Q2 22 Earnings Season Begins!
Welcome to the Q2 2022 earnings season
Succinct Summary: Welcome to the Q2 2022 earnings season. The big US banks kicked off the season last week. Of those that have reported, economic data doesn’t seem to suggest a recession is in the offing. That said, banks are being cautious with some even cutting off buybacks to shore up capital and, in essence, battening up the hatches. Despite this, consumer demand remains strong and inflation is hitting record highs meaning the Fed has to do more to bring it down. Notably, some parts of the semiconductors industry are struggling with excess inventory as PC and smartphone demand shrinks sharply.
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Macro
Economic data so far doesn’t suggest that a recession is coming
"Little of the data I see tells me the U.S. is on the cusp of a recession. Consumer spending remains well above pre-COVID levels with household savings providing a cushion for future stress. And as any employer will tell you, the job market remains very tight. Similarly, our corporate clients see robust demand and healthy balance sheets with revenue softness attributed to supply chain constraints so far. So, while a recession could indeed take place over the next two years in the U.S., it's highly unlikely to be a sharper downturn as others in recent memory." - Citigroup ( C 0.00%↑ ) CEO Jane Fraser
First, consumer demand is still strong
"Consumer demand continues to maintain strength as we look to the fall and we are seeing steady progress in the return of business and international travel. Like all consumer businesses, we are closely monitoring consumer behavior and have yet to see any meaningful pullback in demand." - Delta Air Lines (DAL 0.00%↑ ) CEO Ed Bastian
"We're up and around Main Street U.S.A. every single day and we're watching it really closely. And it seems as though demand is quite strong -- As I mentioned earlier, I hope -- I think we'd all be better off if nobody read the news or listened to the news because it seems like we're trying to talk ourselves into it. But that being said, we're watching it really, really closely because as Mike mentioned, we'll pivot, we'll pivot appropriately. But to date, it appears as though Main Street USA is doing just fine and we're encouraged by that." - Cintas (CTAS 0.00%↑ ) CEO Todd Schneider
Then, there are no signs of credit stress
"Leading indicators such as payment rates, deposit levels, utilization, and revolving debt trends do not yet indicate signs of stress -- Credit performance remained strong. Our allowance reflected an increase due to loan growth -- Overall, our consumer deposit customers' health indicators, including cash flow, payroll, and overdraft trends are not showing elevated risk concerns." - Wells Fargo (WFC 0.00%↑ ) CEO Charlie Scharf
Also, labor markets are still tight but healing
"Hiring remains challenging. However, our trends and applications received have improved. In fact, if I use 2019 as the benchmark, in 2020, post-COVID starting, our applications coming in were down close to 40%. In 2021, our applications using 2019 as a benchmark, were down about 36%. In the first 5 months of this year, they're down about 18% from what we saw in 2019. And I'm pleased to say, in the last 3 months, applications coming in every month are about 10% below where they were in 2019. I consider that a huge win and a sign that people are more comfortable and ready to get back to work and build their careers and to build their futures. And that's just an element of that in our business." - Fastenal (FAST) CEO Dan Florness
Wall Street looks disconnected from Main Street
"...frankly, the boardrooms are reading the same news articles that everybody is. So even if they're not physically seeing a reduction in demand, they are going to react to the noise in the system because nobody wants to be [cut] out in case things turn out dramatically, right? I think I just spent 2.5 weeks in the U.S., there is a little bit of a disconnect between Main Street and Wall Street in terms of what you see." - Larsen & Toubro Infotech (LTI) President of Sales & Whole-Time Director Sudhir Chaturvedi
“...overall, I think the consumer is not doing badly. As you can see unemployment is down significantly. If people want to work they can work. my view at the moment is things are not so bad." - Costco (COST) CEO W. Craig Jelinek
But Main Street may also just be lagging
"Consumers are in good shape. They’re spending money. They have more income. Jobs are plentiful. They’re spending 10% more than last year, almost 30% plus more than pre-COVID. Businesses, you talk to them, they’re in good shape. They’re doing fine. We’ve never seen business credit be better ever like in our lifetimes. And that’s the current environment. The future environment, which is not that far off, involves rates going up, maybe more than people think because of inflation, maybe stagflation, maybe soft -- there might be a soft landing. I’m simply saying there’s a range of potential outcomes from a soft landing to a hard landing, driven by how much rates go up." - JPMorgan Chase (JPM) CEO Jamie Dimon
