Top 10 TMT Transcripts – May 2022

Skip to transcript summaries.

Normally I wouldn’t let a company with a market cap of $1.3B into my top 10 transcripts, but this month SCHL is admitted on scholarship. It’s not only the most popular Tech, Media, and Telecom transcript, it’s the most popular transcript in May, period. We published over 1,500 transcripts in May, putting SCHL in the top 0.1%.

I’ve also included two transcripts on a subsidiary of a private Chinese company, TikTok, mostly because I have a hare-brained idea to use TikTok for marketing. If you’re reading this, then you probably know that roughly 90% of our customers are buy-side analysts, in other words people who would never admit that they use TikTok. Here’s how this pitch would go…

Me: I want to give some kids I saw on TikTok some money.

CMO: [considering just firing me immediately] Go on.

Me: I have seen videos where a TikToker plays two roles- they just put a wig on for one of them. We could send them our spiciest transcripts and they could act them out in a comedic manner.

CMO: [scrolling TikTok on her phone] Do you really think buy-side analysts use TikTok?

Me: TikTok fills the dead time on earnings calls with joy.

CMO: [considering firing me again]

I don’t want to get fired already. I just got here. How am I going to convince skeptical minds to sponsor a Stream by AlphaSense TikTok video that goes wildly viral? I need evidence, evidence that buy-side analysts are secret TikTok enjoyers, and I will continue to summarize TikTok transcripts until I find it.

I’ve ordered the top 10 May TMT transcripts by market cap (as of June 6), with TikTok at the bottom. If you don’t subscribe to Stream by AlphaSense, you can request access to Stream’s expert transcript library here.

 

Transcript Summaries

Tera Cap (>$1T)

AAPL (Apple Inc) – Former Competitor Believes AAPL Is in a Great Position to Be a Fintech Leader – Read full transcript

• Unlike competitors Visa/Mastercard, AmEx built and owns their network end-to-end, allowing for privacy of transactions. Increased privacy allows AmEx to charge more for their cards. Apple positions on privacy, and touches both older and younger generations: “I do think that Apple is going to take control of the payments space and potentially the personal banking space over the next 5-10 years”
• Bigger banks are undergoing agile restructuring to enable user-focused software development, but “they’re going to get disrupted quite a bit by the fintech startups… and the elephants (Apple, Google and Microsoft, maybe Meta / Facebook).”
• Future payments competitive differentiation (especially in a blockchain ledger world) will be in rewards programs. Square’s Cash App is currently the most innovative on rewards, allowing users to choose their reward before a transaction. Square should be a long-term winner. Apple could get into trouble offering similar customization (eg, get 1% back in a certain app in the app store) for regulatory/ antitrust reasons.

 

Mega Cap ($200B – $1T)

TCEHY (Tencent Holdings Ltd.) – Former Yager Producer Believes TCEHY Is in a Good Position to Benefit From Growth in AA and AAA Games – Read full transcript

• Yager is a flight simulator game released in 2003. I’m a gamer, I was in college in 2003, and I’ve never heard of it. The studio kept the name. Their relevant game here is The Cycle, built on Epic’s Unreal Engine. Though competitor engine Unity has 60% market share by # of games (vs Unreal’s 20%), Unreal has the majority share of revenue.
  • “Unreal Engine is mostly used for large-scale games, AA or AAA games… the boundary-pushing [engine that] will be defining the sector for the next couple of years” 
  • “Small to mid-tier games [use] Unity [because] you can more easily set up a project, try things out, prototype something and get something going without having to school up a whole team for three weeks to understand the engine.”
• Expert is skeptical of VR because it’s going the opposite direction as games. Instead of more mass market, it’s more specialized. “It’s solving problems that are not there.” VR developers pitch directly to platforms, who want the content, instead of publishers, who know the VR player base isn’t there, and aren’t interested. Optimistic on AR because it works with existing tech. Can use smartphones to play Pokemon Go or D&D with your friend across the pond.
• “NFTs are a hurtful pyramid scheme… There’s also no benefit for any studio to do this, for any developer to do this.” Some excellent rebuttal to this from the analyst. Worth a read.

 

Large Cap ($10B – $200B)

CRM (Salesforce Inc) – Former Competitor Believes CRM Has Better AI and Analytics vs Competitors Since It Has a More Expansive Platform With More Data – Read full transcript

• Analysis of the top 10 SaaS CRMs in 2021 found average cost per month per seat = $40.
• Salesforce can pay double or triple what competitors pay, allowing them to cherry-pick the best software talent.
• Salesforce is best positioned with ML/AI as a competitive advantage (eg, determining that calling between 4-6pm increases close rate by 27%). Mentioned Gong as an interesting company (sentiment analysis, eg, how many times did you say “um” in your sales call).

