A large portion of the content from this week was already sent. In case you missed it:

A few Dozen More Earnings Reviews From This Season to Catch Up On:

It’s called Stock Market Nerd for good reason… :-)

Next week, coverage will include:

As a reminder, earnings “snapshots” offer a very brief 30,000 ft. view of financials. Earnings “reviews” are where I offer detailed reports on all earnings materials.

GTLB trades for 86x forward EPS and 78x forward FCF. EPS is expected to compound at a 29% 2-year clip. FCF is expected to compound at a 43% 2-year clip.

Shopify delivered $11.5 billion in global sales over the Black Friday, Cyber Monday weekend. This represents 24% Y/Y growth, which is stable compared to last year despite a shorter holiday shopping season vs. last year. This also matches its fastest rate of growth since the pandemic. Customer count for its overall merchants rose by 25% Y/Y and Shop Pay volume rose by 58% Y/Y. This was an undeniably strong showing that I found impressive. The company continues to establish itself as the de-facto commerce operating system and take meaningful share in a $1 trillion market. And with its cost base now fixed, it’s continuing to do so while explosively growing margins. All of this data prompted Deutsche Bank to think Shopify will meet or exceed Q4 Gross Merchandise Value (GMV) estimates.

“Our merchants had a great holiday weekend… The business is enjoying a bunch of growth drivers that are all performing very well.”

Shopify CFO Jeff Hoffmeister This Week

Overall Cyber Monday e-commerce revenue beat Adobe’s internal forecast of $13.2 billion, according to the company. Mastercard observed 3.4% Y/Y growth in Black Friday volume and 14.6% Y/Y growth in e-commerce volume.

“Our real-time insights show that consumers are comfortably in the gift-giving spirit as price reductions and deals occur across sectors, supporting budgets for holiday shopping.” 

Mastercard Chief Economist Michelle Meye

We didn’t really hear much from Amazon on how the weekend went. It called it the largest holiday event it has ever had, but considering this is still a growth company, I would hope so. It talked up meaningful consumer savings and having lower apples-to-apples prices than competitors. Per JP Morgan, holiday shopping results were in line with or better than expectations. It sees e-commerce penetration rising from 23.3% to 24.5% Y/Y and thinks that will keep marching to 40% over time. It also cited a stable 45% e-commerce market share for Amazon.

All of this data continues to point to a resilient U.S. consumer.

Amazon made a series of AWS announcements at this week’s AWS conference. Basically, all of the announcements involved high-performance compute and its various GenAI layers.

Starting with the infrastructure layer, AWS debuted new compute instances (virtual machines used to run cloud-native workloads) for its cloud footprint. It now offers well over 800 types of VMs. These new instances feature Blackwell chips from Nvidia, as well as its own Trainium 2 chips. Trainium 2-powered instances are 4x faster and come with 4x more memory than Trainium 1. Trainium 3 is coming next year. Notably, Amazon leadership also told us that demand for AMD’s Blackwell competitor isn’t seeing much demand. This is why they haven’t begun offering cloud instances involving that company’s GPUs. Notably, Apple is now using Trainium to train Apple Intelligence. Apple’s senior director of AI and machine learning had some very nice things to say about Amazon’s offering this week at the company’s conference.

Amazon is going all in on Trainium to focus on model training cost efficiency. It is abandoning work on its model inference chip set called Inferentia. Some of that Inferentia work will be borrowed by Trainium, as the two products combine best tech and practices.

With 100,000s of these chips, Amazon plans to build a massive super training cluster/supercomputer for Anthropic. It added a new chip linking tool called Ultraserver to combine up to 64 Traimium Chips. Nvidia is able to connect 144 total Blackwell chips, so it’s clearly ahead here… but that’s ok. Amazon is not trying to replace Nvidia. It can’t. It’s merely trying to offer cheaper solutions for customers and better overall supply of processors to power the high-performance compute revolution.

In cloud-based data storage, it added a new simple storage service (S3) for open-source Iceberg Tables. This is important. Snowflake has recently added support for this type of data table to augment interoperability and create an easier platform for developers to use more data. That has inspired more data transference and consumption within SNOW’s platform, and I’d expect a similar benefit here. This new Iceberg support product offers 3x faster querying and 10x faster transactions than Apache Iceberg Tables. Separately, it now offers S3 Metadata to power easy data tagging and discovery. This will become increasingly important considering unstructured data is the centerpiece of GenAI model training and inference. Within its suite of database products, it added another tool to its relational, standard query language (SQL)-powered Aurora product. This is called Distributed SQL (DSQL) to make Aurora a multi-cloud region product.

