The Canadian Investor - Surprising Profits - Earnings Roundup

Episode Date: August 4, 2022

In this release of the Canadian Investor Podcast, we cover the following earnings and news: HKD stock pump? Teladoc TFI International Etsy Match Group Cargojet Airbnb Uber TMX Group Apple Tickers of stock discussed: HKD, TDOC, TFII, ETSY, MTCH, CJT, ABNB, UBER, TMX, UBER 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

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Dude, have you seen this Chinese ADR called HKD? Have you seen this? I saw it this morning. I think I was just going browsing on Bloomberg, BNN, and I saw a mention of it. I'm going browsing on Bloomberg, BNN, and I saw a mention of it. My understanding is it is the latest Wall Street bad meme stock, but I could be wrong. But I do know it's gone way, way up, like a bit like a bit like Game Stonk. It's like Game Stonk, but like makes Game Stonk look like peanuts. This is nuts okay so apparently it's not wall street bets wall street bets like the mods came out and said like there's been no discussion

of this ticker on the on our reddit forum and no one knows what is going on. So for those who are not familiar with what we're talking about, there's this new meme stock of a Chinese Hong Kong listed company called HKD, but you can buy it as an ADR in US dollars. The company's called AMTD Digital. The company's called AMTD Digital. Sounds like a shell code to me. It is up 21,000% as of when I checked and IPO'd on July 15th. And no one's taking credit for pumping this thing. It's not like an online forum. Dude, yesterday it had a market cap of $250 billion USD.

Stock market casino, that's what it is. Yeah, the casino is alive and well here, right? This is insane. A market cap of that size makes it the 33rd largest company in the world, more than Pepsi or Costco. These things happen, you know, all the time in financial markets. It's insanity. The casino's alive and well. But it's another reminder that this is just noise. You don't have to participate. You don't just ignore it because gravity eventually takes hold of these things. You know, they come back down to life from the

stratosphere and people get caught holding this junk. They're the last one with the hot potato and they get crushed. But this is nuts. 250 billion market cap. Like like i don't know how this even happens like that is so much capital it's probably i would if i had to venture a guess it's probably mainland china money because it would be hard to get a pulse of what's going on because of the censorship over there there could have been some people that just decided or some wealthy people that decided to pump that to be able to to make some money that would probably be my best guess because there's so little information around it and most of these things if they would happen in you know western nations there'd be some leaks sooner or later of this kind of stuff happening.

Simon, we're kind of a big deal because three people noticed me in the wonderful city of Montreal this weekend. Three people. Were you at Ocega? I didn't even know three real people in real life. Yeah, were you at Ocega? Is that it? That's right. Yeah. Yeah. Okay. I'm surprised. Yeah, there'd be three people noticing you at Ocega for investing podcast. You didn't even know three people in real life. It was incredible. Simone, let's talk about Teladoc. It's time. Yeah. So Teladoc released its earnings

and the market didn't really like it because the stock was down quite big on the earnings release. I think it was down around 20%. They wrote off another $3 billion as a result of them overpaying for the Livongo acquisition. One of the other issues plaguing the company is that they are seeing a lower return on their ad spend compared to previous years. That's something they had already mentioned in Q1 when they released it. They said, again, they're seeing this trend. They don't know for how long it will last, but they are still seeing this. Jason Garovic, who is the CEO of Teladoc, said that they were still on track to meet the low end of its full year guidance.

And that was revised in the previous quarter. However, he did mention that there are scenarios in which they could exceed that and scenarios in which it could be lower than that. So I think they're still not quite sure on how the year will finish for them. They said they are seeing some challenges because of the current economic climate it was not all bad for Teladoc though there were some bright spots in the earnings release but the market is definitely focused on the bad here although the stock has somewhat rebounded a bit since the earnings release the highlights here revenues were up 18% for the quarter, just shy of $600 million. Revenues were up 21% for the

first half of 2022. Access fees revenue, which are from insurers, grew 20% to $519 million. And visit fee revenues, which would be individual paying as a like pay as you go if you'd like just for a consultation. Those were up 7% to $67 million. U.S. revenues grew 18% while international grew 13%. International was affected by currency fluctuations. And get used to hearing that because when you're dealing with companies that have a substantial business outside of the U.S., you're going to see that across the board this is not specific to Teladoc you'll see it with

all different kind of businesses big tech have mentioned it a lot just a US dollar is very strong compared to its counterparts across the world the average revenue per US paid member here increased 13% to $2.60. Their gross margins were actually up 30 basis point to 69.2%. So that's good to see. And overall, they had a net loss of 3.1 billion. But of course, most of that was due to the write off. And they also had a 83 million worth of stock based compensation. So everyone knows if you've been a listener of this podcast for a while that I do own Teladoc. What I want to see this year is really the transition in customer behavior after the pandemic. I want to see Teladoc being able to still grow.

