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Stitch Fix, Inc. (NASDAQ:SFIX) Q3 2023 Earnings Call Transcript June 6, 2023 Stitch Fix, Inc. beats earnings expectations. Reported EPS is $-0.19, expectations were $-0.3. Operator: Good day and thank you for standing by. Welcome to the Third Quarter Fiscal Year 2023 Stitch Fix Earnings Conference Call. At this time, all participants are in a […] Stitch Fix, Inc. (NASDAQ:SFIX) Q3 2023 Earnings Call Transcript June 6, 2023 Stitch Fix, Inc. beats earnings expectations. Reported EPS is $-0.19, expectations were $-0.3. Operator: Good day and thank you for standing by. Welcome to the Third Quarter Fiscal Year 2023 Stitch Fix Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Hayden Blair. Hayden Blair: Good afternoon and thank you for joining us today to discuss the results for Stitch Fix’s third quarter of fiscal year 2023. Joining me on the call today are Katrina Lake, Interim CEO of Stitch Fix; and David Aufderhaar, CFO. We have posted complete third quarter 2023 financial results in a press release on the quarterly results section of our website, investors.stitchfix.com. A link to the webcast of today’s conference call can also be found on our site. We would like to remind everyone that we will be making forward-looking statements on this call, which involve risks and uncertainties. Actual results could differ materially from those contemplated by our forward-looking statements. Reported results should not be considered as an indication of future performance. Please review our filings with the SEC for a discussion of the factors that could cause results to differ. In particular, our press release issued and filed today, as well as the Risk Factors sections of our annual report on Form 10-K for our fiscal year 2022 previously filed with the SEC and the quarterly report on Form 10-Q for our third quarter of fiscal year 2023, which we expect to be filed tomorrow. Also note that the forward-looking statements on this call are based on information available to us as of today’s date. We disclaim any obligation to update any forward-looking statements, except as required by law. During this call, we will discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the press release on our Investor Relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. Finally, this call in its entirety is being webcast on our Investor Relations website and a replay of this call will be available on the website shortly. With that, I will turn the call over to Kat. Katrina Lake: Thanks, Hayden. Five months ago, I came back as Interim CEO motivated by the opportunity ahead and with a clear understanding of the need to reposition and refocus the company to set ourselves up for success. Today, amidst a challenging macroeconomic climate, preserving profitability and cash flow remain top priorities. Generally, we are focusing on the near term protecting the balance sheet, actively managing our inventory levels, while improving composition and managing the global impact of tightening credit standards on vendors and manufacturers. But we are also mindful of the long-term opportunity ahead and by no means standing still. We understand that focusing on our client is key to success, and we continue to invest in personalization and AI to maximize our long-term potential. We also completed a strategic review of our business operations in Q3, with a critical eye on operational efficiency and effectiveness, while maintaining profitability and cash flow over a longer timeframe as we focus on driving future growth. This was a robust review of our operations and processes across the company to identify areas, enhance the client experience, and drive improved business results. One aspect of this review was a full analysis of our network strategy. As we have refocused on our core fixed business, we believe our inventory will be better optimized across a smaller network of warehouses in the U.S. Understanding this, we have developed a [3 node strategy] [ph] that will allow us to more optimally serve the entire country and simultaneously showcase the greatest breadth and depth of inventory to our clients and stylists. This consolidated network will allow us to deliver a better client experience with access to more inventory for a given fix, while at the same time allowing us to operate with lower more cash efficient inventory levels. Because of this, we intend to close two additional fulfillment centers in Bethlehem, Pennsylvania; and Dallas, Texas. As we have a lease already expiring in Bethlehem, we are choosing not to renew that. Our analysis has also shown that our remaining three fulfillment centers in Atlanta, Indianapolis, and Phoenix will remain optimal even with a larger client base in the future as we could expand capacity within these locations in the short-term and the long-term. We will undertake a phased approach with the closures to maintain our current high levels of client service. We expect to begin the Bethlehem wind down in Q1 and we will move on to Dallas later in the year. We expect to achieve approximately 15 million in annualized cost savings once the 3 node strategy is completed. I want to thank all of our associates and team at the [indiscernible]. We are immensely grateful for your hard work and commitment to our clients. Thank you. Additionally, the continued realities of economic conditions in both the U.S. and the UK have led us to re-examine our geographic footprint. And this morning, we informed our employees in the UK that we are exploring exiting the UK market in FY 2024. In FY 2023, the UK will represent approximately 50 million in annual revenue and negative 15 million of adjusted EBITDA. Though we believe Stitch Fix is a service that will ultimately find success across many geographies, including the UK and Western Europe, today, we are not confident in the path to profitability in the near-term in that market, especially as we prepare for potentially extended periods of complicated macroeconomic conditions in both the U.S. and UK. There are also numerous investments we have made in our core client experience that we have not replicated in our client experience in the UK. Going forward, we would prefer to be investing in our core experience and continue to build it as a more modern, globally capable platform with the ability to scale in many geographies instead of managing multiple [tech stacks] [ph] country by country. We are proud of the UK team and what they have accomplished to date. Consistent with UK law, we will enter into a consultation period with UK employees regarding potentially exiting the UK market prior to making any final decision. While there are a number of moving parts to these operational changes, we know they are the right decisions to make. This review has helped paint a more realistic view of what it will take to change the course of our trajectory, and we have more clarity around the opportunities ahead. We are retooled and refocused on the right metrics that will navigate us through a wide range of macroeconomic scenarios in the short-term and we are setting ourselves up to be in a healthier position for the eventual growth to come. In the meantime, we are committed to continuing to build on our competitive advantages and to further the leadership we have in the space of personalization. We continue to invest in our core client experience, leveraging AI and data science to enable our human stylists, leveraging the advantages of each to further our leadership and personalization and style. For years, we had utilized capabilities in generative AI, injecting scores, and language into our personalization engine, and more recently, automatically generated product descriptions. We have also developed and implemented more advanced proprietary tools, such as outfit generation and personalized style recommendations that create a unique and exciting experience we believe is unmatched in the market. A new area we have enhanced our AI capabilities in is our inventory buying. We have historically utilized a number of tools to make data informed decisions with our inventory purchases. Now, directly leveraging our personalization algorithms, we have developed a new tool that creates an exciting paradigm shift, which will utilize [indiscernible] at the client level to drive company level buying action. We expect the clarity of demand signals at the individual client level to drive more proactive and efficient inventory decisions as a company. And because of this, we expect to see higher success rates on fixes and drive increases in keep rates and AOV over time. This backend personalization will also allow us to more effectively tailor the depth and timing of our buying decisions so it will allow us to buy the right inventory in the right amounts at the right time. Early testing of this approach compared against our existing buying tools have shown a 10% lift in keep rate and AOV, and by the end of Q1, we expect 20% of all POs created to be algorithmically informed. We will continue to scale adoption throughout the year and we are excited about the capabilities. It remains a clear example of how we continue to lean into data science and AI to further our differentiators and drive long-term success. Ultimately, we are continuing to build a business that is truly differentiated, and we want to lean into these areas of differentiation by investing in capabilities that will both improve the customer experience and prioritize profitability in the short-term. I’m excited about the work we have done. Understanding the work that we have to do and continue to believe we are taking the necessary steps to set the stage for healthy growth in the future. With that, I’ll turn it over to David for a deeper dive on the financials. David Aufderhaar: Thank you, Kat, and hello to everyone on the call. Fiscal Q3 results exceeded expectations. Revenue came in at the high-end of our guidance range at $395 million, down 20% year-over-year and 4% sequentially. Consistent with some of our retail peers, we saw strength during February and March, but did see increased macroeconomic headwinds in April. Net active clients in the quarter declined 11% year-over-year, and 3% sequentially to approximately $3.5 million. While our overall average order value is holding relatively steady year-over-year, similar to Q1 and Q2, our analysis shows that all client cohorts are spending less than in prior years, and we expect this trend to continue in Q4. Q3 gross margins expanded 150 basis points quarter-over-quarter to 42.5%, due to improved inventory composition and less promotional activity in the quarter. We continue to expect gross margins to be around 42% for the fiscal year, and are actively focused on improving gross margins with opportunities to improve product margin, transportation efficiency and inventory efficiency over time. The network strategy initiative that Kat highlighted in our comments is a good example of that focus. Net inventory ended the quarter at $152 million, down 5% quarter-over-quarter and down 29% year-over-year. We do expect overall inventory levels to decline in Q4 as we continue to manage inventory closer to demand and revise our assortment strategy to better align with our core experience. And this alignment may take several quarters to optimize. Advertising was 7% of revenue in Q3. While we continue to see customer acquisition costs declining year-over-year, we did see an increase quarter-over-quarter due to seasonality in our growth marketing channels and an increased focus on driving brand awareness. This was partially offset by strong re-engagements in the quarter, which were up 34% sequentially and 24% year-over-year. We expect to maintain similar levels of advertising spend in Q4. Q3 adjusted EBITDA came in ahead of our outlook at $10.1 million, due to the continued realization of cost savings in FY 2023 and tight ongoing cost controls. And finally, we once again generated positive cash flow this quarter, delivering $21.9 million of free cash flow in Q3. We continue to feel good about our strong balance sheet and ended the quarter with over $240 million in cash, cash equivalents, and highly rated securities and no bank debt. Moving on to the outlook. For Q4, we expect revenues to be between $365 million and $375 million reflecting a relatively similar trajectory to what we saw in April. We expect adjusted EBITDA for the quarter to be between $0 and $10 million, largely reflecting the impact of our implemented cost structure initiatives on a sequentially lower top line. Going forward, we will continue to focus on profitability in the short-term, while maximizing our long-term potential. As a reminder, we have already completed a $135 million of cost savings initiatives in FY 2023 and the proposed initiatives that Kat discussed earlier will drive an additional $50 million in annualized expense savings. We are mindful that we’ve been profitable at different revenue levels in the past and we are making the tough decisions now to endure a wide range of possible macroeconomic scenarios. Over time, we expect the investments in improving our client experience along with the increased leverage in our P&L will enable us to establish a healthy base on which to grow. With that, I’ll turn the call over to the operator for Q&A. Q&A Session Follow Stitch Fix Inc. (NASDAQ:SFIX) Follow Stitch Fix Inc. (NASDAQ:SFIX) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Thank you. [Operator Instructions] Our first question comes from Youssef Squali with Truist Securities. You may proceed. Youssef Squali: Yes. Hi, guys. Thank you for taking the questions. I have a couple of [sales] [ph]. Maybe just a high level question. Kat, you touched a little bit on this in your prepared remarks. As you look at the long-term opportunity, you’re obviously making a lot of changes, refocusing on core fixed business, pulling out of the UK. How should we be thinking about just the way you think about the addressable market as we look at the number of addressable customers, I think you have now [3.4, 3.5 now] [ph], realistically, with this new strategy, maybe just talk to us a little bit of how you kind of size up the market? And then in terms of just the, as you look at AI, and this is also something you touched upon. Can you just remind us of basically what are kind of low hanging fruits ahead of you that you believe you’ll be able to realize maybe on the search side on the curation side and over time how do you think AI will ultimately impact the business? So, those are two questions. Thank you. Katrina Lake: Yes, great. Thank you for the great questions, Youssef. I mean, firstly, on the long-term opportunity, I mean, I feel super excited and optimistic. I think a lot of the strategy right now is focusing on the core on our differentiators on the things that we know that we do best, which is really this human in the loop styling of being able to combine the best in the world algorithms in combination with human stylists to be able to deliver and experience, that’s really differentiated. And so, to be able to kind of spend this time where we’re stabilizing the business, but still continuing to push forward in the areas that we really believe that we have long-term competitive differentiation, that’s kind of high level how we’re thinking about the business right now and we’re really excited. In terms of the addressable market, I think we continue to feel really optimistic about that. I think as we think about some of the capabilities that we’re really pushing on, which really are at the, kind of Intersection of AI, and so it’s a good kind of link of questions that you asked. Like one of the things that I love about our experience is that we have generative AI that’s really in more a visual format. And so the outfits that we have in our app, those are actually taking into account your preferences, what we know about you and then in combination with what we know that you own in your closet. And to be able to kind of continue to push that technology and to be able to continue to give people more value in their experience with Stitch Fix. That’s a really good example of, I think a capability that is, firstly, really aligned with our capabilities around data and personalization and really unique to us, and then I think it’s also really compelling because I really think that pushes as we think about what that addressable market is. I think if we can push outfits to be something that can be an asset to everybody, I think that is a universal thing that people would love to be able to have, is to have access to advice on a daily basis around what to wear and how to wear it. And so, as we’re thinking about the ways in which we are innovating and the ways that we’re investing, in particular in AI, I think a lot of that actually is with an eye towards how do we make sure that we’re pushing the addressable market, making sure that we’re serving our clients that we serve well today, but also really thinking about like are these features and capabilities value add to a broader universe of clients. And so, I think we feel really excited about those capabilities and we’re excited about the plan that we have to be able to continue to invest in those. Youssef Squali: Okay. Great. Thank you, Kat. Operator: Thank you. Our next question comes from Simeon Siegel with BMO Capital Markets. You may proceed. Simeon Siegel: Thanks. Hey, everyone. Hope you’re all doing well. Can you quantify any and do you pay impact with P&L maybe last year, just give us context, how many active clients are there, maybe revenues, EBIT pressures, however you want to help us understand to contextualize that? And then maybe also share what you think P&L impacts might be from closing the two distribution centers? Thank you. Katrina Lake: Yes, I’ll have David share more color there. David Aufderhaar: Yes, Simeon, thanks. A couple of things. First on the UK, just a reminder that this is still a proposal, and so there’s no decision that’s been made. But just size and shape, I think Kat called out that in this year, it’s around $50 million in revenue and about negative $15 million in EBITDA. So, if you just do the simple math of flow through, that means there’s about $35 million in SG&A expense in the UK as well. And so, that’s sort of the high level P&L for the UK. And then on the second question was the distribution centers. With this, it would be about an annualized savings of $10 million to $15 million. It’s more of a timing question of, you know we want to make sure that as we do this, we do this in a very client right ways that we aren’t impacting the client and that’s why we’re phasing the closings. And so, savings in FY 2024 would obviously be smaller than that. Simeon Siegel: Great. Thanks. And then Kat, any color on just anything you’re seeing trade down wise, just thinking about the broader promotional environment out there? Katrina Lake: Yes. It’s a great question, Simeon. I mean, honestly, we’ve talked about it a lot internally and we have a wide range of price points. We have items that are in the 20s all the way up to $100. And so, we have a pretty wide range of kind of inventory price points. And it’s an area of our business that we definitely have kept our eye on as we’ve kind of seen a little bit of macroeconomic softness. So far, I think customer acquisition is probably the thing that’s been more hard in a macroeconomic climate. We’ve actually so far I think seeing more strength in terms of people spending in AOV than one might expect, but I think our strategy really is to be able to have that broad range of price points to be able to meet the customer where they are. And so, we feel very prepared to be able to do that. But candidly, I don’t know that we’ve seen – I don’t know that our data reflects like a huge amount of trade down, but it’s definitely something we’re keeping an eye on. Simeon Siegel : Great. Thanks a lot guys. Best of luck for the rest of the year. Hope you have a nice summer. Katrina Lake: Thank you. You too. David Aufderhaar: Thank you. You too. Operator: Thank you. [Operator Instructions] Our next question comes from David Bellinger with ROTH MKM. You may proceed. David Bellinger: Hi, thanks for the question. First one, on the inventories and the greater [depths available] [ph] that was mentioned in the release, can you quantify the improved access to inventory for your stylists? And is just any way to frame up how much that’s improved Q2 to Q3? And how much further work needs to be done in order to open-up inventory access more fully to the stylist base? Katrina Lake: Thanks, David. If I can kind of clarify, are you speaking to the part where we talk about, kind of the network or I just want to make sure that I’m understanding this specific question? David Bellinger: Yes, that’s correct. Yes. Katrina Lake: One of the things as we, kind of really took a fresh look at our business is that as we think about a styling first model and really kind of channeling clients through a funnel where we are collecting the right preferences so that we can really personalize for them, like that model depends on having co-located inventory. And so historically, we’ve had 5 and even 6 warehouses at different points. And when we have that many warehouses were spreading the inventory across a broader network, which means that there’s going to be times when we have pockets of good inventory and pockets of more challenging inventory. And so, if you think especially in used cases where like somebody is coming in with – to a stylist with a very specific request, if we don’t have kind of that density of inventory and the breadth and depth, it makes it potentially harder for a stylist to be able to meet that specific need of the client. And so, consolidating that warehouse into 3 nodes is something that really helps as we think about our future ability to be able to meet specific requests of clients and for our stylists to be able to have availability in all of the breadth and depth of inventory that we buy too and that we have in our system. And so it really, we see this as something that I think can help us to be able to achieve more of our goals as we think about being able to meet our stylist needs and ultimately our clients’ needs. Does that make sense? Katrina Lake: No. That’s perfect. It’s very helpful. And then it’s my follow-up. Could you talk a bit more about some of the April trends? Is there anything specific you can point to that stood out as you exited the quarter? And then can you clarify too on the Q4 guidance, is that consistent with the deceleration you saw later in the period? Is there anything you can comment on in regard to quarter to date revenue growth? Just would help us in our models. Katrina Lake: Yes. David, do you want to answer that? David Aufderhaar: Yes, David. For April, it wasn’t – to Kat’s point, it wasn’t anything around AOV or pricing that tended to hold steady. It was more we saw some macro headwinds around, sort of volume that was coming through. And it was pretty consistent with what we had heard from some of our peers as well where we were – we saw strength in February and March. And then it sort of tailed off in April. And that is included in our guide for Q4 as well. David Bellinger: Understood. Thank you very much. Operator: Thank you. Our next question comes from Trevor Young with Barclays. You may proceed. Trevor Young: Great, thanks. First one, just on the reduced [DC footprint] [ph], as that plays out into next year, should we contemplate some further thinning of your inventory on balance sheet? I’m just trying to get a sense of, should that continue to come in a little bit or are we now, kind of level set on inventory and as you contemplate having more breadth and depth as you were talking about, Katrina that we’re kind of at the right levels here? And then David, just a housekeeping one, just that commentary on advertising, maintaining similar levels of spend in 4Q, did you mean that as a percentage of revenue or in absolute dollars? Katrina Lake: Thanks, Trevor. David, do you want to take both of those actually? David Aufderhaar: Sure. And I’ll answer the second one first, because that’s a really quick one. Advertising, it’s a percentage of revenue. So, we do expect that to be similar to the 7% of revenue we saw this quarter. And so, then on the inventory, I mean, I think there’s two things to think about there. One is, actually the work that we’re doing right now with the teams that are really focusing on composition and focusing on the core experience. I think we touched on this last quarter is, that helps us really focus the inventory and the teams have done a great job chasing into Q4 to get really relevant inventory for our clients. And so because of that, we do expect inventory to go down in Q4. And then with regard to the closures, certainly that could be an added impact or benefit. We want to make sure first that we have the right inventory to Kat’s point around density and making sure that stylists have everything available, but absolutely, as you concentrate in less warehouses, there is the ability to do that with less inventory. And so we would expect inventory turns to go up over time. Trevor Young: Great. Thank you. Operator: Thank you. [Operator Instructions] Our next question comes from Tom Nikic with Wedbush Securities. You may proceed. Tom Nikic: Hey, and good afternoon. Thanks for taking my question. So, I know, you’ve done a lot of work to right size the cost structure of the business. But, you know, I think, ultimately, at some point, you know, the top line needs to inflect, and you know, some of the customer attrition needs to ease up and customer account needs to start rising again. Like, you know, how do we think about, you know, potential, you know, bottoming of the customer base? I mean, like, you know, do we kind of think, like, next year and then customer account starts rising again? There are more normalization that needs to happen, and you know, how do you go about driving, you know, a reacceleration of the top line and the customer count? Thanks. Katrina Lake: Thanks for the question, Tom. Yes, I mean, look, like we totally understand that and like that is our focus, right? Like we’re really focused on cash flow on profitability and ultimately thinking about growth over the longer-term. And we’re to this day, like we were really thinking about like on the marketing side, we’re being efficient. Like, we really want to spend to the right levels, where based on where things are right now, based on where the macro is right now. And we want to be able to be prepared for a range of macroeconomic outcomes. I think we see some good pockets of data here and there. And then as we mentioned, April was a little bit tougher, right? And so, like we just need to be able to be prepared for whatever that means. And this business has been profitable. This business has great economics, and we’ve been profitable at much lower levels of revenue. And so, I think we’re trying to make sure that we are focused on stabilizing the business, making sure that we’re absolutely doing the right things now to be investing in our core, to be investing in our platform so that we can be prepared for that growth. We’re not prepared at this time to be able to tell you when we think that inflection is going to be, but I really believe we’re doing all the right things to set ourselves up for that. Tom Nikic : Thanks, guys. Appreciate the color. Operator: Thank you. Our next question comes from Dana Telsey with Telsey Advisory Group. You may proceed. Dana Telsey: Hi, good afternoon, everyone. Kat, as you think about what categories worked, what are you seeing in categories? Is there a category realignment that you expect to manage the business on given the reduction in distribution center space that you expect Stitch Fix to be known for and what you’re seeing in terms of some of this on the subscription model? And lastly, how are keep rates? And what are you seeing in the past towards enhancing the customer experience? How is that moving along relative to your plans? Thank you. Katrina Lake: Yes, great questions. And I think the first one on the assortment, I mean, we’re seeing like on the men’s side, we’re seeing [short sleeve woven’s work] [ph], we’re seeing across the board. I think we’re seeing more occasion and dressy. In the women’s business, dresses have been a place where we’ve been historically underpenetrated. And we’ve seen a lot of success in dresses. We’ve seen success in fitted dresses and more of the work dresses, definitely an event. I think you’re probably hearing that across the board, but I think people are excited to be out and be doing things and we’re certainly seeing that in our business. And the consolidation of the warehouses really does allow to be able to hit more of that variety. And so, I would say that historically, like our business is probably more over indexed in places like tops. And it’s maybe been harder to serve some of the categories that are less represented in our inventory, partly because it’s, I think the – it’s easier – I think going forward, we believe it will be easier to be able to have, kind of even underrepresented categories available for our stylists to be putting in fixes more often with the consolidation of warehouses. And so, we really do believe that the consolidation of the warehouses will help us to be able to achieve for our clients greater and our stylists, greater, kind of access to variety and that could potentially help us to be able to address more parts of the clients wardrobe and more parts of kind of wallet share in those categories. In terms of, like what we’re excited about in terms keep rates in enhancing the customer experience, as David mentioned, and I said earlier, it’s interesting, like we really haven’t seen AOV be problematic, I would say, even though we feel like we’re seeing macro in some other ways. But I think AOV is a place where we’re actually seeing some holding, which is great. And longer-term, we talked about kind of some of the ways that we’re using algorithms in our buying, and I’m just like really, really excited about that. I think there’s, what we’re doing now is, we’re using algorithms not just to kind of give insights to our buying team, but actually to buy product. And that’s starting, you know we’re starting to see some of the product that we bought that way, kind of hit our warehouses and we’re really excited about, kind of the potential of that product. And I think scaling that capability is something that we’re really excited about that I think really can play a large part in enhancing the customer experience and longer-term definitely impacting things like keep rate. Dana Telsey: Thank you. Operator: Thank you. Our next question comes from Ashley Helgans with Jefferies. You may proceed. Ashley Helgans: Hi. Thanks for taking our questions. First, just any color on the declines in active clients? And then I know in the past you’ve talked about targeting marketing to reactivate clients. Any update on how that’s progressing? Thanks so much. David Aufderhaar: Yes. Thanks for the question. On active clients, we were down 97,000 quarter-over-quarter. That’s around 3%. And we did see higher gross adds this quarter, compared to Q2, and that was sort of a function of both increased acquisition spend. But also, I think to your point, the call out is, we also saw strong reengagement. Reengagement went up 34% quarter-over-quarter and 24% year-over-year. And so, I think we’re definitely leaning in on the reengagement side from a marketing standpoint. With that, we do continue to expect active clients to be negative in Q4, and that’s because we’re still, sort of lapping this high dormancy. Just as a reminder, we spent last year in Q3 and Q4 over $50 million each quarter on marketing and a good portion of that was focused on this Freestyle first client acquisition and pulling back on that. That’s still the headwind that we’re working from an active client standpoint. Ashley Helgans: Great. Thank you so much. Operator: Thank you. Our next question comes from Edward Yruma with Piper Sandler. You may proceed. Edward Yruma: Hey, guys. Thanks for taking the question. I guess first a housekeeping question. I know the stock based comp is down pretty significantly year-over-year, but less so on that trailing 9 month basis, I guess, is this kind of the trend we should think about going forward? And then, Kat, just like a bigger picture question, I was kind of been asked about when could you bend the curve on client growth? But maybe ask differently, do you think you need a more supportive macro to kind of bring the business back to growth or do you think you have the levers and tools today that even if macro remains tough that that you could try to drive that client growth in the medium-term? Thank you. Katrina Lake: Thanks, Ed. I will take the second question and then maybe, and David you can come back to SBC. I mean, it’s a great question, Ed. I mean, we know that we have a macro effect on our business, like there’s no question. That being said, like, I think it’s hard for us to quantify. And frankly, I think it’s kind of a waste of time to really spend too much time quantifying it because I do think, I don’t know that I can answer your question exactly. Like, is it enough to inflect without macro. Like, I don’t know if I can answer that exactly, but I do think there are real opportunities. And I think right now, we’re working on our, kind of strategic plan for the next fiscal year. And I’m really excited. I think where we do have very clearly identified opportunities for us to deliver a better experience, to have a more, for a more compelling value proposition for a broad range of people. And so, I think regardless of the macro, there are definitely things that we can be doing to positively impact our business and positively impact our clients. And so, we’re really focused there. And as I said, like I we just really want to be prepared for a wide range of whatever macro is going to hand us over the next 12 months to 24 months. And so, we want to make sure we’re focused on the right things that are going to be the right things regardless of macro and we want to be able to be prepared to take advantage when macro turns our way. And so, I can’t answer it exactly, but like we definitely believe we can make forward progress even – and we’ll keep an eye on what’s happening with macro. David Aufderhaar: And then Ed, on the SBC side, this quarter we definitely came down from last quarter. I think it’s around 12% down from last quarter, and it’s around 28% down year-over-year. And so, the level that we’re at right now is probably the right level. If you think about it from a near-term perspective and just like the rest of our fixed cost structure, it’s something that we’ll want to leverage going forward. Edward Yruma: Thanks so much. Operator: Thank you. Our next question comes from Lauren Schenk with Morgan Stanley. You may proceed. Lauren Schenk: Great. Thanks. I just wanted to dig a little deeper into your comments about investing more around AI, just sort of any incremental color you can share there? And then just bigger picture, how are you thinking about, sort of AI as a competitive threat, whether that be personal assistance, etcetera, over the coming, you know, months and years, frankly? Thanks. Katrina Lake: Yes. Thanks, Lauren. I mean, we could probably spend an entire hour on this. So, maybe I’ll just share a few highlights. But I think we, like I hear what you’re saying is, like, it is – like it’s in a lot of ways it’s positive, that like AI has been part of our story since the very beginning. We’ve been using data science and machine learning since day one to power our business. And I think there’s some real competitive differentiation that we’ve developed over our 10 plus years of leading in that space that are benefiting us today. And at the same time, obviously, a lot of people are really interested in the space right now and looking at things that we’ve done. And so, I think we plan to kind of have the best of both worlds. And so, I was with our technology team the other day, and we have an AI roadmap, which is part of what’s kind of being, kind of sliced into our strategic plan for next year. And that’s a combination of, I think there are opportunities where we can take advantage of off-the-shelf advancements in AI that have happened where there are capabilities that 5, 10 years ago would have required us to build a 5% or 7% or 10% team to develop a capability that’s now off-the-shelf. That’s something that we can bring into our business and [deliver as value] [ph] to our clients. And then there are other places where we need to push and we need to continue our advantage. And one of the real things about AI is that, like, your capabilities around AI are only as good as the data that you’re training on. And the data that we have is really proprietary. It’s been developed over 10 years it’s really, really predictive. And so, there’s a lot of opportunities for us where there’s off-the-shelf things that we can do that are surfaced, but the real valuable things are where – how can we take advantage of this one-to-one connection that we have with our clients and the incredible amount of data that we have to be able to push the envelope? And I think what we talked about in inventory buying is a really great example of that. We are now actually using like that, kind of individual level data about our clients to be able to buy in aggregate and to be able to do that in a much more compelling way that we have historically. And so, we mentioned we’re just starting to have buys that have been generated by that tool that are hitting our warehouses and that our styles are having access to now. And it’s super early days. And so, we AB tested it. We know that there’s a benefit that we saw in the AB test. We’re starting to gradually integrate that into our buying processes, but that’s a place where we’re really excited, where this is actually algorithmic buying that we are starting to roll-out that I think is going to be able to deliver better experiences to our clients and stylists and ultimately better numbers and better numbers to our bottom line. And so, that’s something that really only we can do because of the depth of data that we have, because of the connection we have with our clients. Because we have individualized data about every single client and their preferences that they’re sharing with us that allows us to then be able to buy in a way that I think would be very, very challenging for any other retailer to do. Lauren Schenk: Great. Thank you. Operator: Thank you. Our next question comes from Aneesha Sherman with Bernstein. You may proceed. Aneesha Sherman: Great. Thank you. So, there’s been a lot of, kind of ups and downs in the last few years, but if you go back to, if we just rewind back to pre-COVID levels in about February 2020, so right before COVID, you had about 3.5 million active customers, kind of where you are now. And so, you’ve sort of anniversaried all of the ups and downs and come full circle, but in many ways, it’s a stronger business now. You have higher awareness levels. You have better customer data, better [algo] [ph], broader assortment. So, why are those same 3.5 million customers generating lower total revenue? Like, what’s different about their behavior? Is it you know, are they buying lower priced items? Are the keep rates different? Can you help us contextualize, like, what is different, you know, versus where you were back then pre-COVID? Katrina Lake: It’s hard without knowing exactly the specific data point that you’re pointing to, but I would say like, at a high level, like some of what we are anniversarying is some of clients that were brought in in a freestyle first experience. And those clients did not generate the same level of engagement and revenue delivery that historically our clients did. And so, I think my guess is kind of that’s probably what you’re looking at. And like going forward, now we are bringing people into an experience where they’re sharing with us their style preferences, what they’re looking for, what they like, what they don’t like. And during some of those Freestyle first days, we weren’t gathering that kind of information about clients. And so that made it hard for us to retain and engage them in the way that we’ve historically done that. And so, my guess is that’s probably the reason and the good news is that we’re largely getting back to where certainly getting back to where we were. And I would say even pushing forward past that. I think we’re now at a place where we – the algorithmic buying as an example is that’s a step change. That is a paradigm shift. That is an improvement from the way that we were doing things in 2019. And as we look forward, I think there are other opportunities for us to be able deliver more value and a more compelling client experience in a similar way to be able to return back that business where we are bringing people in, who are engaged, who are excited, who are looking at this long-term relationship. And that’s a lot of what we talked about. That’s a lot of what’s happening when we talk about, kind of focusing on our core. David Aufderhaar: And I think one other call out is just client tenure. Is, it’s the same amount of clients, but there’s definitely a different mix from a client perspective. And so, clients tend to be more active earlier in that life cycle until it stabilizes. And so, that’s another one of the factors. Aneesha Sherman: Okay. Those are really helpful color. So then, just to follow-up on that. You know, to your comment, David, earlier on that all cohorts are spending less and you’re not seeing differentiation by cohort, if AOV isn’t declining and gross adds are up, I assume that means that churn is what’s gone up, and that’s what’s driving the volume declines. Is that accurate? David Aufderhaar: That is, yes. Aneesha Sherman: Okay. And then does that suggest you’re seeing no differences in churn between those older cohorts and the newer cohorts or actually are you actually seeing some differences in behavior and churn levels between those kind of Freestyle first people you’ve brought on in the last couple of years versus your original clients from several years ago? David Aufderhaar: No, I mean, I think a big part of it is what Kat was alluding to is, losing those Freestyle first clients. But certainly, it’s a little bit of both. Aneesha Sherman: So, you’re seeing higher churn for your newer cohorts than for your older cohorts? David Aufderhaar: Not necessarily the newer cohorts, it’s more specifically those Freestyle first clients that we were bringing. Those are certainly some of our newer clients, but they’re a specific cohort. And for that cohort, we’re definitely seeing higher churn rates. And that’s one of the reasons we pulled back on that and we’re focusing more on the core. Overall, macro still pressures sort of all of them in the same way though. Aneesha Sherman: Thank you. David Aufderhaar: Yes. Operator: Thank you. And this concludes today’s conference call. Thank you for participating. You may now disconnect. Follow Stitch Fix Inc. (NASDAQ:SFIX) Follow Stitch Fix Inc. (NASDAQ:SFIX) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