Spending is growing faster than incomes
"The average consumer is spending 35% more year-on-year on gas and approximately 6% more on recurring bills and other non-discretionary categories. At the same time, we have yet to observe a pullback in discretionary spending, including in the lower income segments, with travel and dining growing a robust 34% year-on-year overall. And with spending growing faster than incomes, median deposit balances are down across income segments for the first time since the pandemic started, though cash buffers still remain elevated" - JPMorgan Chase (JPM) CFO Jeremy Barnum
And may have slowed some in May and June
“...spending, while still strong, started to slow in May and June. Consumer credit card utilization rates remain below pre-pandemic levels. Payment rates remained strong and delinquency rates remain low." - Wells Fargo (WFC) CEO Charlie Scharf
Also, account balances are declining back to pre-pandemic levels
"Overall, our consumer deposit customers' health indicators, including cash flow, payroll, and overdraft trends are not showing elevated risk concerns. However, we're closely monitoring activity by segment for signs of potential stress, and for certain cohorts of customers, we have seen average balances steadily decline to pre-pandemic levels following the final federal stimulus payments early last year and their debit card spend has also been declining." - Wells Fargo (WFC) CEO Charlie Scharf
Investment activity is slowing
"I'd say the industry overall is slowing. And what I mean by that is it's harder to raise funds. The velocity or pace of investing is slowing. People are being much more methodical and selective about their investment opportunities. And if that slows, that drives down the utilization rate, which historically we've said is tending to sort of gravitate toward the mid-30s to high-30s." - First Republic Bank (FRC) SEVP & Chief Banking Officer Michael Selfridge
Hiring is slowing
"Because of the hiring progress achieved so far this year, we’ll be slowing the pace of hiring for the rest of the year, while still supporting our most important opportunities. For the balance of 2022 and 2023, we’ll focus our hiring on engineering, technical and other critical roles, and make sure the great talent we do hire is aligned with our long-term priorities." - Google (GOOG) CEO Sundar Pichai
"We are delaying certain senior hires into next year. We are also trying to juniorize a number of other roles where appropriate. And while I would say these actions will not materially impact our 2022 results, I think they clearly position us well for next year should some of these market headwinds persist." - BlackRock (BLK) CFO Gary Shedlin
CPI increased by the most since 1981
"The all items index increased 9.1 percent for the 12 months ending June, the largest 12-month increase since the period ending November 1981." - Consumer Price Index Summary - 2022
The Fed may need to be tighter for longer than people think
"Eventually, I think the Fed has to slow the economy to a pace to get inflation under control, and I think that's going to be harder to do than the market currently assumes, and I think it's going to take longer than the market currently assumes. And when that happens, we're going to see credit costs go up at least back to what we would call normalized levels -- think the assumption that the Fed is going to start easing in the spring of next year is absurd, which means we're holding off at this point because we think there's going to be -- there's still value to be had in the longer end of the curve as people come to the realization that inflation isn't as easy to tame as people might assume. And separately that the Fed isn't going to immediately cut simply because the economy slows if inflation is still running high." - The PNC Financial Services (PNC) CEO Bill Demchak
"We're anticipating a higher level than we've seen historically used to -- I'm sure all companies are rethinking their plans for the next few years -- It's proven durable to this point and we need to prepare for it to have some additional run-time" - Chevron (CVX) CEO Mike Wirth
"Today’s numbers suggest the trajectory is not moving in a positive way -- How much I need to adapt is really the next question -- The top-line number is a source of concern -- Everything is in play.” - Atlanta Fed President Raphael Bostic
There are a lot of reasons to think that any recession would be shallow anyways
"Look, I don't think there's any cliff involved. I do think that the trouble ahead lies somewhere in the middle of next year not any time in the next 6 months -- I think you're just going to see a slow grind with credit losses increasing over time as we get into the slowdown." - The PNC Financial Services (PNC) CEO Bill Demchak