They're still seeing nice growth, but there remains quite a bit of competition. They're still saying that new players, new entrants in the market are essentially facing eased regulation because these measures were put in place during the pandemic to help speed up telemedicine care. So it'll be interesting how these regulations kind of go back to their pre-pandemic versions if they do and what impact it could have on Teladoc. More and more time that passes, you realize that the Livongo guys were really good at negotiating. were really good at negotiating. Either that or Teladoc came out flying with that offer. Like, yeah, in what world did 19 billion make sense? I mean, it didn't really make sense. We criticized it at the time. The one thing, though, I will say against that, I mean, it's not great

as a shareholder either way, but I'm not sure they were that great because if they were that good, they would have asked for more cash. They would definitely have noticed that the sector as a whole was quite frothy in terms of valuation, because if they held on to their Teladoc shares, they're not reaping the same benefits that they would have when the transaction closed so i mean i get what you're saying but if they were that good i wonder what that lock up looked like yeah i can't i i don't recall i'll be honest so do they highlight um a segment in there which is like corporate b2b enterprise access fees do they do they highlight those would be access fees yeah that would be access fees okay yeah okay yeah

because those are paid by insurers which typically will offer them to their corporate clients obviously it'll be part of the packages so So those are access fees. Those are the one that are obviously the big driver here. It represents, I would say, around like 85% of all their revenues. So it's definitely the biggest driver. Yeah, because I look at that and I'm like, that could be sticky post pandemic, quite sticky, like not the B2C thing, but the actual B2B enterprise thing that these large companies would be getting for their employees. Yeah. And they're still seeing that insurance insurers are really valuing the total solution that Teladoc has. And I think that's obviously that was the biggest driver behind the Livongo acquisition was this holistic solution where it wasn't just primary care it was everything it was chronic care it was also uh you know mental health care so it's a kind of a one-stop shop and i i that's the reason why i'm not selling my shares right now because i think there's a lot of value in there um i'm not

saying i'm gonna hold teldoc for 10 years i'm still kind of in the wait and see in the next probably year or so just to see how it evolves. I haven't made my mind just yet on what I'll do with the shares beyond that. Simone, that's what makes you a good investor is one, you're patient and two, you're willing to see the fundamentals change or come through before you make decisions. And when they do come through, I think you are good at making decisions. So we'll keep tracking this one. TFI International, we have some Canadian company earnings here. We got a couple today on the show.

And TFI is one of them. And TFI is one of them. Side note, just before this, Brookfield Infrastructure Partners reported a pretty nice quarter. It looked like 30% on funds from operations. But we'll go over it with BAM in about two weeks when they report. So for TFI, you know, comps were a bit weird here. And when I say comps, I just mean like comparable quarters, which just means this time Q2 of last year. So Q2 versus Q2 of the previous year. So comps were weird here because of a one time bargain purchase gain. Now, what that is, is if you're seeing that and you're like, that's some finance jargon for sure. Bargain purchases involve buying assets for less than fair market value.

And the acquirer must record the difference between the purchase price and the fair value as a gain on the balance sheet as negative goodwill. The difference in the price paid and fair value is recorded as a gain in net earnings. So, yeah, what's that? So it's basically the opposite of what Teladoc did with Livongo. Yeah, exactly. I had to say it basically. It is the exact opposite because they're they're doing an actual

write-off right yeah it's it's the exact opposite um one is good one is bad a bargain purchase gain is good and that's what tfi does they buy distressed trucking assets this is their bread and butter if this happens that's perfect they buy you know a trucking asset. This is their bread and butter. If this happens, that's perfect. They buy, you know, a trucking asset that's, they buy this trucking company for 80 cents on the dollar. They can fix it up. They can throw the CapEx required to make it work, bring in the synergies, bring in the back office and make it, you know, turn that 80 cents into $1.20. If we back out that number, which is the one I'm going to talk about with these numbers,

