The key operation figures of listed companies are essential to investors.
The most effort-saving and simplest way
On 10/16/2022, an audience raised a question in my new book《十倍股法則》“The Rules of 10 Baggers”, release party “The Rules of 10 Baggers” book release event and speech, Taipei (1:00~2:00 pm, 10/16/2022). Asked how the average investor would know which company should pay attention to which operating numbers? Where to get the important operating figures of the company?
Due to time constraints on the day, I replied very briefly: the average investor can read the “Wall Street Journal“, “Barons Weekly“, “SeekingAlpha“, or “Yahoo Finance” on the day when the companies quarterly earning result they track are published. The media listed above will release comments on the company’s quarterly results n the same day. In their article, in addition to the financial figures in the earnings report, they will definitely mention the company’s key operating figures. This is the most effort-saving, and certainly you won’t miss the operating numbers that Wall Street care most about.
The key operating figures of the business are important
I have stated in sections 6-5 of my new book《十倍股法則》“The Rules of 10 Baggers”, that the important operating figures disclosed by companies are extremely important to investors. This article is just to talk about this important topic:
- We’re talking about operating numbers, not financial numbers.
- And we’re talking about data disclosed by the company itself, not from a third party.
- There is no express obligation by the SEC or the law to disclose the relevant operating figures of a company.
Range of operating figures
Company outlook
The so-called operating outlook usually includes the following:
- Prediction of Financial Values
- Views on the competitive situation in the industry
- Views on the overall economic climate
It will include:
- The operating outlook for the next quarter, which is very important, usually dominates the rise and fall of the stock price the next day. Usually published.
- Most companies will provide an operating outlook for the next year.
- Long-term outlook, in fact, companies provide a five-year, not a ten-year operating outlook.
- The goals set by the company itself usually have measurable figures. These figures are the most important key operating figures of the company, such as ten-year goals or five-year goals.
Numbers that would normally be revealed
Figures that listed companies “usually” disclose include:
- The total number of users on the platform
- Subscribers
- Recurring Revenue Percentage
- List of major customers with more than 10% revenue
- Competitor
Numbers that are not necessarily revealed but are important
Listed companies “don’t necessarily” disclose, and usually they will not, but important numbers include:
- Sales figures of the company’s main products
- The average selling price of the company’s main products
- The company’s market share
- How big is the company’s addressable market (TAM)
Market research company
Market research firms are trustworthy
I have stated in 6-5 of my new book《十倍股法則》“The Rules of 10 Baggers” that investors can buy detailed reports on industries and individual industries from professional market research companies. According to my personal experience, many cases have proved that some companies have voluntarily announced the operating figures that have not been announced before, which proves that the figures and reports of the previous market survey companies are not far from the actual figures of the company. In short, the reports of market research companies are very professional and in-depth, and the analysis of various operating figures and competitiveness is usually accurate.
Famous market research company
I have mentioned some of the important market research companies on page 254 of 4-1 of my book, 《超級成長股投資法則》“The Rules of Super Growth Stocks Investing”. The following are some well-known companies that are worthy of investors to refer to their published industry market surveys:
- Nielsen: It is a long-established and responsible professional market research company that covers almost a variety of topics, but mainly focuses on the civilian production industry.
- Statista and Insider Intelligence: Mainly focus on the technology industry, and industries that are more concerned by general investors.
- Customer Satisfaction Score Survey NPS (Net Promoter Score): This is one of the main reference data used by many investors to judge whether a listed company is popular in the market and whether it has sustained competitiveness.
- CIRP (Consumer Intelligence Research Partners): It has the supreme influence in the United States. It represents the voice of the general American public, and it often releases reports on the use of products or services, which will influence consumers’ purchasing intentions. Many manufacturers will also refer to its report as a reference for product improvement.
- The J.D. Power Vehicle Quality Report is the auto industry’s top market research report, and its regular reports are powerful enough to influence the intentions of most Americans to buy a car, and to influence car rankings and reviews, and every automaker takes it seriously.
- U.S. Situation Survey: Pew Research Center.
- Industry forecasts: Professional consulting firms such as McKinsey report is very influential.
- Website traffic and visit statistics: SimilarWeb or Google’s Analytics service.
How to use market research company?