Couchbase, Inc. (NASDAQ:BASE) Q1 2024 Earnings Call Transcript June 6, 2023 Couchbase, Inc. beats earnings expectations. Reported EPS is $-0.27, expectations were $-0.32. Operator: Greetings, and welcome to the Couchbase First Quarter Fiscal 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal […] Couchbase, Inc. (NASDAQ:BASE) Q1 2024 Earnings Call Transcript June 6, 2023 Couchbase, Inc. beats earnings expectations. Reported EPS is $-0.27, expectations were $-0.32. Operator: Greetings, and welcome to the Couchbase First Quarter Fiscal 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Edward Parker, Head of Investor Relations. Thank you, Mr. Parker, you may begin. Edward Parker: Good afternoon, and welcome to Couchbase’s first quarter 2024 earnings call. We will be discussing the results announced in our press release issued after the market close today. With me are Couchbase’s Chair, President and CEO, Matt Cain; and CFO, Greg Henry. Today’s call will contain forward-looking statements which include statements concerning financial and business trends and strategies, market size and expected future business and financial performance and financial condition, and our guidance for future periods. These statements reflect our views as of today only and should not be relied upon as representing our views at any subsequent date and we do not undertake any duty to update these statements. Forward-looking statements, by their nature, address matters that are subject to risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of the material risks and other important factors that could affect our actual results, please refer to the risks discussed in today’s press release and our most recent annual report on Form 10-K, our quarterly report on Form 10-Q filed with the SEC. During the call, we will also discuss certain non-GAAP financial measures, which are not prepared in accordance with Generally Accepted Accounting Principles. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, as well as how we define these metrics and other metrics, is included in our earnings press releases which are available on our Investor Relations website. With that, let me turn the call over to Matt. Matt Cain: Thank you, Edward. And good afternoon, everyone. On today’s call, Greg and I will provide details on our first quarter results, as well as our second quarter and full-year fiscal 2024 guidance. I’ll start off with a few highlights of our Q1 financial results. Couchbase delivered a strong quarter beating our guidance across all metrics. I’m pleased with the team’s execution on our strategy to deliver topline momentum, while outperforming on profitability all against a difficult economic environment. Total annual recurring revenue or ARR was $172.2 million, up 23% year-over-year. Revenue in Q1 was $41 million, up 18% year-over-year. Our non-GAAP gross margin remains best-in-class at 86.4%. Non-GAAP operating loss was $12.9 million and non-GAAP operating margin was 5 percentage points above the midpoint of our implied guidance range, demonstrating our continued operating expense discipline and focus on driving leverage in our model. I’m proud of how the business is performing despite the macro environment. And I believe we are more strategically aligned than ever before. Indeed, while there are external factors outside of our control, we continue to focus on what we can control. Innovating and investing for an exciting future, while placing increased rigor on our expense discipline. Recall that last quarter, we laid out our key priorities for fiscal 2024. Focus on top line growth, increase the mix of Capella, drive further sales and marketing efficiency and accelerate the pace of leverage in our model. I’ll comment on Capella and our go-to-market progress and Greg will provide more details on the impact they’re having on our growth and leverage results. Starting with Capella. Our R&D team is rapidly innovating to enhance our offering, reduce barriers to adoption and deliver even more value for customers. Last week, we announced our newest release of Capella, which will be accessible by the popular developer platform Netlify and features a New Visual Studio Code extension. This release makes it easier for developers and development teams to build modern applications on Capella. We also extended Capella’s enterprise features and deployability, including new time series data capabilities to support a broader set of use cases. Looking forward, we will continue to focus our product innovation towards making Capella more accessible for customers and on improving the developer experience, all while delivering the enterprise-grade capabilities that have been the core of our DNA. In addition to Capella innovation, we continue to invest in initiatives that drive developer adoption and more efficiently drive growth. These are enabling users to discover the power of Couchbase sooner and are accelerating product-led growth for both new and existing customers. As a result of our efforts, we’re enjoying higher engagement and visibility at more developer meet-ups and conferences, increased content consumption on a revamped developer website and valuable feedback from some of our most strategic customers at developer workshops. Customers are selecting Capella for their long-term cloud modernization strategies due to its performance, speed, scalability and flexibility advantages. Capella’s best-in-class TCO and unique value proposition are especially important differentiators for cost-conscious customers during times like this. On the go-to-market side, we continue to create further sales and marketing efficiency by driving ongoing operational improvements and investing in our partner ecosystem. Last month, we announced the availability of Capella on Microsoft Azure marketplace further simplifying the process for customers to adopt Capella and deploy applications on their cloud of choice. We are excited about the opportunity for our Azure partnership to accelerate the adoption of Capella and bring the power of Couchbase to more organizations. Also on the partnership front, we are building on the momentum of our recently enhanced ISV partner program in conjunction with our expanded relationship with AWS through the launch of our ISV Starter Factory. This program supports ISVs with additional tools and resources to build and modernize their applications with Capella on AWS, reducing complexity and making it easier for organizations to modernize and migrate their applications. We remain closely aligned with AWS and are excited to participate in an increasing number of go-to-market activities with them. These include joint asset creation, developer engagement and AWS summits around the world. We will continue to evolve and broaden our partner ecosystem in order to help organizations accelerate their application development journey and grow our reach in the market. Now turning to wins from the quarter. I am pleased with the breadth of our customer activity across a broad range of industries, including technology, e-commerce, healthcare and travel. Starting with Capella, we’re seeing increasing engagement and uptake of our as a service offering. During the quarter, we crossed a key milestone with the number of Capella customers now in the triple-digits growing dramatically year-over-year. Some exciting new wins included a fast-growing pet health and wellness company, a NextGen real estate technology company and a revenue cycle management software company. We also continue to see existing customers migrating to Capella. A Fortune 500 energy customer that leverages Couchbase for its main field application decided to migrate a meaningful portion of its estate to Capella. This six-figure deal was one of our largest Capella deals in the quarter demonstrating how our large enterprise customers can leverage the full capabilities of Couchbase while enjoying the greater flexibility, efficiency in TCO inherent to our on-demand offering. A Capella expansion during the quarter came from public and is really based online media company, which uses Couchbase to power its indexing and query for its search engine. As public continues to scale its business, it’s expanding its investment in Capella, because they see compelling cost efficiencies compared to competitor solutions. On the enterprise front, we want to spotlight LinkedIn, who serves over 1.4 million profiles per second at its peak. They recently published an article outlining how their existing open source platform could no longer address the loads on their storage infrastructure, which was doubling every year. LinkedIn selection of Couchbase as a centralized storage tier cash resulted in more than a 60% reduction in tail latencies and trim the cost to serve by over 10% annually. Now turning to some thoughts on the near-term environment. As I have said before, there are things we can control and things we cannot control. We were prepared for both heading into Q1 and the quarter played out largely as we expected. One variable we, of course, cannot control is the macro environment. As we discussed last quarter and as you’ve been hearing from many of our technology peers, the uncertainty and volatility continues to present headwinds for IT spending. We’re seeing longer deal cycles, extra layers of scrutiny and approval and customers electing to buy in smaller increments. These trends persisted through the end of the quarter and I am extremely pleased with our ability to navigate these headwinds. At the same time, we feel good about what we can control which includes driving operational efficiency while preparing for the future by building our field capacity and pipeline. We’re committed to improving our profitability and if necessary have the right levers to find further leverage in our model and react accordingly. That said, demand indicators remain strong and we continue to see a healthy pipeline of deals and interest in our cloud database platform. The big secular trends of digital transformation, acceleration of the cloud and innovation at the edge are still in our favor. I’d be remiss if I didn’t mention the topic dominating everyone’s minds. Let me spend a moment touching on how the fast-moving wave of AI-driven applications will power if not accelerate the secular tailwinds that offer specific opportunities aligned with our strengths. At Couchbase, we’re exploring a wide range of initiatives both internally and externally to leverage AI to increase efficiencies across various aspects of our business. Some examples of this include research, generating tests and test data for code, exploring how generative AI can drive developer productivity and adoption of Capella and making our platform more operationally efficient. And while the benefits for Couchbase specifically in the industry more broadly are real and exciting, we believe the implications for our business and mission are more profound and increasing productivity and efficiency alone. Consider the following: the processing of unstructured data in real-time is becoming a necessity; modern applications require predictive insights and real-time decision-making for personalization; and the models are moving closer to the data for improved control and faster time to processing; this series of events collides when enterprises, who are building AI-driven insights into their next-generation applications leverage AI to run private models. It’s at this point, where enterprise will require the combination of a high-performance operational database with analytical functionality making this an exciting opportunity for Couchbase. Much of the promise of generative AI is only recently being understood. But these core concepts will be familiar to many of you, who have been following Couchbase, because they are all foundational elements of how we are architected. Clearly, there is more to do to capitalize on this opportunity, but you’ve often heard me say that Couchbase has been built for this moment and I think that’s as true today as it’s ever been. In closing, we had a solid start to the year and the secular drivers behind our business remained strong. We’re making progress on our initiatives, our committed to focusing on what we can control and are nimble in navigating areas we cannot control. Before handing the call over to Greg, I want to emphasize one of our core values that I’ve repeated many times. At Couchbase, we attack hard problems driven by customer outcomes. With that, I’ll hand the call over to Greg to walk you through our results in more detail. Greg? Greg Henry: Thanks, Matt. And thanks everyone for joining us. We had another strong quarter as we beat guidance across all key metrics. Despite the elevated level of deal scrutiny that Matt talked about, we are pleased with our execution, our dedication to delivering value to our customers and our ability to navigate the environment, while driving healthy outperformance in our operating loss guidance. I’ll now walk you through our first quarter in more detail before providing our guidance for the second quarter and full-year. Total annual recurring revenue or ARR was $172.2 million at the end of the first quarter, representing 23% growth year-over-year. Revenue for the first quarter was $41 million, an increase of 18% year-over-year. Subscription revenue for the first quarter was $38.5 million, an increase of 21% year-over-year. Professional services revenue for the first quarter was $2.5 million, a decline of 15% year-over-year, consistent with our expectations following outsized strength in professional services in fiscal 2023. We continue to expect the contribution as a percentage of revenue in fiscal 2024 to be slightly below recent levels. Our ARR per customer performance in the first quarter was $254,000, up from $242,000 in the fourth quarter and indicative of the growing wallet share we have with large customers. As a reminder, as Capella continues to grow in revenue contribution, we expect ARR per customer growth could moderate or decline in future quarters. Our dollar-based net retention rate continues to exceed 115%, driven by strong renewal and upsell activity across our base of larger enterprise customers. We exited the quarter with 679 customers, an increase of four net new customers from the fourth quarter. Our gross customer addition count was consistent with levels we saw in Q1 over the past two years, but we did see some challenges with a handful of smaller mid-market customers, who are being impacted by the macroeconomic environment, including some who are no longer in business. That said, we’re encouraged by the strength of our new logo pipeline and remain confident in our ability to reliably expand logos as evidenced by our consistent ARR growth and our strong retention metrics against a more challenging spending environment. In discussing the remainder of the income statement, please note that unless otherwise stated all references to our expenses, results of operations and share count were on a non-GAAP basis. In Q1, our gross margin remained strong at 86.4%. This compares to a gross margin of 87.3% a year ago and 86.3% last quarter. As a reminder, as Capella mix increases, we expect gross margin will decline over time. Turning to expenses. We continue to invest to capture the generational opportunity we see in front of us, but our focus on improving the efficiency of our growth. We are pleased with our execution on this front as our expense discipline and early benefits from cost savings initiatives resulted in outperforming our operating loss outlook. Our sales and marketing expenses for Q1 were $29.2 million or 71% of revenue, compared to $24.8 million or 71% of revenue a year ago. Q1 included costs associated with our annual sales kickoff event, which was held in-person this year, compared to last year’s virtual format. Research and development expenses for Q1 were $12.5 million or 31% of revenue, compared to $12.5 million or 36% of revenue a year ago. We continue to thoughtfully invest in our as-a-service offering, as well as an additional features to bolster our platform. General and administrative expenses for Q1 were $6.7 million was 16% of total revenue, compared to $6.5 million from 19% of revenue a year ago. Non-GAAP operating loss for Q1 was $12.9 million or negative 32% operating margin, 5 percentage points higher than the midpoint of our guidance, compared to an operating loss of $13.4 million or negative 38% operating margin a year ago. Non-GAAP net loss attributable to common stockholders for Q1 was $12.3 million from negative $0.27 per share. Turning to the balance sheet and cash flow statement. We ended Q1 with $163.6 million in cash, cash equivalents and short-term investments. We remain well capitalized to execute against our long-term growth strategy. Our remaining performance obligations or RPO totaled $165.6 million at the end of Q1, a decrease of 2% year-over-year. We expect to recognize approximately 68% or $112.1 million of total RPO as revenue over the next 12 months, which represents 11% year-over-year growth. As we have noted, our total RPO performance has been impacted by a year-over-year contraction in billings terms as some customers are electing shorter-term contracts due to the macro uncertainty and because our sales plans no longer incentivize multiyear contracts as aggressively. Operating cash flow for Q1 was negative $7.2 million and free cash flow was negative $8.5 million or negative 21% free cash flow margin. We are pleased with the progress we have made in our free cash flow profile. We remain committed to driving further improvements. Now, I will provide guidance for Q2 and the full-year fiscal 2024. As Matt discussed, we continue to see solid momentum and our pipeline remains strong. Furthermore, we anticipate that our investments in our product capabilities, partner ecosystem and go-to-market motion will complement our momentum in fiscal 2024. That said, we are mindful of the macro headwinds and continue to carefully monitor their impact on our business, including bookings, pipeline conversion, retention expansion rates, deal sizes, sales cycles, logo acquisition and sales productivity. As such, our outlook maintains an elevated degree of conservatism across all these metrics to account for the uncertainty as well as the lack of visibility into how the macro may impact consumption trends for our emerging as-a-service offering. With these factors in mind, for the second quarter of fiscal 2024, we expect total revenue in the range of $41.2 million to $41.8 million or a year-over-year growth of 4% at the midpoint. We anticipate ARR in the range of $176 million to $179 million, which represents 22% growth year-over-year at the midpoint. We expect a non-GAAP operating loss in the range of negative $10.9 million to negative $10.1 million. For the full year of fiscal 2024, we are raising our ARR outlook while maintaining our revenue guidance and decreasing our operating loss. We expect total revenue in the range of $171.7 million to $174.7 million or a year-over-year growth of 12% at the midpoint. As a reminder, we’ve historically seen variability with respect to the implementation timing of certain enterprise deals which impacts our revenue visibility along with new or migrated Capella customers. We therefore continue to view ARR as a better indicator than revenue of the strength of our business. We expect ARR in the range of $191.5 million to $195.5 million or 18% growth at the midpoint. And finally, we expect a non-GAAP operating loss in the range of negative $43 million to negative $39 million. With that, Matt and I are happy to take your questions. Operator? Q&A Session Follow Couchbase Inc. Follow Couchbase Inc. We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. And our first question comes from Sanjit Singh with Morgan Stanley. Please proceed with your question. Sanjit Singh: Thank you for taking the questions. And congrats on a nice start to the year net new ARR growth. I wanted to start my first question with guidance and just sort of look at that 22% ARR growth that you did this quarter. I think on a net ARR basis was even a little bit better than that. If I look at sort of the back half of the year in terms of what’s implies, it implies I think flattish or actually down year-over-year net new ARR growth? And so just in terms of the expectations coming into this year than what you saw in Q1, just wanted to get a sense of — are you seeing the year sort of come in as you expect it or it mean the underlying assumptions are largely holding or did you see incremental deterioration versus what you’ve guided to approximately 90 days ago? Matt Cain: Hey. Sanjit. This is Matt. I’ll provide some opening commentary and then hand it over to Greg. Look, as we stepped into the year, I think we were particularly careful on articulating our perspective of things that we can control versus things that we can’t. And as we mentioned in the remarks that played out largely as we expected in Q1. We continue to be excited about the progress we’re making operationally everything from Capella to go to market. At the same time, we’re cognizant of the fact that the macroeconomic situation persists and we want to be responsible with that as we think about the rest of the year. So I would say as — at a very high level, things are progressing as we anticipated and Q1 was a nice start to enable us to have the year that we know is possible. There are some specifics around the number which Greg can give some perspective on. Greg Henry: Yes, Sanjit, thanks. Look, again, we feel very good about Q1 and the overall look. We have relatively good visibility, particularly into Q2 some deals obviously have closed now and we see the renewals expansion. Some of the consumption trending for Q2. The pipeline remains healthy. And so for the full-year, we’re pleased that we raised the guidance by the beat in Q1 and we see that — we still want to maintain an elevated level of conservatism. And as we’ve always stated, we established guidance to at a minimum deliver that if not try to overachieve as we go through the year. So that’s how we sort of maintain the posture. But as Matt said, we’re pleased and we think things are off to good start. Sanjit Singh: That’s helpful color. And then the LinkedIn comment was certainly a nice feather in the cap type win, any sort of context you could give us where they Couchbase, sort of, customary for before they start to replace their — that core application that was driving all those users. What sort of the evolution to get them to where they are today? Matt Cain: Yes, Sanjit, that was an existing customer who has been enjoying the value proposition of Couchbase for multiple applications aligned with their next-generation application modernization strategy. And then further leaning into the capabilities that are offered with the managed service totally aligned with the value proposition that we’ve been articulating. And as you can imagine, we’re having conversations with most if not all of our existing customers on the eventuality of taking advantage for Capella for their entire estate or a subset of it. Sanjit Singh: Very exciting. Thanks, Matt. I appreciate the color. Operator: Thank you. And our next question is from Rob Oliver with Baird. Please proceed with your question. Rob Oliver: Great. Hey, thanks, guys. Good afternoon. Matt, I had one for you. And then Greg, I had a follow-up for you as well. So, Matt, first off, the — I wanted to dive a little bit deeper into that oil and gas when that you guys had, which was a Capella conversion obviously an industry that you guys have done really well in and just wondering what some of the template — what some of the decision points were for that customer along the way. And if you can help us understand like what got them over the hump on the move to Capella. And if this sort of lighthouse