because if you don't, you'll see net income is down over 30%. And you'll be like, what? Why is the stock doing so well? Why is the stock up 40% since late June and earnings is down, net income is down 30%. And so thank goodness for this nice 40% rally. It is a large position for me. And I need this in 2022. I don't know if you've seen the markets. Operating income increased 109%. um operating income increased 109 so they continue to double operating income year over year for like two years in a row now and um free cash flow is up 16 310 million for the quarter of cash like simone like that is like a that as a number in terms of scale, $310 million of free cash flow for the quarter, that's a lot of cash for a company of this size.

They repurchased a ton of shares. They spent over $200 million very opportunistically in the valley of their share price. And over the quarter, they bought three trucking companies and two more since then in July post-quarter close already. Excellent management team. It's just more of the same. Excellent, excellent, excellent.

It is a boring business, subpar unit economics with an all-star management team. MVPs up at the top there, and they just keep getting it done, man. And somehow they keep buying assets for way below intrinsic value. But they also are able to do the right things and inject the capital to make them worth more than they were in someone else's hands. the capital to make them worth more than they were in someone else's hands. Did they mention if they're experiencing labor shortages issues for truckers or they haven't?

I have yet to listen to the call, but that's always a recurring theme on all the trucking. Like ODFL says the same stuff. They're always dealing with all that. Okay. I think it's across the board just with every company though, in general. Yeah. Yeah. No, exactly. 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. That is questtrade.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 at airbnb.ca forward slash host. That is airbnb.ca forward slash host. Now we'll move on to another company that released its earnings, Etsy. So again, a company I own. So GMS, so their gross merchandise sales was down 0.4% compared to last year, which was 3 billion. So we can say that the GMS was essentially flat.

They were impacted by macro headwinds, lower consumer spending, and again, foreign exchange rate. I did mention that's a reoccurring theme we'll see this earnings season. Revenues were up 11% to $585 million with a consolidated take rate of 19.1 percent so that's essentially that they just achieved that number that 19.1 percent they use their revenues and they divided by their gms and that equals their take rate of 19.1 percent that includes fees for listing transaction fees advertising promotional fees payment processing, and a few more in there. Their take rate, again, is just divided by their GMS. Net income was down 26% to $73 million.

Free cash flow was down 33% for the first six months of the year to $180 million. They repurchased a total of $62 million worth of shares during to 180 million. They repurchased a total of 62 million worth of shares during the second quarter. Active sellers, which is a really important metric here, was up 41.5% to 7.4 million. And active buyers were up 3.8% to 94 million. One really good initiative. That seller number is insane. That sounds really good. Yeah, exactly. I know. I was impressed as well. One good initiative I think they announced was a new Etsy purchase protection program.

This will protect sellers and buyers on qualifying orders up to $250 if the item does not match a description, arrives damaged, or never arrives. And it should cause them approximately $25 million. if the item does not match a description, arrives damaged, or never arrives, and it should cause them approximately $25 million. The reason why I like this is because if we remember a few months ago, sellers did a strike, some important sellers to voice their discontent about Etsy fees going up. And clearly, you know, their take rate is higher. So they're definitely, you know, having higher revenues because of that. But I think it's really important that they have to, you know, make sure the fees and their take rate is not so high that the sellers don't see value in there. And I think they're really threading that line right now. You know, I don't think the strikes or anything And I think they're really threading that line right now.

You know, I don't think the strikes or anything we haven't heard too much since then. I think that was like in April, if I remember correctly. So it seems like they're striking a balance, but they really have to be careful because, you know, we all know Amazon try to get into the space and they failed years ago. But if sellers become more and more unhappy because of the take rate, what's preventing Amazon to try and grab that market once more? So I think it's just, you know, overall, I think the results were pretty good. Obviously, GMS, you'd like to see that increase. But considering the economic climate right now compared to last year not too concerned about that but definitely want to see a good balance going forward with those take rates and what they offer to sellers because they're the most important thing for the

