Affirm(NASDAQ:AFRM) reported fourth quarter fiscal 2025 results on August 28, 2025, with record performance in core metrics and accelerating growth, with GMV, funding capacity, and 0% APR adoption all reaching new highs. Management highlighted a robust credit profile (95% of transactions from repeat borrowers), strong capital markets access (funding capacity up 55% year over year), and the rapid scaling of next-gen products like the Affirm Card and Adapt AI. This summary distills unique, investment-relevant developments and their implications for Affirm's ability to compound value over the long term.

Adapt AI deployment delivers quantifiable lift to GMV

Affirm has rolled out Adapt AI, an artificial intelligence-driven module for its Adaptive Checkout suite, to automate and optimize the consumer financing offer mix in real time, resulting in a reported average 5% increase in gross merchandise volume (GMV) at participating merchants. This capability enhances the efficacy of Affirm's platform beyond traditional manual adjustments, and differentiates the firm's value proposition when negotiating merchant relationships and driving conversion across millions of transactions.

"Let us figure out the best set of programs for any given consumer as they're staring at a cart or a product on your site or in your store, and we will take care of the rest. We will convert them to a buyer from a shopper, at the best possible terms for them that is compelling to them. Not everybody wants a zero percent deal. Many people actually really care about the monthly cash flow impact, and they're far less APR sensitive or total interest sensitive. Many people are extremely headline APR sensitive. And you can sort of slice and dice it from there. Tuning that manually works beautifully. Tuning that automatically is an extraordinary improvement. And the 5% is great early result. We expect more, and we'll certainly brag about it as we get there. But adapt.ai is AI powered configuration of adaptive checkout."

AI-driven optimization is increasing GMV for merchants.

Affirm Card adoption accelerates as cross-channel frequency rises

The Affirm Card surpassed $1.2 billion in volume with a 10% attach rate, while its average trailing 12-month spend per cardholder climbed to $4,700 versus $3,500 in the previous disclosure. Management noted that 0% APR volume on the card tripled, and the product’s usage is expanding into new offline categories, signaling progress toward Affirm’s goal of 10 million active cardholders with $7,500-plus annual spend.

"The current trailing twelve months of the cardholder is about $4,700. So think the last time we dropped this number, it was along the lines of 3,500. This is across all Affirm services. So this is card and all the other places where you might go with CART. Dominates. That's been, obviously, So we're not quite at the 7,500, but we're more than halfway there. And so like, there are many things that are coming together to make sure the card is the best expression. Of the firm. So just as far as I think I wanna go right now, we're kinda long winded on this one. But there's a lot to do, and there's some unexpected things that are coming soon."

The Affirm Card is seeing accelerating engagement and expanding offline utility, positioning the company for long-term cross-channel payment share gains.

Affirm demonstrates durable credit quality and disciplined funding strategy

Quarterly results showed 95% of transactions came from repeat users, with underwriting applied to every transaction and close monitoring of credit cohorts in response to macroeconomic uncertainties, such as the U.S. student loan repayment resumption. Funding capacity rose 55% year over year, while management stressed selection of blue-chip, long-term capital partners and maintenance of a 3%-4% revenue less transaction costs (RLTC) range.

"The numbers you see are there exactly because we want them to be there. Set a many times before. Credit performance is an output of our settings of the models that we run. You know, not not sure to belabor the obvious, but we underwrite every single transaction, and there's reserve the right to decline transactions we feel are too risky for the end borrower and for Affirm, and we do. And if there's ever a deviation from our normally, extraordinarily high net promoter scores because not everybody enjoys hearing, hey. You shouldn't borrow. You're overextended. But we won't change our point of view on their ability to borrow and our willingness to lend if they are in fact overextended, be it with a firm or overall in their credit utilization."

Affirm’s platform-driven credit discipline and intentional funding partner selection underpin resilience through changing economic cycles and reduce risk of adverse selection or funding-driven expansion by weaker competitors.

Looking Ahead

Management’s guidance for fiscal 2026 assumes the wind-down of a major enterprise merchant integration by the end of the fiscal first quarter 2026, with zero associated volume included thereafter. Affirm expects continued mix shift toward monthly 0% loans, which were up over 90% year over year, and forecasts RLTC take rate at the very high end of the 3%-4% range (non-GAAP). Internationally, Affirm is live in the U.K. with friends-and-family pilots partnered with Shopify, and plans to expand to additional European markets using a technology- and data-reusable playbook; no specific quantitative guidance was provided on international contribution timing or magnitude.

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Elastic(NYSE:ESTC) reported first quarter fiscal 2026 results on August 28, 2025, delivering $415 million in revenue (up 20% YoY) and a 16% non-GAAP operating margin. Management raised full-year revenue and EPS guidance, highlighting strong enterprise and AI-driven workload growth. The following insights detail Elastic's momentum in generative AI, security, and subscription revenue durability.

GenAI adoption accelerates Elastic Cloud growth

Elastic Cloud surpassed 2,200 customers using the platform for generative AI (GenAI) workloads, with more than 330 spending over $100,000 annually. The company added more million-dollar average contract value (ACV) customers in this category than in the previous two quarters combined, reflecting increased AI workload intensity and early-stage consumption growth.

"Now over 2,200 Elastic Cloud customers are using Elastic for Gen AI use cases, with over 330 of these customers spending $100,000 or more annually. In Q1, we added more million-dollar ACV Elastic Cloud customers using Elastic for JENNI use cases than the prior two quarters combined."
-- Ashutosh Kulkarni, Chief Executive Officer

This rapid expansion in high-value GenAI customers demonstrates Elastic's competitive positioning as a foundational platform for enterprise-scale AI, supporting a long-term revenue growth trajectory as adoption broadens.