Within foundational models (FMs), it debuted a series of products under the “NOVA” FM family umbrella. Nova Micro is its text-only model for the lowest latency and cost queries. Nova Lite, Pro and Premier are differently sized multi-modal models (in order from smallest to largest) that can field text, audio and video-based prompting. The different parameter sizes emulate OpenAI’s various GPT models and are meant to reflect the diverse array of needs from customers. Some want more speed. Some want more complexity. Some want a bit of both. Finally, Nova Canvas and Nova Reel are its new text-to-image and video generation models.

As a reminder, SageMaker allows developers to build custom models on top of Bedrock for more granular and company-specific needs. It’s very similar to Microsoft Copilot Studio. Amazon debuted SageMaker Unified Studio to batch all products and tools here into a unified suite of utility… from machine learning, to data processing to Bedrock and more. Soon, this will include a GenAI business intelligence app called Business Intelligence, as well as data streaming and search analytics upgrades in the near future. HyperPod Flexible Training Plans helps customers build an optimal timeline and path for model training. Hyperpod Task Awareness makes sure you have efficiently distributed compute capacity and minimal waste. SageMaker also entered the data lakehouse field to create a unified environment for data ingestion right where a company does all of their app and model work. Lakehouses are more organized and gated data lakes for unstructured data.

Now for some Bedrock news. Bedrock is Amazon’s fully managed environment for using GenAI models to build applications. It offers the latest and greatest products from Meta, Mistral, Cohere, Anthropic and more and has tens of thousands of customers so far. As anticipated, it added Model Distillation to morph larger models into smaller products trained on local data. These models are less powerful and a lot cheaper for companies with less intense needs. Bedrock Automated Reasonable Checks cut model hallucination rates, while a new agent collaboration tool enables cross-app collaboration to broaden use cases. Prompt Caching saves similar queries and stores them for future usage to reduce duplicates and waste. Next, Bedrock Data Automation makes onboarding needed context into AWS seamless while Bedrock Guardrails can “now support multimodal toxicity” to eliminate inappropriate, or inaccurate responses. Bedrock also added new integrations to make Retrieval Augmented Generation (RAG) (model output optimization) more convenient.

Bedrock Marketplace is its destination of 100+ FMs for customers to pick from. Again, it fixates on letting clients pick whichever models they want and knows one single product cannot rule them all. If a customer has no strong preference for models, they can use Bedrock’s Intelligent Prompt Routing to be matched with the best one for their specific needs.

Finally, within GenAI apps, Amazon made several Amazon Q announcements. As a reminder, Q is their AWS companion. It has a Q for developers product to assist in code writing and a Q for enterprise product to help manage client data strategies. This week, Q for developers added software package testing, code reviews, issue flagging and more. It also debuted new tools for application translation. For businesses, it added a new structured data searching product. More interestingly, it released a new tool to essentially mimic manual workflows to make them endlessly more scalable, with optimization tools to ensure work is being done efficiently.

This encompasses the most important announcements from the event. AWS leadership is adamant that these releases will be “needle moving” as it builds on its multi-billion GenAI business.

Amazon has gotten a lot of criticism (including from Bezos) due to a perception that it’s falling behind in GenAI. Regardless of whether or not that was ever true, I think it’s now clear that it isn’t.

A Tough Year:

Celsius has had a tough year. Sector-wide growth has greatly slowed, while convenience store traffic has turned negative for some large chains like 7/11. Celsius is impacted by this more than others for two main reasons. First, the company strongly over-indexes towards new-to-category users. Customers are inherently less inclined to consume new things when they’re feeling worse about the economy… especially in consumer discretionary. As this pattern persists, Celsius is focusing more on existing customer frequency to optimize growth. Secondly, Celsius picked up a massive amount of shelf space throughout 2022 and 2023. This should have teed them up for a lot more growth and positioned them for more market share gains. Considering this, it had the most to lose from macro worsening and category growth halting.

Interestingly, Toby David mentioned several times that the company is seeing compelling sector greenshoots. He’s observing clear signs of sector bottoming, with Celsius best-positioned to enjoy that recovery. 

“We feel confident that the energy category is really primed to get back to normalcy in 2025. The question is, how soon? We're starting to see some of these breadcrumbs trickle out that seem to be indicative of it coming sooner rather than later.”