platform it's the number that i track consistently and and we keep up to date at stratosphere because it's got to be the most important number like if you look at the ecosystem active sellers their ability to succeed making real money and potentially making a living off selling products on etsy is integral into the staying power of this business more so than any other metric so what was the top line 11 percent um that's what total revs were up yeah that's not bad a bit bit of a deceleration which we kind of knew was coming off the back of last year right yeah? Yeah, exactly. And I think it's just a reflection of, you know, people coming back to habits that are maybe kind of halfway

between full-on pandemic and pre-pandemic. I think that's what we're seeing is we're not seeing a reversion of pre-pandemic behaviors, but also, you know, it's somewhere in between. That's what I've noticed overall. The truth lies somewhere in between, right? Yeah, exactly. All right. Let's talk about on that same kind of- Let's talk about love. Let's talk about love. You know what? Maybe, you know, you go on Match Group, you use one of the dating apps, and then you buy your significant other something from Etsy, group you use one of the dating apps and then you buy your significant some other something from etsy right and it all goes full circle you heard it here first on the canadian investor podcast

let's talk about match group the owner of popular dating sites like tinder hinge ok cupid and whatever else the people are using these days now it's been a pretty tough trailing 12 months for this company, if you're a shareholder. The stock has been getting crushed. It's down almost another 20% today from the results. Growth is slowing. The Tinder CEO just quit. there's something clearly wrong with the management or the culture because the C-suite of match companies is like a revolving door. Like, dude, it's ridiculous how much turnover there is with management. The results were actually not so bad. Like objectively, they seem fine to me. Revenues were up 12%, number of payers. So that's the KPI, the metric they use, which is payers,

which is people who actually pay for the premium service on the dating apps. So like, I guess it unlocks more more swipes i think um tinder is still growing um 13 percent revs rev growth on on that on that app and they just can continue to spin up or buy new niches like they were highlighting what something called the league. I don't know what this is, but it's a, it's a date. I've never heard of it either, but it's a dating app for young professionals. You know, like they can kind of just like, here's this random niche.

They like hit me with some paid ad. They're like, here's a dating app for podcasters. It's so ridiculous how niche they can go now because it works. People are looking for a specific thing sometimes, and there's a niche for that. So I think the stock's starting to look very cheap, or at least quite cheap. I would actually think about buying the stock

based on the fundamentals, the brand, the IP that they've built over the time. The unit economics are pretty good. The margins are solid. People actually pay for this stuff, which is shocking to me personally, but I can't mentally get over the business model. And the reason for that is if they are successful as a business, like if their product is successful, they lose the customer. And I know it's a cliche thing to say, like the bear case

for match group, everyone always says that. But for me, I like businesses with incentives that are aligned. And these incentives are not aligned, in my view, between the business and the customer. Like they want you to stick around to keep paying. But if they're successful, they lose you as a customer because now you're buying your significant other gifts on Etsy. Right? Like it doesn't align. And that's what's confusing to me as an investment opportunity. But it's starting to look really cheap. I don't think the results are as bad as the news here. It's starting to look really cheap. I don't think the results are as bad as the news here.

Maybe the Tinder CEO is also pushing it lower, but there's a lot of negative sentiment on this stock right now. It's down well over 60% from the highs. Yeah, two thoughts here. First of all, I'm not surprised it's down and they're seeing a slowing in, you said, slowing in revenues? Yeah, the top line is decelerating decelerating i'm not surprised because obviously the pandemic you know a lot of lockdowns that was the only way to basically date if you were single so yeah yeah to connect with other single people uh during the pandemic and clearly some people you know a lot of people are doing pre-pandemic. A lot of people are still doing it right now. So I'm not surprised to see that this would have, they would have clearly have seen tailwinds from the pandemic and the lockdowns. The other thing you're saying, I think you have

to put things in context here. I get it that it's successful. They lose a customer or potentially two, but you have to keep in mind that they probably also gain customers way faster than other companies right so i think you have to see if it kind of levels out yeah the new customers kind of outweigh the ones they're losing because that's really what it is right and and you could make the argument it's like hey look at this couple they got married and they met on tinder like that kind of like brings like it lowers the stigma as well and that's like an overall net positive for their brand and their business so it could go both ways i'm just like i'm just trying to own these like global toll roads and that's just not what this is no no i get it um now another canadian name

uh this one another kind of pandemic play here maybe not as much but definitely saw a boost during the pandemic so cargo jet um i like to have a look at their earnings just because it gives a good sense of how e-commerce is going because a lot of their business is related to that. So revenues increased 44% to $247 million. Gross margins were down 700 basis point to 25%. I thought this was mostly fuel related, but the company does have a fuel surcharge mechanism, which they say allows the company to not carry the risk of fuel price volatility. In other words, I'm assuming here the rise of fuel costs is offset by higher revenues due to that surcharge. All direct expenses increased during the quarter, which is why their gross margins were down.

