Speedwell Research's News Update and Weekly Recap
Airbnb Dialogue, 3 New Business Recaps, Coupang Business Update, and the Importance of Mature Margins
Welcome to Speedwell Research’s Newsletter. We write about business and investing. Our paid research product can be found at SpeedwellResearch.com. You can learn more about us here.
This is a weekly recap, where we summarize recent content you may have missed.
Table of Contents:
Speedwell Releases & Upcoming
Spotlight
Coverage Updates
Sharing Links
1. Speedwell Releases & Upcoming.
Research.
This week, we released a 1Q25 business update on Coupang.
This is in addition to four other 1Q25 business updates so far this earnings season. We have released business updates on CoStar Group, Evolution, Meta, and Airbnb.
We launched a new post format called Business Recaps. Most companies do not have much change quarter to quarter, and so rather than make each update 2-3k words, we will publish shorter updates when warranted. This week, we released three business recaps on Floor & Decor, APi Group, and Dream Finders Homes.
The Synopsis Podcast.
On this week’s podcast we also released a dialogue episode discussing Airbnb’s latest quarter. We discuss Airbnb’s 3 growth vectors, macro impacts on Airbnb, new business speculations, and mature margins.
Upcoming.
Podcast
New Dialogue episode this week covering some business updates! Be sure to follow the podcast to be the first to know when a new episode drops!
Research
Our research report on AppFolio is available for members on our site. We will be sending more out about this soon!
More business updates & recaps coming out this week on our covered companies!
Coverage
Constellation Software and Copart will release their earnings next week.
Axon will be at the JP Morgan Global Technology, Media, and Communications Conference.
Become a Speedwell Member today to get access to all of our research updates and our in-depth research reports!
2. Spotlight.
Below are select quotes from our various writings and podcast.
Dialogue: Airbnb’s Growth, New Businesses, Defending Mature Margins, and Diatribe on Sell-Side Q&A
Yellow Light Warning: “One of the differences here is this potential for general economic pressures. And one of the first things people cut if you lose something like a job, your business isn't doing as well is you're cutting that discretionary level and so I think that is a warning sign. It's not, you know, a red light, maybe it's a yellow.”
Sell-Side Diatribe: “I would watch analysts write the notes for these earnings calls, and it would be this 10-sentence question, and he'd just write with one word, you know, interest rates question mark. That was the question.”
ABNB Focus on Consistency & Reliability: “Short term is just getting the core product in that experience much better, more consistent. And so within that, they're focusing on their core existing markets, which is 3/4 of GBV gross booking value. Which are the United States, the UK, Australia, France and Canada. One of the biggest reasons why people don't book on Airbnb is consistency, reliability.”
Supermarkets to SuperApps: “Someone figured out that bundling them all together increases frequency, increases loyalty, increases average order value. And then once they figured that out, they started to add even more stuff. Some supermarkets have pharmacies in them, some have Starbucks, and some have banks. And so this kind of idea is that once you get the traffic, you could cross-sell them all these different things. It's not a bad idea, it's just very hard in execution.”
Why Understanding the Difference Between Growth vs Maintenance Spend is Important to Valuation: “I think in terms of actually how to value a company, I think it is important to distinguish between maintenance and growth CapEx, because what you're basically trying to do is understand the difference between the value of what they have and what it costs to maintain that versus how much is being spent to grow it.”
Mature Margin Framework Importance: “If you're trying to understand what is the real economic value of the company and the value they are generating, you need to look at it through a framework like this that just count all losses as being negative NPV indefinitely.”
Coupang 1Q25 Business Update.
Undersaturated: “They noted that even their oldest cohort of customers continues to increase their spending. Active customers also grew to 23.4mn, +9% y/y and +0.6mn sequentially. Coupang continues to believe that the core commerce opportunity in Korea has far to go before they reach saturation. We estimate they are around just 10% of the total retail TAM (which they estimate at $500bn).”
Taiwan Traction: “On Taiwan, their only market they are focused on outside of South Korea, they noted that customers are coming back more frequently and spending more on each visit as they added +500% more selection.”