went on Capella that could become a template for others within that industry. And then I had a quick follow-up. Matt Cain: Sure. So look, this has been a customer for us for some time. And one of the capabilities that they’ve been taking advantage of is our mobile capability, in addition to our core enterprise feature set. We’ve continued to grow the account over several years and have been having discussions with them about moving into Capella. I think ultimately, Rob, it became the compelling event for them where they were able to not only offload the database management and save money but also optimize internal resources. And there is almost an insatiable demand in our enterprise customers to modernize and build new applications but they often run into challenges and having the people and resources to do that. Capella helps with that very thing. This is a blueprint that we’re using with many other customers and we’re very carefully engaging with them on the right time for them to move again either their entire state or others. But look, the fact that we’ve architected the solution to be the full power of Couchbase with the additional value proposition of better TCO, better internal productivity as you can imagine that value proposition is resonating quite a bit with current environment and the foreseeable future with the application dynamics that I mentioned. Rob Oliver: Great. That’s helpful. Thank you very much. And then Greg, just one for you, just contemplating the full year guide. You called out some of that I think it was kind of low to mid-range customer churn that happened through the quarter. Just thinking about the full-year guide, can you just help us get comfortable with how that might progress throughout the year? Are we through most of that, as you guys kind of scrubbed that portion of the customer base, what — how did you — where did you land in the end? Thank you. Greg Henry: Yes. Hey, Rob. Appreciate the question. Yes, I think that’s the case. I think we see the churn on the customers is anomalous this quarter. Like I said, like we said in the prepared remarks, the gross acquisitions were consistent with historical Q1. The losses we had were driven by a handful of smaller challenge customers and several of them are going out of business. We had no competitive losses. And the other thing I would say about the logos is the average loss logo was the second lowest we’ve seen in the last three years. So while you see the count, a lot of times that we share with you the dollar is also matter and we actually had a reasonable dollar of new logo. So in terms of how it’s going to play out for the year, it’s going to — it’s not going to materially impact the year per se, and it’s already contemplated in the guide. So I think we’re comfortable where that landed. Rob Oliver: Okay. Super helpful color. Thanks, guys. Appreciate it. Greg Henry: Thank you. Operator: Thank you. And our next question is from Matt Hedberg with RBC Capital Markets. Please proceed with your question. Unidentified Analyst: Hi. This is [Anita] (ph) for Matt Hedberg. Thanks for taking my question here. It’s good to see the improved leverage in the model. Can you remind us how you’re thinking about the path to breakeven profitability and what are the drivers to get there? Matt Cain: Yeah, Thanks for the question. Yeah, again we’re pleased that we were able to continue to demonstrate leverage in the model and inefficiencies. And as we stated before, it’s our other discussions that we are committed to continuing to do that. We haven’t given a long-term range outlook in terms of cash breakeven or profitability. And when we do our Investor Day, we plan on doing that but we certainly are committed to continuing to do that. And hopefully, we saw that we delivered a beat in the quarter. The flow-through of one of the $1.5 million for the full year, but we also in that $1 million flow-through. We also took another $1 million of FX headwind against expenses as well. So we’re feeling operationally pretty good about the leverage and efficiency that will continue to gain and we’re just going to keep marching towards profitability here. Unidentified Analyst: Got it. And then one more from me. Now that Capella is available across all three hyperscalers, can you talk more about the traction you’re seeing there? And is there a way to quantify the new business you’re seeing coming from the three marketplaces? What is the more traditional go-to-market channel? Thanks. Matt Cain: As it pertains to the hyperscalers, a big part of our value proposition is allowing our customers to run applications anywhere from cloud edge and that consists of their own datacenters, inclusive of instances where they have deployments in any one of the big hyperscalers. And oftentimes, our customers have a multi-cloud approach where they’re not totally dependent on a single hyperscaler, but combine that with Couchbase with the ability to do hybrid deployments and run applications all the way out to the edge inclusive of mobile devices, which is a big part of our differentiator. So we were excited to round out the portfolio with the addition of Azure, which has been part of our plan roadmap. And then as we indicated with commentary specific to AWS, we’re now able to go after go-to-market partnerships and programs with the other providers, where we have solutions in market quite frankly to allow customers total freedom of choice and movement in between the cloud solution. So it’s a big part of our value proposition. We thought about the market that way for some time even before we had Capella end market. And so I think it’s an extension of how we think about supporting our customers and being the e-cloud database for modern applications. It’s hard breakdown on numbers, that’s not something we provide. Greg, I don’t know if you have any more. Greg Henry: Yes. I mean, as Matt stated, we were working with all the hyperscalers both on Capella and through their marketplaces. So we continue to see good traction all around but we haven’t given specifics on by vendor. Unidentified Analyst: Got it. Thank you. Greg Henry: Thank you. Operator: Thank you. And our next question is from Kash Rangan with Goldman Sachs. Please proceed with your question. Kash Rangan: Hello, thank you very much. Nice quarter. I just wanted to understand the consumption patterns you’re seeing with Capella. Not sure if we quantified how it is contributing to revenue budget. Since you’ve been added for a couple of years, you probably have enough cohort analysis to conclude some pattern. So curious how much more visibility you’re getting into the consumption model granted that consumption model itself relative to subscription. It’s not that visible. But as you study the cohorts, what are your conclusions? And one of the things that you’re doing from a contracting standpoint to ensure that you have some level of visibility as Capella contracts continue to ramp. Thank you so much. Matt Cain: Hey, Kash. Thanks for the question. Yeah, we are starting to get obviously some insights into the Capella consumption trends given that we’ve been at it for, like you said, a year and a half or so now. And look overall, we can see is once customers begin their journey on Capella, they tend to consume at a very healthy rate and a lot of them consume at a rate faster than they had originally anticipated. We’re seeing some of our customers that are having to buy at least once or sometimes multiple times before they get to their first anniversary from a consumption. And look, we have monitoring, obviously very closely of the consumption trends by customer. We can see it all real time, so we know whether customers are under consuming and we can go help them get up and running faster. We can see where they’re over-consuming. We can obviously spend time and make sure they’re over-consuming for the right reasons and they’re not going to get surprised. So we are seeing healthy trends there. And I think the theory is starting to play out although, we share the metric yet. But we do believe that net retention rate will probably be greater in our Capella customer cohorts than it is for the non-Capella customer cohorts. Kash Rangan: And that should also result in a structural lift of the growth rate that the company as Capella becomes a larger part of the business obviously. And if that’s the case, if you agree with that, how are you scaling your expenses alongside the increase in consumption so that you can still achieve the proper targets that you probably have somewhere in the not too long-term? Thank you so much. And that’s it from me. Matt Cain: Yes. Look, we’re — as we’ve talked about even starting late last year and through current, we are focused on profitability rule 40 efficiency. So we are absolutely monitoring the topline and the pace at which it’s growing and we’re moderating the expenses to go with it, so that we can continue to gain that leverage and efficiency as we go. So we will be monitoring it closely. Obviously, we’ve talked for a while now that we’ve really shifted all of our focus and resources really around Capella from a development perspective. So we are all in on Capella there and we’re going to try to continue to go as fast as we can. But again keeping in mind that we are focused on leverage and efficiency at the same time. Operator: Thank you. And our next question is from Raimo Lenschow with Barclays. Please proceed with your question. Raimo Lenschow: Thank you. Congrats from me as well. The quick question on Capella. Do you see any patterns in terms of use cases that are emerging in terms of some clients kind of particularly focusing on certain areas? And what do you see there in terms of like test development and test development on Capella versus kind of production workloads? And then I have a follow-up for Greg. Thank you. Matt Cain: Raimo, a dynamic that I would bring attention to is kind of two sides of the spectrum as we think about new Capella customers to Couchbase. And on the one end, you have new logos or customers that are brand new to Couchbase in general and are signing up with Capella as their entree to the way to get access to the database. On the other side, you have some of our largest customers that are evaluating the eventual migration of existing applications into the managed service. And I think the dynamics of how a customer adopts it varies pretty significantly from some of the smallest deals that we see a new logo acquisition we just want to get people started and enjoy the growth that we’re seeing in Capella. And on the other side, where people — our largest customers are going to be pretty specific and probably run it through more robust testing and proof of concept before they eventually move into Capella. And I would say, as we’re driving the transformation to cloud-first, that’s probably a more important dynamic than any specific vertical or use case. We’re quite frankly — we’re very fortunate that our platform services everything from financial services to NextGen Healthcare and gaming and everything in between. So I wouldn’t say that Capella consumption model is changing the quote unquote vertical dynamic more so the how our customers thinking about getting into the managed offering. And again, depending on which side of the spectrum, it can be a different on ramp and we’re setup operationally to support both. Raimo Lenschow: Makes sense. Thank you. And then Greg, one follow-up. After the New Year started, has there been any changes in terms of how are you selling in terms of incentive structure to get maybe more Capella in the big’s — like how do you handling that transition and does that create headwinds for you that we should be aware of? Thank you. Greg Henry: Yes. Hey, Raimo. Yes, I think if I was going to comment sort of at a high level in terms of like sales compensation this year, we clearly made more shift to focus on Capella, that’s what we’re trying to drive. So there is a more incentive on Capella this year than there even was last year. We’re still focused on obviously growing the business and new business. But clearly, Capella is the focus and where we’re looking for the sales team to be motivated to go sell. Raimo Lenschow: Okay. Perfect. Thank you. Greg Henry: Thank you. Operator: Thank you. And our next question is from Howard Ma with Guggenheim Securities. Please proceed with your question. Howard Ma: Thank you. And thanks for sharing the triple-digit Capella customer set. Can you reconcile that number with the limited number of net new customer adds? I think it implies that if you triple-digit — if you take 100 and imply that at least 15% of your existing server customers are now Capella customers. But can you comment on the pace of growth of these Capella customers since Capella has been available? And so I guess that’s one part that the pace of growth. And then looking ahead, should we expect a meaningful acceleration in net new Capella customers or will — for like foreseeable future for the next year or so, will most of that Capella contribution come from the existing customer base. Matt Cain: Yeah. Hey, Howard. Thanks for the question. Yes, so very pleased to reach that mark and you’re right if you take the least triple-digit you’d get 15% of our customer set. So we align there. And I would just say that, as a reminder, we can have customers that have both Capella and non-Capella. And in some cases — a lot of cases now, there is both. So we still see very healthy Capella customer acquisition. So we’re seeing that for sure. I think the other thing to consider is, when you see the Capella customer count grow, it can grow through migration of existing customers as well. It doesn’t have to all the new acquisitions. So again, healthy on the Capella side. In fact, look, for Capella migrations, we did 2 times the migrations in Q1 this year versus Q1 last year. So we feel good about migrating customers over and we also feel good about the pace of the add that we’re delivering as well. Greg Henry: Howard, if I could hop on. I think the net number in Q1 is a combination of Capella and enterprise and it was really sort of two different stories there. So we have very high expectations for Capella and that’s playing out largely as we expected. To be frank, this is an area of the business that we’ve been pretty transparent that we know we can do better and Capella will be the biggest driver of that. And so we continue to expect that as we move forward with the business. To your question on percentage of customers, if I go back to that dynamic of big existing customers that are migrating versus net new logos, I think we’re going to see a higher number of customers on the new logos faster as we get new logos that start with Capella. But the dollar contribution is going to be more correlated with the timing at which our large customers decide to move into Capella. What you can’t see reflected in the numbers or the conversations that we’re having with those large customers. And I believe that it is an eventuality. At the same time, we don’t want to try to push our customers before they are ready and they have resources lined up and determine that it’s the right compelling event for them. And so it’s really important for us as these customers are making two, three, five to 10-year decisions that we work alongside of them, particularly in current economic times and we’re more focused on the mid to long-term prospects of the business. Then artificially trying to get quickly over some threshold of percentage of economics. So I’d say those are dynamics that we’re very aware of and managing and we’ll share more of that as we go forward. Howard Ma: Okay. Great. Thanks for adding that color, Matt, to what Greg was explaining. And Greg, just a quick follow-up. To be clear on guidance, I think last quarter you said that you’re baking in a heightened level of conservatism into guidance relative to what you’re actually seeing. Can you just clarify if that’s still the case? Thank you. Greg Henry: Yes, Howard. It’s quite similar to be perfectly honest. Obviously, we’ve just got one quarter under our belt and we’ve seen the results from Q1. So I think in the prepared remarks, we say we’re continuing to have an elevated level of conservatism as we go through the year because we’re very cognizant of what’s happening out in the world today and we want to be in a position where, as I stated earlier, we can at a minimum meet the guidance if not beat it as we go forward. So I think things are continuing as we had stated a quarter ago. Operator: Thank you. And our next question is from Rudy Kessinger with [Technical Difficulty] Rudy Kessinger: Great. Thanks for taking my questions. Greg, I wanted to start with you and double-click on the customer churn commentary. I think you said it was — on a dollar basis, you said it was I think the second-lowest in the last few years. Could you just clarify what comments you had thrown in there? And then just any other further color you could share with these smaller enterprises where their mid-market customers, any verticals and specific any regional banks to call out that churn. I know you said some that went out of business. Just any more color you can give on the customer churn? Greg Henry: Yes. No problem, Rudy. So first of all, there were no regional banks part of this. And what I stated before was, if I looked at the average loss — dollar loss per customer, it was the second lowest we’ve seen in three years. So they were very small on the SMB side of things, customers. And as I said they were many that were quite honestly challenged with what’s going on in the macro today that either put them out of business or we’re on a path to go out of business. And so that was the churn piece, but the dollar component of it was relatively low, which is why I was referencing that while we share that count with you that doesn’t always tell you the whole picture and the dollar — the net dollar new logo for the quarter was actually pretty reasonable. But the count was impacted by those churns. Rudy Kessinger: Okay, that’s helpful. And then Matt, you mentioned I’d say in this call you’ve and then you’ve mentioned it in our past conversations potentially holding our Investor Day at some point in the future. Investors that I speak with are certainly looking for some kind of target date on operating breakeven or free cash flow breakeven that they can hang their hat on. And I certainly understand there might be some hesitancy to give some kind of intermediate long-term targets when you’re in an — operating in volatile macro as we are today. But just have you put any more thought to that? And when could we expect an Investor Day or getting some of those longer-term targets profitability? Greg Henry: Yes. Hey, Rudy. It’s Greg. I’ll take this one. Look, yes, we absolutely are still considering doing an Investor Day later this year. To your point on the macro, we want to really see where this is going to go but we fully intend when we do the Investor Day that we will lay out Capella metrics, a long-term model path to profitability. We obviously trying to share some of that as we go which is why we disclosed today about hitting the triple digits on the Capella customer account. And hopefully, we’re seeing that the path to profitability has begun in terms of our ability to start getting leverage in the model and generating some efficiency and letting that flow through to the bottom line. So all is good. And we, like I said, we still plan on doing an Investor Day. And as soon as we land on a date, we certainly will let you know. Operator: Thank you. And our next question is from Taz Koujalgi with Wedbush Securities. Please proceed with your question. Taz Koujalgi: Hey, guys. Thanks for taking my question. I have a question on the impact, when a customer moves from on-prem to Capella, you’ve mentioned that you’ve seen a lot of success from customers moving from on-prem to Capella. Can you I guess help us understand would the uptick in customer spend is, I’m assuming Capella is obviously the higher price point. But when a customer goes from an on-prem offering to Capella that’s a like-for-like capacity or like-for-like, I guess usage. What is the kind of uptake you see in customer spend? Greg Henry: Yes. Hey, Taz. It’s Greg. Appreciate the question. Yes, I think how we stated it before is — if a customer was spending a dollar on self-managed Couchbase enterprise and they move to Capella, they would go to like $1.50 to $2 depending on which flavor of Capella they chose. So that’s sort of the uplift and that’s assuming again like-for-like no additional volume or consumption just pure moving over. Taz Koujalgi: Got it. Very helpful. And just one follow-up. Your revenue — any comment on linearity for revenue, because your revenue looks like it was better than usual seasonality. Usually, I believe Q1 revenues are down versus Q4 this quarter we saw that improve. I think your Q1 revenues were better than your subscription revenues in Q1. This quarter were better than last quarter. Any comment on linearity? Was it a more front and lower quarter? How does the linearity play out versus other quarters? Greg Henry: Yes. Look, we would expect subscription revenue will continue to grow over time. I think there is obviously timing involved with that in particular around the non-Capella piece and the way the accounting is for when you start the subscription term with the accounting rules. So some of that can drive some of the timing difference. But nonetheless, we expect it to continue to grow. Again, we feel very good about the performance in Q1 and that we’re maintaining the guidance for the full-year. So I think it really has to do a lot of it with the timing of the start dates and that’s why we’ve talked about in the past about ARR being the measure we think is more important, because it can cut through some of that noise, but you will see some — again, some timing differences around revenue recognition based on how those rules work. Taz Koujalgi: Got it. Just one last one, if I may. Services revenue is a little bit lighter this quarter, I think, down year-over-year. What are we expecting for the rest of the year? Should that uptake or is there a reason why they were a little bit light to this quarter? Greg Henry: Yes, it’s a good question. We had tried to share with people that last year was an outperformance on service. We had a healthy backlog and a higher than normal customer demand to deliver services. So we had a outperformance last year and that this year would be a down year just, because we can’t — we’re not going to repeat that. And that the mix of services on our business was around 8% last year and we’d expect it to be even maybe potentially a little bit below normal, which is around 6%. So maybe 5% for the year is the way you should think about it, but you should still continue to expect to see that be a headwind for us the rest of the year. Taz Koujalgi: Got it. Thank you very much. Greg Henry: Thanks, Taz. Operator: Thank you. There are no further questions at this time. I would like to turn the floor back over to CEO and Chairman, Matt Cain for closing comments. Matt Cain: Thanks, operator. To recap, we had a strong quarter and start to the year. We remain excited about our opportunity with Capella, due to some very big trends in our favor like digital transformation, acceleration of the cloud, innovation at the edge and AI. We’re cognizant of the macro environment and are sharply focused on execution during times like this, while also building for what we believe will be a very exciting future. Thank you all for joining us and we look forward to speaking with you next quarter. Operator: Thank you. This does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation. Follow Couchbase Inc. Follow Couchbase Inc. We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

