May 21, 2025 03:26 AM GMT Investor Presentation | Japan Semiconductor Production Equipment: Industry Outlook M Foundation Morgan Stanley MUFG Securities Co., Ltd.+ Tetsuya Wadaki Equity Analyst Tetsuya.Wadaki@morganstanleymufg.com +81 3 6836-8890 Semiconductor Production Equipment Japan Industry View Attractive Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect ...

Core Viewpoint - Adobe's stock has increased by 19% in a month due to its focus on Generative AI and innovative portfolio, but faces challenges from competition and monetization issues [1][3] Company Performance - Adobe's AI business is small compared to competitors like Microsoft and Alphabet, with Microsoft benefiting from Azure AI services and Alphabet from its AI infrastructure [2] - Adobe shares have underperformed compared to Microsoft and DocuSign, which returned 24.9% and 20.9% respectively, while Adobe outperformed Alphabet's 8.2% return [3] Valuation Metrics - Adobe's stock is considered overvalued with a forward price/sales ratio of 7.28X, higher than the sector average of 6.14X and competitors like Salesforce and DocuSign [6] AI Portfolio Development - Adobe has expanded its AI offerings with products like Adobe GenStudio and Firefly Services, aimed at enhancing marketing collaboration [9] - The company plans to monetize Firefly through new Creative Cloud offerings and is integrating AI across its portfolio, which is expected to drive top-line growth [10] Financial Guidance - Adobe's AI business is projected to grow from over $125 million in Q1 FY25, expected to double by the end of FY25 [11] - For FY25, Adobe anticipates Digital Media segment revenues between $17.25 billion and $17.40 billion, with total revenue guidance between $23.30 billion and $23.55 billion [12][13] Earnings Estimates - The Zacks Consensus Estimate for FY25 earnings is $20.36 per share, reflecting a 10.53% growth over FY24, although it has seen a decline in estimates recently [14] - The estimate for Q2 FY25 earnings is $4.96 per share, suggesting a 10.71% growth from the previous year [16]

Financial Data and Key Metrics Changes - In 2024, the company's net sales reached $638 billion, an increase of $63 billion year over year, representing an 11% growth [56] - Operating income for 2024 was reported at $68.6 billion, showing substantial improvements in profitability compared to previous years [60] - Free cash flow improved to $38 billion, an increase of over $1 billion year over year, driven by a rise in operating cash flow [62] Business Line Data and Key Metrics Changes - North America segment sales grew to $387 billion, up 10% year over year [57] - International segment sales reached $143 billion, also up 10% year over year, excluding foreign exchange impacts [57] - Advertising services generated $56 billion in net sales for 2024, marking a 20% increase year over year [59] Market Data and Key Metrics Changes - The company expanded its same-day delivery sites by over 60% in 2024, now serving more than 140 metro areas [55] - Third-party sellers accounted for 61% of all units sold on Amazon, the highest annual seller percentage mix ever recorded [58] Company Strategy and Development Direction - The company aims to be Earth's most customer-centric company, focusing on improving customer experiences through technology and innovation [49] - Significant investments are being made in generative AI, with over 1,000 applications being developed to enhance customer interactions and operational efficiency [71] - The company is expanding its grocery business, with over $100 billion in gross sales from center aisle items, excluding Whole Foods Market and Amazon Fresh [91] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the grocery sector, highlighting growth in Whole Foods Market and new store formats [92] - The company is committed to improving warehouse safety, reporting a 34% improvement in the recordable incident rate over the last five years [96] - Management emphasized the importance of maintaining low prices and broad selection amidst changing tariff policies, noting no significant demand reduction [88] Other Important Information - The company invested approximately $78 billion in cash CapEx in 2024, primarily for technology infrastructure and generative AI services [62] - The company has made substantial progress in profitability, returning to levels seen in 2020 and 2021 after a challenging 2022 [60] Q&A Session Summary Question: Can you respond to reports that Amazon is reducing AI investment and explain how AI is tangibly benefiting the company? - Management confirmed there are no plans to reduce AI investment and highlighted benefits in cost avoidance and productivity through generative AI applications [76][77] Question: How does Alexa Plus use AI? - Alexa Plus utilizes AI for automatic speech recognition, natural language understanding, and improved query handling, enabling it to perform actions for users [83] Question: What are the implications of the government's new tariff policies on Amazon? - Management noted uncertainty regarding tariff outcomes but emphasized efforts to maintain low prices and a diverse marketplace to mitigate impacts [87] Question: Do you still see the opportunity in grocery? - Management expressed bullishness about the grocery business, citing significant sales and growth potential in various formats [90] Question: What improvements is Amazon making in warehouse working conditions? - Management reported a 34% improvement in the recordable incident rate and highlighted initiatives to enhance workplace safety and ergonomics [96]