And it's across the board. I even took a screenshot of their release. And you're talking here increases double digits across the board. Some as high as 157% and ranging as low as 17% and anywhere in between. So you're talking here fuel cost, depreciation, aircraft costs, heavy maintenance, amortization, maintenance costs, crew costs, ground services, airport services, navigation, insurance, they all went up. So, you know, when you dial down, and I was interested in seeing when I was reading the earnings, I'm like, you know what, I'd like to see what led to such a significant decline in gross margins. And when you just dig down a little more into these earnings release you can oftentimes find the information pretty easily and i just i it's my personality i like to understand

what happened and it's pretty clear when you look at those direct expenses now they still had net earnings of 160 million versus a net loss last year so that's definitely good. EPS was 929 a share. They lost 178 million on a free cash flow basis compared to 23 million last year and they purchased 14.2 million of shares worth of shares during the first six months of 2022. Management did say that there will be volatility in the results because of a change in consumer spending in the near term they did mention that long term their e-commerce growth premise for cargo jet does remain intact dude every canadian transport stock has reported huge top line growth. Even the rails, CP and CN reported record freight volume in the second quarter. So how confusing is that on the backdrop of what people are calling a tougher consumer environment. And you get

Visa CEO coming out and saying, we do not see any weakness in consumer spending. Record freight volumes, cargo jet, 44% on the top line. It creates a conflicting noise for investors on a macro perspective. What are you making of that? Yeah, I mean, I was listening to a really interesting podcast with an economist that looks at indicators for recessions and so on and inflation. And it was really, really really interesting and what we're seeing right now is typically when you end an economic cycle you'll see a like a rise in inflation is typical obviously not as high as we're seeing right now and then you start seeing a contraction in the GDP you also start seeing kind of the employment numbers starting go down because you have

oftentimes companies that have too much inventory so they have to sell that off they have a build up they you have production that kind of goes down so all that I'm saying I'm not overly surprised with these results as I was kind of listening to that and making sense of it. I think some of the pain may be coming in the next couple of quarters for different sectors of the economy. Maybe not as bad as we think either. I'm not saying like doom and gloom or anything like that. But it'll be interesting as consumers, because this is really consumer-based, if they start kind of tightening up their their purse strings because um they have

to focus on things that are essential so the marlo pyramid of needs right um if the marlo or marlo what was it isn't it maslow maslow maslow mas i was gonna say maslow. Oops. It's okay, dude. It's like grade 10 psychology or whatever. Yeah. But all that to say that, you know, it's hard to say where it will go. You may see a bit of a shift in consumer spending and just the type of things that they spend on because they have to make their money go a bit further or cut out some things let's talk about airbnb you ever heard of airbnb i enjoy a few times yeah you've heard of this podcast yeah okay good i enjoy their quarterly reports because they make it very easy as numbers people they just like have like a title page it's like right at the top it's like okay here's every metric that matters and they

don't change them and they don't uh swap them in and out conveniently like they keep them consistent and they've been reporting on them since like their days of being a startup at Y Combinator. So it's just nice because I think that they really do matter. And it's a list of KPIs we keep constantly up to date on stratosphere.io, by the way. Also, they do 2019 comps as well, which is obviously key for a travel company. Now, Knights and experience book, nights and experiences booked, it was up to almost 104 million nights booked on the platform, which was up 25% year over year, gross booking value. So the total value booked on the platform, most of that going to the hosts, was $17 billion. That is a gigantic part of this total addressable market that they are unlocking.