Investors piling in on the rally in stocks could face trouble in the third quarter, DataTrek warned. Scott Heins/Getty Images Investors piling into the current rally in stocks could face trouble in the third quarter, DataTrek said. That's because inflation may not fall enough while the economy stays strong.  The firm warned that rate hikes could continue, which would be a headwind for the stock market.  Investors have been riding a wave of bullishness this quarter, but the rally in stocks could face trouble, as inflation can't fall much further while the economy remains this strong.That's according to DataTrek Research, which in a note on Thursday pointed to the strong performance of stocks this year, with the S&P 500 up 12% since January. The benchmark index rose 3% over the past 30 days alone, partly fueled by a slight decline in inflation and expectations that the Federal Reserve will pause rate hikes at its policy meeting next week.But the rally could falter soon, as prices may not be able to ease to the Fed's 2% inflation target without additional rate hikes, the firm said. "The fly in that optimistic ointment is the threat that a strong economy and declining inflation are mutually incompatible, and the Fed will be forced to keep raising rates in this scenario. Markets have gotten the 'peak Fed' call wrong 3 times so far; a fourth unforced error is not out of the question," DataTrek co-founder Nicholas Colas said. Colas predicted that the rally in stocks will continue through the end of June, though the market could face a conundrum in the third quarter as inflation and Fed rate expectations become repriced. Currently, markets have priced in a 72% chance the Fed pauses rate hikes at the June 14-15 meeting, but a 50% chance rates will rise another 25 basis-points in July, per the CME FedWatch tool.Central bankers have raised interest rates aggressively in the past year to lower inflation, a move that's weighed heavily on stocks and threatens to tip the economy into recession. Meanwhile, inflation is still well-above the Fed's target, with prices coming in at 4.9% in the April Consumer Price Index report. Core CPI measured at 5.5%, a sign that inflation pressures in the economy are still strong. Commentators have warned more rate hikes are in order before the Fed gets inflation fully under control, though higher rates will likely be a headwind for stocks. The S&P 500 slumped 20% last year amid the Fed's aggressive interest rate hikes, notching its worst performance since 2008.Read the original article on Business Insider.....»»

