactly so i know let, no, let's do it. Did you want to start with Microsoft? Quick question on that. What do you think, and there's no right answer to this, what do you think makes Elon Musk so desirable for people to talk about? Is it because he's so rich? Is it because he's so unconventional? Like, you know, that you have this billionaire, richest guy in the world, CEO of multi-billion dollar companies posting memes and stuff, posting like, you know, like everyone's so invested in his life. Yeah. What is it? I'll be honest. I think it's because he's one of these people that manages to polarize an individual on an individual basis. So I'll just explain it that way. I'll just like for me, for example, Elon, you know, I love the fact that he's trying to

make change and trying to make good for planet Earth and, you know, continue the human species and his vision. I think I love that about him. But I also hate some of the tweets he does, the fact that he's wrecked people financially because of the tweets and people wanting to invest. He has shilled and pumped crypto over the past year. So I actually have internal debates, whether sometimes like, I don't know, I can't say I love him. I can't say I hate him.

I would say it's a love-hate relationship for me. I think there's some good, some bad, and some really ugly when it comes to Elon Musk. And I think a lot of people feel that way. I could be wrong. I know there's something. No, I think you're right. I think you're right. Because a lot of people think he's goofy. And then a lot of people are like, yeah, but he's sending people to Mars. Like, have you ever thought about that? Have you ever thought about someone spinning up a space company that's more innovative than the bajillions in funding that the predecessors get?

Like, he doesn't fit. Here's what it is. He doesn't fit in a box. No, exactly. He fits in no box. And that's why he's so controversial. And people love to talk about him. And he has, like, stole pop culture in a way.

Yeah. And it's also fascinating to see how his brain works right because some of the comments he makes sometimes and that that is one of the thing that really rubs me the wrong way is you know he'll talk about his employees and almost like they're machines you know or they're like him yeah and it's and i always tell myself i'm like buddy like people will quit if they like you keep treating them that way you'll lose some really good people and i think is you know emotional intelligence is definitely not a strong suit of he's you know really good well you've heard him talk too right like oh yeah he's weird yeah yeah he's definitely special let's just say that you can't put him in a freaking box, man. No, exactly.

Okay, our discussion off the cuff here on Elon Musk. Dude, it was just something I've been thinking about. Like, what? Who is this guy? All right, here, I'll share my screen right now. We've never done this on the show. This is cool. Let's start smallest, or sorry, biggest to largest here on companies here.

Biggest to largest? Biggest to largest? Is that what I. So let's, let's biggest to largest. Is that what I just said? Yeah. That's what you said. Largest to smallest. We're going to do biggest to largest. So small though on this screen. Is it tiny? Yeah, that's okay. I can pull it up on mine. Is it bigger now? Yeah, a little bit. Okay. Okay. All right. Here's Microsoft is breaking news here. It is four 30. So, you. So we just got the results for Microsoft here. Revenue of $51.9 billion for the quarter, up 12%, 16% in constant currency, net profits of 16.7 billion, only up 2%, but 7% in constant currency. So this is what we were expecting across the board is all these effects for every company, right? Like I know Canadian companies as well. The Euro is now like the same

as the USD, been a lot of changes. Oh yeah, definitely. And I mean, from a revenue basis, I can't remember what the guidance was here. So I think a lot of it will have to do with what the market was expecting and the guidance. But overall, this looks pretty good, although it's almost flat in terms of comparing on constant basis between the increase of revenue and operating income. So it's a similar increase. But overall, I think it looks pretty good. I was reading CNBC, their kind of breakdown quickly as well and apparently they what came shorter than expected was the cloud segment no cloud killed it here really 40 on azure look 40 on azure year over year yeah that's in line with that ridiculous 40 that they keep

hitting it's weird how all these hyperscalers keep hitting exactly 40. Yeah. Here's the issue is that apparently, and again, analyst prediction, they affect the market short term, but analysts were expecting 43%. That's why. Oh, okay. Well, screw that. No, no. Yeah, exactly. But if people are wondering, we're like, oh, this is awesome, and they see the stock down that would be why right the stock is basically flat after hours is it yeah down one percent okay yeah but it was down a little bit today so i don't know if it's people anticipating the results in advance yeah worse than than it is so probably linkedin up 26 on sales yeah how does LinkedIn keep getting it done? It's so spammy, man. Yeah, now a lot of people are raising the alarm

