What CEOs talked about in Q2/2022


Key upcoming themes. 40% of CEOs talked about Ukraine of their earnings calls in Q2/2022 (+164% progress in comparison with Q1/2022), with the Russian invasion of the nation persevering with to be a number one subject for CEOs. The looming recession is one other main imminent challenge that CEOs mentioned (20% of CEOs talked about it). The three different themes that drew substantial consideration in Q2/2022 (vs. Q1/2022) included vitality costs, the inventory market, and layoffs (though on a smaller scale).

Most mentioned themes. The three most-discussed matters had been COVID-19, Inflation, and provide chains (talked about in 60–72% of all earnings calls).

Declining themes. As matters such because the Ukraine/Russian struggle and vitality costs rose in significance in Q2, quite a lot of different matters that had gained important consideration in earlier quarters light. Sustainability was talked about by 23% of CEOs (10% lower than in Q1 of 2022). Moreover, discussions regarding digital transformation declined by 22% alongside different expertise matters corresponding to AI, analytics, and 5G. In Q2/2022, CEOs seemed to be combating off short-term issues quite than emphasizing long-term options.

| Concerning the evaluation
The evaluation highlighted on this article, titled “What CEOs talked about,” presents the outcomes of IoT Analytics’ analysis involving the Q2/2022 earnings calls of ~1,500 US-listed corporations. The ensuing visualization is a sign of the digital and digital-related matters that CEOs prioritized in Q2/2022. The chart visualizes key phrase significance and progress.
X-axis: Key phrase significance (i.e., what number of corporations talked about the key phrase in earnings calls in Q1). The additional out the key phrase falls on the x-axis, the extra typically the subject has been talked about.
Y-axis: Key phrase progress (i.e., the rise or lower in mentions from Q2/2022 to Q1/2022, listed to 100). A quantity >100 on the y-axis signifies the subject has gained significance, whereas a quantity

On this article we spotlight 5 themes of curiosity in additional depth: Recession, Conflict on Ukraine, Cloud, Industrial IoT, and Digital Transformation:

# 1 RECESSION

20% of all CEOs mentioned a possible recession in Q2/2022. That constituted a rise of 399% in comparison with Q1/2022. A large number of issues together with provide chain disruptions, larger enter costs, and low progress in rising markets weigh on the financial progress within the US and the world economic system. Many financial indicators level to the start of a recession; Family spending within the US grew at a really sluggish fee in Could 2022, as did client spending in Europe and Asia. Nonetheless, economists disagree on the probability of recession. Economists at Deutsche Financial institution and Wells Fargo contemplate a recession to be extremely probably, whereas specialists at Deloitte and Morgan Stanley contemplate this a low likelihood.

The CEO of Financial institution of America places it as follows in his earnings name:

“Our economists don’t have a recession predicted when it comes to this 12 months, it’s round 3% progress, subsequent 12 months, a bit over 2%. And despite the fact that there could also be some quarters that may present modest progress, I believe they’re all optimistic, if I bought it proper.” – Brian Moynihan — Chief Govt Officer, Financial institution of America, 18 April 2022

Different executives see the optimistic facet of a recession and anticipate further enterprise alternatives, as clients will search for alternatives to chop prices. Two cloud firm CEOs imagine their companies to be in nice positions.

“And I’d say simply sort of upfront whereas there are close to time period headwinds within the economic system corresponding to provide chain disruption, the struggle in Ukraine, we don’t see any recessionary stress on this enterprise. […] So, cloud is actually solely accelerating even within the difficult financial atmosphere we’ve seen up to now this 12 months. Now if the economic system does slip into recession, we predict that multi-cloud turns into much more of vital for purchasers as a result of it helps clients lower your expenses, shortly scale up or scale down and alter their enterprise mannequin.” – Kevin Jones — Chief Govt Officer, Rackspace Expertise, 22 Could 2022

“And as we speak concerning the macroeconomic challenges, the fears of a recession, the inflation — clients most likely more and more involved about saving value going ahead and that would present some counterbalance as nicely, [..] we’re in a very good place to assist main enterprises lower their cloud spend.” – Tom Leighton — Chief Govt Officer, Akamai, 3 Could 2022

# 2 WAR

40% of earnings calls mentioned the scenario within the Ukraine, reflecting a rise of 164% in comparison with Q1/2022. For comparability, in This fall/2021, the nation was solely talked about in 0.4% of earnings calls.
The assault let to a widespread introduction of sanctions towards Russia and Russian items. Russia had been a serious supply for uncooked supplies for the world economic system and the Western sanctions in addition to Russian export bans introduced that commerce to a halt. CEOs mentioned the necessity for locating new sources to fabricate their merchandise. Monetary service corporations corresponding to Visa had been affected notably harshly by Western sanctions towards Russia.