$17 billion of gross booking value is tremendous scale. That was up 27% year over year and up 73% from 2019. So that is very significant. And the numbers are completely almost aligned on revenue over that 2019 stack as well. well. $2.1 billion in sales, which was up 58% year over year. Now, they actually reported some profit. Would you look at that? Some profit for the lads. $379 million in net income and almost $800 million in free cash flow, which is very significant for a company that just in that long list of venture backed bleed money forever. And to give you a hint, I'm going to be talking about after your next one, I'm going to be talking about another venture backed company, After your next one, I'm going to be talking about another venture-backed company, the good old unicorn darling of Silicon Valley as well, that is also producing profits. So we're seeing a seismic regime shift in the way that these companies are approaching profitability.

As the market turns, they can't go tap the markets for money valuations that don't make sense anymore. That era, that window is closed, or at least closing very quickly. And so you've seen them pivot to making money. And it's interesting, and they're proving me wrong, that they can turn on the profit machine. They can do it. And so overall, I'm impressed with the execution. I'm impressed with Brian Chesky and what he's done with this business. And yeah, it's obviously become quite the household name, this company. 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. That is Airbnb.ca forward slash host. But now we'll move on.

I don't have much more to add about Airbnb. So we'll move on to another Canadian name here. So we do try to put some Canadian names as much as we can. It's a good balance for the Canadian investor. Yeah, a good balance. Obviously, there's some names that are American that we can't really miss. So for me, this one is TMX. So they had their earnings release. Revenues were up 17% to $286 million, but that included their acquisition of Box that closing January of this year, which represents $27 million of that

$286. So I would say about 10% here. Without the acquisition, revenues would have been up just shy of 6%. Net income was up 19% to 91 million. EPS was up 20% to $1.65. Operating expenses were up 32%. So that's something to keep an eye on for any shareholders and expenses in general. I think if anyone investing, if you weren't keeping a close eye on expenses before, I think now is as good a time to start than ever because you are seeing pretty much across the board expenses trending higher. Some companies are able to offset that with higher prices, therefore having higher revenue. So they're keeping their margins fairly stable.

But some companies are just not able to do that. So that's something to just keep an eye on because it's been across the board here. I think there's not one company that I can't remember looking at recently that hasn't seen an increase in expenses this business is so untalked about and they have obviously such a defensible position for those who do not are not familiar with the TMX, they run the Toronto Stock Exchange and the venture. And so, you know,

it's monopoly on the capital markets here in Canada. What is Box? I'm not sure. Yeah, I was just... I was trying to type it in. Yeah. I'm not sure as well. Box is a public like NASDAQ stock that I...

It's a cloud-based content content management it's like file sharing it's kind of like drop like dropbox which is not this so i'm trying oh it's the box it's called so i i mistyped that so it's a thing called box yeah technology inc i think so publicly traded haptic motion technology i don't know i think it's just i mean i got it straight from their site so tmx mold reducing stake in box um that was one of them yeah and no on their press oh it's the in Boston Option Exchange. So that makes a lot more sense. I was going to say, they're buying this like imaging company. Yeah, so they had a stake, I think, for a while because I just saw this article from 2010. So they must have had the stake for a while and then they decided to buy it. So that makes a whole lot of sense.

That makes a lot more sense. Yeah, I should have researched that. just kind of no no that's good dude the exchanges are such good businesses yeah like if you look at the if you look at the kager like compounding growth rate for internet intercontinental the even the lsx uh the nasdaq tQ, TMX, some of the best compounders in the world. Yeah, and they all pay a dividend. I'm pretty sure, at least I know TMX and I think Intercontinental and I think the Chicago Mercantile Exchange too, they all pay a dividend. And it tends to be pretty stable growing over time. You're not going to be experiencing amazing growth here in revenues.

Like you're probably going to be, you know, mid single digits, but it'll be pretty consistent. TMX is definitely an interesting name for anyone wanting to get a decent dividend, especially in the TFSA, because it would be a Canadian dividend. So you wouldn't get that withholding tax. That would be an interesting play for anyone wanting a kind of slow, steady grower with a slow, steady growing dividend. Yeah, and they've been, all of them as a group, not just for TMX, but they've all been quite acquisitive too in buying these like SaaS data companies for financial markets markets for public securities data basically a long list of the people i'm trying to disrupt what's transfer um and those companies

they'll have all recurring revenue high margins and pretty good businesses all right two more on the slate here i hinted at this before another household name you may have never heard of simone named uber they turned a profit as well can you believe that i like i didn't think this was possible i thought that they all got together at the office like they got they got all the employees in one room and then grabbed Brinks trucks of money, like helicoptered in Brinks trucks of money, and then just lit all the money on fire. I was convinced of this for a while, but they turned a profit. Now, they had gross bookings of an all-time high of $29.1 billion, which is just outrageous scale. It's kind of very similar to Airbnb.

It's like these sharing economies. If you look at the gross booking numbers, the scale of these businesses is just mind-blowing. So that was up 30%, 30%. The free cash flow was $382 million. Who would have thunk? Here's a quote here from Dara, the CEO. Last quarter, I challenged our team to meet our profitability commitments, even faster than planned, and they delivered. Trips was up 24%. So like trips that were done on Uber, revenue doubled. The stock is up almost 50% in the past two weeks. And I think it is actually very deserving to be up that much. I actually believe that. This has to be the most shocking quarter of earnings I've seen in a long time. They flexed

pricing power and they're like, all right, let's turn on the profit machine. Let's stop lighting these Brinks trucks on fire, although we had a lot of fun. And trips were still up 22%. So this is a bit thesis changing for me. I am willing to change my mind when the facts change. I have counted this business out as an investable opportunity. And I thought that is complete junkie unit economics wise. But hey, I'm going to keep

watching it more closely because certainly it dominates mindshare. Both it and Airbnb dominate mindshare have become household names and have become verbs in this sharing economy. So household names and have become verbs in this sharing economy. So I'm willing to change my mind if Uber can continue to impress me. I am honestly quite shocked. I am shocked, but I think there's a big risk for Uber and the risk is Apple privacy. One thing I don't know if you notice, I have Uber Eats and I've noticed in the past like six months or so, they've really stepped up their push notification to let me know there's a deal on to let me know like, oh, are you hungry tonight? Go eat that. And that there's more and more of a push, I think, to, you know, trying and monetize that screen on your phone, your lock screen where you get these notifications. Apple wants to make more money? Well, yeah, but I could see Apple potentially giving the options to user, right? Saying like, I want to push notifications from uber just so

it lets me know when my driver is here i don't want them to constantly like send me a text or a notification to tell me there's a deal on like i get so annoyed it's always at dinner time they probably listen to me on my phone or whatever and i mean turn off the notifications yeah but then it's uh it's annoying when you have to use uber right i guess you turn them back on and off whenever you use it right i guess you could just look at the app if you know they're coming but yeah but that's one thing i see what you're saying yeah i mean i think that's a risk because if apple starts clamping down on that and asking users a bit like, I know you have an iPhone, you have an app, like ask, now you're prompted, ask the app not to track you. And that's always what I do is I ask the app not to track you. And clearly that's what's been affecting Facebook,

with their advertising revenue. So I think that could be a risk for for Uber, because that's probably like, super profitable advertising for them low cost as well. And if they Apple starts clamping down on that, I could see that affecting their revenue. I think Apple is just a risk to every single company that their business relies on an application on in on ios and i know it's obviously available on other hardware devices like android and whatever else but every single company that their business is a square on your phone aka an application apple can just do whatever they want and they play this like oh we're the good guys in privacy all the time and you know it's just complete garbo yeah and yet they do business in china and they let the chinese government access the data as they see fit.

They're so good at convincing you, though, that they're like the ESG good guys, and they're honestly scumbags. I mean, I own shares of Apple, so it's been a great investment for me. But I do find, I totally agree with you, I do find that they kind of, you know, they say one thing and they do act another way sometimes they're bullies yeah yeah exactly so now speaking of apple speaking of speaking of apple by the way i thought you would have had a few big tech in there i left you some i you took a different you took a different route i thought you'd do like meta or something like that well we did google and Microsoft last week.

Live, yeah. Yeah, I guess I could have talked about meta. Anyways, you splashed it, it didn't do well. Yeah, my comment is also, oh, well, their whole business is at risk because of Apple and Mark Zuckerberg is also joining the Brinks truck lighting entire cash piles on fire for this metaverse bet, which may or may not ever pan out. But if it doesn't work, they're screwed. Yeah, yeah, pretty much. So now Apple earnings earnings sales increased two percent to 83 billion

gross margins were stable at 43 percent sales were flat or up in all markets except japan only the only segment that saw growth was actually iphone and their services segment everything else was down services were definitely the bright spot here up 12 percent to just shy of 20 billion iphone sales were up 2.7 percent uh keep in mind though they will be coming out with the iphone uh 14 in september so cook said the company expects revenue to accelerate uh in sept, which would make sense. It usually does when they have some new iPhone releases. Mac, iPad, and wearables, home and accessories were all down.