The conversations around severe air pollution in New York brings back memories of growing up in the Indian capital. Morning haze and smog in New Delhi, India, in November 2021.Altaf Qadri/AP I spent more than two decades of my life in Delhi and battled with poor air quality every day. Watery eyes, a runny nose, and an irritating cough became a part of my life — as did face masks.  New York's smog situation brings back memories of what it was like growing up in Delhi. The conversations around severe air pollution in New York brings back memories of growing up in New Delhi. I spent more than two decades in the Indian capital and saw its air quality go from bad to worse.Watery eyes, a runny nose, and an irritating cough became an everyday part of my life. I stopped going to the doctor because they would often attribute this to "severe air pollution" and tell me to resort to home remedies. After multiple rounds of antibiotics, I found a way to survive in one of the world's most populated cities.Ginger and lemon tea with honey became my new best friends and the air purifier was the latest gadget that everyone started wanting.Ever since the smoke from Canadian wildfires made its way to New York, my phone has been buzzing with messages, photos, and videos about severe air pollution.From friends and colleagues sharing images that look like they've turned on a sepia filter, to social media buzzing with posts sounding the alarm over the state of smog — it's everywhere. And while it looks like the apocalypse is nigh, I can't help but look back at my time in Delhi where air quality remains unhealthy year-round.A few years ago on a flight home, I decided to get my phone out just before the plane landed. I was excited to get home and wanted to capture the perfect touchdown for my Instagram Stories.But I was shocked at the lack of visibility. I was hoping to see some famous landmarks in Delhi but instead saw only thick, grainy, and dusty smog.Air quality in Delhi varies throughout the year. In one part of Delhi it's 252 micrograms per cubic meter, characterizing it as poor.Delhi's air-quality index on June 8.Spriha SrivastavaHowever, air quality tends to be worse in Delhi later in the year as well as January, due to changes in weather conditions and burning of crops ahead of the next season. Despite government bans, the practice is still fairly widespread across India.Another contributing factor to the rising pollution in Delhi is road traffic. There are more than 11 million registered vehicles in Delhi and they play a big role in the unhealthy air quality.You can feel it in the air and spending too much time outside often sends you down a sneezing fit. Masks were my friends even before the pandemic kicked in.Read the original article on Business Insider.....»»