Financial Data and Key Metrics Changes - Total bookings for Q1 2025 were $511 million, reflecting a 12% year-over-year increase [22] - Total revenue reached $474 million, up 13% year-over-year, exceeding the high end of guidance [23] - Non-GAAP gross margin for Q1 was 69%, consistent with expectations [26] - Free cash flow for Q1 was over $142 million, representing 30% of revenue [27] Business Line Data and Key Metrics Changes - Partners revenue grew 24% year-over-year to $172 million, driven by increased subscription purchases and adoption of business applications [23] - Transaction revenue in Q1 was $59 million, up 19% year-over-year, supported by increasing GPV and improved take rates [24] - Core GPV growth, excluding the impact of a small subsidiary, was 12% year-over-year in constant currency [25] Market Data and Key Metrics Changes - The new user cohort generated $36 million in bookings, a 12% increase over the previous year's cohort [14] - Nearly 5.3 million new users were added in Q1, representing a 7% year-over-year increase [16] - The company maintained a high proportion of high-intent and commerce-oriented users, indicating strong demand in key geographic regions [16] Company Strategy and Development Direction - The company launched Wixl, a new visual design platform, aiming to democratize visual design similar to how Wix democratized website building [6][8] - The introduction of Astra, an AI assistant, is expected to enhance user engagement and reduce churn [11] - The company is focused on continuous product innovation and strategic momentum aligned with long-term growth [5][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand trends observed in early 2025, with expectations for continued growth in new cohorts [19] - There is a cautious outlook regarding macroeconomic uncertainties, particularly affecting the Business Solutions segment [20] - The company aims to achieve a time to return on investment of four to five months for the Q1 2025 user cohort, indicating effective acquisition strategies [17] Other Important Information - The board authorized an additional $200 million for share repurchases, reflecting confidence in cash flow generation and commitment to shareholder value [29] - The company expects total revenue for Q2 to be between $485 million and $489 million, representing 11% to 12% year-over-year growth [28] Q&A Session Summary Question: Can you provide more details on Wixl's rollout and monetization expectations? - Management indicated that Wixl is in early stages, with plans for separate subscription pricing and partnerships to drive user acquisition [32][35] Question: What are the factors behind the deceleration in partners revenue growth? - Management noted that FX impacts and lower-than-expected GPV growth contributed to the deceleration, but remains optimistic about future growth [53][55] Question: How does the company view the competitive landscape for design software? - Management believes that Wix's focus on future-oriented AI capabilities differentiates it from traditional design tools, which may struggle to adapt [60][62] Question: What are the expectations for free cash flow margins throughout the year? - Management anticipates a modest increase in free cash flow margins, driven by revenue growth and operational efficiencies [47] Question: How does the company plan to address macroeconomic uncertainties in guidance? - Management emphasized the importance of conservatism in guidance due to unpredictable macro factors, while remaining confident in current demand trends [49]

Financial Data and Key Metrics Changes - In 2024, the company achieved 11% operational revenue growth and a 15% increase in adjusted net income operationally, indicating strong financial performance [22][23]. Business Line Data and Key Metrics Changes - The innovative companion animal portfolio grew 14% operationally, with all key franchises delivering double-digit growth [23]. - The livestock portfolio also grew 5% operationally, surpassing the historic industry average [26]. Market Data and Key Metrics Changes - The dermatology franchise has helped over 25 million dogs and is projected to reach a market size of $2.5 billion by 2028, showcasing significant market potential [24]. Company Strategy and Development Direction - The company continues to focus on an omnichannel strategy, enhancing customer access through clinics, retail, and home delivery [23]. - There is an emphasis on integrating advanced technologies like generative AI into R&D processes to accelerate discovery and optimize development timelines [25]. - The strategic divestiture of certain product portfolios aligns with the focus on high-growth opportunities [26]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the portfolio and the ability to adapt to market changes, highlighting a long runway of opportunity ahead [27][28]. - The company remains committed to delivering meaningful outcomes for animals and their caretakers, reinforcing its purpose-driven approach [28]. Other Important Information - The company received conditional licensure for an avian flu vaccine for chickens, positioning it to support customers in addressing evolving threats [25]. Q&A Session Summary Question: How does the compensation committee use the compensation actually paid total compensation figures in its calculation of the CEO target total compensation award for the upcoming year? - The board considers competitive practices and performance, with 92% of the CEO's compensation based on performance incentives, both short-term and long-term [31][32].

