Best and Worst Earnings This Week. One Looks Like a Screaming Buy

Hey everyone and welcome back to another video for today. It's been an amazing week. So first of all, congrats to everyone. That's exactly why we don't panic when everybody else is panicking. That's why we have these so-called therapy sessions when the market is deep red, especially the high beta name. So let's enjoy it. Let's celebrate. But let's not forget that yeah, maybe maybe the market will take a breather sooner rather than later. Maybe a Nebus, maybe a cororeweave or any other high-flying names could be down 10% in one day, could be down 20% in a couple of days, right? Couple of weeks ago, barely a couple of weeks ago, Nebus was down 40% in a week. So these things can happen. Just remember the bad times, remember the good times, and remember why you are investing in these types of companies. Now, we still have a couple of earnings to go through. We have new holdings. We have the local. We'll cover that in this video. Then a quick reminder on the core reef nebus earnings report. The moves there. It's been amazing actually. IN was up 10% I believe yesterday or so because they delivered right Horizon 1 the first 50 megawatt to Microsoft. Stock popped 10%. Guess what? Stock ended the week. the same price it was before they announced it. Now they were going to report their quarterly figures towards the end of August, August 27, which I believe is pretty close or maybe the same day as Nvidia. Now I know for iron shareholders, it sucks right now, right? It must be one of the hated Neocloud names out there. But I do think that if they show a good report, which I don't think it's going to be suddenly generating billions of dollars or hundreds of millions of dollars in revenue, but if they show that they're getting closer and closer to their own AR target, maybe through guidance, then I do think that the stock could experience the same pop as a core reef or nebuse in just one day. It's also heavily shorted and the stock did not move on the way up unlike a Nebus unlike a core. So we could see could potentially see a huge pop towards the end of August. Now right now I only own Nebus and Corewave. Then we also have Nvidia. Nvidia still needs to report. We also have Oracle. That should be again two big names that will give us a lot of information and yes that could move the market in September. That's when we are going to get a micron micron memory name also a I would say defining earnings report. I am still expecting growth to be excellent. I'm still expecting for them to say, "Look, supply is just not even close to demand right now or even in 2027." Now, the analysts are probably going to ask, "Yeah, but what about 2028? What about 2029?" And in my opinion, whatever they will say is not going to be enough to satisfy these analysts because the analysts and the markets will always ask questions, more questions, more questions. had a conversation actually a couple of hours ago and we were talking about okay this whole spending cycle continues to go up. Yes. Okay. The expected growth rates year-over-year are coming down. All of these companies are seeing accelerated growth but what about a year from now? What about two years from now? And then we went back and forth. And then at the end I was asking, yeah, okay, but what about all the other companies out there? What about a Netflix? What about an Apple, an Uber, etc. So, what about these companies? These companies that have experienced huge growth for many years? Did the company suddenly stop growing? Did margin stop expanding? No. Right? Did we say, "Oh, YouTube has grown to a billion viewers. Is that the top?" No. They continue to grow. Netflix 100 million subscribers, 200 million subscribers. Was that the end? No. They continue to grow. Content spent barely grew over the last couple of years yet margins are expanding. So we can always say yeah but what about next? We can do the same thing with the banks. We can do the same thing with the fintech players. We can do this across the board. Always say yeah but what about growth in two years time in three years time. I I never understood why this is now specifically for the AI players or the big tech players. It's a question that you should ask to any other company out there. Like who's to say that company XYZ is going to be growing in three years time. We don't know. Now I know the counter argument is yeah but these companies are not growing triple digits right now. Okay fair enough. I'm not expecting a nebuse or any of these companies to be growing 400% in 2028 or so. No. But by then the revenue base is going to be yes substantially larger than today. And yes if by 2028 let's say you are still your business is still only selling bare metal then you're going to have a problem cuz the good companies are going to have value added services. If you don't have it in my opinion you're going to be close to worthless or you're going to be acquired by someone that does it better than you. And so this constant, oh yeah, but what about growth? What about growth in in in JP Morgan? What about growth in Home Depot? What about growth in all of the other names out there? Everybody's so obsessed about, oh, what about the growth of the big tech players that they completely missed the runup? They completely missed the revenue reaceleration. And yes, eventually eventually we are going to get hit because these big tech companies are going to reduce their spend. It makes sense. We know it's going to happen. But guess what? If they are going to reduce the spend or the growth in spend by a lot, their stock will get hit. No, nobody's going to be safe. Okay? So if someone's telling