“One of many challenges as we take into consideration Russia, for example, that was a big supply of a few of our titanium provides. And due to the sanctions, we want to useful resource quite a lot of materials.” – Greg Hayes — Chairman and Chief Govt Officer, Raytheon applied sciences, 28 April 2022

“Simply as 2021 was a 12 months of two distinct halves because of the restoration, 2022 will likely be a 12 months of two halves attributable to Russia. The suspension of our enterprise in Russia will cut back second half revenues by about 4%.” – Al Kelly — Chairman and Chief Govt Officer – Visa, 27 April 2022

# 3 CLOUD

3% of earnings calls mentioned public cloud spending or options. CEOs emphasised the numerous alternative {that a} additional cloud adoption brings with it. This quarter (Q2/2022) noticed a rise in CEOs’ curiosity within the public cloud (+11%), whereas the important thing phrases “hybrid cloud” and “personal cloud” had been mentioned much less continuously (−15% and −16%, respectively) in comparison with Q1/2022. IoT Analytics made the case for a $2 trillion addressable public cloud market earlier this 12 months. The present curiosity on this seems to level to a bullish state of affairs in the interim.

“If you concentrate on personal cloud rising, you realize, mid- to excessive single digits, public cloud rising excessive double digits. That’s what’s actually going to drive the highest line essentially, and that’s truly what it bought us comfy with the important thing enterprise case right here.” – Tom Krause — President, Broadcom Software program Group, 02 June 2022

“Now we’re working with 1000’s of start-ups, massive corporations which can be constructing who’re utilizing the general public cloud. And so it’s driving quite a lot of demand for us within the public cloud. […] I believe now we have now 10,000 AI inception start-ups which can be working with us and utilizing NVIDIA AI, whether or not it’s on-prem or within the cloud, it saves cash, as a result of the computation time is considerably lowered. […] The 1000’s of corporations all over the world which can be utilizing NVIDIA AI within the cloud — driving public cloud demand, all of this stuff are driving our Knowledge Heart progress. And so we anticipate to see Knowledge Heart demand stay robust.” – Jensen Huang — President and Chief Govt Officer, NVIDIA, 26 Could 2022

# 4 INDUSTRIAL IOT

Industrial IoT was talked about by 0.5% of all earnings calls in Q2/2022, which constituted a rise of 56% in comparison with the previous quarter. Moreover, Q2 additionally noticed the main world industrial truthful, Hannover Honest, being held once more. After three years of digital festivals, 75,000 guests attended the truthful in Hannover (Germany) and confirmed an curiosity in industrial IoT. The IoT Analytics analyst workforce introduced 9 analysts and visited +230 cubicles over the course of 4 days (Discover our key takeaways from the truthful right here).

Key themes on the truthful included the transfer in direction of industrial software program options in addition to wi-fi software-based management. Siemens, for instance, had a heavy give attention to showcasing quite a lot of options, every as a mix of numerous merchandise from the Siemens portfolio. Nokia exhibited wi-fi connectivity between the I/O and PLC, leveraging a non-public 5G community. AWS, Software program Outlined Automation (SDA), and Tulip Interfaces collaborated to indicate how a digital PLC, operating on a standardized Lenovo server with a VMware Edge Compute Stack, might run manufacturing operations on a single IT server as a substitute of a number of IPCs and PLCs.

“Industrial IoT skilled the quickest year-over-year income progress inside IoT this quarter pushed by continued demand for each connectivity and superior processing on the edge.” – Cristiano Amon — President and Chief Govt Officer, Qualcomm, 27 April 2022

“[…] It’s very encouraging to see how clients are literally making that everlasting change from their conventional manufacturing to additive. We highlighted a couple of of the shoppers within the slides, however there’s dozens and dozens and I believe that actually is the strongest demonstration from the market that they imagine within the expertise, they imagine that we can assist them enhance their manufacturing strains.” – Yonah Lloyd — Chief Communications Officer and Vice President of Investor Relations, Stratasys, 18 Could 2022

#5 DIGITAL TRANSFORMATION

The rise in give attention to potential issues appeared to come back on the expense of extra long-term matters, corresponding to digital transformation (−22% mentions in comparison with Q1/2022) and sustainability (−10% mentions in comparison with Q1/2022), which each misplaced consideration throughout the latest quarter. Nonetheless, many CEOs view digital transformation as a hedge towards a cooling world economic system and different crises.

“We’ve seen quite a lot of high-multiple corporations undergo some layoffs and a few challenges in attempting to preserve money. I believe from an M&A perspective, we’re at all times corporations, and we’ll purchase good corporations with good folks irrespective of the present atmosphere. Clearly, as we take into consideration what’s arising, multiples compressing in numerous areas, together with the personal markets, we definitely will likely be disciplined as we take a look at these.” – George Kurtz — President and Chief Govt Officer, Crowdstrike, 03 June 2022.

“And the widespread theme from the shoppers I’ve met with, from Singapore to New York to the 30 CEOs I met one-on-one with at Davos final week, is the digital transformation traits that dramatically accelerated through the pandemic, they proceed full steam forward regardless of all of the volatility within the world economic system.” – Bret Taylor — Vice Chairman and Co-Chief Govt Officer, Salesforce, 01 June 2022.

“We’re definitely conscious of the macro atmosphere and the uncertainty that’s on the market immediately. In order that’s one factor that we’ve thought of. I believe that uncertainty although, [..] I believe that’s offset by the traits in digital transformation. Firms want to rework. And the worth that our software program delivers helps corporations function extra effectively and drive larger ROI.” – Kevin Burns — Chief Monetary Officer, Dynatrace, Inc. , 18 Could 2022.

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