Tesla and Alphabet earnings, OneStream's IPO, and did VCs buy Trump at the top?
Tesla and Alphabet earnings, OneStream's IPO, and did VCs buy Trump at the top?
Welcome to Cautious Optimism, a newsletter on tech, business, and power. Modestly upbeat.
This morning we’re looking at Tesla and Alphabet earnings, OneStream’s IPO pricing, and whether or not VCs bought Trump at the top.
📈 Trending Up: Global heat records … open source(ish) AI … data center power usage in Ireland … Starlink in Gaza … Google Cloud … Waymo … Ether ETF inflows … drone spying …
📉 Trending Down: Tesla and Google stock after earning (keep scrolling) … venture taxes in India … Apple in Spain … NFT volume …
🤔 What Else?
Vanta just raised $150 million from Sequoia, pushing its valuation up from $1.6 billion to $2.45 billion. The company, TechCrunch reports, said that it crossed $100 million in ARR earlier this year.
That’s a 24.5x ARR multiple, based on the company doubling its customer base in its last fiscal year. Naturally, we can’t say that twice the customers are twice the revenue (could be more, could be less), but we can infer that the company’s growth trajectory is pretty hot.
That makes Vanta one to watch. (Disclosure: Vanta advertises on This Week in Startups, though that fact has no impact on what I write here or say there.)
Throw in the Harvey $100 million Series C that we saw yesterday, and megarounds are not extinct, they’re just rarer than they once were.
Tesla and Alphabet report Q2 earnings
Shares of both Tesla and Google are down in pre-market trading this morning. Let’s unpack why both companies are losing ground.
Tesla: Revenue growth was incredibly modest (2%); automotive sales were down year-over-year (-7%); net income was sharply lower compared to year-ago levels (-45%); the company’s robotaxi unveil was pushed back to October; and even its adjusted profitability (adjusted EBITDA) tumbled (-21%).
Tesla is in a growth pause and a profitability plunge. Of course Wall Street was going to complain about it.
Does the Tesla bull case change? Nope. In fact, you can argue very easily that Tesla only losing ~8% of its value after watching its growth story evaporate is more a market compliment than diss; what other company could turn in results this lackluster and still maintain a valuation that is miles richer in price/sales terms than its rivals?
The silver lining to Tesla’s falling automotive sales is that its revenue mix is diversifying. The argument that Tesla is not a car company but instead an energy company is actually coming true, albeit slowly.
Alphabet: Growth accelerated (14% v 7%), operating income expanded ($27.4B v $21.8B), operating margin expanded (32% v 29%). And costs are coming down. Alphabet spent less on S&M and G&A in Q2 2024 than it did in Q2 2023. R&D spend rose along with costs of revenue; but you can see the company’s operating leverage come into view.
So why aren’t investors happy? YouTube advertising revenue growth came in under expectations. Which is fair, frankly, as I cannot imagine how YouTube could cram any more fucking ads into its product without banning videos themselves in favor of pure advertising streaming.
Even more, the company made a real point in its earnings call to shout out its AI revenues. Here’s its CEO, Sundar Pichai: “Year-to-date, our AI infrastructure and generative AI solutions for cloud customers have already generated billions in revenues and are being used by more than 2 million developers.”
So why is the company’s share price lower? I wonder if YouTube’s miss is a big enough deal to undercut all of the above-listed good news. But there’s one more wrinkle: A $5 billion pledge to Waymo, Alphabet’s self-driving program. As a fan of self-driving, hell yeah, Alphabet. However, investors who want Google to enshittify its search product even more to drive near-term EPS and larger dividends might be disappointed that the company still cares about the future.
OneStream’s IPO pricing is good news
A week ago, we took a look at OneStream, a software company that has spent time in the arms of private equity shop KKR. Its finances were generally in good shape, and despite a weird tax setup with its private equity parent, it was a good company to take out.
The bad news was that OneStream was not set to tear up the current SaaS pricing norms that we see on the public markets: