Hi,
Apologies for the delay in getting this posted.
Below is my pre-earnings model on where I think existing customers will land for Q4 2025. M1 forecasts 3,783,355 and M2 3,613,900. It is interesting to see M1 is finally showing a positive reversal here, but it's one data point and a trend it is not....yet. Still a nice change of pace!
For clarification though my M1 model has been breaking down to the downside (QVC has actually been worse than the model forecasted) for the past two quarters and if it breaks again then I will need to look at adjustments to it. I will likely then post this original model and a newer one for comparison if I need to make a change.
M2 continues to hold up pretty well.
I also took a stab at trying to build something new. Below is a rolling revenue forecast based on a few data points I am tracking.
If the above is close to correct then we should see QVC, Inc finish 2025 with revenue in the range of $8,589.63M - $8,798.7M. This one is newer so we will see if she holds up like the existing customer models have for a long, long time. I think to be safe though you could +/- ~1% on the output from M1 to get a range from there. Directionally this is helpful if it holds up as it gives insight into where revenue is trending today. Just another tool in the toolbox is all and any reversal could invalidate the current effectiveness here, but for now it seems to hold.
If the above revenue range is close to accurate then below is where EBITDA could be using an EBITDA margin range of 10% -11.5%:
They have been close to a 10% EBITDA margin in 2025 so if that holds then this puts them pretty close to my $850M expectations I've written about.
We shall see. The goal is not to be a master predictor though, only to use these tools to identify risk and if I am making a sound investment. Then one can use probabilities to identify if such an investment has the right R/R - this does not in my analysis.
I came across this tweet when I was looking at QVC affiliate trends:
Now it depends where that commission is hitting but 40% is....steep. Nice to see YouTube jumping into the mix as there is potential in live shopping, but 40% is steep. I can't imagine QVC paying this long-term.
I also saw this article from Modern Retail that stated TikTok is making some changes to their shipping platform. I am tired and trying to think through this so I will probably go to bed and have better insight later. In short though TikTok US is requiring sellers to fufill orders through TikTok shops proprietary logistics services where it would seem sellers send their products to TikTok and they send via their services. This goes into effect February 25th and plans to be completed by March 31st, 2026.
The article said "some brands and consultants who spoke with Modern Retail said TikTok’s logistics services have historically been uneven, with merchants citing operational errors, shipping delays and limited support when problems arise. Others said moving inventory into TikTok’s fulfillment network could raise costs, squeeze margins and make it harder to offer the steep discounts TikTok shoppers often expect.". It's too early to know the impact to QVC but something to watch. Especially as I am unsure that TikTok is logistically ready for the influx of volume.
Happy investing,
Sean |