Core Insights - Bristow Group Inc. released its 2024 Sustainability Report, emphasizing its commitment to responsible growth and sustainable practices [1][2] Group 1: Safety and Community Impact - The company achieved a 32% reduction in lost workdays in 2024, highlighting its focus on safety as a core value [2] - The UK Search and Rescue (SAR) team rescued 470 individuals during 2,870 missions, showcasing Bristow's role in community safety [2][8] Group 2: Sustainable Aviation Initiatives - Bristow secured an agreement to acquire 10 Leonardo AW189 helicopters, with options for 10 more, aimed at reducing CO₂ emissions and supporting sustainable aviation fuel (SAF) [3][8] - The company signed a letter of intent to participate in Norway's international test arena for zero- and low-emission aviation, indicating a commitment to future aviation innovation [3][8] Group 3: Ethical Leadership and Community Support - A new human rights supplier commitment process was implemented in Norway, with plans for global expansion in 2025, enhancing transparency and ethical standards [4] - Through the Bristow Uplift initiative, the company donated over $600,000 in 2024 to support local communities, reinforcing its corporate social responsibility [5]

Core Insights - The global security market is projected to reach $212 billion in 2023, growing 15.1% year over year, benefiting both Okta and Fortinet [2] Company Analysis: Okta (OKTA) - Okta is experiencing strong demand for its identity security solutions, with a diverse portfolio expected to drive share price growth by 2025 [3] - Over 20% of Okta's fourth-quarter fiscal 2025 bookings came from new products, indicating robust client acquisition and top-line growth [4] - Okta's customer base reached 19,650, with remaining performance obligations totaling $4.215 billion, showcasing strong subscription revenue prospects [4] - The number of customers with over $100 thousand in Annual Contract Value increased by 7% year over year to 4,800 [4] - Okta's AI capabilities are integrated across its products, enhancing user experience and cybersecurity [5] - The company has a strong partner ecosystem, with over 7,000 integrations with various cloud and IT infrastructure providers [6] Company Analysis: Fortinet (FTNT) - Fortinet maintains strong momentum in network security, being the most deployed firewall vendor globally [7] - The expansion of Fortinet's unified Secure Access Service Edge (SASE) platform is a key performance driver, offering comprehensive security solutions [8] - Fortinet's sovereign SASE solution is gaining traction in regulated sectors, ensuring compliance while maintaining performance [9] - The company is investing in AI capabilities, holding over 500 AI patents, with new features driving client engagement [10] Performance and Valuation - Year-to-date, Fortinet shares have appreciated by 10.9%, while Okta shares have surged by 60.5% [11] - Both companies are currently considered overvalued, with Fortinet trading at a forward Price/Sales ratio of 11.38X and Okta at 7.49X [14] - Fortinet's 2025 earnings estimate is $2.15 per share, reflecting a 2.74% year-over-year increase, while Okta's fiscal 2026 estimate is $1.09 per share, indicating a significant 172.14% jump year over year [17][18] - Both companies have consistently beaten earnings estimates, with Okta showing a higher average surprise of 204.9% compared to Fortinet's 30.98% [19] Conclusion - Fortinet is benefiting from increased demand from large enterprises and growth in security subscriptions, while Okta faces challenges from macroeconomic conditions [20]