Elastic security displaces legacy incumbents

Security was a major growth driver, with one-third of new and expansion deals in the segment coming from competitive displacements. The launch of the Elastic AI SOC engine (EASE) further differentiated the offering by integrating advanced threat detection and alert correlation on top of existing security information and event management (SIEM) systems, and the company secured a seven-figure expansion with a leading U.S. academic health system.

"In Q1, a third of our new and expansion wins in security involved competitive displacements. In one such deal from the quarter, one of the largest integrated academic health systems in The U.S., selected Elastic Security to replace its existing SIM solution. This 7-figure expansion deal marks the customer making a strategic shift from an incumbent solution towards a more scalable AI-driven security approach."
-- Ashutosh Kulkarni, Chief Executive Officer

Elastic's ability to win complex displacement deals and deliver differentiated AI-powered security capabilities positions it to capture market share as organizations consolidate legacy tools onto modern, unified platforms.

Sales-led subscription revenue remains durable

Sales-led subscription revenue, defined as all subscription revenue excluding monthly Elastic Cloud, grew 22% YoY to $339 million, marking the fourth consecutive quarter of mid-to-high teens growth following sales segmentation changes. The self-managed segment also contributed meaningfully alongside continued cloud growth, reinforcing overall subscription resiliency.

"Our sales-led subscription revenue grew 22% in Q2 2025, 18% in Q3 2025, 19% in Q4 2025, and now 22% this quarter. These consistent results demonstrate the durability of our team's execution."
-- Navam Molyanda, Chief Financial Officer

The sustained strength of sales-led subscriptions and diversified delivery models enhances Elastic's revenue visibility and business stability, supporting management's confidence in future performance.

Looking Ahead

Elastic raised full-year revenue guidance to $1.679 billion to $1.689 billion (approximately 14% YoY growth at the midpoint), with a non-GAAP operating margin of 16% and non-GAAP diluted EPS between $2.29 and $2.35. Next quarter, revenue is expected to be $415 million to $417 million and non-GAAP EPS $0.56 to $0.58. Management expects to sustain recent adjusted free cash flow margin levels, notes anticipated seasonality, and will move to annual customer count disclosure going forward.

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Autodesk(NASDAQ:ADSK) reported second quarter fiscal 2026 results on August 28, 2025, exceeding guidance across revenue, non-GAAP operating margin, billings, and free cash flow, and subsequently raised full-year guidance for fiscal 2026 (ending Jan. 31, 2026). Total revenue (GAAP) grew 17% year-over-year, non-GAAP operating margin reached 39% (up 140 basis points YoY), free cash flow reached $451 million, and share repurchases totaled $709 million year-to-date; management provided updated targets on long-term margin and capital allocation, including full-year billings guidance of $7.355 billion to $7.445 billion, and articulated concrete progress on cloud, AI, and go-to-market strategic initiatives.

Operating margin guidance for 2029 underscores model scalability

Autodesk implemented a cost discipline and restructuring plan at the beginning of the year. Optimization in sales and marketing contributed to operating leverage. The new transaction model is expected to increase operating margin drag in fiscal 2027, with management targeting long-term expansion through controllable efficiency levers despite non-linear progress.

"Assuming no material change in the external environment, we expect reported non-GAAP operating margin to be 41% in fiscal 2029, or about 45% on an underlying basis, which excludes the mechanical impact of the new transaction model as it fully scales next year. This would represent a reported and underlying improvement of approximately 500 basis points and approximately 900 basis points, respectively, since we started to scale the new transaction model at the start of 2024."
-- Janesh Moorjani, CFO

Long-term profit expansion will be driven predominantly by improved sales and marketing efficiency and inherent operating leverage, positioning Autodesk for substantially higher margin structure as temporary transition headwinds subside.

Strategic capital allocation prioritizes organic innovation and targeted M&A

Autodesk repurchased 2.5 million shares year-to-date for $709 million, and increased fiscal 2026 share buyback targets to $1.2 billion–$1.3 billion. Management confirmed excess free cash flow dedicated to capital returns after funding product and AI initiatives, while clarifying the scale and focus of M&A activity.

"First and foremost, Saket, you know, we invest organically in the business to drive our strategy around AI and all the things related to our product strategy. The second thing we look to do is we look at M&A as the next option, and we look at it for tech tuck-in reasons, really things that accelerate our existing roadmap and move us forward. And we look at it through the lens of targeted acquisitions that extend our adjacency strategy, things like construction operations. These kinds of acquisitions tend to be in the hundreds of thousands to the billions of dollars range, not in the tens of billions of dollars range. The other thing, of course, we're doing is as we have excess capital, above and beyond those needs, we are accelerating the deployment of that to shareholders via stock buybacks that move beyond offsetting dilution and accelerate and reduce the share count."
-- Andrew Anagnost, CEO

This disciplined approach keeps capital allocation flexible but focused, with limited appetite for large-scale transformative deals and a clear preference for extending competitive strengths in core adjacencies through smaller acquisitions and buybacks.

AI and platform investments accelerate product adoption and differentiation

AI-powered features such as Fusion’s Sketch Auto Constraint have achieved an acceptance rate of more than 60%, with over 1.2 million dimensions delivered since launch in 2025, demonstrating measurable productivity gains among commercial users. Data model and API adoption is rising among large and mid-market customers, with foundation models and adaptive AI engines under development across 2D/3D workflows.

"For more than a decade, Autodesk, Inc. has been at the forefront of innovation. In BIM, SaaS, generative design, and now in generative AI. We have been building industry-specific foundation models and products capable of understanding and reasoning about 2D and 3D geometry, design and make data, complex structures, and even physical behavior. For example, last year, we introduced Project Bernini. A generative AI model for 3D, as part of a broader initiative to create professional-grade foundation models that will disrupt long-standing technology paradigms and redefine what we mean by software, platforms, and products. By combining our own spatial and physical reasoning with deep industry-specific knowledge, Autodesk AI will move beyond traditional, deterministic, and rule-based parametric CAD kernels to deliver adaptive and context-aware AI-driven CAD engines."
-- Andrew Anagnost, CEO

Rapid integration of AI across flagship platforms strengthens Autodesk’s long-term competitive moat, improves value proposition for enterprise accounts, and attracts third-party partnership opportunities.

