Shareholder letters: Nvidia, Twilio, MarketAxess, Texas Roadhouse
Nvidia (NVDA)
It will be hard to find more exciting letter this year than Nvidia’s. It’s founder and CEO Jensen Huang has put his company on top of AI revolution. The magnitude of innovations led by Nvidia is astounding. I would like to share a passage where Huang discusses four waves of AI:
AI—computers automating intelligence—is the most powerful technology force of our time. We see AI in four waves. The first was to reinvent computing for this new way of doing software. The second came as internet companies deployed AI in the cloud. AI services recognize our speech, understand our meaning, and make recommendations.
The next wave is enterprise and the industrial edge. AI will revolutionize the world's largest industries—manufacturing, logistics, agriculture, healthcare, financial services, transportation. Companies are integrating 5G, AI, and autonomous machines to create smart services. It's the smartphone moment for the world's industries.
Autonomous systems are the fourth wave. Self-driving cars are iconic examples. Everything that moves will someday be autonomous machines that perceive their environment, reason, plan, and act. Whether it's a robot assisting a factory worker or an autonomous car on the road, each has to make split-second decisions to do its job safely. The computation required is enormous, the software is complex, and safety and security are vital.
Huang finishes his letter with the following paragraph which reminded me “Day One” narrative from Jeff Bezos:
I often say that we are "30 days from going out of business." True or not, I've believed this since our founding. Relevance and growth are not the natural state of any company—the opposite is. So, we must work to stay relevant, fight the gravity of good enough, and seek the extraordinary. It's a struggle—easy for no one. But it is a struggle we love.
https://s22.q4cdn.com/364334381/files/doc_downloads/2021/04/2021-Annual-Review.pdf
Twilio (TWLO)
I have no doubts Jeff Lawson is an outstanding tech CEO. He also has a good sense of humor:
Lawson on the power of Twilio platform:
What makes our platform so powerful is that APIs enable developers, and companies, to build just about anything they can imagine. Every time we launch a new platform, my quote in the press release says: “We can’t wait to see what you build!” It’s not just a catch-phrase, it’s true. Of course, there are the use-cases we know people need, based on our customer research. But we are careful not to limit our product to only supporting the known use-cases. We spend a lot of time building APIs that enable the unanticipated use-cases, as well. It takes a lot more time and attention to detail, but the essence of a platform is building products that make the anticipated easy, and the unanticipated possible.
Lawson on his vision:
Twilio spent the last 10+ years building the leading cloud communication platform, but our vision is about more than communication. It’s end-to-end customer engagement, ultimately providing businesses with the holy grail - a single view of the customer journey. As much as our platform has grown in the last year, we’re still only scratching the surface of the opportunity to help every company effectively engage with their customers. With over 220,000 active customer accounts - from digital disruptors and incumbents alike, non-profits, and even governments - we’ve realized it’s a two-step process. First, you need to understand your customer, and second, you use that understanding to effectively engage with that customer - using the right channel, at the right time, with the right message. If you think about the great customer experiences you’ve had over the years - you have the best experience when a company “gets” you and doesn’t waste your time. It’s when companies add something needed and sometimes unexpected to your life that makes it hard to imagine how you managed before them.
https://s21.q4cdn.com/963721274/files/doc_financials/2020/ar/2020-Twilio-Annual-Report.pdf
MarketAxess (MKTX)
MarketAxess on a huge opportunity ahead of them (although comparing revenues from Fixed Income trading with revenues from Fixed Income, Currency and Commodity businesses seems a bit misleading):
As we look ahead, we are reminded that the world’s fixed income markets are still in the early stages of an electronic transformation. Greenwich Associates, a leading consulting firm, estimates that corporate bond electronic trading now accounts for a third of the volume in investment grade securities, and that’s just one segment – albeit an important one – of global credit markets. To put the opportunity in context, the top 5 global banks alone had Fixed Income, Currency and Commodity revenue of $84 billion in 2020 and we currently estimate that aggregate revenues in the fixed income e-trading space are approximately $2 billion. We believe that this demonstrates the incredible opportunity that lies ahead of us, particularly as the demand for more efficient and cost effective ways of trading grows. Our market leadership and robust technology and data capabilities position us well to capitalize on this opportunity.
https://investor.marketaxess.com/static-files/c4e3368b-80a6-4744-bf84-f8258154a067
Texas Roadhouse (TXRH)
While I have not been following TXRH and their Founder and CEO Kent Taylor, his last letter deserves attention (unfortunately, Taylor died recently). He begins the letter by recoomending a book “Investing Between the Lines” which inspired me to start this blog.
Dear Shareholders and interested folks,
Last year, I received a handwritten letter from a young man in Texas along with the book “Investing Between the Lines.” The premise of the book was to teach investors to decode CEO speak in annual reports. The author of the book writes that many CEOs don’t write their own letters or if they do, it’s often chock-full of fancy language and jargon that confuses current and potential investors. I never want to fall into the trap of adding any Wall Street jargon just to be more “professional sounding.” I appreciate the inspiration to be even a little more myself this year, so here goes.
Taylor finished his letter with a great quote by T.S. Eliot:
Surprisingly, I am going to finish my letter with a quote from a famous poet. What I know about poets and poetry could fit in a thimble, but a quote by T.S. Eliot that was recently shared with me sums up the past year at Texas Roadhouse.
“Only those who risk going too far… find out how far they can go.” T.S. Eliot
Thanks to all who went far, and now we know how far we can go in 2021 and beyond.
https://s22.q4cdn.com/200744459/files/doc_financials/2020/ar/21-10026-1_439381_client_low-res.pdf
Thanks for reading!
Max
this is really really helpful, thanks so much for sharing