Good morning. QQQ -50bps as yields ticking up 2-5bps across the curve and crude +3%. Iran news back front and center as Trump tweeted a threat to subject Iran to an “economic D-day” due to its refusal to reach a deal: “It will be economic warfare and isolation on an unprecedented scale.”
BTC +4% and BTC proxies up again early: MSTR+10%, COIN+6%, CRCL+6%, HOOD+5%.
In Tech, the August choppy action continues with all sectors in the red early led lower by semis -1%.
Asia up overnight:NKY +1.36%, Hang Seng +0.8%, HSCEI +0.9%, SHCOMP +0.24%, Shenzhen +0.79%, Taiwan TAIEX +0.48%, Korea KOSPI +5.89% Memory up in Korea on FCF return plans with SK Hynix +5% /Samsung +6% (more below).
Let’s get to it…
BABA: Solid print with EBITA modestly better, cloud +45% in line with preview but shy of buyside who wanted high 40s; focus shifts to cloud acceleration and investment returns
Revenue was essentially in line, overall adj. EBITA came in a bit better than expected, while Cloud growth matched the preview and CMR was roughly in line.
Cloud accelerated to +45% y/y from +38% last quarter, but that was already previewed and likely explains some of the initial disappointment; Cloud EBITA margin at 11.6% was at the high end of ~11-12% expectations. CMR at -7% y/y, or +1% on a like-for-like basis, was all you really needed, while capex stepped up sharply q/q as expected. Call ongoing: key item is whether management says Cloud growth continues to accelerate with further margin expansion, plus any context around FY capex and investment returns.
Key KPIs vs. Street
Revenue: RMB269.0B, +9% y/y vs. Bloomberg RMB268.5B
Adj. EBITA: RMB27.3B vs. Citi RMB25.1B, modestly better than expectations
Cloud revenue: RMB48.4B, +45% y/y (last q +38%) vs. preview/expectations ~45%
Cloud EBITA margin: 11.6% vs. expectations ~11-12%, toward the high end
CMR: RMB82.5B, -7% y/y / +1% like-for-like vs. Citi RMB81.5B
Non-GAAP NI: RMB20.6B vs. Bloomberg RMB25.3B
Non-GAAP EPS/ADS: RMB8.52 vs. Bloomberg RMB11.28
Capex: RMB67.7B vs. RMB38.7B last quarter; no formal FY guide yet
TECH RESEARCH/NEWS
ETSY: BofA upgrades to Buy, PT to Street-high $105 from $88
BofA says Etsy’s growth trajectory looks increasingly structural rather than a temporary rebound, with recent 3P data pointing to upside versus guidance and higher app adoption improving personalization, conversion and LTV. It raises 2027 GMS growth to 4.5% vs. Street ~3%, EBITDA to $912M vs. $899M, and EPS to $6.38 vs. $6.27, helped by better marketing efficiency and post-RIF operating leverage. BofA also sees $1B+ of buyback capacity from the Depop sale as an underappreciated catalyst, with the stock still only ~13x 2027 EPS.