The air in New York City has been awful this week but it's nothing new for many parts of the world. It also used to be more common in the US. The sun rises over a hazy New York City skyline.Seth Wenig/Associated Press New York City's air is abysmal this week because of smoke from Canadian wildfires.  Hazy skies are a shock to New York and other eastern locales but poor air is common in many cities. The US didn't always have the clean air many of us are used to. As a former New York City resident, I'm always curious about what's going on there. This week I didn't expect my texts to be about air quality. Coworkers, friends, and family members in various locales up and down the East Coast texted me about the terrible smoke blanketing their neighborhoods, with a cousin saying he'd had some trouble breathing. Another family member said Manhattan looked apocalyptic.For the past few days, New York City's air has appeared dirtier than the bottom of a subway track. The foul air from massive Canadian wildfires is expected to linger through at least Saturday. As shocked as New Yorkers — and people in other big cities from Detroit to Washington, DC — might be to barely be able to make out their skylines, this is nothing new for many people who live in other parts of the world. Lahore, Pakistan; Hotan, China; and Bhiwadi, India, had the worst air quality in the world in 2022, according to data from IQ Air. My colleague Spriha Srivastava wrote that New York's suffocating smog reminds her of growing up in Delhi. Indeed, New York City has found itself atop the rankings — and above all of the perennial offenders — for having the worst air quality and being hazardous to breathe. New York Mayor Eric Adams said that by Wednesday afternoon the air quality index hit 484, out of a scale of 500. As of midday Thursday, it's around 180 — still not great.New Yorkers and others are getting a taste of what it can be like to live in Doha, Qatar, and Shanghai, where at least air pollution appears to be improving.The sky over Manhattan looked orange on Wednesday.Julia LeMenseIn many developed economies, expectations about clean air are baked in. But that wasn't always the case, even in the US. Landmark legislation like the Clean Air Act, signed into law by President Nixon in 1970 and beefed up in 1990, acted like a giant air filter for the nation. Today, in many global cities where the air quality is poor, the focus is often on building economies to lift people out of poverty. "They're in a period of rapid economic growth," Robert Kremens, a physicist who studies wildfires, told Insider. "They sacrifice air quality over human health." He said those decisions are often understandable because the focus is on ensuring citizens aren't going hungry, for example. Yet there are consequences from the pollution as well. A study published last year found 86% of people living in the world's urban spaces encounter air pollution that's more than seven times above guidelines put out by the World Health Organization back in 2005. Cleaner air is something the US now takes for granted — even out west where smoke from wildfires is far more common. Kremens, who is with the Chester F. Carlson Center for Imaging Science at Rochester Institute of Technology, said the US made a decision decades ago to make cleaner air a priority. That meant a big drop in pollution from industrial smokestacks and tailpipes. That was quite a change from the years before the federal government had the authority to regulate what America was sending into the sky. In 1948, for example, over the course of five days in Donora, Pennsylvania, 20 people died and thousands more were made sick by air pollution that spewed from a factory. It was incidents like this and seminal works like Rachel Carson's 1962 book "Silent Spring" on the effects of insecticides that propelled a nascent  environmental movement.When the first Earth Day took place in April 1970, air pollution was a major problem in most US cities. In 1969, a river in Cleveland topped with industrial runoff caught fire, something that had happened at least a dozen times before. Almost one in 10 Americans took part in demonstrations or activities on the first Earth Day, and those participants sought something in particular: government action. Those actions have since made such a difference that many of us are now shocked by what poor air quality looks like."I'm going out to LA tomorrow. It's not red anymore. It used to be red when we went there," Kremens said this week from his office in Rochester, New York. "This is a societal decision, where we're going to clean up the air and the water." Kremens pointed to the Clean Air Act and the Clean Water Act as examples for what can be done when enough attention is paid to an environmental challenge. These advance are likely why the recent haze choking so many eastern cities has been so jarring, even for Kremens, who has gone around the world studying — and fighting — fires for more than 20 years. "I go outside and it smells like Montana," he said. "I have so many pictures on my wall that look like here now, but they're from Utah and Montana and places I've worked out west."I'm looking forward to another batch of photos from friends and family in eastern cities — pictures showing clear skies.Read the original article on Business Insider.....»»