because there are a lot of scams too, I think apparently on LinkedIn. Yeah, I get tons of DMs that I'm like, dude, I don't want to sign up for your coaching, bro. Like block. There's only two segments that seem to be down here. So there's only Windows Oem and xbox content and services this one is surprising oh xbox yeah and a little bit surprised that xbox is down six percent

could be the time of the year though yeah gaming revenue decreased seven percent well there's cyclicality to the console yeah exactly and you know the subscription i could see people canceling it for the summer months and then put it back on so i don't know whether that's in line with previous quarters like the same quarter in previous years very cool so looking at this i mean you're getting more of the same they keep crushing it with the office 365 and the azure business and somehow stupid LinkedIn. Yeah. Dynamics, which is their CRM, up 31%. I think overall, I would say it's a solid quarter.

Maybe fell a tiny bit short of expectations, but compared to what we've seen overall from the tech space, I'd say Microsoft is doing pretty well. So damn resilient. Like Microsoft is just a utility now, right? Like it's a utility that grows with unbelievable margins like look at this i mean it's just it like it's so sticky what's more sticky than office 365 and cloud and dynamics and azure for businesses these days not much who are

on their stack now you wanna which one are we doing next? Google? Let's do Google. Let's do Google. Oh, wow. Okay. Revs were up, sorry, I'm changing the sizes here. Revs are up 13%. You want me to tell you the headlines on CNBC for that? Sure. Give me the headlines. Revs are up 13% to almost 70 billion. Yeah. So the headline, and again, we don we don't usually will dig in more into the actual release and the earnings but right now it's just off the cuff right or and i always find interesting the immediate headline from cnbc because oftentimes it's like this big bad thing or great thing and then you look at the results especially in a bear market they don't like positive exactly and it's not positive sophabet misses on earnings and revenue for a second quarter. So we'll see after

we look at it if it's really as bad as the headline says. Okay. So revenues are up 13% and constant currency 16%. So again, no, you're not getting this crazy growth that we've seen on the top line for these names overall across everything. I mean, ads are somewhat cyclical. They're not immune to like the ad business is very cyclical. It's not immune to the economy, but Hey, look how resilient this is. 16% on constant currency operating margin. Looks like it was down a couple of percentage points to 28%. And net income was certainly down, but $16 billion in net profits.

I think it looks like, at first glance, like a good quarter. What does it look for segments? Yeah, let's look at segments. Okay, so Google search, actually, wow, look at that. It went from $35 billion, almost $36 36 to 40 billion, which is pretty decent. YouTube was mostly flat. It was seven to 7.3. So it was all the ads advertising.

Yeah, all advertising is up. So I guess the snap earnings was not a good indicator of Google. No, dude, Snapchat doesn't know how to know. I keep talking about how all the kitties are using snapchat don't use my stupid anecdotal evidence on if it's a good business because they don't know how to monetize the stupid app so here we go dude cloud was one from 4.6 to 6.2 so that's that was a nice what's that hold on let me do the math on that probably like 30 percent i would say keep keep entertaining

while i math on that i lost your screen sharing i think yeah probably around 30 did i their other bets is flat 47 is the math on that there you go so that's really good although cloud let's keep in context it's still a very small portion of the business and then you have their other bets which is insignificant that That was flat. But overall, it seems like a really good quarter. And in post after hours, it's up close to 3%. It was down 2.5% today. So I guess it's kind of just gaining what it's lost mostly. Hey, the hedging gains was actually not a loss. Okay. Other bets is still flat. When are they going to freaking cut that?

Operating results. Yeah. They just lose like almost, yeah, 1.7 billion net operating loss from other bets. They just love incinerating money there. Didn't they say recently that they would potentially be reallocating resources to contain costs a bit more? So I don't know. We may see those other bets seeing their funding reduce in the coming quarters if they really want to help that operating margin out, for example. Sundar says, in the second quarter, our performance was driven by search and cloud.