Chief of Staff Toby David

The optimism isn’t just based on Nielsen data that we’ve seen brighten over the last two months. Conversations with retailers and convenience store vendors, qualitatively speaking, are offering more confidence in foot traffic bottoming. So important.

Competition is Good?

Monster and now Red Bull have been successfully pushing hard into the sugar-free category.  Celsius thinks this is a net positive. It wants those entrenched customers to try sugar-free options, as it knows many of those experimentations will lead to new Celsius customers and more revenue. The energy drink pie is finite, but is also shifting towards sugar-free. Competition expediting that shift, David believes, is a net positive.

“We want them to transition their existing core audience into sugar-free, because we feel like we can win on taste versus anybody, especially when it's sugar-free versus sugar-free.”

Chief of Staff Toby David

In terms of Alani (popular disruptor), the share gains that company has seen have come mainly from promotional events. They run limited time offers where they routinely enjoy market share spikes that quickly fizzle out. The most recent spike has led to some concern from investors, but they’ve seen this many times before. For more evidence of its strong competitive positioning, its sales velocity per store continues to outperform all other new entrants. Sales velocity has dipped in 2024, but that’s true for everyone and this brand has been relatively resilient. As leadership says, better velocity is a “great story to tell” to retailers to win more shelf space… and it expects a lot more shelf space gains to come in 2025. If macro improves for the category, that new capacity, as well as 2023-2024 gains, should yield better results.

Pepsi Inventory Headwinds:

David reiterated previous Q4 guidance, stating that the Pepsi inventory resets will be anywhere from a modest revenue tailwind to a $15 million headwind. As a reminder, Pepsi is the North American distribution partner. Celsius makes money when Pepsi orders more products, not when a can sells at a store. Pepsi overbought inventory throughout 2023 as Celsius growth stayed over 100% Y/Y and it wanted to ensure having what it needed. It has since shrunk that inventory position (especially last quarter) which has been a massive yet temporary revenue growth headwind. Leadership is confident that these resets are wrapping up and will not be part of the 2025 conversation.

“We have very candid conversations with Pepsi, we have a great relationship with them. They've optimized their system quite well. We feel like we're in a good place for 2025 where hopefully these aren’t conversations we have moving forward.”

Chief of Staff Toby David

Growth Engine:

Okta is a cloud-native identity broker. It is the grantor of access to a client’s apps and devices. It offers single-sign on (SSO), multi-factor authentication (MFA) and manages minimum permissions for global workforces and consumer bases (principle of least privilege).

Okta splits its business into three subcategories. Access Management is by far its largest. Access management serves as a gatekeeper for which identities and credentials are allowed to enter certain environments. This is the digital identity security guard. Within access management, Okta further divides its product buckets into Workforce and Customer Management. Workforce Management is the access management broker for Okta’s clients; Customer Management is its access management broker for the customers of Okta’s clients. Important products on the customer ID side include “Highly Regulated ID.” This caters to clients in industries with especially sensitive data (financial services and healthcare) with “elevated security, privacy and user experience controls.” This is for post log-in use cases.

The other two are Okta Identity Governance (OIG) and Privileged Access Management (PAM). OIG gives clients a birds-eye-view of identities and access across various apps to optimize hygiene and observe any potential vulnerabilities. It has a posture management tool that ties closely to PAM. This has been its most successful product cross-sell to date, as it is essentially an extension of access management visibility for corporate workforces. PAM is Okta’s zero trust approach to identity. It grants permission on an “as needed” basis and doesn’t offer consistent, unconditional, perpetual privileges to devices upon initial entrance. It flags unfamiliar usage patterns and demands verification at every needed turn. Like Zscaler in network security, this prevents free, identity-based access to an entire software stack after penetrating the most vulnerable piece of it.

These products encompass all of the revenue drivers today. And for PAM, as well as all other new products in the works, it’s still in product-market fit mode. It wants these all to be best-in-class before getting aggressive on selling. It isn’t there yet.

We also got some initial 2025 guidance. It sees $2.775 billion in annual revenue, which missed estimates by 1.6% and represents 7% Y/Y growth. Okta’s top priority, beyond improving internal systems to avoid future breaches, is accelerating growth. It looks like it has a lot more work to do there, despite comps getting much easier in 2025 vs. 2024. EBIT guidance also missed by 1.7%, with EBIT dollar guidance of just 6% Y/Y growth to pave the way for modest Y/Y margin contraction. It is worth noting that Okta has comfortably outperformed initial annual guidance for a few years now, but comparing this forecast to other disruptors in cybersecurity makes these targets look quite underwhelming.