you, oh this company is going to be safe, no, the headlines are going to be there. Everything is going to come down. But on paper, the company is going to be much better because right now when we're looking at all of these big tech companies, price to free cash flow 100 times, 50 times, 200 times. But the moment the spending cycle slows down or comes down, well, guess what? The core profitability of the business is going to be visible for everyone. Suddenly, price to free cash flow will not be 200 times, but we're going to get back to normal levels. That's the thing. That's the thing that a lot of people are missing. And so when we look at the end of the week right now, there are still, yes, some names that have taken a small hit. Broadcom is down close to 6%. AMD is up 6.5% because there was a report that said that Google and AMD might start to work together when it comes to uh TPUs. Okay, that's going to be interesting to see how that develops. But overall overall the past week I think it's been a pretty a pretty good week all in all. Google is down 3%. Still reasonable price. Meta can't catch a bit. I did buy more meta today. Why is that? It's under $600. It's disrespected. It's extremely extremely attractive at these prices. Even Micron. Micron is making its way back to $1,000 per share. wouldn't be surprised if Micron goes back and revisits all-time highs. Might be maybe closer to their own earnings report. But all in all, it's quite clear that suddenly something flipped here in the market. Maybe it's the whole Leopole story. Maybe it's just the the company's reporting pretty good earnings and growth and the story actually makes sense. Now, there are definitely some names where the market still doesn't understand it or where I feel it's still quite undervalued. We mentioned Meta being one of those names. I talked about Netflix before. Netflix did catch a bit. That's because Bilakman, Persian Square did open a position again in Netflix. We talked about that in another video. That would be in the top right corner. But there are definitely companies that yes have underperformed the market. If I put here the year to date performance, you can see that quite clearly. Meta has underperformed. Palanteer has underperformed this year, but over the last couple of weeks has done excellent. Netflix has underperformed. Many people like here applovin haven't really looked at that company for a long long time. The growth is there, but I think last quarter they report or the one that just reported a week or so ago, they missed, but they said it's already fixed. We'll see what happens. Worst case scenario, it's another trade desk. Best case scenario, it's just one time thing. And so to me, it's quite clear if you've been bearish this year, you are underperforming. If you've joined the live stream, there was that one troll dark age metal or whatever. He's been shorting apparently. Maybe he's lying. I don't know. Might be Pinocchio. But yeah, if you are short this year or in the past 3 years or so, yes, you're not making money. Now that said, there are certain companies that I'm bullish on, I own, that have done absolutely nothing despite very good results. The local is of course one of them. As you can see, year to date, the stock is basically flat. If you bought it at the start of the year, you've done absolutely nothing. If you bought it a year ago, you would actually be down 7.6%. 6% and of course you bought it three years ago also almost nothing. Now DLO is part of the multibaggers in my opinion. It's a company worth $4 billion. It's profitable. It's growing super quick. It's operating in a huge huge market and yet I mean PEG ratio is here.8 forward PE 13.8 eight. Again, it's it's a misunderstood name. And let's say, you know what, this one doesn't need to go to hundred billion. Doesn't. If it goes to 10, if it goes to 15, if it goes to 20 over the next couple of years, that's a multibagger, and that's good enough for me. Now, why does the market not like a DLO? We'll go over the earnings report in a second. The market doesn't like DLO because TPV growth has accelerated for what? Seven consecutive quarters above 50% growth or so. No, it likes it because of this. And actually this quarter it increased by 92% year-over-year. TPV is now at 17.69 billion. A year ago, that was still under $10 billion. This is not the issue. The issue has more to do with the fact that the market still doesn't understand what the company and its CEO has been saying for the past year or so, maybe even more. The company is focused on this, okay, on TPV growth. The focus is not on take rate. They do not optimize for take rate. What they do want is to make sure that the amount of dollars that flow to the bottom line gets bigger and bigger and so of course when you see this and this is basically gross margin when you see this you're saying ah that's not great right because gross margin here has come down why is that well again TPV is growing faster revenue is growing faster than gross profit we can look at revenue we can see it's quite clear revenue has done quite well and we actually see an acceleration as well. And that's the thing, as long as TPV growth outpaces the drop intake rate, they're doing exactly what they told us they're going to do. More money at the end of the day that flows to the bottom line. Now if we go and have a look at the report, we can see TPV record quarter revenue a record gross profit dollar amount a record here as well. Operating profit $64 million net income $55 million that's up 28% year-over-year. TPV retention rate 188% versus 153% overall net revenue retention. Excellent. TPV growth is accelerating also. Amazing stuff. Where do they see the growth? Right hailing up 108% quarter over quarter, 248% year-over-year. Travel is doing excellent. On demand delivery is up 37%. SAS is up only 10% quarter over quarter, but 66% year-over-year. Same story with e-commerce, more growth year-over-year, still 16% quarter over quarter. remittances up 69% year-over-year and 18% quarter over quarter. Now with this huge growth here in right hailing they said the following thing much of the right hailing search traces to one very large global merchant ramping up rapidly across LATAM. We'll assume it's Uber that specific ramp is now largely complete. The rest of the book still grew 65% year-over-year. With regards to gross profit, we see some strength, a lot of strength in Brazil and Argentina. Brazil is up 64% year-over-year. Argentina is up 40% year-over-year. Mexico was flat. Africa and Asia was actually down 27% quarter over quarter. They said lower contribution from high effect spread markets in Mozambique, Vietnam plus a oneoff cost increase in Nigeria. As for take rate and that's again the big story here, what happened with take rates and that's important especially this quarter. One very large merchant ramped up fast hitting lower volume pricing tiers quickly. again they want more dollars that flow from the top to the bottom lines and so yes sometimes most of the times that customer will get a much better deal now if you exclude that one specific merchant take rate would have been flat sequentially even with TPV growth still above 65% year-over-year on the rest of the book the CEO said again incremental TPV at incremental gross profit is the model not managing to a specific take rate. I don't know how many times he needs to repeat this until the market actually understands. Then moving on to operating leverage. As you can see, this has also been coming down with a bottom in Q1 44%, we're now back to 50%, this is operating profit as a percent of gross profit. Now, five reasons management expects further improvement in the second half. Second half 25 investments will annualize. So, the year-over-year cost headwinds will fade. The World Cup sponsorship marketing was front-loaded in the first half and of course won't repeat in the second. The one of 4.4 million prior year tax item was booked in Q1 OPEX that's gone. AI automation ramping so decoder that's their own thing writes around 60% of code autonomously and headcount is broadly flat and expected to stay near flat. And I think if they can show in Q3, Q4 that this really goes back up, I think it will be impossible for the market to ignore this name for much longer. They then talked about the fact that yes, AI is becoming a real cost lever, not just a buzz word. So every time every time we talk about oh what was the use case of AI other than a glorified search or your AI agent for some BS stuff on your laptop clearly there are some companies if not a lot of companies out there that just become way more efficient and that allows them to move faster which means they can grow more generate more revenue more profits then as for guidance they did raise TPV and gross profit so originally TPV growth was between 50 to 60% %. Now that's expected to be between 60 to 70% growth year-over-year. Gross profit was previously between 22.5% to 27.5%. Now that's between 25 to uh 30% with basically the 27.5% being the midpoint but operating profit stays the same. Now why did they do that? They said the following thing. the one of prior tax adjustment booked in Q1 and two FX turning into a modest headwind versus the original forecast. Much of the cost base sits in currencies like the Brazilian rise that appreciated versus the US dollar. Management said that excluding those two items they likely would have raised profit guidance too, but prefer consistency over promising a cost cut they aren't fully confident in. Again, this just leaves them with some room to beat. And look, I understand it sucks to have a company in your portfolio, a position where the business is doing excellent, yet the stock doesn't move much. To me, that's actually a good thing because it allows me to just accumulate more and more shares, it's one of those companies where yes, even in this market that has gone up significantly where maybe in some companies valuation is super stretch, I can comfortably say that here, no, it's not stretch. It's it's in my opinion very undervalued. It's only $4 billion. I do think this company will outperform in the future. And look, if it stays cheap for that long, then maybe maybe it will be taken private, maybe a company will try to acquire it because we've seen it time and time again. If a company is really that good, but the market doesn't reward it, something will happen. Either the stock starts to move on the upside, they buy back all the shares or they take the company private or somebody takes them private or they get acquired. That's it. Moving on to another name also in that region but stock under pressure is not really an issue and that company is new holdings. Now of course year to date I believe the stock is still down 10% or so but at least here a good quarter stock got rewarded was up close to 10%. This is the first quarter where net income was above a billion dollars. That increased 49% year-over-year. Return on equity 33%. That's a record. That one is annualized. Risk adjusted NIM 12.4% here as well. A record up 2.9 percentage points quarter over quarter. 139 million customers up 13% year-over-year. Gross revenue 5.9 billion up 39% year-over-year. an efficiency ratio of 19.5% versus 21.3% a year ago. More on that in a bit. Like I said, this is the first billion dollar quarter when we look at net income. And if you look at where we were a year ago, $637 million. The quarter before that, $557 million. This is a company that yes, I I just don't see how much longer this stays under $und00 billion in market cap. Now if we look here at the risk adjusted NIM as we said that hit 12.4%. So we have we started here Q1 with 9.48% risk adjusted that increased 178 basis points by credit income. Another 115 basis points cost of credit. Then you reduce here five basis points for the cost of funding which reaches here a record 12.42%. Now onethird of it did come from Desenola which is the Brazil's government debt rig renegotiation program. It is a one-time boost. So don't expect this to happen again and again. We still get a little bit in Q3 but the majority of it the boost did happen already in Q2. Twothirds from generally strong underlying credit performance and higher yielding balances maturing from Q1's loan growth. In Mexico they already the largest digital bank. They have 16 million customers. 35% had no bank account from new. 52% had no credit card before new. 98% of municipalities served. 78% outside major cities. And they broke even in 6 years versus 8 years in Brazil. They're basically, yes, running the same Brazil paybook, but much faster. Now, before you're going to say, "Oh, they can do the same thing in the United States." in the United States they are taking their time. More on that a bit later. Now Brazil, we know that Brazil is their let's say more mature most mature market. That's where they started. But even there even there it is underpenetrated. They can still they can still monetize their core user base or their customer base more and more. They've introduced here a new tier called super core. They estimate around 23% of Brazil's hundred billion dollar gross profit pool which is $23 billion. And here as well they talked about AI how they use it. So they have their own model their own foundation model called new former their model for financial behavior that now underpins underwriting support and uh growth. Now with regards to the non-performing loans discussion, so credit card NPLs by income band improved across every segment since July 2025. Yet the whole company's 90 plus NPL rose to 6.9% from 6.5%. Management did say that a mix shift towards higher risk, higher return unsecure lending and intentional risk expansions is the reason for that not deterioration within any one product. non-analyst did push back on this. Didn't really get a full answer. They said they will talk about it later. Unfortunately, later doesn't help me or you cuz we don't know what was said there. But I do still think that again this is a company that knows exactly what it is doing. And I'll show you one extra chart that we pop up on the screen right now. You can clearly see that things are going in the right direction. And just one specific uptick here is not a reason to start freaking out. Then other things to watch out. Efficiency ratio guidance is around 20% for the full year. Q1 17.6% was explicitly flagged as not repeatable. A timing shift not a new baseline. With regards to the US entry, their credit models will need around 12 to 13 months for it to be as good as what they have probably in Brazil. Now, they did also say that the efficiency ratio spent for that is capped at 100 basis points. So for the investors or the analysts that freaked out that oh there's no reason for them to now start spending an insane amount of money to enter into the United States, they are taking the right approach here. And so new holdings down 10.8% year to date, up 26.4% over the past year. You might say, "Oh, it's a $15 stock. Must be extremely cheap or small company." No, this is already a company worth close to 73 billion. But it is, yes, it is valuation wise a cheap company and in my opinion still still undervalued today. This yes is another one of those examples where I think yes in a couple of years time this is a hundred billion dollar plus company talked about marcado libre quite a lot think marcado libre is going to be the biggest company in Latin America for many many years to come new is also one of those companies I have to say Latin America you have some amazing companies super well-run companies and all credit to management which I'm still trying to get on the channel. We'll see over the next couple of weeks who pops up on the channel. But all in all, new the local, Marcado, Libre, those are names that were under pressure this year. Right? If we go and have a look at Marcado Libre, year to date, down 6.7% over the past 12 months, down 20%. Yes, this is a company that, okay, PE-wise is not cheap, has never been cheap, has just been less expensive. But for the results that you're getting from Marcado Libé, you're not going to get it for cheap. If if you are waiting to get this at 20 times earnings, you're never going to buy it. That's just my opinion because these are some of the best companies out there. No fluff, no BS, pure growth, pure execution. And so all in all so far so very good for me in this earnings season. Yes, some names the reaction was not the best but results to me are more important. There are still a couple of names that are yet to report that are quite important for the portfolio but all in all all was great. Reddit popped as well in the S&P 500 of course doesn't really change that much for the business or the thesis because we're still looking for those AI data licensing deals. That's way more important than an index inclusion. Who knows, maybe one day SoFi might get included and we'll go back above $20. We'll see when that happens. But all in all, that's about it for me in today's video. See you all in the next one. Bye-bye.