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Even when all the companies on your radar hit their quarterly targets, applause will rarely be universal. The only thing that matters in the long term is making sure your hits speak louder than the scattered misses . . . and that's where we are at this point in the 4Q19 cycle.


Yesterday Shopify (SHOP: $531, up 11% this week) blew through all targets and earned a standing ovation. Revenue of $505 million was 4% above what we expected, and best of all, the accelerated sales ramp turned what would have been only $0.24 per share in operating profit into $0.43. For a company like this where fast growth stretches the multiples, every bottom-line beat provides substantial relief. And with management confirming that our 2020 projections are a little low, we're looking for even better things ahead. The stock opened at $569, up $76, shot to $594 (up $101) before slowly settling for the rest of the day. Cramer on CNBC had the CEO yesterday and let us tell you - he is one super sharp guy. Revenues hit close to $1.5 billion for the year and management is looking for over $2.1 billion for 2020. One million customers! Incredible company. Let's see how well this post-earnings rally holds and then raise our Target Price.


Those results set an extremely high bar. CyberArk (CYBR: $119, down 14%) would have passed muster on any other day with a slight beat on revenue ($129 million versus our $126 million target) and a big beat on earnings ($0.97 per share versus $0.81). Revenue guidance for 2020 is tracking a few percent above expectations but when people saw the earnings per share outlook they panicked.


They had no reason to panic. The overall profit pool is coming in exactly where we thought it would. What changed? CyberArk plans to issue 500,000 shares in the current quarter to cover bond holder conversions, which is trivial for most companies but it's big enough to move the needle when you're still just a $4.5 billion stock. That extra dilution lowers the per-share numbers without changing the underlying business. We weren't expecting a lot of earnings growth in 2020. What management just signaled is that they'll be running a significantly bigger company in a year than anyone sees coming now.


Did you see that discussion in any of the reports slamming the company for "missing guidance?" That's why we dig deeper. And those bond holders are happily exchanging about $70 million in debt in order to get CyberArk stock for a reason.


Moving through the rest of the day, Ares Capital (ARCC: $18.99, down 1%) did what it needed to do with $386 million in revenue (roughly on target) turning into $0.45 per share in profit (exactly what we expected). Management authorized a $0.40 dividend, which keeps the 8.4% yield story alive even though there's no special shareholder payout this year. We're not going to get guidance here. That's OK.


Other yield stories are equally robust. Annaly (NLY: $10.05, up 1%) and Welltower (WELL: $86, up 2%) both booked enough income in a challenging environment to pay their dividends out of current cash. That's really all we need. The cash keeps flowing for the foreseeable future and everything else is extra.



Earnings Preview: Roku (ROKU: $138, up 11%)

Earnings Date: Thursday, 5:00 p.m. ET

Expectations: 4Q19
Revenue: $391 million

Net Loss: $16 million
EPS: -($0.14)


Year Ago Quarter Results
Revenue: $275 million

Net Profit: $7 million
EPS: $0.05


Implied Revenue Growth: 42%
Implied EPS Decline: flip from profit to loss


Target: $205
Sell Price: $130
Date Added: May 24, 2018
BMR Performance: 295%


Key Things To Watch For in the Quarter


Roku is spending a lot of money building out its Advertising platform and selling additional Streaming Video devices at low margins in order to keep building its audience. Those are the numbers to watch here. We want to see the audience grow by at least 3-4 million active accounts and we want to see Advertising or "Platform" revenue come in around $260 million.


Those forecasts are really extrapolations, so there's room for acceleration or deceleration. Obviously we'd love to see Platform revenue expand by at least 80% to match last quarter's year-over-year trend, but the ultimate number could be much higher. All we know for sure is that management expects overall revenue to come in above $380 million. They usually aim a little low so we're expecting close to the top of their guidance zone.


Either way, we'll get the first hint of 2020 numbers in the shareholder letter. It will be great to see Roku return to profitability in the future. The big question for us is when.




Earnings Preview: Alteryx (AYX: $147, up 6%)

Earnings Date: Thursday, 5:00 p.m. ET

Expectations: 4Q19
Revenue: $130 million

Net Profit: $20 million
EPS: $0.29


Year Ago Quarter Results
Revenue: $60 million

Net Loss: $1 million
EPS: -($0.01)


Implied Revenue Growth: 125%
Implied EPS Growth: flip from loss to profit


Target: $120 (we will raise if the numbers are good)
Sell Price: $105
Date Added: November 8, 2018
BMR Performance: 154%


Key Things To Watch For in the Quarter


Another big season in a huge year for Alteryx. The stock is up 46% YTD so a lot of paper profit (and shareholder optimism) is already built in here. Management needs to not only deliver results but confirm Wall Street's high expectations for the year to come. Anything above $0.04 per share in profit for the current quarter and $0.80 for 2020 as a whole will be seen as a win.


Those numbers revolve around continued revenue growth of 30% . . . with room to surprise on the upside. Still, we've come a long way here in a short period of time. If Alteryx steps back, we can be patient.




Earnings Preview: AstraZeneca (AZN: $50, flat)

Earnings Date: Friday, 8:00 a.m. ET

Expectations: 4Q19
Revenue: $6.7 billion

Net Profit: $1.3 billion
EPS: $0.97


Year Ago Quarter Results
Revenue: $6.4 billion

Net Profit: $2.0 billion
EPS: $1.58


Implied Revenue Growth: 5%
Implied EPS Decline: 40%


Target: $58
Sell Price: $44
Date Added: April 7, 2016
BMR Performance: 81%


Key Things To Watch For in the Quarter


This is a rebuilding quarter as AstraZeneca keeps shuffling its product portfolio and manufacturing activities around the Brexit and gyrations in the Chinese economy. Watch for a lot of questions about China on the conference call. Otherwise, there probably won't be any surprises here. Management set a firm earnings target three months ago. Barring incidental currency effects, that outlook supports a return to year-over-year earnings growth in the current quarter. That's what we're here for.