A wise person once told me to never bet against cult brands. $TSLA$YETI and so far, $AMC, are all cult brands that come to mind. The brand loyalty for their products is immense.
With that, I was scrolling through Twitter to see what customers feel about the Peloton brand, and several times, I've seen tweets where people consider $PTON as a cult brand. Having that in mind, I wanted to confirm it for myself by creating this poll on CommonStock.
YETI Holdings, Inc. ($YETI) - Reporting earnings tomorrow morning (5/11)
Often unmentioned, YETI is one of my "stable" positions. I don't expect them to return 30% growth year after year. That's what makes 2021 curious, as they had 29% growth. Even the 2nd half of 2020 over the 2nd half of 2019 was just 27.3%. 2021 was heavily driven by DTC sales (35% growth), which has gone from 24% of their 2016 revenue (with the other 76% being wholesale) to 72% in 2021.
Where does Q1 revenue fall? YETI is highly cyclical with their Q1 sales being the lowest each fiscal year. On top of that, they're lapping some tough comps.
What's the DTC revenue growth?
The "Other" segment (one of three revenue segments along with Coolers & Equipment and Drinkware) grew 61% in 2021. Granted, that still makes it only 1.9% of full year revenue. Barely affects the bottom line but I'm just curious what it comes in at.
International more than doubled in revenue in 2021. Will that continue?
Marqeta, Inc. ($MQ) - Reporting earnings tomorrow afternoon (5/11)
Here's what I'm looking for:
Total Payment Volume is a key indicator, obviously. Over $111B flowed through their company in 2021, 85% above 2020. It goes without saying that number needs to keep growing rapidly.
They recently announced their new RiskControl solution, "a comprehensive product suite to help its customers better optimize their card programs and take control of end-to-end risk management" to combat card fraud. I love this. Build out a suite of tools to make your network more sticky.
Need to see concentration risk start dropping. 90% of their TPV settled through Sutton Bank in 2021, down from 96% the year before. Need to keep that going down. Additionally, 69% of their revenue in 2021 came from Block ($SQ). That's a great customer but if that agreement, which is due to expire in March 2024, isn't renewed, Marqeta will tank. Keep bringing on new business and expand existing relationships.
It'd be nice if management began releasing additional KPIs like customer count, customers generating >$100,000 in revenue, etc. At least management gave the DBNER on the conference call for 2021 full year results (they said it was a remarkable 175%).
Dutch Bros Inc. ($BROS) - Reporting earnings tomorrow afternoon (5/11)
Ooooh boy, do I love coffee. I still haven't tried Dutch Bros. yet but I will be in a month or so when I make my next trip up to Wine Country in California!
Here's what I'm looking for:
Company-operated (co.-op) shops is where it's at. They're moving away from the franchising model (existing franchisees can open new shops but they aren't taking any new franchisees). Revenue has grown >60% for co.-op shops the past 2 years. That needs to continue.
Same-shop comps have been all over the place due to COVID. 2021 was 9%. Not sure that can continue. I'll be watching to see where this lands.
Did they hit their Q1 goal of opening 30 new shops and will nearly all of them be co.-op shops? From the guidance section of the Q4 earnings press release: "Total system shop openings are expected to be at least 30, of which nearly all shops will be company-operated."
Dutch Rewards membership count. They launched it in early 2021 and ended the year with over 3.2MM members. Strong loyalty will keep this chain thriving and membership to Dutch Rewards will be a great indicator of that.
Cut out the middle man and boost margins by selling your product directly to consumers. This sounds like a simple objective to improve a business's operational efficiency but generating DTC sales is no easy task.
This is where brand development pays dividends. By being a strong brand consumers know and trust the consumer now shops directly on the company website. The company website is a safe space. Competitive products are out of sight and out of mind of the consumer. It's not like the battlefield of Amazon where products compete on price and ranking to attract the eyeballs (and wallets) of consumers.
Owning the relationship between the consumer enables a really powerful flywheel too. This relationship unlocks data on consumer preferences and the information needed to target consumers with future promotions. So not only are the higher margin DTC sales allowing the company to reinvest more capital into the business but the data collected allows for more effective reinvestment.
I believe it's fair to use DTC sales as proxy of brand strength. However, there will be exceptions, $AAPL is among the strongest brands in the world but as of 2021 just 36% of their sales were direct-to-consumer (the phone carriers are a very powerful middleman).
Venture capitalists love to fund companies that are digitally native and focus on owning the customer relationship. By being more efficient they can pass the savings on to the consumer and so forth begins their cycle of disrupting incumbents. That's how the story goes for $HIMS but it turns out that in order to grow they needed help from a middleman, Target, as Hims products are now on Target shelves.
This isn't a totally new concept. Before we went to grocery stores there was a milk man who delivered the product directly to your home. Grocery stores are a great example of where the middleman provides value to consumers as it would be a nightmare to go on company websites to order 30+ items every week( Frito-Lay wants you to order your chips directly).
So to wrap this up I'm looking to compile a list of the most impressive Direct-to-Consumer sales stories.
What companies currently have impressive DTC sales?
What companies are poised to grow their DTC sales?
What companies are struggling to grow their DTC sales?
What companies are becoming more reliant upon middlemen?
For reference at the top we some DTC superstars in $TSLA & $PTON who are 100% DTC.
A surprisingly high figure from $YETI where 55% of their sales in Q2 2021 were DTC.
A potential transformation in revenue collection methodology from $SMG as close to 10% of sales in their US Consumer segment is DTC. The US Consumer segment focuses on lawn fertilizer so it is feasible that consumers seek to have their yearly fertilizer supply dropped off in the beginning of spring (much simpler than driving to Home Depot to grab a few 30lb bags of fertilizer).
Here are featured earnings we are paying attention to @ Fincredible.
The ones I'm paying close attention are:
$PYPL - Want to learn more about their plans for 'super app', integration of BNPL and if any color on rumored $PINS acqn, which is now dead (or never was there). I own some $PYPL
$PLTR - I think I'm the only non-bull on this company. I'm unsure of their technological prowess and confused by their corporate governance. I don't own and have no plans, but just curious.
$COIN - I have no exposure in crypto except via a managed investment on Titan, but I think this is a great way to continue to learn and try and get smarter
$U - I like this company a lot. I'm particularly interested in their non-gaming revenues which I think is a larger TAM. Selfishly, I'm hoping this stock falls after earnings (Sorry for the many who own it) so I can buy on the dip, but not expecting it.
$SOFI$AFRM - I view both of these innovative companies but are overpriced, and don't have as much moat as people give them credit. Yet always interested to hear about them to be proven wrong, and given my investments in $PYPL, banks, and various private fintechs
$EHTH - not Ethereum, but eHealth. Given they fired most of the management team recently, always interested in what the tone/focus of the call is.
BTW as of this week, for S&P 500 companies (plus other popular stocks) you can not only play the calls in real-time at Fincredible, but also read the transcript and monitor specific keywords in real-time. Check it out - https://app.fincredible.ai/latest-earnings
Commonstock is a social network that amplifies the knowledge of the best investors, verified by actual track records for signal over noise. Community members can link their existing brokerage accounts and share their real time portfolio, performance and trades (by percent only, dollar amounts never shared). Commonstock is not a brokerage, but a social layer on top of existing brokerages helping to create more engaged and informed investors.