Doing more with less

Six charts on the most important thing we will have to figure out how to do a lot of

• BigCos cutting costs, no sweat

• TechCos cutting costs, no sweat

• restaurants and hotels running tighter ships

• just a little less robot-dense

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Doing more with less

As longer-term Random Walk readers know, “doing more with less” is a very long-running theme.

It’s always good to get more efficient, but it’s basically the sine qua non of survival for an aging nation, whose economy is already propped up by an unsustainable healthcare habit.

In other words, if we don’t figure out how to do more with less, then we’re screwed. We have fewer people to do the work, and no room on the balance sheet to paint over the potholes until the demographic winter has passed. We are the proverbial grasshopper, heading straight into winter.

But that’s fine because we’re America and America loves a challenge.

Plus, our deus ex machina ending is just getting started, and timing couldn’t have been better. And, let’s be honest, whether or not you like his politics, you gotta admit that Elon Musk is the closest thing to a god-tier inventor that civilization has had since, idk, Da Vinci?

Anyways, it’s obviously way too soon to know if we’re winning. Nor will Random Walk attempt a comprehensive account of our various leap-forwards or backwards.

This is just six-ish charts about doing more with less (or not).

BigCos cutting costs, no sweat

The margin-expansion party is growing:

Daily Chartbook

Margin-expansion has driven recent earnings growth, and the share of Large Caps expected to grow earnings is forecast to rise from ~60% to ~90% by this time next year.

Now, I would take the earnings forecasts with a grain of salt, and even some caution. I mean, it’s great to see the enthusiasm, but that might be a bit too enthusiastic.

The impressive thing though, is really the top-chart. Even though revenue growth has been pretty flat since 2023, earnings have still been increasing. That means, of course, that BigCos have figured out to keep a larger share of the revenue they generate, presumably by cutting costs.

In other words, BigCos are doing more with less.

TechCos cutting costs, no sweat

That’s also consistent with what we’ve seen from techcos, who long-ago trimmed the fat, and while they sacrificed some growth, they too are doing more with less.

Cash-flow margins got public saas cos have tripled since tightening began:

Meritech

Growth rates are also about 60% slower, but public saas cos figured out how to increase profitability very quickly.

How’d they do it?