EPS is expected to grow by 6% next year and by 12% the following year.

Cross-Selling & Becoming a True Platform:

Okta is behind complementary peers like Zscaler in network or CrowdStrike in endpoint in terms of rounding out its product suite. Workforce and customer access management remain pretty much its entire business, with OIG the only real contributor to new business entering this quarter. That’s a large reason why it sees slower than 10% Y/Y growth next year. Access management is a more mature part of cybersecurity than most of cloud, data and endpoint.

Luckily, this quarter began to deliver stronger signs of effective cross-selling. 15% of Q3 bookings came from new products, while OIG rose to 33% of new contract value within the workforce bucket. Aside from OIG, PAM and Identity Threat Protection (what it refers to as more advanced MFA) are both becoming more material drivers of growth.

Platformization appeals to larger customers yearning for vendor consolidation and more simple operations. Encouragingly, $1 million+ average contract value (ACV) customers continue to be its fastest-growing cohort and crossed $1 billion in total contract value. Some of the biggest software buyers reside in the federal government, where Okta secured 5 of its 10 largest deals during the quarter, including a second consecutive quarterly win with the Department of Defense.

Where is this progress coming from? Two improvements to its go-to-market. First, it has worked hard to get closer to global system integrators (GSIs) and other partners like value-added resellers and managed security service providers (MSSPs). This quarter, all ten of its largest deals (representing $20 million in contracts) were partner sourced. One of these wins represented $5 million in annual business for just “phase one” of the deal.

Getting close with partners (especially GSIs) is a fantastic way to provide easier onboarding to  prospective customers. It can materially shrink sales cycles and is a very positive development. Identity migrations are always complex for companies. Whether it’s migrating their own systems or moving purchased assets into their ecosystems, these things are difficult. That means winning customers takes longer, but victories come with better churn dynamics. 

The second change in go-to-market is salesforce specialization. Okta thinks its sales approach had become too general for its expanding product suite. It is addressing that by driving specialization for its U.S. small-medium business (SMB) cohort. Positive results from this change are prompting Okta to expand the specialization aim throughout 2025. It thinks it has been leaving revenue on the table by not offering this more precise selling approach, and that’s now changing. Notably, specialized selling means higher input costs per contract, but the revenue uplift is expected to more than offset that concession.

Market Share & Competition:

Okta was bluntly asked why its 2025 guidance implies customer and workforce identity growth that will be slower than the market. Why is it losing share? 

Per the team, it’s due to the go-to-market issues now being fixed and a need to drive faster cross-selling. It no longer thinks the 2023 outage is impacting its business, as it has removed that piece of prudence from its forward guidance. Leadership conversations with customers provided confidence that if they control what they can control, market share losses will reverse.

Okta included a slide in its presentation on why it thinks it’s “always better” than its largest competitor, Microsoft. It offered an example of saving a Global 2000 company “hours of time” in domain migration while automating 70% of provisioning tasks. It disclosed that Microsoft has had 2,100 minutes of outages since 2021 vs. 70 minutes for Okta. It then reminded us that it scores better with Gartner and other research organizations than this behemoth. Microsoft leans on its fortress bundle moat. It undercuts players like Okta because it knows it can cross-sell dozens of other products to plug the margin gap down the road. As Okta and other cybersecurity companies constantly tell us, cost is not value. Cheap cost today means complex license up-sells or breaches tomorrow. Preventative security is by far the cheapest way to secure an ecosystem, and that’s what Okta provides more consistently than Microsoft.

Retention & New Logos:

Net revenue retention (NRR) continues to be held back by software spend rationalization on the workforce side, and monthly active user (MAU) growth for client user bases on the customer side. I’d love to see non-core product cross-selling offsetting this headwind, but it may take more time for that to happen. Okta sees NRR again falling Q/Q in Q4. Importantly, clients are not leaving the platform, they’re just expanding usage more slowly than expected. This is why gross revenue retention (GRR) for the company remains stable while NRR falls. That’s a great hint for troughing NRR whenever macro cooperates a bit more for them. Like many other software names, macro headwinds are not worsening or improving as of now. 