"I think it’s unlikely to be a deep and dramatic recession at least in the U.S." - Morgan Stanley (MS) CEO James Gorman
"...the consumer -- I feel like a broken record. The consumer right now is in great shape. So, even if we go into a recession, they’re entering that recession with less leverage in far better shape than they’ve been -- did in ‘08 and ‘09 and far better shape than they did even in 2020. And jobs are plentiful. Now, of course, jobs may disappear. Things happen. But they’re in very good shape. And obviously, when you have recessions, it affects consumer income and consumer credit." - JPMorgan Chase (JPM) CEO Jamie Dimon
But there are still dark clouds on the horizon
“When I said there were dark clouds on the horizon, I think people underestimated my warning. They thought that these economic problems were temporary, and this is not the case. Things can get much worse. We are facing very serious problems such as high inflation, particularly in energy and food prices, and increases in interest rates” - JPMorgan Chase (JPM) CEO Jamie Dimon
International
Europe is in a gloomy mood
"I'm just back from Europe, where it's a different story. We expect a very difficult winter is coming, and that's due to disruptions in the energy supply. There is also increasing concern about second-order effects on industrial production and how that will affect economic activity across the continent. And the mood is, of course, further darkened by the belief that the war in Ukraine will not end anytime soon." - Citigroup (C) CEO Jane Fraser
China may have reopened but people are still cautious
"Our third question relating to China reopening. Yes, I mean we've had the stores closed for more than 2 months in this latest 3-month period. They opened during the course of June. We've seen a very positive uptick in Chinese consumers, but it does still vary by the week. So it's not a consistent pattern at this point in time. And we are conscious that with regard to China, there are still quite serious pressures on the population because of the testing regime, they still have to do a PCR test within 72 hours of going out. And that obviously has an impact overall on traffic. We just pick up this higher degree of caution. But it's good news that they're opening, and we've got all the stores open. We just recently had one go back into closure. But basically, the vast majority are now open, which is good news," - Burberry (BRBY) CFO Julie Brown
"In Asia, a rebound in China also faces some constraints given the potential for future lockdowns, the amount of leverage in the Chinese economy and stress in their property sector." - Citigroup (C) CEO Jane Fraser
China travel to Europe is down by over 90%
"Americans are traveling more. We're also seeing an uptick in Continental Western Europeans traveling. In terms of other nationalities traveling, the Chinese are still down by over 90% in terms of coming to Europe. And Asians coming to Europe, it's down by about 50%. This is both versus pre-pandemic levels. So some parts of the world were obviously resuming their travel patterns earlier than others." - Burberry (BRBY) CFO Julie Brown
Financials
Commercial loan demand remains strong
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Charge-offs are still slow
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Investment banking is under a lot of pressure
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The mortgage business is also very weak
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Some banks have suspended buybacks to build up capital
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Investors are rebalancing their asset allocations
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Banks continue to battle fintechs
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Consumer
Consumer spending is stable despite higher prices
"Overall, sales have remained stable, high single digit, a bit of a difference between beverages and snacks. Snacks are a bit higher than beverages but stable. And that has continued into the last few weeks. So we don't see any meaningful consumer behavioral change as gas prices go up. Obviously, we're watching this channel very carefully as an indicator of potential consumer behavioral change. But so far, high incidents in our categories, yes." - PepsiCo (PEP) CEO Ramon Laguarta
"Prime members purchased more than 300 million items worldwide during Prime Day 2022, making this year’s event the biggest Prime Day event in Amazon’s history. And, more shopping means more savings—Prime members saved over $1.7 billion, more than any previous Prime Day event. This year was the biggest Prime Day event for Amazon's selling partners, most of whom are small and medium-sized businesses, whose sales growth in Amazon’s store outpaced Amazon's retail business” - Amazon (AMZN)