Apple still has an awesome balance sheet here, $60 billion in net cash position when you factor in their debt. So far, their current fiscal year, which is nine months done, they have a bit of a weird reporting schedule. They've produced $90 billion of free cash flow. That's 18% more than last year. And they currently have 860 million paid subscription. It does sound like a lot, and it is a lot, but it does include anyone who would have purchased an app in the Apple Store. So I think it's a little bit misleading. That's just what I'll say.

I mean, they do say it includes that, but, you know, $860 million sounds like a lot. But then when you say anyone who's purchased an app, it's like, okay, you know, maybe not as fantastic as you may have thought. They also mentioned that it continues to be challenging operating environment. We might also be seeing a slowing consumer demand for computers. I'm mentioning this because this would also be in line with what Intel mentioned last week when they released their quarterly result. They said that they saw a significant decrease in PC sell.

So obviously that would also affect quarter by the way they had a brutal quarter but i think you can also like see that apple is is not seeing the same traction in that macbook uh segment so um or that max segment so i think that makes sense i think a lot of people people probably purchase PCs or Macs when the pandemic started because they had no choice to work from home. And then with inflation and everything going on in the macro world, you're seeing that demand kind of slow down a little bit. 16 inch macbook because it's fine right now you've had it for two years like dude i dropped it off my bed when i was like being a fat lazy guy and like sitting in bed watching something on netflix and went to go grab popcorn hit my hand off the water glass caught the water glass mid-air it was a glove saving a beauty and uh thank goodness i saved that 30 cent glass from ikea and sacrificed my $4,000 laptop. Just wonderful thinking there.

But I think this is a pretty overall decent quarter for Apple. I mean, the numbers are hard even to really fathom what they're producing in terms of cash. You said their current fiscal year nine months um so they've done three quarters in their in their fiscal and produced 90 billion dollars in free cash flow up almost 20 year over year for a company of that scale that at one point hit two trillion in market cap what is the law of large numbers like it just doesn't make any sense to my brain like how they keep how they keep doing this it's got to be that uh dollar that they keep charging me for iCloud that I will never care about yeah me too I have the same thing it's like it gives you what, like 25 gigs or something?

It's like a paper cut. I've had that. I think it's 169 or something. I've had that for so long just because it's like it's 5 gigs or you pay a buck a month for like 20 gigs extra and it's like more than you need for everything, right? Or I think it's even 50. It might be even 50. I think it's 50. Yeah. I don't know but they just know that

it's annoying enough for people when that like storage thing comes up that people are like ah it's a dollar who cares right like it it goes like that headache that comes around when you don't have enough storage in your phone can just be removed for $1.69 a month. And you're like, that sounds like a good deal. Yeah. Oh, yeah. I don't even. I see it every month come in. I'm like, oh, yeah.

Yeah. Sure. Whatever. I'm canceling that. Yeah. Oh, paper cut. Fine. Thanks so much for listening to today's earnings roundup.

Lots of good Canadian co's in the mix. Lots of tech. Lots of good Canadian co's in the mix. Lots of tech, lots of everything. New age tech too. New age tech that's turning a profit. Who would have thought? I didn't have that in my 2022 bingo card. we release episodes on Mondays and Thursdays. I usually don't sound like I smoked 48 packs of darts over the weekend, but I left my voice in the beautiful city of Montreal. Simone, we have over 1200 five-star reviews on Spotify, which is kind of nuts to me to think about that. But we can get it to 2,000. So if you're a Spotify listener and you haven't smashed that rating button at the top, hit that five stars. It's on the phone app if you go to the page or go to Apple Podcasts and leave a quick review. We appreciate you guys very much.

We'll see you in a few days. Bye-bye. The Canadian Investor Podcast should not be taken as investment or financial advice. Brayden and Simone may own securities or assets mentioned on this podcast. Always make sure to do your own research and due diligence before making investment or financial decisions.