Q3 2024 Earnings Preview

Welcome to this week’s edition of our earnings review newsletter, where we examine the latest financial and operational performances of leading companies across diverse sectors. This week, we delve into the Q2 2024 results for nine key players: Palantir Technologies, Marriott International, Ferrari, Arm Holdings, CVS Health, Airbnb, DraftKings, Rivian Automotive, and Lucid Group. Each of these companies represents unique trends within their industries, from advancements in AI and cloud solutions to dynamic shifts in hospitality, automotive innovation, and consumer health.

In technology, Palantir and Arm Holdings underscore the growing integration of AI and data solutions, showing robust revenue growth driven by demand across both government and commercial markets. Within automotive, Ferrari and Rivian deliver contrasting stories of luxury vehicle demand and high-growth EV production, while Lucid Group focuses on expanding its EV portfolio amid continued investments in production.

The hospitality and travel sector saw resilience from Marriott and Airbnb, as both companies capitalized on sustained travel demand. In the health care and digital entertainment fields, CVS Health and DraftKings illustrate diverse growth strategies—whether through expanding health services or enhancing customer engagement in online gaming.

As we break down the performances, strategic initiatives, and outlooks for each company, this newsletter aims to provide insights into market trends and the opportunities shaping the quarters to come.

Palantir Technologies (PLTR)

Category: Technology

Palantir delivered a strong Q2 2024 performance, with revenue increasing 27% year-over-year to $678 million, driven by solid growth in its U.S. government and commercial segments. U.S. government revenue grew 24% to $278 million, while U.S. commercial revenue surged by 55% to $159 million. The company's Adjusted Operating Income reached $254 million, representing a 37% margin, and GAAP Net Income increased significantly to $134 million. Additionally, Palantir achieved its seventh consecutive quarter of GAAP profitability, with an EPS of $0.06, up 500% year-over-year.

In terms of customer growth, Palantir’s U.S. commercial customer count grew by 83% year-over-year, reflecting the increasing adoption of its Artificial Intelligence Platform (AIP). The company closed 27 deals over $10 million each, showcasing its strong foothold in large enterprise contracts. CEO Alex Karp emphasized the transformative impact of AI-driven applications across industries, which Palantir aims to scale further.

Key Points:

• Total Revenue: $678 million, up 27% YoY.

• U.S. Government Revenue: $278 million, up 24% YoY.

• U.S. Commercial Revenue: $159 million, up 55% YoY.

• GAAP Net Income: $134 million, representing a 20% margin.

• EPS: $0.06, up from $0.01 YoY.

Looking ahead, Palantir has forecasted continued growth, fueled by expanding adoption of its AI and data analytics solutions across both government and commercial sectors. Analysts will closely monitor the company’s revenue growth and profitability trajectory, particularly as it expands its AIP deployments.

Marriott International (MAR)

Category: Hospitality

Marriott reported solid Q2 2024 results, with total revenue of $6.4 billion, a 6% increase year-over-year, driven by strong demand across both U.S. and international markets. Systemwide revenue per available room (RevPAR) grew by 4.9% globally, with notable gains of 7.4% in international markets, particularly in Asia Pacific (excluding China), which saw a 13% increase. U.S. & Canada RevPAR also improved, growing nearly 4%, supported by increased group bookings and mid-single-digit growth in both rate and occupancy. Marriott’s net income for Q2 was $772 million, up from $726 million in the prior year, while diluted EPS rose to $2.69, an increase of 13% year-over-year.

The company expanded its portfolio by adding 15,500 net new rooms in the quarter, contributing to its total of nearly 9,000 properties worldwide. Adjusted EBITDA for Q2 was $1.32 billion, an 8.6% increase from $1.22 billion in Q2 2023. Marriott’s loyalty program, Marriott Bonvoy, continued to strengthen, with new offerings such as a collaboration with Starbucks that drove a rise in linked accounts, helping to increase customer engagement.

Key Points:

• Total Revenue: $6.4 billion, up 6% YoY.

• RevPAR Growth: 4.9% globally; 3.9% in U.S. & Canada; 7.4% internationally.

• Net Income: $772 million, up from $726 million YoY.

• EPS: $2.69, up from $2.38 YoY.