Looking Ahead

Management raised full-year guidance, projecting billings of $7.355 billion to $7.445 billion, revenue of $7.025 billion to $7.075 billion, non-GAAP operating margin of approximately 37% (or 40% on an underlying basis), and free cash flow of $2.2 billion to $2.275 billion for fiscal 2026 (ending Jan. 31, 2026). Autodesk reiterated its expectation of a 41% reported non-GAAP operating margin for fiscal 2029 (45% underlying), along with continued elevated capital return via $1.2 billion to $1.3 billion in share repurchases. No material change was made to macroeconomic or policy risk assumptions embedded in the guidance; additional details on long-term strategy and AI initiatives will be provided at Autodesk University in September and Investor Day on October 7.

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Gap(NYSE: GPS) reported second quarter fiscal 2025 (period ending Jan. 31, 2026) results on July 29, 2025, highlighting comparable sales growth of 1% year over year and operating margin of 7.8%. Old Navy, Gap, and Banana Republic all posted positive comparable sales, but Athleta experienced a double-digit sales decline, with notable strength in inventory discipline and cost management offsetting new tariff headwinds. Gap updated its fiscal 2025 operating margin guidance to 6.7%-7%, explicitly absorbing $150 million to $175 million in incremental annualized tariff costs in fiscal 2025 while maintaining its 1%-2% net sales growth expectations for fiscal 2025.

Operating margin grows despite tariff and Athleta setbacks

Operating margin came in at 7.8%, down 10 basis points compared to last year despite a 140 basis point gross margin contraction, attributed mostly to credit card benefit lapping and inventory actions at Athleta. Cash, cash equivalents, and short-term investments climbed 13% year over year to $2.4 billion, reflecting the highest cash levels in 15 years as of fiscal 2024 (period ending Jan. 31, 2025), and supporting $144 million in shareholder returns during the period.

"We delivered operating margin of 7.8% EPS of 57¢, up 6% versus last year, and ended the quarter with strong cash balances of approximately $2.4 billion allowing us to make targeted investments in capabilities. Infrastructure, and our brands to drive shareholder value creation over time."
— Richard Dixon, Chief Executive Officer

This margin resilience and capital build bolster Gap's ability to absorb external shocks, fund growth initiatives, and drive long-term shareholder return irrespective of transitory macro or segment pressures.

Gap brand momentum accelerates with digital engagement and price discipline

Gap brand delivered its seventh straight quarter of positive comparable sales, with comps up 4% year over year and net sales up 1% year over year; this was accompanied by broad-based strength in new product launches, average unit retail (AUR) growth, and viral social media traction, notably 20 million views in three days for its latest campaign ("Better in Denim") for Gap. Key collaborations contributed, but growth in AUR persisted even excluding the impact from these limited-run partnerships, indicating underlying pricing power and customer engagement through core product relevance.

"To be very direct, the AUR is up, and it would be up without the collaborations. What's really driving Gap's momentum is the execution of our playbook. We're continuing to deliver strong and consistent results, building momentum that gets bigger and better every time."
— Richard Dixon, Chief Executive Officer

The ability to drive higher average pricing and digital engagement independent of collaborations demonstrates the brand's progression from discounting to sustained premium positioning and strengthens the investment case for ongoing comp momentum, as evidenced by Gap brand's seventh consecutive quarter of positive comparable sales and a 4% comp.

Tariff mitigation strategies position Gap for margin improvement by 2026

New U.S. trade policy has created $150 million to $175 million in incremental annualized tariff impacts (about 100-110 basis points to margin) for fiscal 2025, with teams quickly deploying mitigation levers, including repricing, assortment, and sourcing changes, to prevent further EBIT degradation in fiscal 2026. Management confirmed that, excluding tariffs, underlying gross and operating margins would have expanded year over year in fiscal 2025, and expects to fully offset tariffs over time, unlocking future operating margin improvement opportunities.

"we don't currently expect that the annualization of tariffs in 2026 will cause further operating income to declines year over year. And we expect to mitigate the full impact of tariffs over time which we believe represents actual opportunity for operating margin improvement over the longer term."
— Katrina O'Connell, Chief Financial Officer

Swift and diversified mitigation efforts limit downside risk from external cost shocks, supporting a favorable long-term margin and profit growth trajectory even in a higher tariff environment, as discussed in the context of fiscal 2025.

Looking Ahead

Management reiterated its full-year net sales growth guidance of 1%-2% for fiscal 2025 and expects operating margin in the 6.7%-7% range for fiscal 2025, incorporating a 100-110 basis point net tariff impact. Third quarter fiscal 2025 guidance calls for net sales up 1.5%-2.5% year over year, gross margin deleverage of 150-170 basis points (driven primarily by a 200 basis point tariff impact) expected for Q3 fiscal 2025, and near-term SG&A deleverage is expected in Q3 fiscal 2025 due to the phasing of technology investments. No additional specific longer-term quantitative targets were provided beyond the explicit intention to mitigate the full impact of tariffs and improve operating margin over time.

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Marvell Technology(NASDAQ:MRVL) reported record revenue of $2.006 billion in the fiscal second quarter ended Aug. 3, 2025 (+58% year-over-year revenue growth, +6% sequential revenue growth), non-GAAP EPS of $0.67 (+123% year-over-year (non-GAAP)), and operating cash flow of $462 million. Management announced the $2.5 billion divestiture of the Automotive Ethernet business, completed at the beginning of the fiscal third quarter ending Nov. 1, 2025, representing a major strategic pivot to AI-focused data center markets, with data center comprised 74% of total revenue. The following analysis highlights key developments in market focus, operating leverage, and custom silicon momentum.