The investments we've made over the years in AI and computing are helping to make our services particularly valuable for consumers and highly effective for businesses of all sizes. As we sharpen our focus, we'll continue to invest responsibly in deep computer science for the long term. So yeah, my thesis here, search and cloud, right? Search and cloud, even school cloud, just search, man. It's the best freaking business ever invented is Google search. What did they make? Operating profits of almost $23 billion for the quarter in search. Yeah, I think they'll be okay. What the hell, man? It's unbelievable business. Ruth said, who's the CFO? Ruth is a savage, by the way. Ruth is ruthless. She goes, our consistent investments

to support long-term growth are reflected in our solid performance. This is a bunch of press release crap. Want to move on to Visa? Yeah. Yeah. Let's do the last one and then we'll wrap things up. It's not as- Can you see my screen? Yeah, I can see it. Yeah. It's different than being prepared, I'll be honest. It's just on the- This looks pretty good. Yeah. Let us know if you guys enjoyed that because it's testing it out because it's all coming out at the same time well we weren't just going to not talk about these companies i mean they're reporting right when we start recording we need like a i'm gonna work oh we have a new intro by the way we haven't addressed that new intro that

everyone's been hearing we're gonna get that guy to do some drops so like breaking news how is that should i just do Yeah, you could do it. So we can drop these like kind of things on the podcast. But Simone, here's Visa here on the screen. Revenues were up 19%. How's that for a recession on the payments company? Revenues up 19%. Net income was up almost 30%. EPS up 33%. Okay, so here's the important one. Cross-border volumes, 40% increase year over year. So that's that people getting back to travel.

Yeah, that's not surprising, right? There were still a lot of restrictions last year. So that's something I would have expected to see. They had something pretty interesting where the page from the CEO and just overall, they said they're really, I can sum it up because I was reading it. So essentially they said they were really resilient considering the macro economic uncertainty and the suspension of their business in Russia. The results were quite resilient despite all of that.

And obviously cross-border volumes were surpassing 2019 levels for the first time. But they did finish that there remains some macroeconomic uncertainty going forward, but they remain positive about the business. That's in a nutshell what they said. The growth of digital payments, The growth of digital payments, I've been thinking about this as like the growth in digital payments pretty much can outpace any macro pain. And I don't know, like that seems to be right from these numbers. I mean, net revs up almost 20% and EPS up 33%. The cross border coming back helps a lot. Payments volume being up 12%, that helps a lot. Total process transactions being up 16%, that helps a lot. These types of key business drivers, what they call it, and whatever every company will call their KPIs, I really like how they lay it out here on Visa. But if you look at what really matters here, the thesis is so strong here. Yeah, yeah.

And I mean, I still like that they put some words of caution too. I like that the CEO mentioned that they're being really resilient. Everything is going quite well. But they're also acknowledging that there is challenging times because I think it would be pretty reckless of a CEO not to at least acknowledge that. And I think he did well highlighting what has gone really well, how they've been resilient and how they should be resilient going forward. But there's a lot of uncertainty and I don't know if they're doing guidance. I have no idea. I can't remember. But I think for most companies, I think it's pretty smart to either not do any guidance right now or just being on a bit more the conservative

side. And then the best case scenario is you end up just over delivering. I think they should be doing guidance. I mean, companies got their pass during this one-off pandemic for guidance. But these companies have been around a long time. They've seen a few recessions, you know? Yeah, that's true. But it would be hard though, because then you have the wonkiness of COVID, then this inflationary period. Like I can see how for a lot of businesses,

it can be really difficult to provide guidance. Yeah, I get it. I'm just trying to see here if they have any comments here. I think the main things, you'd be able to find them obviously on their call, which is probably happening live right now. And we'll update people on what that is. But he's basically saying, you know what, the things that matter still look good. Yeah, we're on the backdrop of probably a scary time looking forward, but we have a pulse on consumers. Everyone and their dog holds one of these cards or our direct competitor MasterCard cards on them at all times,

whether it's the physical card on their phone, whatever it is, ready to tap, tap, tap that thing and make some transactions. They have their pulse on this stuff and they just keep getting it done. Who's using cash, man? I've been. I've been recently a little bit, but not obviously very rarely. So it's still- I was doing it a lot in Europe, of course.