• Adjusted EBITDA: $1.32 billion, up 8.6% YoY.

For Q3, Marriott projects a continuation of its growth momentum with global RevPAR expected to increase by 3-4%. Key areas to watch include the impact of China’s weaker recovery and Marriott’s expansion strategy, especially in international markets.

Ferrari N.V. (RACE)

Category: Automotive

Ferrari reported a strong Q2 2024, with net revenues reaching €1.71 billion, a 16.2% increase year-over-year, driven by increased shipments, an enriched product mix, and higher personalizations. The company delivered 3,484 units, up 2.7% from the previous year, bolstered by the launch of new models like the Purosangue, Roma Spider, and 296 GTS. The Adjusted EBIT rose to €511 million, reflecting a 17% growth, with a margin of 29.9%. Net profit increased by 24% to €413 million, resulting in an adjusted diluted EPS of €2.29.

Ferrari’s Adjusted EBITDA was €669 million, with a margin of 39.1%, supported by positive volume effects and country mix improvements, notably in the Americas. Additionally, the launch of Ferrari’s new e-building for hybrid and electric powertrains reflects its forward-looking strategy toward sustainable innovation. The company also increased its 2024 guidance, citing robust demand and strong product positioning.

Key Points:

• Total Revenue: €1.71 billion, up 16.2% YoY.

• Adjusted EBIT: €511 million, up 17% YoY.

• Net Profit: €413 million, up 24% YoY.

• EPS: €2.29, up from €1.83 YoY.

• Adjusted EBITDA: €669 million, with a 39.1% margin.

Looking forward, Ferrari has raised its full-year guidance, expecting continued revenue and profitability growth, driven by high demand across its hybrid and internal combustion engine portfolios and increasing personalization offerings. Key factors to watch include Ferrari's expansion in hybrid and electric vehicles and its ability to sustain high margins amid potential cost pressures.

Arm Holdings plc (ARM)

Category: Technology

Arm Holdings reported a record Q1 FYE25, with revenue reaching $939 million, up 39% year-over-year. This growth was driven by license revenue, which increased 72% to $472 million, boosted by several high-value agreements and AI-related demand. Royalty revenue also saw a solid increase of 17% to $467 million, attributed to smartphone sales and the expanding adoption of Armv9 architecture across various markets. The company achieved a 97% gross margin and a 48% non-GAAP operating margin, with non-GAAP operating income rising to $448 million.

Arm’s advancements in AI-ready designs contributed to robust demand, especially in cloud, automotive, and IoT sectors, positioning it well in a rapidly expanding semiconductor market. The Armv9 architecture, which commands higher royalty rates, now comprises 25% of Arm’s total revenues. CEO Rene Haas emphasized the strategic importance of Arm’s subscription model, which is enabling broader deployment of its technology across all major compute markets.

Key Points:

• Total Revenue: $939 million, up 39% YoY.

• License Revenue: $472 million, up 72% YoY.

• Royalty Revenue: $467 million, up 17% YoY.

• Non-GAAP Operating Margin: 48%, with non-GAAP operating income at $448 million.

FYE25 guidance projects revenue between $780 million and $830 million, with continued focus on AI and data-center growth. Analysts will be observing Arm’s expanding role in diverse applications as it scales its AI and IoT technology integration.

CVS Health Corporation (CVS)

Category: Health Care

CVS Health reported Q2 2024 revenue of $91.2 billion, marking a 2.6% increase year-over-year, driven by strong performance in the Health Care Benefits and Pharmacy & Consumer Wellness segments. The company’s adjusted EPS for the quarter was $1.83, down from $2.21 in Q2 2023, attributed to higher utilization rates in the Health Care Benefits segment and lower-than-anticipated Medicare Advantage star ratings for 2024. Operating income decreased by 5.8% to $3.0 billion, mainly due to reduced adjusted operating income in the Health Care Benefits segment, which was partially offset by gains in the Health Services segment.

During the quarter, CVS generated $8.0 billion in operating cash flow, underscoring its robust cash generation capability. The company adjusted its 2024 guidance, lowering its expected GAAP EPS to $4.95–$5.20 from $5.64 and its adjusted EPS guidance to $6.40–$6.65 due to challenges in the Health Care Benefits segment.