Financial Data and Key Metrics Changes - Total sales for Q1 2025 were $39.9 billion, an increase of 9.4% from the same period last year [5][25]. - Adjusted diluted earnings per share were $3.56, down from $3.67 in Q1 2024, reflecting a decrease of approximately 3% [6][28]. - Gross margin was 33.8%, a decrease of 35 basis points from the previous year [26]. - Operating margin for Q1 was 12.9%, compared to 13.9% in Q1 2024 [27]. - Return on invested capital was 31.3%, down from 37.1% in the same quarter last year [29]. Business Line Data and Key Metrics Changes - Six out of 16 merchandising departments posted positive comps, including appliances, plumbing, indoor garden, electrical, outdoor garden, and building materials [19]. - Comp sales in the U.S. were positive 0.2% for the quarter, with negative 3.3% in February, positive 1.3% in March, and positive 1.8% in April [25][26]. - Pro comp sales outpaced DIY customers, with strength in pro-heavy categories like gypsum, decking, concrete, and siding [20]. Market Data and Key Metrics Changes - In local currency, Canada posted comps below the company average, while Mexico posted positive comps [6]. - Foreign exchange rates negatively impacted total company comps by approximately 70 basis points for the quarter [26]. Company Strategy and Development Direction - The company is focused on diversifying its global supply chain, with over 50% of purchases sourced in the U.S. and plans to ensure no single country outside the U.S. represents more than 10% of purchases [7][9]. - The company aims to invest in its business to gain market share, particularly in periods of disruption, and is focused on enhancing the pro ecosystem to better serve professionals [10][11]. - The addressable market for home improvement is approximately $1 trillion, with a healthy consumer base and rising home equity encouraging investment in home improvements [9]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current macroeconomic environment, with customer engagement continuing from the previous fiscal year [30]. - The company reaffirmed its fiscal 2025 guidance, expecting total sales growth of approximately 2.8% and comp sales growth of about 1% compared to fiscal 2024 [30][31]. - Management noted that while there is macro uncertainty, the fundamentals of home improvement remain strong, with a healthy consumer base and increasing home equity [39][40]. Other Important Information - The company opened three new stores, bringing the total store count to 2,350 [28]. - Merchandise inventories were $25.8 billion, up approximately $3.3 billion compared to the previous year, with inventory turns down from 4.5 times to 4.3 times [28]. Q&A Session Summary Question: Insights on overall demand environment and sales trends - Management noted that macro concerns have eased, with improved consumer sentiment and low unemployment, but larger remodeling projects remain pressured due to high interest rates [36][39]. Question: SG&A growth and one-time impacts - SG&A grew 12% year-over-year, influenced by a legal settlement from the previous year and the addition of SRS expenses [41][42]. Question: Comp guidance and potential for better performance - Management reaffirmed guidance, noting that FX pressure impacted results, but they feel good about business heading into Q2 [50][51]. Question: Tariffs and pricing strategy - The company is diversifying its supply chain to mitigate tariff impacts and does not anticipate broad-based price increases for customers [60][62]. Question: Deferred demand in home improvement - Management expects to capture share opportunities from deferred demand as macro conditions improve [68][70]. Question: Regional performance and housing activity - Some markets showed slight softening, but overall sales remained stable, with weather being a significant factor in performance [99][100].

Core Insights - Biostate AI has successfully completed a $12 million Series A funding round led by Accel, with participation from several notable investors [1][2][13] - The company aims to make RNA sequencing services more affordable and integrated for precision medicine, focusing on molecular research in the US [2][3] Company Overview - Founded by David Zhang and Ashwin Gopinath, Biostate AI is based on the principle that the entire RNA transcriptome is an underutilized biomarker for human health [5][17] - The company has patented technologies that significantly reduce the cost of RNA sequencing, allowing for the simultaneous processing of multiple samples [14][17] Technology and Innovation - Biostate AI is addressing key limitations in conventional RNA sequencing, including high costs, data aggregation challenges, and vendor siloing [7][8] - The company utilizes a combination of biochemical innovations and generative AI tools to enhance RNA sequencing capabilities [8][11] - Their proprietary BIRT technology and PERD methodology enable cost-effective and high-quality RNA sequencing from various tissue samples [14] Market Position and Growth - Since its commercialization, Biostate AI has processed RNA sequencing on over 10,000 samples from more than 150 collaborators and customers [15] - The company has secured agreements to process several hundred thousand unlabeled samples annually, contributing to rapid dataset growth [15] Future Directions - Biostate AI plans to expand collaborations in oncology, autoimmune diseases, and cardiovascular diseases, leveraging its AI models for better treatment decisions [12][17] - The company envisions a future where AI can generalize across diseases, enhancing diagnostics and therapeutics [12]

Core Insights - A significant majority of organizations (90%) have altered their operating models to integrate AI, with 39% completely redesigning their workflows [1][2] - Companies anticipate that over half of their processes will incorporate AI within the next year [1] Group 1: AI Adoption and Implementation - More than half (54%) of business leaders feel they are "a little ahead" of competitors in AI implementation, while 22% believe they are "far ahead" [5] - The primary focus for AI technology among business leaders is to improve customer targeting and attraction (50%), followed by enhancing margins and profitability (47%) and reducing operating costs (47%) [5] - Despite rapid adoption of GenAI, approximately 60% of AI initiatives remain in pilot mode, with 73% of organizations acknowledging challenges in improving data capabilities [5] Group 2: Barriers to AI Progress - The most significant barrier to AI adoption is the shortage of skilled talent (31%), followed closely by concerns regarding data privacy and security (30%) and budget constraints (30%) [5] - Only 30% of respondents reported that their company's data is accessible on an enterprise-wide basis, indicating potential data quality issues [5] Group 3: Industry Context - The findings are based on a survey of 290 senior decision-makers across various industries, including banking, finance, insurance, retail, utilities, and healthcare [2][3] - The report emphasizes that the true potential of AI is realized when it is seamlessly integrated into workflows, supported by AI-ready data, appropriate technology, and skilled personnel [3]