With the names of these market research companies or units, next time you can enter the name of each market research company, the industry you are interested in, and the operating indicators you want to know on the Internet search engine. With these words, you can basically find the information you are looking for, which can be of great help to your investment research.
Non-financial key operating indicators of key industries
On pages 266 to 267 of 4-1 in my book, 《超級成長股投資法則》“The Rules of Super Growth Stocks Investing”, I gave some simple examples of key operating indicators in the software industry.
Next, we will introduce some key operating indicators of major industries that investors must know.
Software and Gaming Industry
- Order Value (Billing)
- Booking revenue
- Software licenses: The legal software licenses required by the traditional one-time buyout of software, usually lifetime licenses, unlike new SaaS software or subscription-based software licenses that use lower-priced fixed lease installments Software license.
- The average online time (Hours engaged); it is used to measure the length of the Internet connection time of software users, and it is the most important indicator for judging the user stickiness of software (especially online games).
- The number of platform developers (Developers): refers to the number of programmers who write platform-specific programs for this software platform, which is one of the most important indicators for judging the ecosystem of software manufacturers.
- For example, the number of developers in Apple and Android is powerful.
- It should be noted that software is omnipresent, so even if other companies are classified as non-software vendors, developers are required to develop programs for the vendors’ system, such as Block, Shopify, Amazon, Alibaba, Tencent’s main revenue are all not like Microsoft, Adobe, Oracle, the company’s revenue mainly comes from software sales, but they still have huge developers to develop software for these companies, in order to integrate with the company’s platform, customize, or enhance function. Even these companies will have their own software marketplaces, allowing their developers to sell software that meets their needs on their own company’s software marketplaces. Such a situation will be the trend and normality of the technology industry in the future, to demonstrate the influence and external penetration of various companies.
- For example, in the 11th version of Microsoft’s Windows operating system (Windows 11), Microsoft used it to hype the powerful functions that can run Alphabet’s Android operating system programs built-in, and the integrated Android program software market is from Amazon software marketplace, not the Google Play software store of Alphabet. This shows two things: Alphabet is reluctant to let Microsoft get its hands on its Android operating system, and secondly, Amazon not only has the long-term market share of the first AWS cloud computing platform for enterprises, but has already extended its power from e-commerce to software.
e-commerce
Industry market research professional:
- Industry Market Research Expert: Insider Intelligence
- Annual ecommerce report: Adobe
Key Operating Indicators:
- Annual Active Users (AAU)
- Gross Merchandise Value (GMV)
- Parcels Delivered
- Gross Purchase Order
- Cross border GMV
Fintech
- Total Transaction Value (TPV)
- Transactions
- Lending loss rate
- Cumulative Loan
- Take rate
- Cross border transaction amount (Cross border TPV)
SaaS software and subscription model businesses
Industry market research professional:
- Cloud computing: Canalys
- Mobile App: App Annie、Sensor Tower
- Game: Newzoo
Key Operating Indicators:
- Net Dollar Retention Rate (NDRR)
- Annual Recurring Revenue (ARR)
- Monthly Recurring Revenue (MRR)
- Churn Rate
Social network or metaverse
- Monthly Active Users (MAU)
- Daily Active Users (DAU)
- Average revenue per user (ARPU)
- Average time online (Hours engaged)
Semiconductor, hardware device
Industry market research professional:
- Wide range of industry surveys: IDC, Gartners
- Semiconductors: IC Insights, TrendForce, WSTS, SEMI (Semiconductor Industry Association International), SIA
- PC Industry, End Devices: Canalys
Key Operating Indicators:
- Average Selling Price (ASP): Semiconductors are typically bulk products, and pricing usually adjusts with market supply and demand.
- Shipped Units
- Installed Units: It is the most important operational indicator for semiconductor equipment manufacturers.
Medical devices
- US FDA and EU CE certification and authorization progress
- Product in Pipeline
- Installed Units
- Procedures have been performed
- Patients
- Surgical Staff Trained
Biotech
- Products listed
- Product in Pipeline
- It can be further divided into the products under development in the first phase, the products under development in the second phase, and the products under development in the third phase.
- Drugs in U.S. FDA and EU EMA drug approval applications
- Combination of drug indications (Indications) for each product
- Patent
- The term of the patent for each drug
- Expiring drug combinations
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