Q2 Results All About 2019: Morning Brief

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Monday 26 July 2021

The path of two years back to normal

The earnings season for the second quarter is in full swing.

Over the next week, heavy hitters like Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Facebook (FB), and Alphabet (GOOGL) will all report their results. And if the first few weeks of earnings are any indication, we know two themes will emerge: big beats and talk of 2019.

As Yahoo Finance’s Emily McCormick noted in her week-ahead preview on Sunday, FactSet data tells us that estimates don’t stand a chance. With 24% of the S&P 500 reporting results, 88% of companies have exceeded expectations on the bottom line, while 86% of reporters are correct on the top line.

Regular readers of The Morning Brief may not take this as a total surprise: for months we have been writing about Wall Street’s inability to live up to expectations throughout the cycle.

But as more companies report results and executives start conference calls with analysts, we’re seeing companies across industries harking back to 2019 to help investors and analysts understand what “normal” might look like, and how far from that baseline the world is. still.

Last Tuesday, Netflix (NFLX) reported its latest quarterly results and spent a lot of time on its shareholder letter talking about how they’ve looked over the past 24 months, with 2019 serving as an anchor to understand what trend growth could be for the company.

“For Q3’21, we forecast paid net additions of 3.5 million versus 2.2 million in the same period last year,” the company said. “If we meet our forecast, we will have added more than 54 million paid net additions in the past 24 months, or 27 million year-over-year over that period, which is consistent with our annual net additions before COVID. ”

Split the difference from the past two years, and Netflix tells investors that the subscriber count graph shouldn’t look so strange.

After a massive 2020, Netflix has had a slower 2021. That’s why business leaders talked so much last week about seeing the two years as different sides of the same trend. (Source: Netflix)

In last quarter’s retail space, Crocs (CROX) reported a blockbuster quarter on Thursday, and the company referenced 2019 some 17 different times on its earnings. And maybe to highlight how some pandemic trends have not disappeared, Crocs stressed to investors that while Q2 digital sales were up 25% from last year, this category was up 99% from the same period two years ago.

Domino’s Pizza (DPZ) also made at least six references to its earnings call for 2019, with CEO Ritch Allison saying, “As we continue to experience COVID overlaps, we think it will be instructive to continue looking at the cumulative stack of comparable U.S. Same-store sales were anchored in 2019 as a pre-COVID baseline, at 19.6% for the second quarter, we saw a material sequential improvement in the 2-year stack compared to the first quarter.

Another way to outline how you can take the positive impact of the pandemic on the pizza industry and see that Domino’s is still growing well.

And as we wrote in Friday’s Morning Brief, Whirlpool (WHR) CEO Marc Bitzer told Yahoo Finance Live that the “reverse” world of the device maker that doesn’t keep up with demand isn’t going to go away anytime soon.

Turning the clock back a year, the most talked-about expression in the business world was that the pandemic brought about “a decade of change in one year.” How many kilometers you can still get a year later differs.

But we know from this earnings period that executives believe that talking about this year’s results compared to last year doesn’t give a clear picture of what is and isn’t happening in your company. For that you have to look a little further back.

Through Myles Abroad, reporter and anchor for Yahoo Finance Live. follow him up @MylesUdland

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What to watch today?


  • 10:00 a.m. ET: New Home Sales Month-over-Month, June (4.0% expected, -5.9% in May)

  • 10:00 a.m. ET: Dallas Fed Manufacturing Activity Index, July (32.3 expected, 31.1 in June)




Also: Big Tech Earnings, Federal Reserve Decision: What You Need to Know This Week?

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