Marvell pivots portfolio to AI data center dominance

Management executed a $2.5 billion all-cash sale of the Automotive Ethernet business at the start of the fiscal third quarter, with proceeds to bolster buybacks and data center R&D. Data center end market revenue has more than doubled from 34% of total in 2024 to 74% in 2026, and is expected to continue outpacing other segments as new classification aligns reporting to this core strategy.

"to further bolster our technology platform. The auto divestiture aligns with our strategy to focus the company on what we expect to continue to be a massive AI opportunity in front of us by purposely redirecting our investments towards data center, relative to our other end markets. That strategy has been very successful, with data center alone now driving three-quarters of our total revenue. The auto divestiture further reduces the relative proportion of revenue from our non-data center end markets. As a result, starting in the third quarter, we will consolidate our non-data center end markets into a new single communications and other end market."
-- Matt Murphy, Chairman and CEO

This transaction and reporting realignment cement Marvell’s transformation into an AI and cloud-centric chip supplier, likely improving capital efficiency and competitive focus while simplifying investor narratives around long-term growth drivers.

Operating leverage accelerates as margins and cash flow hit new highs

Non-GAAP operating margin expanded sharply by 870 basis points year-over-year to 34.8%, outpacing the 58% YoY revenue growth as Non-GAAP operating expenses came in below guidance. Operating cash flow rose to $462 million, up $129 million sequentially, with gross debt to EBITDA improving to 1.63x, providing further financial flexibility for buybacks or capacity investment.

"We expanded our non-GAAP operating margin by 870 basis points year-over-year to 34.8%, and delivered record non-GAAP earnings per share of $0.67, up 123% year-over-year. We also delivered $462 million in operating cash flow, up significantly from the $333 million in the first quarter. Robust cash flow generation is enabling us to continue to return significant capital to our stockholders. We have repurchased $540 million of stock through the first half of the fiscal year, with approximately $2 billion remaining in our authorization."
-- Matt Murphy, Chairman and CEO

Sustained margin expansion and outsized EPS growth versus revenue point to greater fixed-cost absorption and scalable profitability as more custom silicon ramps to production, supporting Marvell’s long-term compounding potential.

Custom silicon and XPU pipeline drive multiyear revenue visibility

Design win momentum is accelerating, with management disclosed over 50 pipeline opportunities representing $75 billion in estimated lifetime value as of June 2025. Over 90% of data center segment revenue is now tied to AI and cloud, while existing custom programs are ramping, and newly won sockets are expected to enter production over the next 24 months.

"During the quarter, we hosted a highly successful custom silicon investor event in June, where we outlined an expanded $94 billion data center TAM for calendar 2028, a 26% increase from our prior view. We also unveiled a new fast-growing custom silicon product category of XPU attach, updated our custom design win board to 18 multi-generational XPU and XPU attached sockets, and highlighted over 50 new pipeline opportunities with an estimated $75 billion of lifetime revenue potential. Based on the sockets we have already won, we concluded with our plan to grow our data center market share from 13% of a $33 billion TAM in calendar 2024 to 20% of a $94 billion TAM in calendar 2028."
-- Matt Murphy, Chairman and CEO

This rapid expansion in design pipeline and TAM substantiates Marvell’s increasing strategic value to hyperscalers, supporting a path for structurally higher revenue growth and long-term share gains in AI infrastructure semiconductors.

Looking Ahead

Management guided total revenue to $2.06 billion at the midpoint for the fiscal third quarter ending Nov. 1, 2025 (+36% year-over-year revenue growth forecast), with non-GAAP EPS of $0.69 to $0.79 and gross margin in a 59.5%-60% range. The company remains on track to accelerate in the fiscal fourth quarter ending Jan. 31, 2026, driving annual second-half strength. Following the auto Ethernet divestiture, new reporting segments will be implemented beginning in the fiscal fourth quarter, further emphasizing the primacy of data center growth and profitability in Marvell’s future outlook.

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Domo(NASDAQ:DOMO) reported fiscal second quarter 2026 earnings on August 28, 2025, delivering $79.7 million in GAAP revenue, $70.3 million in billings, its first positive non-GAAP EPS ($0.02), and $1.4 million in positive adjusted free cash flow. Management emphasized a successful transformation to a consumption-based model, rapidly expanding cloud data warehouse (CDW) partnership activity, and rising net revenue retention (NRR), particularly among new consumption customers, which reached 108%. The following insights examine the company's business model inflection, emerging competitive strengths, and investment implications. (Fiscal year 2026 refers to the period ending January 31, 2026.)

Domo accelerates shift to consumption-based revenue

The company's annual recurring revenue (ARR) mix reached over 75% consumption-based contracts, up from just a few percentage points two years ago, with management aiming to exit fiscal 2026 above 85%. Consumption customer NRR for those who initiated purchases on the new model was 108%, while total ARR net retention rate was over 94%, marking the fourth consecutive sequential increase.

"Two years ago, we had zero cloud data warehouse partners, or CDW partners. Today, we have five of the largest and most important CDW. Back then, consumption customers were just a few points of our ARR. And now over 75% of our ARR is on consumption. What an incredible transformation in just two years. Sales productivity and new ACV once lagged, now they're performing as strong as ever. The new business engine is firing on all cylinders. Our turnaround is visible in multiple areas over the past year. New ACV growth has accelerated every quarter. After a double-digit decline in Q3 fiscal year 2025, we have accelerated to growth approaching 20%. The highest we've seen in three and a half years. Our year-over-year Salesforce productivity growth has accelerated from 19% in Q3 fiscal year 2025 to a stunning 67% in Q2 fiscal year 2026. Subscription RPO growth has accelerated from 3% in Q3 fiscal year 2025 to 19% in Q2 fiscal year 2026."
-- Josh James, CEO

This historic mix shift to consumption contracts, coupled with surging sales productivity and annual contract value (ACV) momentum, signals structurally higher growth capacity and improves Domo’s long-term operating leverage, as well as customer expansion potential.

