Personal blog on investing and financial musings.

Category: Companies

Amazon Ads and generative AI

In a March 2023 survey, Amazon found that among advertisers who were unable to build successful campaigns, nearly 75% cited building ad creatives and choosing a creative format as their biggest challenges. To tackle this Amazon Ads rolled out AI-powered features such as image generation and product descriptions.

Image generation is a generative AI solution designed to remove creative barriers and enable brands to produce lifestyle imagery that helps improve their ads’ performance. For example, an advertiser may have standalone images of their product against a white background, like a toaster. When that same toaster is placed in a lifestyle context – on a kitchen counter, next to a croissant – in a mobile Sponsored Brands ad, click-through rates can be 40% higher compared to ads with standard product images.

O’Reilly Automotive EPS history

O’Reilly Automotive released their 2023 Q3 results and I have to say that I’m in love with this company. I took a look at their diluted earnings per share growth over the years and it has been breath taking. Here are the numbers:

Amazon Sponsored Products

On August 16, 2023 Amazon announced that sponsored product ads will now start showing in premium apps and websites, including Pinterest, BuzzFeed, Hearst Newspapers, Raptive, and Ziff Davis brands like Lifehacker and Mashable to name a few.

Pinterest explained how this will work on their last investor day:

When a Pinterest user expresses commercial intent, say, searching for something as specific as green dresses or broader like hiking guides. We send a request to Amazon for relevant ads. Amazon gets that request and sends ad candidates back to us. We then decide which ads to show based on relevance and price blended with our first-party auction. And when an ad is engaged, Pinterest and Amazon share the revenue. So that’s how it works. But what makes this partnership especially exciting is that because these sponsored product ads are designed for search on Amazon, they’re well suited to perform on Pinterest, where we see similar behavior. So now brands and retailers who buy sponsored product ads on Amazon can expand their reach to capture similar commercial intent on Pinterest.

Amazon is pushing it’s Prime delivery hard. In the partnership announcement Amazon said that:

Sponsored Products only appear when advertised items are in-stock, and include trusted Amazon shopping attributes such as Prime delivery promise, ratings, and accurate pricing information

Amazon ads did $12 billion in revenue in as of 2023 Q3. Ads are becoming a huge business.

Heico (HEI, HEI.A) Management Quotes

I went over some of the companies quarterly earnings calls and wrote down some quotes from management that I found to be interesting. I really like how they view the company as owners.

“This management is really compensated because of our stock ownership, just like every shareholder out there. And we are completely aligned with every shareholder, if we selfishly make a good acquisition or we generate cash and it goes to the bottom line. If the stock price goes up, yes, we benefit because we’re the largest group of shareholders.

However, every shareholder benefits pari-passu with what we have. In other companies, many companies, I believe that the motivation is bifurcating. The management generally owns little equity and therefore, the management wants to grow the company top line, even if the operating margins are 8% or 10%, the top line can double. That requires the use of a lot of cash.

But the management who is generally there for 3 to 7 years, sees his or her compensation double. If they grow the top line from $2 billion to $5 billion, the managers’ compensation goes from $3 million to $6 million, whatever the number is. In our case, we own a large number of shares. So if the stock goes up 10 points, and I’ll define it for you. It’s public. If we own 12 million or 14 million (shares), and I don’t know the exact number, but if you include the 401(k) because we’re very concerned about the success and the financial stability of our people, our team members. If that goes up 10 points, we make $140 million or $200 million in equity value. Now do I care if my salary goes up $3 million, of course, not.”

Texas Instruments (TXN) 2023 capital management update

Every year TXN has a capital management call where they update shareholders on their capital management long term targets and for the current year, they also look back at how they performed the previous year. I love that they do this and wish more companies would follow.

Link to the full deck and the webcast.

Here’s how they did in 2022:

O’Reilly Automotive (ORLY): a Cannibal Compounder

What does OReilly do?

O’Reilly is one of the largest retailers of automotive aftermarket parts in the U.S. They sell products to both do-it-yourself (“DIY”) and professional service providers. The business was founded in 1957 and initially operated from a single store in Springfield, Missouri.

O’Reilly’s stock has returned over 60x in the last 20 years and over 8x in the last 10 years.

As of the end of 2021 O’Reilly operated 5,759 stores in 47 states in the United States and 25 stores in Mexico.

O’Reilly holds a high number of SKUs at its stores and distribution centers, this is a huge competitive advantage. Professional service providers, which account for 41% or revenue, usually consolidate to the supplier that has the most parts and can deliver the fastest.

Tl;dr just take me to the financials.

Cloudflare (NET) 2022 Q3 Earnings

Cloudflare reported Q3 results on November 3. I summarized some of the most important point from the report.



Cloudflare grew revenue 47.4% y/y, surpassing $1 billion in annualized revenue for the first time. They are still operating at a GAAP loss of 18% but if we take out stock base compensation than non-GAAP operating income was $14.8 million or a 6% margin. Matthew Prince has indicated that they are going to hold non-GAAP operating margins near breakeven for the foreseeable future as he sees a large runway for them to invest in.

ASML (ASML) 2022 Investor Day

ASML had their 2022 investor day on November 11, I summarized some of the most important points from the day.


Global trends continue to fuel semiconductor growth, this translates to semiconductor end market annual growth rate of around 9% and a doubling of semiconductor revenue (2020-2030). This drives the increased demand for wafers to about 6.5%. The reason it’s not 9% is because wafers will become more valuable.

ASML plans to increase their capacity to 90 Low-NA EUV and 600 DUV systems
(2025-2026), while also ramping High-NA EUV capacity to 20 systems (2027-2028)

Datadog (DDOG) 2022 Q3 Earnings

Datadog reported Q3 results on November 3. I summarized some of the most important point from the report.



Datadog continued its rapid revenue growth, at 61.4% year-over-year, although a a slower pace. They grew revenue by single digits vs. previous quarter, the only other time this happened was during the COVID pandemic. DBNER continued to be best in class above 130% (21 quarters in a row).

Datadog bills all of their revenue in U.S. dollars, they don’t price in local currencies. Customers in Europe and Japan still have their budgets in euros or yen and so the strong dollar is a headwind.

Selected GAAP financials

Activism at Salesforce (CRM)

It finally happened, an activist came for Salesforce. Salesforce is a big company with a market cap of $153 billion and so I believe Starboard has a relatively small position in the company but they do have a voice and an audience in not very happy shareholders.

So lets look at Salesforce.

Salesforce is a global leader in customer relationship management (“CRM”) technology… With our Customer 360 platform, we deliver a single source of truth, connecting customer data across systems, apps and devices to help companies with their digital transformation. Customer 360 gives teams sales, service, marketing and commerce capabilities and more, and a single shared view of their customers so they can work together to build lasting, trusted relationships and deliver the personalized experiences their customers expect…” – 2022 10K

After reading the whole business overview I still don’t understand what they do. But that’s ok. We do know that they are #1 or #2 in some stuff.

They have a FY26 (actual year is 2025, they have this weird reporting timing. Their 2023 Q2 ended on July 31, 2022) revenue target of $50 billion.

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