ABB (ABB Ltd.) – Former Unit Head Thinks ABB Does Not Behave in a Single Way as an Organization – Read full transcript

• This expert joined ABB in 2018 to centralize and improve warehouse operations, but instead ABB decentralized power to the four major divisions in 2019. That meant that ABB’s stock levels remained too high, which “helped them ride out the Covid storm…not because they got a particularly good plan, but just there hadn’t been any focus on the stock levels before.” Now they are in the same position as competitors.
• Divisional leadership is strong but highly regional. China leads in industrial robots. Finland, Sweden and USA in different parts of the electrification business. Italy and Germany in electrification.
• “At any one time… you could see one part of the business going in one direction and potentially another part of business going in another direction… that was a weakness…”

PANW (Palo Alto Networks Inc) – Customer Believes Cyber Security Will Continue to Be an Increased Focus for Firms and Their Boards – Read full transcript

• Generally CISOs choose between an all-in-one provider like Microsoft or cobble together best-in-breed offerings from different vendors
• “[The cyber security] market is going to at least double in the next two, three years.”
• The biggest issue in cyber security is the lack of talent. “There isn’t a good pool of resources who can come up and solution the security stack”

DASH (DoorDash Inc) – Competitor Thinks DASH Is a Triple Threat Growth Leader With Enormous Potential and Exceptionally Well Run – Read full transcript

• The quick commerce marketplace business (DASH, Uber Eats, Postmates, Instacart, etc) “is inherently a tight, low-margin business, [with no]  influence over the unit economics of the product that is ultimately being delivered to the end consumer.” That’s why the businesses are investing in advertising, “All you need to do is just go look at the job openings… and you will see enormous numbers of advertising-related open headcount. “DashMart is still very largely a marketplace business, but starting to open their own retail locations…. a fundamentally different model. You can control unit economics”
• DoorDash is exciting because of 1) rapid sales growth, 2) investment in ads business, 3) early proven success of DashMark, and 4) the company “is exceptionally well run.” The primary risks are 1) loss of COVID tailwinds, 2) shortage of 1099 workers and reliance on 1099 workers generally, 3) no brand loyalty / commodity offering.
• DashPass is a cost center, but when the industry consolidates, subscriber base will likely determine the winner.

 

Mid Cap ($2B – $10B)

VRNT (Verint Systems, Inc.) – Former Customer Services VP Thinks the CX Industry Has Been Consolidating and Will Continue to Do So – Read full transcript

• 20 years ago, Verint was the only company doing call center workforce automation (WFO). As technology has improved, it’s been commoditized. VRNT and NICE are the gorillas, with Calabrio third. Small call centers often start with Calabrio, then grow out of it.
• “As far as market growth, it’s almost dictated by the switch. If you have a Genesys switch, you’re probably not going to go with Verint… If you’re going to Five9, you really don’t have a choice but to go with Verint.”
• The Contact Center as a Solution (CCaaS) is a formidable competitor to VRNT: Avaya, Genesys, Alvaria are major players.

 

Small Cap Scholar

SCHL (Scholastic Corp.) – Former VP Thinks SCHL Has a Higher Elasticity and That There’s a Lot of Opportunity in the Children’s Market – Read full transcript

• Teachers are financially incentivized to push books on kids, “The book clubs mail out multiple catalogs per year to teachers… [who are] rewarded with bonus points, which acts as essentially frequent flier miles in other affinity programs.”
• “We had a captive audience in the book fair because the school looked like they were in cahoots with Scholastic in terms of saying, ‘We’re good for you…. It’s a good thing for your kid not only to have a book, but it’s also good for them to be helping the school at the same time.’ Very challenging to get that message across in a remote sense.”
• The elasticity of demand is higher in children’s education generally, but not on the good IP, eg Harry Potter: “You have to raise the price on books that people actually want.” Scholastic has a creative culture/ environment where the best IP continues to be identified, which is a competitive moat.

 

TikTok

TikTok – Customer Believes TikTok Is Aimed Right at the Target Demographics and Delivers Low Subscriber Acquisition Costs – Read full transcript

• Teen athlete customer acquisition cost is $0.70-$0.80 on TikTok.
• TikTok has much better engagement than Instagram, which suffers from the infinite scroll.
• “When it is time to actually ask our users to… buy a product from us… they’re more than willing to do so because we just provide so much value in content and engaging content creation.” Ok, I think I’m getting it. We sponsor dozens of TikTok videos that go wildly viral, then our fans will subscribe to Stream by AlphaSense in appreciation. We don’t even need the buy-side.

TikTok – Partner Believes TikTok Will Be Less Relevant in ~2-3 Years – Read full transcript

• In Spain, marketing spend breaks down: 45% digital (mostly search and online video), 35-40% TV, and 15-20% radio and out-of-home.
• “Three years ago, TikTok in Spain was nothing. Nobody knew it… The pandemic helped TikTok to be more important.”
• “In two, three years, there will be a new one then nobody will talk about TikTok” I don’t how this can be true, since everybody will still be talking about that legendary Stream by AlphaSense TikTok of Summer 2022.