Travel demand is robust. Consumers are making up for lost time
"We also survey SkyMiles customers, and we have an active survey dialogue going on there. And there is still pretty – some meaningful pent-up demand there. It’s not just people that haven’t traveled. It’s volumes of trips that we anticipate people will take looking forward as they start to catch up on all the experiences and all the opportunities that they lost. When you think about this pent-up demand, it feels – it sounds very personal. It actually is very personal. It’s people investing in themselves to go see friends and family and have life experiences that they haven’t had time for. I can’t put how many weddings are being held now. All the reasons why people travel have not gone away. They have just been deferred and now they are being accelerated in the next period of time. So, whether it’s the next 12 months, 18 months, 24 months, there is a lot of catch-up to be done." - Delta Air Lines (DAL) CEO Ed Bastian
Retailers are struggling to manage inventory levels
"But on an ongoing basis, due to the ongoing supply chain complexities, we do expect our inventory levels to continue to run a bit higher than historical levels" - PriceSmart (PSMT) CEO Sherry Bahrambeygui
"The inventory question is all over the place because you have a bunch of customers who have more inventory than they want. And you have others who are still struggling to build inventory to keep up with supply because of continued supply chain disruption. So I don't know that there's a simple answer on inventory" - The PNC Financial Services (PNC) CEO Bill Demchak
"We are seeing that retailers are taking a step back right now and closely managing their inventory levels as they anticipate or try to anticipate what the consumer is going to do, kind of [indiscernible] before this call we were talking about the dynamic right now between the consumer and the retailer. It feels like they're in a little bit of a staring contest. But for our products, we are seeing products move through nicely. We're just seeing that inventory levels are coming down with retailers." - American Outdoor Brands (AOUT) CEO Brian Murphy
“Non-sugar” is an unstoppable trend in the beverage industry
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Consumers are cutting back on streaming subscriptions
"Consumer reactions are taking place in an inflationary context. Every customer asks themselves the question of the value of a subscription in relation to its cost. ..We are adjusting to slower growth relative to projections. Without limiting expenditure on content production: it will reach 17 billion euros in 2022. We are adjusting to slower growth relative to projections. Without limiting expenditure on content production: it will reach 17 billion euros in 2022." - Netflix (NFLX) Co-CEO Ted Sarandos
Technology
There is now an excess inventory of consumer semiconductors
"On the inventory side, due to the softening device momentum in smartphone, PC, and consumer end market segments, we observe the supply chain is already taking action and expect inventory level to reduce throughout the second half of 2022. After 2 years of pandemic-driven stay-to-home demand, this type of adjustment is reasonable, in our view. Our expectation is for the excess inventory in the semiconductor supply chain to take a few quarters to rebalance to a healthier level -- The inventory correction maybe go for a few quarters, through the first half of 2023. It's not like a big down cycle back in 2008 or something like that." - Taiwan Semiconductor Manufacturing (TSM) CEO C. C. Wei
“I think the extent of the shift has definitely been bigger than anyone was anticipating in the ecosystem. These changes are rippling through the ecosystem now." - Micron (MU) Chief Business Officer Sumit Sadana
But chip demand still exceeds supply in other parts of the market
"On the demand side, while we observe softness in consumer end market segments, other end market segments such as data center and automotive-related remain steady. And we are able to reallocate our capacity to support these areas. Despite the ongoing inventory correction, our customers' demand continues to exceed our ability to supply. We expect our capacity to remain tight throughout 2022 and our full-year growth to be mid-30% in U.S. dollar terms." - Taiwan Semiconductor Manufacturing (TSM) CEO C. C. Wei
“Light vehicle sales trended softer than light vehicle production across the board as historically low inventory levels largely attributable to the effects of the global semiconductor shortage continued to weigh on vehicle availability. At the same time, based on our consultation with customers and industry experts, we continue to see significant pent-up demand in key regions. For instance, U.S. inventory levels remained low, with June marking the 8th straight month that retail inventory closed around the 1 million vehicle market. While in Europe, waiting times for new vehicles remain high by historical standards, generally ranging between 8 months and a full year.” - Nemak (BMV: NEMAKA) CFO Alberto Sada Medina