Partner ecosystem propels pipeline and enterprise adoption

Domo integrated with five leading CDWs, enhanced technical integrations with Snowflake, Databricks, Oracle, and Google, and is now present in hyperscaler marketplaces, which enables streamlined procurement and creates joint selling opportunities. New logos and large upsells increasingly originate through partner referrals; for example, a private equity customer signed a five-year deal expanding Domo’s platform company-wide via a CDW marketplace, while a home improvement retailer replaced Power BI with a joint solution through a CDW partner.

"Through this collaboration, we constructed a solution that was truly a win-win. We helped the customer transition from a traditional seat-based licensing model to consumption, which also opened the door for an upsell and a three-year contract. Importantly, they were able to leverage their existing spend commitment with our CDW partner by purchasing our product through their marketplace, allowing our customer to increase their usage of our platform without needing any approvals for extra budget. This would not have been possible without our partnership with the CDW, the availability of our platform on their marketplace, and the flexibility built into our consumption model."
-- Josh James, CEO

The multi-channel partner-led go-to-market model increases enterprise account penetration, accelerates sales cycles, and drives a higher-quality pipeline that historically converts at up to seven times the rate of Domo’s own-sourced leads, according to management commentary on partner ecosystem lead conversion rates.

Domo achieves non-GAAP profitability and margin expansion milestones

The fiscal second quarter marked Domo’s first-ever positive non-GAAP earnings per share ($0.02) and positive adjusted free cash flow ($1.4 million), with operating margin reaching a record 7.7% and subscription gross margin improving for the second straight quarter to 81.9%. Current subscription remaining performance obligations (RPO) grew 4% year-over-year to $220.2 million, and total subscription RPO reached a new high of $409.8 million, up 19% year-over-year. These results support Domo’s sustainability and provide financial flexibility for reinvestment in AI and strategic partnerships.

"Balance has been critical to achieving our first positive non-GAAP EPS and maintaining a positive free cash flow, milestones that demonstrate the strength and momentum of our business. Moving forward, I'm committed to scaling efficiencies and driving consistent profitable growth. This disciplined approach to growth and profitability is reflected in our continued focus on longer-term, more strategic contracts, which contributed to another strong RPO quarter. Current subscription RPO grew 4% year over year to $220.2 million and our total subscription RPO grew 19% to $409.8 million, the highest ever."
-- Todd Crane, CFO

This supports Domo’s sustainability and provides financial flexibility for reinvestment in AI and strategic partnerships.

Looking Ahead

Management guided to billings of $75.5 million to $76.5 million for the fiscal third quarter, GAAP revenue of $78.5 million to $79.5 million, and a non-GAAP net loss per share of $0.03 to $0.07. For fiscal 2026, Domo raised guidance to billings of $317 million to $321 million, GAAP revenue of $316 million to $320 million, and non-GAAP net loss per share of $0.11 to $0.19. Management now targets year-end fiscal 2026 billings growth and non-GAAP operating margin of 6% each, up from 5%, and reiterated the goal to reach 10% for both metrics by fiscal year-end 2027, with expectations that gross retention will improve meaningfully in the fiscal fourth quarter as multi-year consumption contracts scale.

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SentinelOne (NYSE:S) reported fiscal second quarter ended July 31, 2025, results on August 28, 2025, delivering 24% year-over-year (YoY) annual recurring revenue (ARR) growth to surpass $1 billion (non-GAAP), 22% YoY revenue growth to $242 million, with an industry-leading 79% gross margin. Management raised full-year revenue guidance for the fiscal year ending Jan. 31, 2026, to $998 million to $1.002 billion (non-GAAP) and highlighted the approximately $180 million acquisition of Prompt Security, expected to close in the fiscal third quarter ending Oct. 31, 2025, to expand into GenAI security and data loss prevention (DLP).

Record ARR and platform traction drive outperformance

Net new ARR (non-GAAP) exceeded internal expectations by approximately 40%, with both new logo acquisition and existing customer expansion each contributing roughly half of growth (non-GAAP), alongside a 23% year-over-year increase in customers with ARR above $100,000 (non-GAAP). Non-endpoint products such as Purple AI, AI SIEM (Security Information and Event Management), and data solutions represented about 50% of total quarterly bookings (non-GAAP). This indicates successful platform diversification.

"Our total ARR grew 24% and crossed $1 billion, a significant milestone in our growth journey. We also achieved a record second quarter net new ARR reflecting positive year-over-year growth of over 20% and a strong uptick in new business generation. That's a clear reflection of our team's execution, business momentum, and rising demand for SentinelOne's AI-powered cybersecurity. Our fiscal second quarter performance was broad-based, with strong contributions from new customer additions, expansion with existing accounts, and increased adoption of our AI and data solutions. These results underscore our stronger competitive position and growing product differentiation. We continue to maintain a top-tier growth profile while driving operating leverage. Following a strong fiscal second quarter outperformance, we're raising our full-year revenue outlook while remaining prudent in our assumptions for the second half given a dynamic macro backdrop."
-- Tomer Weingarten, CEO

This momentum signals a tangible business mix shift and validates SentinelOne's strategy to drive high-margin, multiproduct expansion within both new and existing enterprise accounts (non-GAAP). This supports increased operating leverage and durability of growth.

SentinelOne Flex shifts consumption model, fuels larger deals

Launched in the fiscal second quarter ended July 31, 2025, SentinelOne Flex yielded its first eight-figure total contract value (TCV) platform deal, enabling customers to dynamically access the full suite of nearly 30 modular solutions, with early adoption by mid- and large-sized organizations looking to scale security investment efficiently. Flex is expected to support deal size growth, increase average contract duration, and streamline procurement for renewals and new logos, with Prompt Security being added to the available product set.