Prepare for Increased Capex Spend?: “If Taiwan continues to see momentum, shareholders should prepare themselves for increased capex investments, much like we saw in South Korea as they built out their fulfillment footprint to execute on 7 hour delivery across millions of items.”
Read the Coupang 1Q25 Business Update here.
Floor & Decor Business Recap.
Tariff Headwind: “With tariffs and the potential consumer slowdown they could bring, they have lowered their SSS guidance from flat to +3% y/y prior to -2% to +1% y/y. They also took store opens down from 25 to 20 this year.”
Diversifying Tariff Exposure: “They have already had experience with tariffs from the initial round in 2018 and have since diversified their supply base… They also have noted they can bring China down to mid-single digits by year end.”
Pricing Power: “They also believe that they can not just protect gross profit dollars by passing off prices, but gross margin percent as well, in contrast to the past. This is because everyone is being impacted, and they have a better ability to navigate supply chain issues with 240+ suppliers. The independents are going to be even further pressured, and Floor & Decor could take share coming out of this.”
Read the Floor & Decor 1Q25 Business Recap here.
APi Group Business Recap.
Improving Higher Quality Revenues: “The Safety Services segment, which is their higher quality segment, grew +13.4% y/y, bringing them closer to their goal of 60% of revenues coming from inspection, monitoring, and service.”
Recession Resistant Revenues: “In the event of a material economic slowdown, 100% of their inspection and monitoring revenues will stay because of the regulatory nature.”
Slow, Then Fast: “Management noted they want to go slow with bolt-on acquisitions for the elevator platform they acquired (Elevated), but once they build confidence in their integration, they can accelerate it.”
Read the APi Group 1Q25 Business Recap here.
DFH 1Q25 Business Recap.
Hiding Softness?: “They have maintained their full year guidance of 9,250 home closings, but that includes several new home building acquisitions. This suggests that acquisitions are somewhat hiding the market softness.”
Home Speculation: “This commentary is worrisome as we do not want to see them volume focused at the cost of profitability. Additionally, the push to “move-in-ready” seems to be a euphemism for home speculation.”
Promo Monitoring: “While these promos are typical of homebuilders, especially in soft environments, they should be monitored as they have the effect of hiding weakness in their core business by bolstering the top line at the cost of the bottom line.”
Read the DFH 1Q25 Business Recap here.
3. Coverage Updates.
DFH
DFH reported 1Q25 earnings.
Revenue grew 20% y/y
Net income for the quarter was flat despite a +20% y/y increase in revenues as SG&A increased +46% y/y.
Cancellation rates were “one of the lowest in the company’s history” at 11.7%.
Read more about DFH’s latest quarter here: DFH 1Q25 Business Recap.
PRM
Perimeter Solution reported 1Q25 earnings.
Revenue grew 22% y/y.
Adj. EBITDA grew +49% y/y.
Completed their first bolt-on acquisition.
Read more about PRM’s latest quarter here: PRM 1Q25 Business Recap.
Axon
Axon reported 1Q25 earnings
Revenues grew 31% to $604mn. This is the 13th consecutive quarter of growth over 25%+.
Software & Services revenue grew 39% to $263mn.
Annual recurring revenue grew 34% to $1.1bn.
4. Sharing Links.
A Letter a Day: Greg Abel and Doug Suttles (Outside of Berkshire meetings, this is the only long-form discussion of incoming Berkshire Hathaway CEO Greg Abel) (link)
LiLu on “Global Value Investing in Our Era” (link)
Josh Tarasoff on “Conviction and Quality” (link)
And a special thank you to Matthew Harbaugh for helping put this weekly recap together!
The Synopsis Podcast.
Follow our Podcast below. We have four episode formats: “company” episodes that breakdown in-depth each business we write a report on, “dialogue” episodes that cover various business and investing topics, “article” episodes where we read our weekly memos, and “interviews”.
Speedwell Research Reports.
Become a Speedwell Research Member to receive all of our in-depth research reports, shorter exploratory reports, updates, and Members Plus also receive Excels.
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