U.S. stocks were higher Thursday afternoon in the final hour of trade, putting the Dow on pace for a third consecutive session of gains. The Dow Jones Industrial Average DJIA was up about 165 points, or 0.5%, near 33,832, while the S&P 500 index SPX was 0.6% higher and the Nasdaq Composite Index COMP was advancing by 0.9%, according to FactSet. Investors have been focused on next week’s two-day Federal Reserve meeting, especially on whether the central bank will skip a rate hike in June, or potentially even signal a longer pause to let its prior slavo of rate increases time to sink in. Some economists see a “skip” in June by the Fed as unlikely. Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news......»»

General Motors Co. GM said Thursday it plans to invest more than $500 million in its Arlington, Texas assembly plant to make future internal combustion-engine, full-size SUVs. Product details and timing were not released. The “significant” investment will strengthen GM’s lead in SUVs and “also highlights the company’s commitment to continue providing customers with a strong portfolio of ICE vehicles for years to come,” GM said. Shares of GM dropped 0.8% in late trading Thursday, underperforming vs. the S&P 500 index SPX for the day. GM stock has gained nearly 7% so far this year, compared with an advance of around 12% for the index. Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news......»»

In this article, we are going to discuss the 20 best imported beers in USA in 2023. You can skip our detailed analysis of the size of the U.S. import beer industry, the rise of Mexican beer brands and their dominance in the U.S. beer market and a comparison of sales volume data of some […] In this article, we are going to discuss the 20 best imported beers in USA in 2023. You can skip our detailed analysis of the size of the U.S. import beer industry, the rise of Mexican beer brands and their dominance in the U.S. beer market and a comparison of sales volume data of some industry giants and go directly to 5 Best Imported Beers in USA in 2023. The United States of America is the largest importer of beer in the world. According to the Beer Institute, imported beers comprise nearly 18% of the overall beer market in the country. You can check out more on that in 22 Cheap Imported Beer Brands Targeting Budweiser’s Market. In 2021, the U.S. imported around $6.21 billion worth of beer, accounting for 2 out of every 5 cross-border beer dollars. Canada, Belgium, Germany, the Netherlands, were all big sources of these imports but the lion’s share of the overall U.S. beer imports came from one country, Mexico.  After the Great Recession, the Dutch had solid control on the global beer market, led by the industry giant, Heineken. But within a decade, the Netherlands, along with other European brewing powerhouses, were overtaken by Mexico. According to the Geneva-based statistics provider Trade Data Monitor, today, Mexico ships out more beer than any other country, accounting for around 30% of the global beer exports.  Some of the best and most popular imported beers in America come from Mexico and the country accounts for nearly 80% of the overall U.S. beer imports, up from a mere 17% in the 1990’s. In the recent months, nearly 97% of the total Mexican beer exports flowed to its northern next-door neighbor. According to data from the Beer Institute, the U.S. imported around 98.7 million gallons of beer from Mexico in just March 2023, a 12% increase from March 2022. The Netherlands was next on the list, with around 8.19 million gallons, a decrease of 19.7% from the same period the previous year.  This is also reflected in the overall sales volume data of the beer industry giants in the U.S. According to a report by the Brewers Association, Anheuser-Busch InBev SA/NV (NYSE:BUD), a juggernaut in the global beer industry and the owner of many popular beer domestic brands, including Budweiser, Busch, Michelob Ultra and even import beers, such as the Belgian Stella Artois, witnessed a steep decline in its sales volume in the U.S. The company reported an overall dip of 4.5% in its total shipments to wholesalers in 2022, compared to 2021.  Similarly, the Molson Coors Beverage Company (NYSE:TAP), which owns brands such as Carling, Miller Lite, Blue Moon etc, witnessed an even steeper decline of 5.1% in its shipments to U.S. wholesalers, including an unprecedented 11% drop in Q4, 2022.  On the other hand, the total sales volume of Constellation Brands, Inc. (NYSE:STZ), which owns some of the best selling imported beers in America, including Mexican beer brands like Modello, Corona and Pacifico etc., grew 9%, from 25.85 million barrels in 2021 to 28.2 million barrels in 2022. To put that into perspective, the next-largest volume gain from any beer supplier was 120,000 barrels, from Kirin-Lion (New Belgium and Bell’s). Constellation Brands, Inc. (NYSE:STZ) is single-handedly fueling the growth in the import beer industry in the U.S., through its highly sought-after Mexican brews.  The operating income of Constellation Brands, Inc. (NYSE:STZ), up 6% to $2.86 billion in its fiscal year, has been second behind only Anheuser-Busch InBev SA/NV (NYSE:BUD) for several years now. Although a recent change in the company’s ownership structure sparked plenty of debate about its potential sale, Constellation Brands, Inc. (NYSE:STZ) keeps turning up with the best results in beer all the same, coming off the company’s 13th consecutive year of beer volume growth.  With that said, here are the Best Imported Beers in America in 2023: Pixabay/Public Domain Methodology America’s imported beer category is as vast in brands as it is in geographic origins. To collect data for this article, we have searched through a multitude of sources such as BeerAdvocate, RateBeer, Drizly, and Zippia, among others, looking for indexes of the best and most popular imported beers available to Americans in 2023.   For our list, we have only selected beers that appeared at least twice in the above-mentioned indexes. We then gave them scores based on the number of times that they appeared in these lists and ranked them accordingly. The respective scores have been granted from a total score of 6.  Although the American import beer market is dominated by Mexican brands, we have tried to include the best beers from different corners of the world, to keep our list diversified.  Another thing that must be kept in mind is that imported beers don’t always require consumers to splurge huge amounts of cash. Sometimes, these foreign brands can be quite economical and even compete with domestic beers, such as Budweiser.  20. Carlsberg Insider Monkey Score: 2 Carlsberg is a trend-setting Danish beer that has been enjoyed for decades in bars, homes and restaurants around the world. The 5% ABV pale lager is made with a proprietary hop blend, known as Carlsberg Aroma Hope Extract, which grants the beer its hoppy and bready flavor. First brewed in Copenhagen in 1847, the iconic Danish lager is now available in over 140 countries worldwide. Carlsberg A/S had an annual revenue of $9.95 billion in 2022, a 6.15% decline from 2021.   19. Sapporo Premium Insider Monkey Score: 2 First introduced in the U.S. in 1964, this iconic Japanese beer has grown to become the #1 top-selling Asian beer brand in America. The 4.9% ABV lager has a crisp and perfectly blended taste, with a refreshing flavor and clean finish. Sapporo also plans on starting production in the U.S. in the fall of this year. Sapporo Holdings Ltd. announced a revenue of $3.44 billion in 2022, up 9.4% from the previous year.  18. Hoegaarden  Insider Monkey Score: 2 This 4.9% ABV Belgian beer dates back to the 15th century, when a group of monks decided to experiment with their brewing process by adding a dash of botanicals. The result was the Hoegaarden White Beer that we know today. Hoegaarden is owned by the industry giant Anheuser-Busch InBev SA/NV (NYSE:BUD). The reported revenue of Anheuser-Busch InBev SA/NV (NYSE:BUD) for 2022 was $57.8 billion.  17. Tecate  Insider Monkey Score: 2 Brewed in the town of Tecate in Baja California, this 4.5% ABV Mexican golden beer has been using the same recipe since 1944. It is a full-bodied lager with a malt and crisp flavor. Although the beer is brewed in Mexico, it is owned by Heineken N.V. Tecate is one of the top imported beers in the U.S. with total dollar sales of $125.3 million in 2022, according to IRI.  16. Skol  Insider Monkey Score: 2 This 5% ABV lager is brewed according to the lager bottom fermenting tradition, using the finest natural ingredients to produce the optimum lager with a light and crisp taste. The beer is recognized as a Brazilian brand, but it was, in fact, first produced in Scotland. Skol is owned by the Carlsberg group and is currently the 5th top-selling beer brand in the world. The brand value of Skol grew to approximately $3.83 billion in 2022.  15. Red Stripe Insider Monkey Score: 2 Brewed in Jamaica, Red Stripe has a tagline of ‘Jamaican Pride in a Bottle’. The 4.7% ABV amber lager is made with pilsen malt, cassava starch and hops. Diageo plc (NYSE:DEO) acquired Red Stripe in 1993 and then in 2015, Heineken N.V. bought the brand from Diageo plc (NYSE:DEO), reportedly for $421 million, and is now also brewing the iconic Jamaican beer in the Netherlands. Diageo plc (NYSE:DEO) owns a multitude of alcohol brands around the world and has a current market cap of $93.9 billion. 14. Unibroue La Fin Du Monde Insider Monkey Score: 2 Serving as the brewery’s flagship beer since 1994, this Belgian tripel from Quebec is a 9% ABV heavy-hitter that is particularly popular among craft beer lovers. Its alcohol content may sound high, but it’s well-hidden because of its fusion of coriander and banana flavors with warm spice and a hint of yeast. Unibroue is also owned by Sapporo Holdings.  13. Dieu du Ciel! Péché Mortel Insider Monkey Score: 2 French for ‘mortal sin’, this imperial coffee stout from a microbrewery in Quebec has a high ABV of 9.5%. It is an intensely black and dense beer with pronounced roasted flavors. Fair trade coffee is infused during the brewing process, intensifying the bitterness of the beer and giving it a powerful coffee taste.  12. Tsingtao  Insider Monkey Score: 2 Produced in Qingdao, Tsingtao can trace its origins back to the brief German occupation of the northern Chinese city. This 4% ABV beer has a high-malty and well–hopped character. Tsingtao is produced with spring water for Laoshan and the domestically grown hops are so good that they are even exported to European breweries. In 2022, the beer sales of Tsingtao Brewery amounted to around 8.07 million kilolitres, with a revenue of around $4.52 billion.  11. Pilsner Urquell Insider Monkey Score: 3 First brewed in 1842, this Czech beer is generally considered to be the main reason why most of the world’s best-selling beers are pilsner-style lagers to this day. This 4.4% beer, with its clean, refreshing and crisp taste, has been brewed with the same recipe since it was first produced. In 2016, Anheuser-Busch InBev SA/NV (NYSE:BUD) agreed to sell Pilsner Urquell and four other Eastern European brands to Asahi for €7.3 billion, to help get clearance from competition regulators for its $100 billion takeover of SABMiller.  10. Dos Equis XX Insider Monkey Score: 3 Popular for its commercials featuring ‘The Most Interesting Man in the World’, Dos Equis is a 4.2% ABV, crisp, refreshing and light bodied amber lager, made from pure spring water. Dos Equis XX had total dollar sales of $430.68 million in the U.S. multi-outlets in 2022. This Mexican brand is also owned by Heineken N.V.  9. Leffe Blonde Insider Monkey Score: 3 Also owned by Anheuser-Busch InBev SA/NV (NYSE:BUD), this 6.6% ABV Belgian blonde is no longer brewed in Abbaye Notre-Dame de Leffe, but at the Stella Artois brewery, and the abbey earns royalties from its sales. However, it’s still crafted with an authentic Abbey ale recipe, serving up a flavor that blends sweetness with spice, plus a marked yeastiness.  8. Franziskaner Premium Weissbier  Insider Monkey Score: 3 Brewed following the tradition of the German purity law of 1516, this 5% ABV wheat beer dates back to the oldest privately-owned brewery in Munich in 1363. The Spaten-Löwenbräu-Gruppe, which owns the brand, was sold to Interbrew in 2003 for €530 million. Interbrew is a subsidiary of Anheuser-Busch InBev SA/NV (NYSE:BUD), based in the Netherlands. The beer with its natural cloudiness and its spicy and fruity flavor is among the best imported wheat beers in the U.S. in 2023.  7. Pacifico Clara Insider Monkey Score: 3 Brewed in the Pacific ocean port city of Mazatlán, this 4.5% ABV pilsner-style beer is hearty and crisp, with a touch of grass-citrus and ocean mist flavor. The Pacifico brand family is owned by Constellation Brands, Inc. (NYSE:STZ) and had total dollar sales of $271.48 million in U.S. multi-outlets in 2022.  6. Modelo Especial Insider Monkey Score: 4 This 4.4% ABV light pilsner is the second most popular import beer in America, right after Corona Extra. However, the Modelo brand family had the highest dollar sales among imported beers in U.S. multi-outlets in 2022, with $3.97 billion. Modelo is owned by Anheuser-Busch InBev SA/NV (NYSE:BUD) everywhere, except in the U.S., where it is owned by Constellation Brands, Inc. (NYSE:STZ).  Click to continue and see the 5 Best Imported Beers in USA in 2023. Suggested Articles: 20 Biggest Beer Brands in America 25 U.S. States with the Highest Beer Consumption per Capita Top 20 Beer Companies in the World Disclosure: None. 20 Best Imported Beers in USA in 2023 is originally published on Insider Monkey......»»

The Big 3 stock market indexes are all rising Thursday, but data on market breadth indicates that the stock market is actually falling. The number of stocks falling outnumbered advancers by 1,528-to-1,239 on the New York Stock Exchange (NYSE) and by 2,016-to-1,898 on the Nasdaq exchange. Volume in declining stocks represented 45.5% of total volume on the NYSE and 58.5% of total Nasdaq volume. Meanwhile, the Dow Jones Industrial Average DJIA rose 152 points, or 0.5%, even gainers and decliners were split evenly at 15; the Nasdaq Composite COMP advanced 0.9%; and the S&P 500 SPX tacked on 0.5%, with 267 components trading lower. The Russell 2000 index tracking small capitalization companies declined 0.5%. “Ideally, in a bull market, lots of stocks are participating and breadth is strong,” wrote Scott Wren, senior global market strategist at Wells Fargo Investment Institute in a note to clients. “That has not been the case in the current rally, as the advance in the S&P 500 has been quite narrow and most stocks are lagging.”Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news......»»

Wedgewood Partners, an investment management company, released its “Focused SMID Cap Strategy” first quarter 2023 investor letter. A copy of the same can be downloaded here. In the first quarter, the fund returned 2.5% compared to a 3.4% return for the Russell 2500 Index. In addition, please check the fund’s top five holdings to know its […] Wedgewood Partners, an investment management company, released its “Focused SMID Cap Strategy” first quarter 2023 investor letter. A copy of the same can be downloaded here. In the first quarter, the fund returned 2.5% compared to a 3.4% return for the Russell 2500 Index. In addition, please check the fund’s top five holdings to know its best picks in 2023. Wedgewood SMID Cap Strategy highlighted stocks like Landstar System, Inc. (NASDAQ:LSTR) in the first quarter 2023 investor letter. Headquartered in Jacksonville, Florida, Landstar System, Inc. (NASDAQ:LSTR) is an integrated transportation management solutions provider. On June 7, 2023, Landstar System, Inc. (NASDAQ:LSTR) stock closed at $187.96 per share. One-month return of Landstar System, Inc. (NASDAQ:LSTR) was 6.13%, and its shares gained 27.61% of their value over the last 52 weeks. Landstar System, Inc. (NASDAQ:LSTR) has a market capitalization of $6.754 billion. Wedgewood SMID Cap Strategy made the following comment about Landstar System, Inc. (NASDAQ:LSTR) in its Q1 2023 investor letter: “As we continue to familiarize our clients with our SMID portfolio’s holdings, we would like to discuss our significant exposure to the U.S. Transportation industry. We currently have three transportation holdings and have been substantially overweight the industry in comparison to the Russell 2500 index for several years. While these undoubtedly are cyclical business models, we see many long-term tailwinds for the domestic Transportation industry, which will provide attractive growth levels and will allow these companies to improve their returns on investment over time. Landstar System, Inc. (NASDAQ:LSTR) primarily is a provider of truckload (or TL) transportation services. Truckload transportation consists of moving one load by truck from source to destination. Landstar differs from our other two holdings in being a brokerage model, essentially, with the company owning only limited transportation assets and outsourcing all shipments to third-party providers…” (Click here to read the full text) sirtravelalot/Shutterstock.com Landstar System, Inc. (NASDAQ:LSTR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held Landstar System, Inc. (NASDAQ:LSTR) at the end of first quarter 2023 which was 22 in the previous quarter. We discussed Landstar System, Inc. (NASDAQ:LSTR) in another article and shared Liberty Park Capital’s views on the company. In addition, please check out our hedge fund investor letters Q1 2023 page for more investor letters from hedge funds and other leading investors.   Suggested Articles: Insider Buying Alert: 10 Stocks Seeing Insider Activity 14 Best Annual Dividend Stocks To Buy Now S&P 500 Dividend Aristocrats List: Sorted By Hedge Fund Popularity Disclosure: None. This article is originally published at Insider Monkey......»»