Key Points:

• Total Revenue: $91.2 billion, up 2.6% YoY.

• Operating Income: $3.0 billion, down 5.8% YoY.

• Net Income: $1.77 billion, down from $1.91 billion YoY.

• Adjusted EPS: $1.83, down from $2.21 YoY.

• Operating Cash Flow: $8.0 billion year-to-date.

Looking forward, CVS will focus on integrating recent acquisitions like Signify Health and Oak Street Health to strengthen its health care delivery network. Analysts will be closely watching CVS’s strategy for improving Medicare Advantage performance and its ongoing initiatives to enhance customer retention and optimize operations.

Airbnb (ABNB)

Category: Hospitality & Travel

Airbnb posted a strong Q2 2024 performance, with revenue growing 11% year-over-year to $2.75 billion, driven by increased nights and experiences booked on the platform. The company recorded a net income of $555 million, representing a 20% net income margin. Adjusted EBITDA reached $894 million, with a stable 33% margin, indicating Airbnb’s focus on maintaining profitability. Airbnb generated $1.1 billion in net cash from operating activities and a free cash flow of $1.0 billion, underscoring its robust cash generation. The company’s total nights and experiences booked rose by 9% year-over-year, with gross booking value reaching $21.2 billion, a growth of 11%.

Airbnb's active listings surpassed 8 million as of Q2 2024, aided by its initiatives to expand hosting and improve listing quality. During the quarter, the platform introduced features like “Guest Favorites” to help users identify top-rated listings, and added new group travel options, which doubled group travel bookings year-over-year. The North America region saw continued growth in non-urban destinations and group travel, while other international regions, especially Asia Pacific and Latin America, recorded strong booking growth.

Key Points:

• Total Revenue: $2.75 billion, up 11% YoY.

• Net Income: $555 million, with a 20% margin.

• Adjusted EBITDA: $894 million, maintaining a 33% margin.

• Free Cash Flow: $1.0 billion, up 16% YoY.

• Gross Booking Value: $21.2 billion, up 11% YoY.

For Q3 2024, Airbnb is expected to benefit from sustained demand, especially in non-urban and group travel segments. Analysts will monitor the company’s progress in expanding its user base and enhancing the guest experience, particularly through newly launched product features and global marketing strategies.

DraftKings Inc. (DKNG)

Category: Digital Entertainment & Gaming

DraftKings delivered strong Q2 2024 results, with revenue increasing by 26% year-over-year to $1.1 billion, fueled by a nearly 80% increase in new Online Sports Betting (OSB) and iGaming customers. The company achieved $128 million in Adjusted EBITDA, marking significant progress as the customer acquisition cost (CAC) decreased by over 40%. Notably, DraftKings raised its full-year 2024 revenue guidance to a midpoint of $5.15 billion, a 41% year-over-year growth expectation, though it lowered its Adjusted EBITDA guidance to a midpoint of $380 million due to increased promotions and higher taxes in Illinois.

DraftKings continues to see strength in its core metrics, with average revenue per user (ARPU) and retention remaining robust. The company is also expanding product offerings, including in-house player props and Progressive Parlays, and plans to integrate a "bet-and-watch" NFL streaming experience. In addition, the acquisition of Jackpocket and entry into Washington D.C. are expected to contribute positively to 2025 EBITDA. DraftKings’ Board also authorized a $1.0 billion share repurchase program, reflecting confidence in its financial trajectory.

Key Points:

• Total Revenue: $1.1 billion, up 26% YoY.

• Adjusted EBITDA: $128 million, up from a loss in prior periods.

• Customer Growth: Nearly 80% YoY increase in new OSB and iGaming customers.

• 2024 Revenue Guidance: Raised to $5.05–$5.25 billion.

• Adjusted EBITDA Guidance for 2024: Revised to $340–$420 million.

For Q3 and beyond, DraftKings will focus on leveraging high customer acquisition rates and new features to drive growth. Analysts will be observing how the company manages tax impacts and operational efficiencies in high-tax states, which may play into its profitability in 2025 and beyond.