Younger users don’t search the web in the same way that older users do
"We keep learning, over and over again, that new internet users don’t have the expectations and the mindset that we have become accustomed to. The queries they ask are completely different. In our studies, something like almost 40% of young people, when they’re looking for a place for lunch, they don’t go to Google Maps or Search. They go to TikTok or Instagram." - Google (GOOGL) SVP Prabhakar Raghavan
Gaming engagement has slowed from COVID levels
"Is engagement slowing? Yes. In fact, we reported about 3 months ago with our gaming award 2022. COVID sent people home and they played games for entertainment. But we also have data showing that engagement is sustained much elevated versus pre-COVID periods. I've also been in the game industry for a long time, and I know that once people discover gaming, they stick around." - Unity Software (U) CEO John S. Riccitiello
Twitter is suing Elon Musk
“Less than three months later, Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests. Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he - unlike every other party subject to Delaware contract law - is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away” - Twitter (TWTR)
Healthcare
Healthcare moving to normal levels like pre-covid
“I think the other point that I wanted to speak to that we are seeing, we've been very encouraged that we are seeing some pockets of care moving towards more normal levels. Ones that we would say are kind of bellwethers for future care, an important -- for example, super important for us. Annual wellness visits among our Medicare patients, they're back at pre-pandemic baseline. That's very important for us in getting them the care they need. First-fill prescriptions are trending above baseline a little bit, so we're seeing people get some care they need. We're seeing important pickups in some preventative care such as colonoscopies, also those now getting back to baseline." - UnitedHealth Group (UNH) CFO John Rex
Industrials and Transport
Manufacturers are sitting on big backlogs
"When I talk to our regional leaders when I talk to our national comp sales leaders and I get the tone of what they are seeing from their customers, I don't think there's a customer they talk to that doesn't have as strong a backlog as they've ever had in their business -- when I talk to our manufacturing customer base and our construction customer base, folks, the proverbial canary in the coal mine, and I'll use a term from one of our directors yesterday, is projects don't get canceled, but they get delayed when things get softer. But there's a lot of pent-up demand because a lot of manufacturers have stuff that's sitting there ready to be finished, but they're waiting for components" - Fastenal (FAST) CEO Dan Florness
Costs are elevated but not worsening
"Most costs remain elevated but not worsening. As a result, while we expect price levels to be stable in the third quarter of 2022, we expect the contribution to growth to moderate as we begin to grow over the start of more aggressive pricing actions from the third quarter of last year -- I would challenge, the assumption a little bit about steel pricing being down. It depends on which index you're looking at. I mean we source most of our steel product over in Asia. And so what's relevant to us is sort of what's going on in Taiwan, what's going on in China. At least on the last statistics that were fed to us, those prices are still relatively elevated" - Fastenal (FAST) CFO Holden Lewis
"It is noteworthy that during that time, ocean containers and vessels suffered an unprecedented disruption, causing container prices to skyrocket from roughly $4,000 per container to over $20,000 per 40-foot container. In all, we estimate approximately $2.4 million hit to our bottom line caused by the unexpected surge in container pricing. The good news is that so far this year, container prices have stabilized and they've come way down from the peak where they were last year. However, that being said prices still remain elevated above normal." - The Singing Machine (MICS) CEO Gary Atkinson
Toyota’s plants are still facing production delays due to supply chain disruptions
"Toyota’s North American plants continue to face intermittent production delays due to supply chain disruptions. To minimize the impact, our teams are working diligently to do everything possible to lessen the inconvenience to our customers and suppliers." - Toyota Texas Press Statement
Materials & Energy
It’s going to be a rough winter in Europe. There may have to be energy rationing.
"It will be a really tough winter in Europe. Some countries will fare better than others but we will all be facing a very significant escalation in energy prices.. In a worst case, we will be in a situation where we have to ration" - Shell (LON:SHEL) CEO Ben van Beurden
“I think the next few months are very concerning for all of Europe; Germany kind of at the epicenter of that. It’s a big, industrial economy that relies heavily upon the energy system that supports it today, and the risks to that are very real. One of the big pipelines that supplies Germany is down for maintenance right now. Inventories are not building the way they normally would. And as we head through the fall and into the winter, I think these risks begin to accumulate. So it’s a real concern, and I think the whole world is watching and trying to help in whatever way it can” - Chevron (CVX) CEO Mike Wirth
We’re not talking about food disruptions enough
"The one thing I worry about that we don’t talk enough about is food. This isn’t just an inflation concern. There are also geopolitical concerns that result from this. We talk a lot about gasoline prices because that’s what affects Americans but the bigger issue is food. There has been tremendous destruction of arable land in Ukraine -- Globally the cost of fertilizer is up almost 100 percent and that additional cost is reducing the amount of fertiliser used in farming. That is harming the quality of the crop worldwide." - BlackRock (BLK) CEO Larry Fink
Tight oil supplies mean that oil prices could still go higher
"It's good prices have moderated but I see the risk remaining skewed to the upside -- The world is pretty tight, there is no doubt about it. The price signal tells us that production was constrained when global economies were shut down, and demand declined. And as demand has come back very rapidly, supply in our industry and many others can’t respond quite as quickly as demand has grown, so we see that in the prices. I think markets are tight and likely to continue to be so for some time” - Chevron (CVX) CEO Mike Wirth
The energy transition is still a challenge
"The war has changed many things, but even without this distorting factor, we must be more rational when thinking about this energy transition. There is no alternative to betting on renewable sources. There were many people who thought that closing coal plants and nuclear power plants would solve the problem. However, the world still consumes 100 million barrels of oil per day and a huge amount of gas. The climate threat is real, it is there, and we have to work to combat it. But we need more rational energy policies. The best transition is to replace coal with gas. But now we are seeing how many countries are turning to coal because they cannot afford the high prices of hydrocarbons. It’s happening in Germany, in the Netherlands, in India, and in China." - JPMorgan-Chase (JPM) CEO Jamie Dimon,
"Adopting unrealistic policies to reduce emissions by excluding main sources of energy will lead in coming years to unprecedented inflation and an increase in energy prices, and rising unemployment and a worsening of serious social and security problems," - Saudi Crown Prince Mohammed bin Salman
Only 25 percent of a barrel of oil ends up in gasoline
“Well, only about 25 percent of a barrel of oil ends up in gasoline. 75 percent ends up in airplanes, ships, agriculture, mining, petrochemicals, and a whole host of other uses where there are not easy and readily available alternatives today. So that’s the big challenge for us, is how do we find ways to continue to meet the needs of those industries, lower the carbon emissions associated with that” - Chevron (CVX) CEO Mike Wirth
EV demand is a tailwind for certain commodities
“When the U.S. enacted the renewable fuel standard in the 2000s, we saw corn-based ethanol become a bigger part of the gasoline pool. Corn prices went from $2 a bushel to $9 a bushel. So it had an impact on food, because the energy system is so large that you start to attach different parts of the economy to the demand for energy, and it can manifest itself in these, you know, inflationary pressures. Metals are an area that we’re seeing right now. As you see batteries and battery-powered vehicles growing, the demand for lithium, cobalt, and nickel has driven the prices for some of these commodities up. And electric vehicles are still a very small portion of the vehicle fleet. If you were to see some of the ambitions of the automakers realized, you’re seeing big multiples in terms of the demand for some of these metals, which come from only a few places in the world. So you create new supply chains that pull on different resources.” - Chevron (CVX) CEO Mike Wirth
Real Estate
The housing market slowing down
