Top CFOs Take Positive Macro View While Doubling Down Digital

Where a firm spends its money tends to be highly correlated to its business strategy.

That makes the chief financial officer (CFO) role crucial for sustainable success – and underscores the importance for CFOs of being tapped into the macro climate, ready, able, and willing to adjust growth levers and revenue flywheels on a moment’s notice.

This, as more than half of the organizations in the S&P 500 have reported their most recent quarterly earnings, with another solid chunk of the index set to report by the end of this week (Aug. 4).

And while the most recent economic cycle was defined by high levels of inflation, rising interest rates, fears of a possible recession, banking failures, shrinking consumer purchasing power, and geopolitical tensions spilling over into supply chains, most CFOs at the helm of North America’s largest public companies projected a rosier-than-expected picture.

This relatively bullish attitude comes as many firms beat their earnings expectations and excitement continues to grow over the potential of artificial intelligence (AI) to drive efficiencies and boost profits.

Beyond that, sentiment was also buoyed by renewed stability in the banking sector after March’s mini-crisis prompted CFO-led changes at many companies, with firms increasingly diversifying their approach to treasury management and working capital, prioritizing cost management and financial performance fundamentals.

That’s because for many of today’s CFOs, mitigating risk goes hand-in-hand with accelerating growth.

Read more: Time for CFOs to Break the AP/AR Automation Bottleneck

Captain of the Balance Sheet as Macro Environment Rights Itself

Finance department responsibilities evolve alongside business strategies, and as PYMNTS reported, treasury teams are increasingly getting shout-outs on this latest quarter’s earnings calls for their savvy management of firms’ funds, pulling the right levers to redefine success in today’s dynamic ecosystem.

But in order to drive healthy growth, CFOs need to understand and act on broader trends within the operating landscape.

And what they are saying has been largely positive.

Packaged goods giant Unilever believes inflation has reached its peak, with CFO Graeme Pitkethly explaining on its quarterly earnings that, “we’re past peak inflation now,” as the company showed sales increasing 9.1%.

Bank of America CFO Alastair Borthwick said investors on his organization’s latest earnings call that the economy is “in a pretty healthy place,” while in response to questions about the current cycle, Capital One CFO Andrew Young said that “credit continues to normalize.”

American Express (Amex) CFO Jeffery Campbell said spending on goods and services was up 6% overall, while spending by U.S. small and medium-sized businesses slowed during the quarter (logging 2% growth).

Looking ahead, Campbell that that spending on travel and dining by consumers should be up by double-digit percentages through the rest of the year — and travel bookings are now above pre-pandemic levels. Spending from international consumers grew 16%.

CFO Moves Across the Landscape

Of note during the latest earnings season was the announcement of several CFO transitions at leading companies.

Uber CFO Nelson Chai is stepping away from the ride hailing platform on Jan. 5, 2024. The company has yet to find a replacement and a search is underway.

Pet-focused online retailer Chewy announced that its chief accounting officer, Stacy Bowman, has been appointed interim CFO while the company continues its search for a permanent CFO after the retirement last week (July 28) of former CFO Mario Marte.

GameStop’s CFO will depart next Friday (Aug. 11) and vice president, corporate global controller, Daniel Moore, will be appointed as the company’s principal accounting officer and interim principal financial officer.

Of particular impact was the news that Alphabet and Google CFO Ruth Porat was being elevated into the newly created role of president and chief investment officer of Alphabet and Google, effective Sept. 1, where she will oversee Alphabet’s “Other Bets” investments and work more closely with policymakers and regulators. She will continue to serve as CFO, including leading the company’s 2024 and long-range capital planning processes, while the company searches for and selects her successor.

Porat has already staffed her team at Alphabet with many former CFOs of public companies including HP’s former finance chief Steve Fieler and Palo Alto Network CFO Kathy Bonnano, who now runs finance for Google’s Cloud business.

Driving Growth With Digital

In today’s business landscape, experienced CFOs have unprecedented leverage over the growth plans and roadmaps of their organizations.

PYMNTS has long been covering how the evolution of the CFO role beyond its traditional definitions is critical for organizations to win in the 21st century’s digital age.

What is also increasingly critical for finance chiefs is integrating and investing into the digital growth engines powering today’s environment.

As noted by executives on CCC’s latest earnings call, “there’s a general sense of leaning in to use technology more aggressively than in the past to improve efficiency.”

“We do expect elevated investment in our technical infrastructure to support the opportunities we see in AI as we continue to see the pace of innovation quicken,” said Alphabet and Google CFO Ruth Porat.

For Microsoft’s part, its CFO Amy Hood also emphasized “accelerated investment” into digital infrastructure and AI capabilities — noting that capital expenditures will “increase sequentially” each quarter through the year as “we scale to meet demand signals.”

Still, the Microsoft CFO noted that there will be a lot of spending on AI especially before there’s a return on that investment.

Part of the reason is due to the high cost of switching to a yet-unproven technology, while some CFOs are waiting for the dust to settle before integrating the tech into their own workflows.

Amazon and Apple announce their results Thursday (Aug. 3).