Rivian Automotive, Inc. (RIVN)

Category: Automotive

Rivian reported Q2 2024 revenue of $1.16 billion, up 3% year-over-year, primarily driven by the delivery of 13,790 vehicles. The company produced 9,612 vehicles, reflecting supply chain improvements and greater manufacturing efficiency. However, Rivian posted a net loss of $1.46 billion, compared to a $1.2 billion loss in Q2 2023, impacted by increased expenses related to its second-generation R1 vehicle production. Adjusted EBITDA came in at $(860) million, in line with last year, as Rivian continued to invest in its supply chain and production capabilities.

Rivian’s gross margin remained negative at $(451) million, but the company highlighted several cost-saving initiatives in its second-generation R1 vehicles. These include a 30% increase in production line efficiency and a projected 20% material cost reduction by the fourth quarter. The company’s partnership with Volkswagen Group was a highlight, with $1 billion in initial funding to support the launch of its R2 platform in 2026. Rivian also ended the quarter with $7.87 billion in cash and equivalents, enhancing its liquidity position.

Key Points:

• Total Revenue: $1.16 billion, up 3% YoY.

• Vehicle Deliveries: 13,790 units, up from previous quarter.

• Net Loss: $1.46 billion, compared to $1.2 billion YoY.

• Adjusted EBITDA: $(860) million, consistent YoY.

• Cash & Equivalents: $7.87 billion.

For Q3 and the rest of 2024, Rivian expects to continue reducing costs while ramping up production for the second-generation R1. The company’s focus on operational efficiency and strategic partnerships positions it for long-term profitability, though near-term financial pressures remain a challenge.

Lucid Group, Inc. (LCID)

Category: Automotive

Lucid Group reported Q2 2024 revenue of $200.6 million, a 33% year-over-year increase, attributed to higher deliveries and expanded production of its luxury electric sedan, the Lucid Air. However, Lucid’s net loss widened to $643 million, reflecting increased production and operating costs associated with ramping up its Advanced Manufacturing Plant-1 (AMP-1) in Arizona and ongoing development at AMP-2 in Saudi Arabia. Adjusted EBITDA remained negative at $(610) million, with Lucid investing heavily in its production capabilities, including pre-production on the Lucid Gravity SUV, scheduled for launch in late 2024.

In Q2, Lucid delivered 2,394 vehicles, up 70% year-over-year, and maintained a stable gross margin despite a special warranty campaign provision impacting quarterly performance. Additionally, Lucid raised $1.5 billion in funding from its strategic partner, the Public Investment Fund (PIF) of Saudi Arabia, to support its liquidity and future expansion plans. The company ended the quarter with total liquidity of approximately $4.28 billion, positioning it to continue its aggressive production ramp-up and new model introductions.

Key Points:

• Total Revenue: $200.6 million, up 33% YoY.

• Net Loss: $643 million, an increase from $585 million YoY.

• Adjusted EBITDA: $(610) million, reflecting high operational costs.

• Vehicle Deliveries: 2,394 units, up 70% YoY.

• Liquidity: $4.28 billion, backed by recent funding from PIF.

Looking forward, Lucid’s success in launching the Gravity SUV and managing production costs will be crucial as it seeks to scale up and compete in a challenging EV market. Investors will be watching Lucid’s margin improvements and production efficiency gains, along with new model rollouts.

Conclusion

This week’s earnings reports highlight the adaptability and forward-thinking strategies of industry leaders across technology, health care, automotive, hospitality, and digital entertainment. From Palantir’s advances in AI-driven data solutions to Ferrari’s luxury performance vehicles and Lucid’s electric innovations, companies continue to innovate and address evolving market demands. The robust growth in Arm Holdings' cloud and AI licensing, coupled with Airbnb’s expansion into group travel, reflects a clear trend toward meeting specialized consumer and enterprise needs.

Meanwhile, CVS Health and DraftKings underscore the value of customer-centric approaches within their sectors, focusing on scalable health services and enhanced digital offerings. The automotive sector saw Rivian make strides in production ramp-up and delivery targets, illustrating the balancing act between growth and financial discipline as the EV market evolves.

As these companies navigate the challenges and opportunities presented by global market shifts, the path forward is marked by a focus on innovation, operational efficiency, and strategic growth. Investors and stakeholders alike will be watching closely to see how these businesses sustain momentum and adapt their strategies for continued success in the quarters to come.