"Inflation and high mortgage rates are taking a bite out of homebuyer budgets. Few people are able to afford homes costing 50% more than just two years ago in some areas, so homes are beginning to pile up on the market. As a result, prices are starting to come down from their all-time highs. We expect this environment of reduced competition and declining home prices to continue for at least the next several months." - Redfin (RDFN) Chief Economist Daryl Fairweather
"51% of homes sold above list price, down from 54% a year earlier. On average, 7.1% of homes for sale each week had a price drop, a record high as far back as the data goes, through the beginning of 2015. The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, declined to 101.6%. In other words, the average home sold for 1.6% above its asking price. This was down from 102.2% a year earlier." - Redfin (RDFN) Chief Economist Daryl Fairweather
"I've talked with all our homebuilders and a number of other homebuilders, and some of the things that they're seeing are a weakening in traffic for homes priced above that 600, 650. That's where they're seeing a little bit longer time on the market for those homes, and that's obviously a function of the traffic, the number of buyers, and the interest rates on those. And some of that traffic is flowing to prices -- homes that are priced below 600." - Pure Cycle (PCYO) CEO Mark Harding
Nuggets of Wisdom
The beginnings of Snapchat
"A friend of mine was living down the hall from me at school, and we were hanging out one day and he was like, ‘Oh my gosh, I’d love to send pictures that disappear’. And I was like, ‘Oh, that’s really interesting’, so we started building a prototype. Bobby and I were working on another project at the time, but we started building a prototype, and we called it PiccaBoo. When I presented to the class, of course, everyone is like, ‘Well, this obviously doesn’t work because you can just take a screenshot, so no one’s going to use it’. But Bobby and I really liked it, because we were just sending photos back and forth really quickly. Back then, it took about a minute to send a photo via MMS, but we invented a way to send them much faster. We were talking with pictures, so we renamed it Snapchat. By this time we were working on it at my dad’s house, and we launched it in the app store." - Snapchat (SNAP) CEO Evan Spiegel
Learning to say no
"It was the early days of our business, and we’re just starting to get momentum and more interest in the business and he said, ‘Evan, you just got to get really good at saying no’. I asked what he meant and he said, ‘As the business gets more momentum, people are wanting to want to do partnerships, and they’re gonna want you to go and speak at their conference and spend time helping them with their business. Just say no and focus on serving the community’. And that for us was so crucially important because when you’re a small company your resources are so limited. It’s so hard to invest in any new product or new feature, and so by really focusing, that helped us continue to grow the business at a fast pace and never lose sight of the important thing, which is serving our community." - Snapchat (SNAP) CEO Evan Spiegel
The secret sauce of Berkshire: Don't trade too often
"Berkshire often buys something because the seller wants a good home and knows that Berkshire will be a good place for his employees who are transferred with the business will be fairly treated -- the only reason that Berkshire and Stonehouse succeed is that we don’t do it very often, and we’re pretty careful. He’s got just three big businesses in 12 years. Berkshire’s top 40 deals in its whole history account for most of our achievement. Life is a game where you work very hard and deal only occasionally." - Berkshire Hathaway (BRK) Vice Chairman Charlie Munger
Scarcity breeds clarity
"Scarcity breeds clarity — this is something we have been saying since the earliest days of Google. It’s what drives focus and creativity that ultimately leads to better products that help people all over the world. That’s the opportunity in front of us today, and I’m excited for us to rise to the moment again" - Google (GOOG) CEO Sundar Pichai
A reminder of why we love listening to earnings calls
"I suspect for most people listening to this call, the reason you're looking at our earnings release today and looking at participating in this call is you want to see what breadcrumbs might come out of it as far as where the economy is going. Spoiler alert, we've often said that our visibility to the future is about 8 hours. And most of it comes from what we're hearing from our customers, the anecdotes that come through, and what we're seeing in some of the trends in the business. So we get an indicator, and we try to share those as we see them. But we don't have a backlog in a traditional sense." - Fastenal (FAST) CEO Dan Florness