Investment management company Ave Maria recently released its “Ave Maria Focused Fund” first quarter 2023 investor letter. A copy of the same can be downloaded here. In the first quarter, the fund returned 12.84% compared to the S&P MidCap 400 Growth Index’s 5.05% return and the S&P 500 Index’s 7.50% return. The fund’s top holdings, as […] Investment management company Ave Maria recently released its “Ave Maria Focused Fund” first quarter 2023 investor letter. A copy of the same can be downloaded here. In the first quarter, the fund returned 12.84% compared to the S&P MidCap 400 Growth Index’s 5.05% return and the S&P 500 Index’s 7.50% return. The fund’s top holdings, as mentioned in the 2022 Annual Letter, continued strong operational performance in the first quarter. You can check the top 5 holdings of the fund to know its best picks in 2023. Ave Maria Focused Fund highlighted stocks like GFL Environmental Inc. (NYSE:GFL) in the first quarter 2023 investor letter. Headquartered in Vaughan, Canada, GFL Environmental Inc. (NYSE:GFL) is a waste management and environmental services company. On June 7, 2023, GFL Environmental Inc. (NYSE:GFL) stock closed at $36.71 per share. One-month return of GFL Environmental Inc. (NYSE:GFL) was -2.42%, and its shares gained 20.24% of their value over the last 52 weeks. GFL Environmental Inc. (NYSE:GFL) has a market capitalization of $13.766 billion. Ave Maria Focused Fund made the following comment about GFL Environmental Inc. (NYSE:GFL) in its Q1 2023 investor letter: “The strong operational performance of the Fund’s top holdings noted in the 2022 Annual Letter continued in the first quarter. Additionally, several of the catalysts for improved investor sentiment mentioned in the same letter came to fruition. The catalysts include: GFL Environmental Inc. (NYSE:GFL) announcing the divestiture of some non-core assets, and eDreams’ reported earnings reflecting the continued transformation from a transaction-based business model to a subscription-based business model. The stock prices of GFL and eDreams were up during the quarter, 18% and 46% respectively. Overall, the combination of strong operating performance and improving investor sentiment led to outperformance versus the Fund’s index.” Olaf Speier/Shutterstock.com GFL Environmental Inc. (NYSE:GFL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held GFL Environmental Inc. (NYSE:GFL) at the end of first quarter 2023 which was 30 in the previous quarter. We discussed GFL Environmental Inc. (NYSE:GFL) in another article and shared Ave Maria Focused Fund’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q1 2023 page for more investor letters from hedge funds and other leading investors.   Suggested Articles: 20 Countries with Highest Sugar Consumption 10 5G Stocks Billionaires Are Loading Up On 25 S&P 500 Dividend Aristocrats To Avoid Disclosure: None. This article is originally published at Insider Monkey......»»

The CNN Money Fear and Greed index remained in the "Extreme Greed" zone on Wednesday. U.S. stocks closed mixed on Wednesday as investors assessed the recent economic data. The trade deficit in the U.S. increased to a six-month high level of $74.6 billion in April, versus a $60.6 billion gap in the prior month. Exports from the U.S. fell by $9.2 billion from a month ago to $249 billion in April, while imports rose by $4.8 billion to $323.6 billion. United Natural Foods, Inc. ...Full story available on Benzinga.com.....»»

The CNN Money Fear and Greed index remained in the "Extreme Greed" zone on Wednesday. read more.....»»

Despite disappointing Q1 results, insider purchases pushed ZUMZ stock higher in extended trading In the wake of Zumiez’s (NASDAQ:ZUMZ) lackluster ... Read more Despite disappointing Q1 results, insider purchases pushed ZUMZ stock higher in extended trading In the wake of Zumiez’s (NASDAQ:ZUMZ) lackluster first-quarter financial report, which saw a sizable decline in sales, there is a glimmer of hope for investors. Two Form 4 filings submitted to the SEC after market close on Tuesday revealed that Zumiez’s CEO, Richard Brooks, and International President, Adam Ellis, made notable stock purchases on market in the approved trading window following the result. This unexpected move by the company’s top executives has piqued the interest of investors and has the potential to turn the tide for Zumiez. ZUMZ stock is down more than 51% in the last 12 months. They are due to exit the S&P SmallCap 600 index effective June 19..  Tracking Trades The trades were initially spotted on Fintel’s insider trading tracker later on Tuesday afternoon. The screen is a live filter of trades by insiders of listed public companies. Zumiez shares tumbled more than 15% following the release of what turned out to be weak Q1 results last week. However, the subsequent insider trades by Brooks and Ellis, which occurred after market hours, have sparked a renewed sense of confidence, with shares rising by 6.1%.  When delivering into the activity, CEO Brooks purchased a whopping 74,930 shares at an average price of $13.57, giving the total transaction a value just above $1 million. The CEO owns a total of 2,647,954 shares of ZUMZ stock following the transaction, extending his ownership of the float to around 13.5%. Ellis bought 10,000 shares at $14.67 each, with the trade totalling around $150,000. His total share count rose to 34,393 as a result of the trade. The trades by these insiders speak louder than words and suggest that they believe in the youth fashion retailer’s ability to overcome the current challenges and deliver better results in the future. Even with these recent purchases, Fintel’s insider sentiment score of 35.46 ranks the activity well below global peers. Bell Curve of Institutional Interest Research on the Fintel platform revealed that institutional interest in the stock has waned in recent months in a similar trend to the declining share price. Fintel’s data on hedge funds investing in ZUMZ could partially explain the decline, with the average portfolio allocation falling by 6.14% during the most recent quarter. While the number of owners on the register has stayed firm at 433, many of its backers have trimmed exposure to the company. Fintel’s fund sentiment score of 41.83 ranks ZUMZ in the bottom 30% when screened against 37,181 other global securities for the highest levels of institutional activity. The chart below shows the ‘bell curve’ like trend in share count ownership by institutions over the last five years. Bad Results For the first quarter, Zumiez told investors that net sales declined from $220.7 million in 2022 to $182.9 million during the quarter. The sales figure was broadly within consensus expectations. Net losses widened significantly from a loss of $397,000 last year to a more significant $18.4 million bottom line loss, or a per share loss of 96 cents. Analysts were forecasting the company to generate an EPS loss of around 85 cents per share. Zumiez’s management attributed the operating pressure points to lower sales, primarily driven by store wages and costs, as well as the absence of a German government subsidy received in the previous year.  The company also provided guidance for the second quarter of $187 million to $192 million, below Street expectations for around $199 million, reflecting a conservative stance. However, the higher end of the sales guidance indicates some positive sales trends in May, with a decline of 12.8% compared to the 17.1% decline in the first quarter. While hardgoods has been a challenge for the company in recent years, there are signs of improvement. Zumiez is capitalizing on the popularity of items such as Adidas Samba shoes, Pit Viper sunglasses, and chunky skate shoes. The company plans to deepen its inventory in these areas as the year progresses, suggesting a potential boost to sales. Looking ahead, Zumiez anticipates a more favorable sales and margin environment in the second half of the year. Comps will ease, and product margins may stabilize and expand as inventories align and promotional pressures subside.  Analyst Thoughts B Riley Securities analyst Jeff Van Sinderen thinks that the recent first quarter earnings reflected inflationary pressures coupled with foreign exchange impacts while in a tough operating environment. Sinderen said that even with Zumiez differentiated culture and merchandise content, headwinds continue to impact the industry and visibility continues to remain opaque. Following the recent investor update, B Riley lowered its target price for its ‘neutral’ recommendation from $21 to $15. Fintel’s consensus target price of $21.42 suggests the market is still cautiously optimistic on the stock, suggesting it could rise 58% over the next year. We note that this target is likely to drift lower as analysts remodel expectations for the year ahead. The post Zumiez Execs’ Insider Trades Signal Optimism Amid Weak Q1 Results appeared first on Fintel......»»

Amid widespread optimism among investors about Japan and Japanese stocks, sentiment toward the iShares MSCI Japan ETF is quite positive. Amid widespread optimism among investors about Japan and Japanese stocks, sentiment toward the iShares MSCI Japan ETF (US:EWJ) is quite positive, according to readings on Fintel’s quant dashboards. The exchange-traded fund, which has assets under management of nearly $11 billion and is operated by the large U.S. investment manager BlackRock, is one of Wall Street’s most widely owned ETFs specializing in Japanese stocks. Fund Sentiment on EWJ stock is 80.93 on Fintel’s proprietary model, which measures the extent to which major funds are accumulating the shares. For comparison, the $2 billion AUM WisdomTree Japan Hedged Equity Fund (US:DXJ) scores 36.35. For investors, EWJ has an expense ratio of 0.50%, while DXJ charges 0.48%. The exchange-traded fund also shows up on Fintel’s Dividend Yield Screen, which finds all securities with a dividend yield greater than 4%. Bullish Options Bets As far as options are concerned, the overall put/call ratios on June 5, June 2, June 1, and May 31 were all either 0.30 or 0.31. That means that roughly 70% of the options on EWJ that have been bought are bullish call options, while only 30% are bearish put options. Moreover, as of June 6, the put/call ratios for options that expire on June 16 and July 21 are 0.07 and 0.04. That means that over 90% of the options that expire on those days are bullish call options. Investors Optimistic on Japan Japan’s key stock gauge, the Nikkei 225 index, in May reached its highest level since 1990, when the Japanese economy was roaring. As of June 6, the index had jumped nearly 25% in 2023. Meanwhile, the EWJ soared 29% between last Sept. 30 and June 6. The celebrated American investor, Warren Buffett, in April reported that “he owned more stocks in Japan than in any other country besides the U.S.,” Investor’s Business Daily noted. In 2020, Buffett bought shares in Japan’s five biggest investment banks, and he recently boosted his stakes in those names to 7.4%, from his original stakes of just over 5%. Among the positive catalysts for Japanese stocks has been an increase in inflation in the country, which had for decades been plagued by extremely low and, at times, negative inflation. That has changed in recent years, and inflation in the country is now trending around 3%-4%. Meanwhile, the weakening of Japan’s currency is helping the country’s large export sector, and its interest rates are staying low. Moreover, Buffett’s statement has drawn investors’ attention to the country’s stocks. Familiar Names EWJ holds 238 companies in its portfolio. The two top components are very well-known companies — Toyota (US:TM) [4.34% of assets] and Sony (US:SNE) [3.56%]. Ranking third [3.83%] is a less-familar name, Keyence (JP:6861), which manufactures and markets automatic controlling equipment, measuring instruments and other electronic application equipment. Global bank Mitsubishi UFJ Financial (JP:8306) is the fourth-biggest holding [2.32%], while Tokyo Electron (JP:8035) ranks fifth [1.86%]. This article originally appeared on Fintel Sponsored: Find a Qualified Financial Advisor Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now......»»

Using data compiled by education research platform Niche, 24/7 Wall St. identified the 50 best public high schools in the United States. Niche ranked schools based on a weighted index of seven measures, including self-reported standardized test scores, parent and student surveys, extracurricular activities, and indicators of teacher quality. A full description of each measure […] Using data compiled by education research platform Niche, 24/7 Wall St. identified the 50 best public high schools in the United States. Niche ranked schools based on a weighted index of seven measures, including self-reported standardized test scores, parent and student surveys, extracurricular activities, and indicators of teacher quality. A full description of each measure and its weighting is available here. Charter and magnet schools were excluded from analysis.  American public schools are funded largely at the state and local levels, and some states are investing more in their schools than others. While greater funding does not always translate to better outcomes, many of the high schools on this list are in states that spend far more than average on education. New York, for example, spends an average of over $23,000 per pupil annually on public education, the most of any state. New York is also home to 11 high schools on this list, also the most of any state. (These are the best private schools in America.) Additionally, many of these high schools are located in wealthy areas with a strong tax base for local schools to draw from. These areas include Palo Alto, California, and Lake Forest, Illinois, where most households earn over $170,000 a year. (Here is a look at the richest school district in every state.)  It is important to note that some high schools on this list, though still taxpayer funded, are specialized schools that students often have to apply for or test to get accepted. These schools include South Carolina Governor’s School for Science and Mathematics and Stuyvesant High School in New York City. Click here to see the best public high schools in America. Sponsored: Tips for Investing A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now. Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit......»»