The Six Five team discusses Honeywell’s most recent earnings report as they come in above expectations, with software helping drive their growth.
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Daniel Newman: Anyway, let’s jump on, Pat, because we always do go long, and I want to make sure we get through all of these stuff. A little bit of a quicker shot through the ball here, but Honeywell. So over the last few months, you and I have been talking more about this company, and I feel like each time we bring them on as a topic on the show, we need to sort of remind people. This is a company that has a massive commitment to quantum.
This is a company that has a significant commitment in IOT and converged enterprise performance management software, building management using intelligence, AI, IOT. Well, this quarter, the company came in with some pretty solid results. And when I say solid results, I am basically saying, beating the expectations that were coming in from the streets. So, just touching on it quickly because overall, the company came in above on earnings. The company came in above expectations on revenue, fairly flat, Pat, on a year over year basis. What are we looking at? We’re not looking at masks. We’re not looking at building products, thermostats. But what we are looking at is the fact that this company is layering in software, SAS-based software solutions that overlay buildings, overlay jet engines, overlay their production, their workflow management for hundreds of thousands of industrial companies that use Honeywell.
And so what we got from CEO Darius Adamczyk… What I look forward to you and I talking to at some point in the near future, [crosstalk] maybe at an event, is that they’re seeing double digit percentage growth in their software business that’s focused on IOT and SAS and enterprise performance. And this is, basically as I see it, the two spots where I want to see more strength from Honeywell. First of all, I want to see this capability laid into more products and more clearly articulated to the market by the company how Honeywell Forge EPM are part of the bigger and broader story of the company success. We’ll come back and be talking more and more, but in terms of Honeywell coming on par, and it really is. I think if you and I had one big objective here, is to help people see that this pivot is not a temporary or a momentary thing. This company is coming into technology much like we’ve seen with Siemens and others, this is the focus, not an afterthought and not an extension. We’ll see if they can get there soon.
Patrick Moorhead: Good analysis, Daniel. Yeah, I can’t wait. The way I look at Honeywell right now is they’re one of the only, if not the only, OT plus IT companies. They hired a bunch of incredible people out of IT to augment that. They come up with an industry leading EPM. And in many ways, they’re leading on many factors in quantum. And these things just take time, right? I mean, when you’re looking at quantum, which people are debating, hey, five years or 10 years, it’s going to take some time. We need to be a patient. What’s more near term to me, but still a very long lift, is in the industrial IOT. And the way that we manage it, those are very long lifts, because a lot of these are brownfield and it takes time. But, what you and I get paid to do primarily is, it’s fun to talk stonks, but it’s to point out kind of the gems of the industry. So good stuff, Daniel.
Daniel Newman: Yeah. More time in the near future.