"We've also launched SentinelOne Flex, a major step forward in how customers adopt the Singularity platform. It's a unified flexible licensing model that gives organizations the agility to manage entitlements, seamlessly deploy new platform capabilities, and drive greater return on their security investments. Flex provides customers with full access to the entire Singularity platform, enhancing our opportunity to expand our footprint across customer environments. The reception for Flex is outstanding, with an 8-figure total deal value validating the model and many customers and prospects choosing the new structure. It enables our team to land bigger deals with higher efficiency and expand with greater velocity."
-- Tomer Weingarten, CEO

This augments the long-term value per customer and enhances sales pipeline visibility.

Expanding AI-native platform with Prompt Security acquisition

The $180 million acquisition of Prompt Security, expected to close in the fiscal third quarter ending Oct. 31, 2025, provides SentinelOne with proprietary capabilities for runtime GenAI governance, endpoint-based data protection, and DLP, directly addressing urgent enterprise risks around uncontrolled AI usage and shadow IT. Prompt's technology integrates natively into the Singularity platform, targeting both endpoint (SOC and DLP teams) and cloud security buyers and positions SentinelOne as an early mover in GenAI security as adoption accelerates across industries.

"To extend our innovation lead and further differentiate our AI-powered platform, we also announced the acquisition of Prompt Security, a pioneer in securing generative AI at runtime, preventing GenAI-related data leakage, and delivering security for AI agents. GenAI adoption is exploding across all industries, which brings a new class of risks and exposure. As GenAI and agentic AI fundamentally reshape how businesses operate, new risks are emerging around visibility, compliance, data leakage, and control. Prompt Security enhances the Singularity platform with the ability to monitor, govern, and control GenAI usage in the enterprise. These are critical capabilities that every CIO and CISO is now prioritizing."
-- Tomer Weingarten, CEO

This move opens an incremental total addressable market (TAM), fortifies SentinelOne’s claim to AI-native security leadership, and creates the foundation for upside as GenAI and DLP compliance requirements proliferate in the enterprise segment.

Looking Ahead

Management guided fiscal third quarter ending Oct. 31, 2025, revenue (non-GAAP) to $256 million (22% YoY growth), with full-year revenue (non-GAAP, fiscal year ending Jan. 31, 2026) now expected in the $998 million to $1.002 billion range (22% YoY), gross margin of 78.5% to 79% for the full year, and full-year operating margin (non-GAAP) of approximately 3%, including an 80 basis point dilution from the Prompt Security acquisition. Management maintains expectations for positive full-year free cash flow and operating profit, and expects the Prompt acquisition to close in the fiscal third quarter ending Oct. 31, 2025, with minimal fiscal year ending Jan. 31, 2026, revenue impact but a strategic position for long-term growth in the GenAI security market.

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Ulta Beauty (NASDAQ:ULTA) reported its Q2 FY2025 earnings on August 14, 2025, with net sales up 9.3% to $2.8 billion, comparable sales increased 6.7% year-over-year, and diluted EPS at $5.78. Management raised full-year sales and EPS guidance for FY2025, announced milestones in international expansion, provided segment-level performance detail, and addressed the future impact of its Target partnership wind-down. The following analysis distills three key insights shaping the long-term investment thesis.

Ulta Beauty lifts 2025 outlook amid double-digit e-commerce growth

Management raised annual GAAP net sales expectations to a range of $12 billion to $12.1 billion, citing momentum from both stores and digital channels, with e-commerce comp sales up in the low double digits. Gross margin rose 90 basis points to 39.2%, attributed to lower inventory shrink and better promotional efficiency, while operating margin (GAAP) faced pressure from higher SG&A spending, including increased incentive compensation and investments supporting strategic priorities.

"We now expect consolidated net sales for the year will be between $12 billion and $12.1 billion with comp sales growth in the range of 2.5% to 3.5%. This outlook reflects our expectation that comp sales will be in the range of flat to up low single digits in the second half. We now expect operating profit for the year will decrease in the high single-digit range and operating margin will be between 11.9% and 12% of sales."
-- Chris Lialios, Interim Chief Financial Officer

This revised guidance signals management’s discipline amid ongoing inflationary and competitive pressures, but also highlights e-commerce as an increasingly critical engine of future growth for Ulta Beauty, reinforcing the value of its omnichannel strategy.

International expansion and marketplace launch mark pivotal growth initiatives

In July 2025, Ulta Beauty completed its acquisition of Space NK, a retailer with 83 stores in the U.K. and Ireland, and initiated a soft launch in Mexico, with a Middle East debut slated for later this year. Additionally, management outlined the upcoming “invitation-only” Ulta Beauty Marketplace, set for Q3 launch, designed to broaden category reach and product assortment with a curated, margin-accretive offering directly through ulta.com.

"Our acquisition of UK specialty beauty retailer Space NK was a unique and strategically compelling opportunity to enter the growing UK market with an established and successful player. A top destination for beauty lovers, SpaceNK operates 83 UK and Ireland stores and a vibrant online platform. SpaceNK will continue to operate as a standalone subsidiary with CEO Andy Lightfoot and his talented team staying at the helm leading operations from the UK. We see opportunities to leverage each other's strengths, talents, and expertise and over the long term we will focus on sharing best practices in transferring learnings between markets, particularly around assortment, guest experience, and scaling growth. Chris will share more about the financial details of the acquisition shortly. In addition to our expansion in the UK, we just celebrated the soft opening of our first Ulta Beauty store in Mexico, with the grand opening to come in a few weeks. And we remain on track to open our first store in the Middle East later this year."
-- Kecia Steelman, Chief Executive Officer

These initiatives diversify Ulta Beauty’s geographic exposure and digital footprint, positioning the company for incremental international revenue streams and leveraging its loyalty ecosystem while preserving capital via asset-light market entry tactics.