What are you using cash on? What are you using cash on these days in Canada? When I go to a casino to play poker. And I was- Okay. Yeah, and I know a lot of people- Aside from that. Because we were in a pause of recording during that time.

But I think a lot of people in Canada may have PTSD over the Roger outage and the fact that Interact wasn't available. So they may have a bit more cash on their hands. We haven't got a chance to rip on Rogers yet. And can you imagine what is it, Tony, the new CEO, the whole thing that happened with Rogers. Yeah. And can you imagine that? What is it, Tony, the new CEO, the whole thing that happened with Rogers and he names his old buddy CEO and now he has to deal with all this stuff. He's probably wishing he never came back. No kidding. God, what a disaster. What a disaster that company is just across the board. Yeah. I mean, I don't know how it's going to go for the whole shock communication thing i know

the regulators are definitely on them right now so i have no idea whether it'll get approved or not but they definitely did not help themselves with the outage we have rogers internet and phone over here so when that happened i was lucky enough that my work phone is Bell. So I was able to like essentially tether on all our devices. Yeah. Or hotspot. Yeah. Yeah. We're out here trying to launch a podcast on the day that like Canada's not working.

Didn't it line up on the exact day? Yeah, it was pretty close. We were preparing. I think it was, it was on a Friday, right? That it happened. Yeah. I think it was Friday and then it lasted until the saturday if i remember correctly they like started fixing it overnight and i remember we were like you know

texting with dan and nick and having like as soon as my phone shut like the screen would lock the hot spot would stop so i constantly would have to like reopen it then i kind of stopped the locking of the screen but then the battery was draining quickly it was just just a pain to be able to get yeah messages and stuff yeah dude you should have hit the golf course like no one had to work that day everyone's just like i don't work today have you heard about rogers like even if you're on bell you're like hey have you heard of rogers i can't work today man that's the sentiment i got across the board for the entire country it was quite hilarious and i think they refunded some people like two days of of service i think they said five five yeah i'll let you know on my bill if it's like $7 cheaper or whatever.

Oh, yeah. That's going to make a huge difference. Thanks for listening, folks. That was a fun chat. Fun to be back. Glad to be back recording episodes. This podcast comes out on Mondays and Thursdays. Mondays releases our strategy, our thoughts, our long-term optimism.

Thursdays, our updates on the markets. And earnings season is here, baby. So you got to be here at least every Thursday. Probably we're going to be talking about it on Mondays too. This is the time to not miss a Monday or Thursday episode. If you haven't checked out stratosphere.io, like those key business drivers for Visa, we just launched a pro plan. It has those metrics and we update them within every 24 hours for the entire TSX-60 and half of the S&P 500 now.

So that's at a clip, dude. Yeah, that's good. That's a lot of data. Definitely. It's a lot of data, but yeah, it's fun. It's a lot of data. Definitely. It's a lot of data. But yeah, it's fun. It's a grind. My team is killing it. Thanks so much for listening. Anything, any last thoughts here, Simon? No, I hope people enjoy our new jingle. Oh yeah, the new intro, you mean? Yeah, the new intro. It's been on for a little bit. We kind of just started it and it aligns pretty well. I mean, it's pretty similar to the one from Dan and Nick with the Canadian real estate investor. So I think it's a little more, you know, a little less intense. I like it much

better. And the guy actually pronounces my name correctly. That's a good change because my father in law kept saying like, why does he like, why don't they change the intro? He butchers your name. He did it well this time. Yeah. Yeah. So fun story. I know that guy who did it pseudo like friend of a friend. He's from Ontario. He lives in Canada. And he was on Fiverr for me to contract some dude in the Philippines to do our intro for like 37 cents. And there he was. And I was like, I know this guy. How do I know this guy? It turns out he was the guy I know who does voices in Ontario, friend of a friend. And so, he did a good job. But small world, you're just like, it's all connected. It's all connected.

And we're supporting locally, Simon. Yeah, exactly. I just like support a local business. Thanks for listening. I'll see you in a few days. Bye-bye. The Canadian Investor Podcast should not be taken as investment or financial advice. local business. Thanks for listening. I'll see you in a few days. Bye-bye.