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Medpace Holdings, Inc. ($MEDP) - Reporting earnings Monday (7/25) morning
Here's what I'm looking for:
- Revenue is up 27% on a TTM basis but gross, operating, and net margins are all down TTM. We're laaping tough late-2020 comps but I'd like to see margins begin rebounding.
- Same with FCF. Q1'22 was their worst Q1 since 2019. FCF/S is 18.2% TTM vs. 24.6% over the previous TTM.
- Did they use any of their active $190MM share repurchase program to buyback any shares?
- Book-to-bill took a sharp drop in Q1 compared to 2021 but was on par with 2019. Where does Q2 fall?
- Backlog, baby. It's increased >25% YoY for 5 straight quarters against easy comps. Give me more of that backlog growth.
Current position:
Total cost basis: 38th highest in my portfolio
Current portfolio market value ranking: 26th
Time since first buy: 0.44 years
Number of purchases since initial position: 1
Annualized return: (14.5%) - Beating both of my benchmarks
Annualized $SPY return: (30.2%)
Annualized $QQQ return: (28.8%)
Shopify Inc. ($SHOP) - Reporting earnings Wednesday (7/27) morning
Everyone is watching Shopify so I'll keep it brief. Here's what I'm looking for:
- Looking to see if management gives an update on the Deliverr acquisition.
- What is the revenue growth number?
- FCF turn back positive?
- Watching MRR, GMV, GPV, and take rate all very closely.
Current position:
Total cost basis: 67th highest in my portfolio
Current portfolio market value ranking: 5th
Time since first buy: 5.12 years
Number of purchases since initial position: 3
Annualized return: 32.2% - Beating both of my benchmarks
Annualized $SPY return: 8.0%
Annualized $QQQ return: 15.6%
Etsy, Inc. ($ETSY) - Reporting earnings Wednesday (7/27) afternoon
Here's what I'm looking for:
- As with most of the companies I own, FCF. It took a big dive in Q1 for Etsy and the TTM FCF/S is down so 22.4% from 38.5% the 4Qs prior.
- Seller count and take rate. Did the fee hike have an impact on active sellers on the platform? Did take rate improve regardless?
- Habitual buyers count.
- GMS per active buyer has been down YoY for 4 consecutive quarters. As usual, we have tough comps to lap but my thesis can't stay intact if this keeps dropping. It needs to bottom out above pre-COVID levels (it was $28.44 in 2019, $39.61 in 2020, and $36.13 in 2021. Q1'22 was $34.20).
Current position:
Total cost basis: 21st highest in my portfolio
Current portfolio market value ranking: 56th
Time since first buy: 1.24 years
Number of purchases since initial position: 2
Annualized return: (45.8%) - Trailing both of my benchmarks
Annualized $SPY return: (7.6%)
Annualized $QQQ return: (8.4%)
Tyler Technologies, Inc. ($TYL) - Reporting earnings Wednesday (7/27) afternoon
This is a new position in my 401k. I'll be adding to it monthly going forward. Here's what I'm looking for:
- Backlog has seen double-digit % growth the past 3 quarters after 3 Qs of single-digit growth. Want to see the double-digit trend continue.
- Recurring revenue is a big reason I bought into Tyler Technologies. In 2017 when they first started reporting recurring and non-recurring revenue, recurring accounted for 63% of their revenue. That has steadily risen to 65%, 67%, 73%, and now 79% in 2021. That percent continuing to rise is a big part of my thesis and so I'll be watching it closely each quarter.
- Can we get another FY revenue guidance increase?
- As with the other companies I've mentioned in this post, FCF/S is down on a TTM basis vs. the previous TTM (16.9% vs. 30.2%) and was just 9% in Q1. Would like to see a rebound.
Current position:
Total cost basis: 105th highest in my portfolio
Current portfolio market value ranking: 92nd
Time since first buy: 0.14 years
Number of purchases since initial position: 3
Annualized return: 200.4% - Beating both of my benchmarks
Annualized $SPY return: (28.6%)
Annualized $QQQ return: 60.0%
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