Ulta Beauty Unleashed strategy drives comp growth and operational recovery

The Ulta Beauty Unleashed framework has yielded tangible results: loyalty membership reached a record 45.8 million (up 4% YoY), comp sales grew across all categories, and shrink improvements contributed to gross margin gains in every region. Management cited balanced performance between newness and core assortments, as well as broad executional improvements in stores and digital channels, overcoming prior-year operational and promotional headwinds.

"Highlights from our quarterly results include comp sales growth of 6.7%, positive comp growth in both channels and all major categories, continued market share gains during a highly competitive quarter, loyalty member growth of 4% year over year to a record 45.8 million members, and ongoing improvement across several key performance indicators including brand engagement, earned media value, in-store conversion, and app engagement."
-- Kecia Steelman, Chief Executive Officer

The successful execution of the Unleashed strategy demonstrates robust management adaptability, quantifiable customer engagement, and ongoing operational improvements that should support sustainable long-term earnings power, even as external conditions evolve.

Looking Ahead

Management forecasts full-year net sales of $12 billion to $12.1 billion, comp sales growth of 2.5% to 3.5%, operating margin between 11.9% and 12%, and diluted EPS (GAAP) in the $23.85 to $24.30 range. Ulta Beauty plans to open 50 to 56 new stores per year over the next two to three years and expects SG&A to increase 13% to 14%, with growth elevated in the second half due to higher incentive compensation, strategic investments, and the addition of Space NK. No changes were made to long-term financial targets, and leadership will update 2026 expectations at the next annual planning cycle.

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Petco Health and Wellness Company(NASDAQ:WOOF) reported results on July 29, 2025, with adjusted EBITDA reaching $114 million and operating income improved by over $40 million. Management raised full-year adjusted EBITDA (non-GAAP) guidance for fiscal 2025 (period ending Jan. 31, 2026) to a midpoint of $390 million, up approximately 16% year over year, while net sales (GAAP) declined 2.3% year over year due to strategic store closures and an exit from unprofitable sales, as the company progresses through the second phase of its transformation plan.

Operating margin expands as Petco Health and Wellness Company shifts focus

Gross margin increased by more than 120 basis points to 39.3% in the second quarter of 2025, driven by changes in promotional strategy, pricing discipline, and operational improvements in both products and services. The company closed 35 net stores from 2024 through the second quarter of 2025, reducing its U.S. store base to 1,388 locations at the end of the second quarter.

"Our top-line results primarily reflect the decisions we are making to move away from unprofitable sales, shifting instead to promotional strategy, better retail execution, and enhanced customer experience. This work resulted in gross margin expansion of more than 120 basis points versus last year to 39.3%, with gross margin in both products and services expanding once again this quarter."
-- Sabrina Louise Simmons, Chief Financial Officer

This deliberate reduction of unprofitable revenue channels in favor of margin expansion signals a business model reset, enhancing long-term earnings quality and lowering operating risk as the company manages for profitability rather than undisciplined growth.

Transformation yields free cash flow and inventory progress

Free cash flow exceeded $50 million, up substantially year over year compared to the prior year, while inventory declined 9.5% year over year with higher in-stock rates. The balance sheet ended the quarter with $190 million in cash and total liquidity of $684 million, including the availability on the undrawn credit revolver.

"Inventory continues to be well managed, with ending inventory 9.5% below last year, all while achieving higher in-stock for our customers. Free cash flow for the quarter was over $50 million, and year to date was about $10 million. Both the quarter and year to date were well above the prior year. We ended the quarter with a cash balance of $190 million and total liquidity of $684 million, including the availability on our undrawn revolver."
-- Sabrina Louise Simmons, Chief Financial Officer

Maintaining positive free cash flow and tight inventory discipline demonstrates effective operational execution, positioning the company with meaningful flexibility to reinvest for growth and withstand macro or tariff-related headwinds (includes reference to non-GAAP financial measures as discussed on the call).

Petco Health and Wellness Company revamps merchandising and deepens customer engagement

The company relaunched its "where the pets go" brand campaign and introduced new in-store experiential marketing events, while also expanding shelf space for high-turnover SKUs and launching a first-ever human-oriented product line based on customer insights. Customer satisfaction, as measured by Net Promoter Score (NPS), has improved sequentially since year-end, driven by in-store experiences and upgraded partner engagement.

"Survey respondents highlighted partner friendliness and helpfulness, with an average satisfaction rating above 90%, which speaks to our ability to deliver experiences that pets and their people aren't getting anywhere else. In addition, several of our store managers reported people waiting outside our doors before we opened for in-store events. This is simply evidence the marketing message is breaking through the clutter, and our pet parents want to engage and have in-store experiences with our store partners."
-- Joel D. Anderson, Chief Executive Officer

Enhanced experiential retail and differentiated merchandising create competitive advantages against pure-play e-commerce rivals.

Looking ahead

Management raised full-year adjusted EBITDA (non-GAAP) guidance to $385 million to $395 million for fiscal 2025 (period ending Jan. 31, 2026), up roughly 16% year over year at the midpoint, with net sales (GAAP) expected to decline in the low single digits for fiscal 2025 due to ongoing store optimization efforts. For the third quarter, adjusted EBITDA (non-GAAP) is guided to $92 million to $94 million, up nearly 15% year over year, as tariff impacts intensify toward year-end and selective investments resume. Positive comparable sales are not expected until 2026, with new merchandise, omnichannel initiatives, and loyalty program upgrades to drive the next growth phase.

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Ambarella (NASDAQ:AMBA) reported Q2 FY2026 non-GAAP revenue of $95.5 million, up 49.9% year over year (non-GAAP) and surpassing the high end of prior guidance. The company raised full-year revenue growth guidance to 31%-35%, or approximately $379 million at the midpoint for FY2026, citing broad-based edge AI (artificial intelligence) application momentum and increasing average selling price (ASP); key developments span IoT, automotive, robotics, and edge infrastructure markets.

