1/8 Thread: $CPRT FY 2Q'21 Earnings Call Notes

I wrote a deep dive on Copart this month. I love the company and management (you'll see why in these notes), but less of a fan of the industry and valuation.

Here are my notes.
2/8 For the second consecutive quarter, volume is down 13%, but offset by ASPs which is up by +35%, significantly outpacing overall industry.

Dealer business +10% when overall industry was down
3/8 Revenue +7.3%
Gross margin +49.8%, up 160 bps
Operating margin improved by ~500 bps
Capex for the quarter $136.1 Mn, 85% of which is growth capex
4/8 SS is throwing some softball:

"please talk about innovation"
Copart: nah, dawg, we are good.
5/8 Although ~40% of units are bought by international buyers, 90% of the units are affected by international buyers as they bid on many more cars than they buy.
6/8 Copart continues to think total loss frequency, which increased 5x in last 40 years, is the most important and secular driver for the demand.

Even >40% total loss frequency is in the realms of possibility at some point (not sure whether I believe that).
7/8 Good questions by JPM analyst Ryan Brinkman.

If Copart can become a major player in the whole car auction, things can become more interesting than it is now.

Copart has pretty great management at the helm with lots of skin in the game, so hard to rule them out.
8/8 Here's my deep dive on $CPRT (paywall):


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More from @borrowed_ideas

11 Feb
1/ Thread: $UBER 4Q'20 Update

"If a stock doubles on you and you thought it was expensive 50% lower, nine times out of ten its time to learn something."- @JerryCap

I passed on $UBER at $34/share, and it's been +85% since then.

Here are my notes from Q4 earnings call.
2/ Total gross bookings -4% YoY, but +16% QoQ.
Revenue -15% YoY, but +13% QoQ

Take rates down 221 bps YoY, primarily because mix shift to delivery which is lower take rates business

Strong conviction of reaching adj EBITDA profitability sometime in 2021.
3/ Mobility

Mobility appears to be improving in January; Brazil is at ~90% of last year's bookings.

Airport travel is the real laggard here, currently indexed at 27% of last year's bookings.

Expects WFH to continue, but travel to come back strongly this.
Read 12 tweets
10 Feb
1/4 I am 30 today.

As I reflect today, I realize I will probably never be as confident about the world as I was in my early 20s. The hubris of early 20s, thankfully, faded away.
2/4 Individually, we all are suffering from n=1 problem, n being the number of lives we can have. The best solution to this problem is vicarious learning.

Liddell Hart said, “There is no excuse for anyone who is not illiterate if he is less than three thousand years old in mind”
3/4 Or consider what Niall Ferguson said, “The dead outnumber the living fourteen to one, and we ignore the accumulated experience of such a huge majority of mankind at our peril.”

Hopefully, by the time my 30s ends, I will gain at least a few hundred years of wisdom vicariously
Read 4 tweets
5 Feb
1/ Thread: Notes from $IAC+ $ANGI Earnings call 4Q'20

Lots of interesting data points related to Vimeo on this call. Continued conviction on fixed price at ANGI+ real excitement about Dotdash.

Here are my notes.
2/ Let's start with Vimeo.

$IAC owns 88% of Vimeo. 1 IAC share = ~1.6 Vimeo share

"TAM is every professional, every team, every organization in the world who now needs to use video to reach their customers"

70% of Fortune 500 companies use Vimeo. Total enterprise customers <4k
3/ 60% paying subs start as free first, and 60% of enterprise customers come from free or self-serve base. Most enterprise customers are SMBs.

Recent partnership with $SHOP, $GDDY, $HUBS, Mailchimp

Net revenue retention increased for 7 consecutive quarters.
Read 10 tweets
4 Feb
1/ Thread: $IAC/ $ANGI Q4'20 Update

"At IAC, 2020 was a year of giving back. Not just giving back via spinoffs or distributions to the shareholders who have supported us, but giving back to the communities that have enabled us."

A very stakeholder friendly into :)
2/ $1 invested in Silver King ( $IAC predecessor) in 1995 would be $40 today, which is 16% CAGR over 25-yr i.e. 50% higher than $SPY

What an incredible track record.
3/ $ANGI

Fixed price model generated $160 Mn in 2020. More data points in terms of how fixed price perfectly fits in.

$ANGI, however, dropped ~10% after seeing lukewarm growth in January. I expect $IAC to really hone its focus on ANGI once Vimeo spin-off.
Read 11 tweets
3 Feb
1/ Thread: $GOOG 4Q'20 Update

For the first time, GOOG segmented its cloud revenues/income separately, and overall revenue was >20% in 4Q which led to +7% after-hours reaction yesterday.

Here are my notes from earnings/press release.
2/ In the last quarter, here is the segment-wise growth:

Search +17.4%
YouTube ads +46.0%
Google Network Members +22.9%
Cloud +46.6%

Cloud more than doubled in the last two years.
Other bets losses $4.5 Bn in 2020 (vs $4.8 Bn in 2019)
3/ Operating margin in Q4 ~28%
FCF margin in Q4 ~30%

One of the big takeaways was the core business was even MORE profitable than most investors thought since cloud had -42.9% operating margin.

$GOOG's search business is a good comp for Fed in terms of "printing" money. JK.
Read 9 tweets
3 Feb
1/ Thread: $AMZN 4Q'20 Update

"If you get it right, a few years after a surprising invention, the new thing has become normal. People yawn. And that yawn is the greatest compliment an inventor can receive."

The market collectively nodded to that with +0.6% reaction.
2/ The best owner-operator perhaps the world has ever seen finally takes a backseat from the Everything Store, but pretty sure he won't be chilling.

"In the Exec Chair role, I intend to focus my energies and attention on new products and early initiatives."
3/ Andy Jassy, who had been with $AMZN since 1997 and became CEO of AWS in 2016 , will be the new CEO in 3Q'21.

AWS's new CEO is yet to be declared.
Read 12 tweets

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