GenAI:

Okta’s expansion into GenAI, like its product suite building, has been somewhat slow. It spoke about excitement surrounding all of the new GenAI apps and models and how they will all need identity tagging. They’re trying to effectively build a single sign-on (SSO) for all of the AI agents being deployed by companies. It does have a batch of AI tools (called Okta AI) that it uses to augment its Identity Threat Protection product and a few others. Still, this is not really moving the financial needle today, and there’s little indication of that happening in the near future.

The headline numbers were uniformly better than expected for 2024 while the modest 2025 guidance weakness was likely a byproduct of prudence. It’s always wise to be conservative when offering predictions on what will happen 12 months from now. The company’s earnings multiple is quite reasonable and Okta is showing some signs of successful product expansion.

With that said, I can’t get past the margin-dilutive 7% 2025 growth guidance. Cyberark is comfortably outgrowing it and will likely continue to do so in the quarters ahead. And outside of endpoint, whether we look at any next-gen cloud, endpoint or network name, this guidance looks weak. The company is entering its mature growth phase more quickly than any of the other names I cover here. For that reason, I do think the cheaper forward valuation is warranted. Better than expected results are always a great thing and I cannot call this quarter bad. But? It leaves me continuing to favor other names in the space over this one.

Silverlake liquidated their position in SoFi. They’ve held equity in the company for about 7 years, with a stated holding period of 2-5+ years. The block sale was worth $500 million in shares and had very little discernible impact on volatility. Clearly there was ample demand for these large chunks of shares. Considering this, the recently strong upward trajectory in institutional ownership and that Silver Lake held for 7 years, I’m not concerned about this.

A few media outlets ran with this headline throughout the week. I think the lack of share price impact reveals a sea change in Sofi market pricing. This is the kind of noisy headline that would have sent shares plummeting in the recent past. Now? Not so much. Rate cuts, real earnings performance, and better liquidity are all wonderful for market support.

SoFi is also offering SpaceX shares to accredited investors. This is a great way to differentiate its brokerage product, as it has done in the past with other high-profile IPOs. It’s easy to see how some of Musk’s loyal fans will be more motivated to open a SoFi account because of this. This will be offered through a private fund called “Cosmos Fund” which has a 100% portfolio allocation to SpaceX.

Two Senators are asking the Federal Trade Commission to look into anti-competitive practices from DraftKings and FanDuel (Flutter). They say the two companies are “acting as one.” Headlines like these are generally mostly bark and little bite – especially considering how many players operate in this market. We’ll see how things develop.

Jefferies came out with a note defending Uber’s autonomous vehicle positioning. It thinks the Miami news (covered this week) is just Waymo experimenting with various business models. It thinks Waymo will eventually partner more entirely with Uber. Uber also inked an expanded partnership with Toast during the week. This relationship now includes its white label delivery service (Uber Direct).

Jefferies also reiterated a buy rating on Nu this week with an $18.90 price target. It sees the recent pullback in PIX financing as preemptive (as leadership told us). It also sees strong NIM trends ex-Mexico expansion and FX headwind. It thinks it’s making progress on raising credit limits to better take advantage of affluent consumer demand.

The TikTok ban was upheld by an appeals court this week. Meta’s great week likely had something to do with this. ByteDance will need to sell this asset by January 19th if nothing changes from now to then.

There are some rumors building that The Trade Desk is considering buying Roku. Trade Desk recently announced a new streaming operating system, which does compete with Roku to a certain degree. I’d love for this buzz to die down and for Trade Desk to build this internally rather than buying Roku. It has a fantastic track record… from Unified ID 2.0, to OpenPath, to OpenPass, to a custom ad platform for Walmart to Kokai… of building elite products all on its own. There’s no reason to stress the balance sheet in any capacity to do this, and I suspect they won’t.

Zuckerberg took to Threads on Friday to share that Meta AI has crossed 600 million monthly active users (MAUs). This compares to 500 million less than 3 months ago. It’s well on its way to becoming the most used free GenAI assistant. Leadership thinks it may have already gotten there last quarter. It also announced a new Llama text model and plans for Llama 4. There will be many more future Llamas… a flock of Llamas, if you will.

Disney hiked its annual dividend by 33% to $1 per share.

Korea’s president removed the martial law order after Parliament quickly blocked it.

TransMedics (TMDX) abruptly parted ways with their CFO and pre-announced Q4 revenue slightly below previous guidance. Leadership continues to believe in its long-term targets, and will host an investor day next week to try to prove to skeptics that it’s right.

Output Data:

Employment & Consumer Data:

Inflation Data: