Money & Markets Week Ahead for the week of June 13, 2021: Earnings season continues to slow down as companies prepare for the next round of quarterly reports. I look at an Israeli “software as a service” IPO, analyze the earnings of a popular grocery store and get into inflation data.
Here’s more of what to watch in the week ahead on Wall Street:
On the IPO Front
There is just one initial public offering (IPO) on the calendar in the coming days.
Walkme Ltd. plans to price its IPO on Thursday. It will list on the Nasdaq under the ticker symbol WKME.
What it is: Walkme is an Israeli-based “software as a service” company that has developed a platform that allows employees and customers to navigate a website or mobile app easier.
The platform makes the user experience on a website more like a GPS. It makes online transactions easier for customers.
It also helps automate website browsing to require little to no manual clicks or entries.
In its F-1 filing with the Securities and Exchange Commission, Walkme serves around 2,000 customers worldwide.
Of those customers, 368 have more than $100,000 in annualized recurring revenue (ARR), and 22 of them have more than $1 million in ARR.
In 2020, Walkme generated $148.3 million in total revenue — between subscriptions and professional services. That was up from $105 million generated the year before.
In the first three months of 2021, the company reported total revenues of $38.4 million compared to $29.6 million reported in the same three months of 2020 — a 30% increase in top-line revenue.
The company decreased its year-over-year net losses from $50.1 million in 2019 to $45 million in 2020.
A majority of its operating expenses were from sales and marketing efforts.
During its fundraising rounds, the company collected around $345 million in equity investment from Greenspring Associates, Gemini Israel Ventures and Insight Partners.
The offering: Walkme plans to sell 9.3 million shares at a price range of $29 to $32 per share.
The intent is to raise around $282 million with the offering.
According to Renaissance Capital, at a midpoint of $30.50 per share, Walkme would see a market value of $2.9 billion.
Morgan Stanley, Goldman Sachs, Citi, Wells Fargo Securities, Barclays and BMO Capital Markets are all bookrunners on the deal.
The skinny: This is a unique company with a unique product.
Its revenue growth is around 25%, which isn’t bad. However, its earnings before interest, taxes, depreciation and amortization are not so good … around minus-30%.
Walkme is generating more revenue, but its net losses have only decreased slightly year over year.
I think the price point for this IPO is a little high compared to the potential valuation.
I would watch this IPO rather than dive into it right away.
Deeper Dive: Kroger Co. Earnings
Popular grocery store chain Kroger Co. (NYSE: KR) will report its quarterly earnings on Thursday.
These numbers will focus on the quarter ending April 30, 2021.
The Cincinnati, Ohio-based chain operates different grocery brands — like Dillons, Food4Less and Harris Teeter — across 35 states.
Kroger Earnings Steadily Rise
Despite shutting down its stores during the COVID-19 pandemic in 2020, Kroger managed to report higher earnings per share in each of the four quarters of the year.
In April, the company reported its highest earnings in history — $1.22 per share — as the chain maintained delivery and curbside shopping.
Those earnings fell slightly in subsequent quarters but remained higher than any other quarter since 2018.
However, Kroger has beaten Wall Street expectations for quarterly earnings in 11 of the last 13 quarters.
Kroger Quarterly Revenue Remains Consistent
There is a trend pattern in Kroger’s quarterly revenue.
Since 2018, the company has reported much higher revenue for the quarters ending in April than the other three quarters.
In 2020, Kroger’s revenue for the April quarter was $41.6 billion. The next highest quarter that year was the July quarter — $30.5 billion.
Kroger has beaten analysts’ revenue projections in just seven of the last 13 quarters.
Wall Street is projecting the company to report earnings of $0.98 per share on revenue of $39.6 billion.
The skinny: Kroger could pivot quickly to delivery and curbside pickup for groceries during the height of the COVID-19 pandemic in 2020.
It’s one reason why its financial picture remained steady when other, smaller grocery chains struggled.
I believe this quarterly report will indicate higher revenues — similar to other April quarter reports — and we could see $1 earnings per share.
Money & Markets Week Ahead: Data Dump
Last week, the U.S. Bureau of Labor Statistics found the cost of goods and services surged 5% to their highest level in 13 years.
Tuesday, the bureau will release another set of figures to paint an even clearer picture of inflation.
The Producer Price Index examines the average prices received by producers of domestically produced goods and services.
Producers Price Index Continues to Rise
In April, producer prices increased 0.6% — coming off a March where prices jumped 1%.
The index has seen price increases every month since prices fell 1.3% in April 2020.
Since that April 2020 drop, the index has recorded a total increase of 5.6% — indicating domestically produced goods and services have steadily gone up in price since the COVID-19 pandemic lockdowns.
Analysts are projecting a 0.5% increase in the index — the smallest increase in producer prices since December 2020.
Earnings Reports
To finish off the Money & Markets Week Ahead, here’s a look at some of the key earnings reports due out next week:
Monday
Azure Power Global Ltd. (NYSE: AZRE)
Hexo Corp. (NYSE: HEXO)
Tuesday
Oracle Corp. (NYSE: ORCL)
H&R Block Inc. (NYSE: HRB)
Anixa Biosciences Inc. (Nasdaq: ANIX)
Wednesday
Lennar Corp. (NYSE: LEN)
Korn Ferry (NYSE: KFY)
Honest Co. Inc. (Nasdaq: HNST)
Thursday
Adobe Inc. (Nasdaq: ADBE)
Kroger Co. (NYSE: KR)
Jabil Inc. (NYSE: JBL)
Pure Bioscience Inc. (OTC: PURE)
Friday
Livexlive Media Inc. (Nasdaq: LIVX)
That’s all for now.
Until next time…
Safe trading,
Matt Clark, CMSA®
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. He is a certified Capital Markets and Securities Analyst with the Corporate Finance Institute. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.