Ambarella raises 2026 outlook on sustained high ASP and unit demand

Management delivered its fifth consecutive quarter of record hybrid AI (HAI) revenue, driven in part by rapid IoT adoption and new edge AI applications in portable video, robotics, and infrastructure. Raised full-year revenue growth guidance from 19%-25% (set in May 2025) to 31%-35%, reflecting both volume and pricing drivers.

"With a strong order book as well as our expectation for both our total unit ship and our average selling price to increase in fiscal 2026, we are increasing our fiscal 2026 revenue growth estimate to a range of 31% to 35%, or approximately $379 million at the midpoint."
-- Fermi Wang, President and CEO

The simultaneous growth in ASP and shipments signals Ambarella's expanding value proposition and pricing power, underpinning accelerated topline expansion and margin resilience in fiscal 2026.

IoT outpaces auto revenue as Ambarella leverages shared platform

IoT revenue contributed slightly more than 75% of Q2 FY2026 sales and grew in the low teens quarter-over-quarter, outpacing the automotive segment, which rose in the mid-single digits. Management confirmed the fundamental hardware architecture between automotive and IoT is unified, enabling operational efficiency despite different go-to-market strategies.

"Our CPU architecture, our image processing pipeline, our CPU investment, even the online OS side, they are huge in average between each two. So in terms of OpEx expense side, the leverage is very strong. Obviously, the go-to-market strategy from the marketing side is almost sales side. Are different. But we are going to continue to focus on those two areas because I still believe, you know, long term, the time driving continues to drive our strength."
-- Fermi Wang, President and CEO

This cross-market platform allows Ambarella to efficiently allocate R&D and field engineering resources, fueling rapid IoT expansion while laying groundwork for eventual automotive outperformance as design wins mature post-2027.

Major customer wins expand Ambarella’s presence in drones and edge infrastructure

The company announced its first design win in edge AI infrastructure with the N1655 system-on-chip (SoC), and highlighted Insta360’s anti-gravity A1, the world’s first 8K 360-degree drone powered by Ambarella’s CV5 AI SoC, set to launch globally in January 2026. Management cited robust global demand for these SoCs, especially in emerging robotics and infrastructure applications.

"our future vision and strategy. In the rapidly growing robotic drone market, Arashi Vision, also known as Insta360, launched the world's first 8K 360-degree drone on this new anti-gravity brand. Powered by our CV5 AI SoC, this drone features dual lenses on both the top and the bottom, enabling 8K 360-degree video recording. The AI capacity in CV5 is fully utilized in this partially autonomous drone,"
-- Fermi Wang, President and CEO

These wins validate Ambarella’s expanding reach beyond traditional security and automotive markets, unlocking higher-ASP opportunities across high-growth, next-generation devices and edge AI infrastructure deployments.

Looking Ahead

For Q3 FY2026, management forecasts revenue of $100 million to $108 million, with strong mid-teen QoQ growth in IoT and mid- to high-single-digit QoQ growth in automotive; gross margin is guided at 60%-61.5% for Q3 FY2026. Fiscal 2026 total revenue growth is projected at 31%-35%, anchored by broadening edge AI adoption and increased ASP. Ambarella remains on track with two-nanometer development, targeting early 2027 customer production.

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Key Points

• Hollister brand sales surged 19% in Q2 FY2025, driving record second quarter net sales.

• Inventory increased nearly 10% to $593 million as of Q2 FY2025, compared to $540 million a year earlier.

• Full-year net sales growth guidance was raised to 5–7% for FY2025, and the EPS outlook was increased for FY2025.

• These 10 stocks could mint the next wave of millionaires ›

Abercrombie & Fitch (NYSE:ANF), an apparel retailer known for its Abercrombie and Hollister brands, released Q2 FY2025 earnings on August 28, 2025. The company reported record net sales of $1.21 billion (GAAP), up 7.0% year-over-year, exceeding the company’s earlier projection of 3–5% net sales growth. Adjusted earnings per share (EPS) reached $2.32, above the high end of guidance but down from $2.50 in the prior period. The company’s operating margin (excluding a one-time settlement gain) was 13.9%, also coming in above the company’s prior 12–13% guidance range. Abercrombie & Fitch raised its full-year guidance for FY2025, highlighting exceptional performance by its Hollister brand and market strength in the Americas and Asia-Pacific regions.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Inside Abercrombie & Fitch’s Business and Focus Areas

Abercrombie & Fitch is a global specialty retailer offering casual apparel and accessories under two main brands: Abercrombie and Hollister. The company increasingly drives sales through digital channels as part of its omnichannel retail strategy.

In recent years, it has invested in digital infrastructure and mobile platforms, aiming to create a seamless customer experience both online and in stores. Success factors for the business include strong brand differentiation, effective customer engagement through loyalty programs and influencer partnerships, and disciplined financial operations, especially inventory management and pricing strategies.

Quarter Highlights: Sales, Margins, Brands, and Regional Trends

Second quarter revenue (GAAP) reached a new record, fueled by the Hollister family of products for teens, which grew net sales by 19% year-over-year (GAAP). This was the best second quarter ever for the Hollister brand, amid high engagement for summer and back-to-school apparel. In contrast, Abercrombie brand sales declined 5%, as the company faced tough comparisons and challenges with some product launches and inventory mix. Comparable sales for the Abercrombie brand fell 11% year-over-year, underscoring persistent brand-specific pressure.

Geographically, the Americas continued as the engine of growth, with net sales up 8% year-over-year in the Americas and comparable sales up 5% year-over-year in the Americas. Asia-Pacific sales rose 12%, mainly from new store activity, with comparable sales increased 1% year-over-year in Asia-Pacific. The Europe, Middle East, and Africa region saw GAAP net sales decline 1% and comparable sales dropped 5% year-over-year in EMEA after previously positive momentum in the first quarter.

Profitability metrics were mixed. Operating margin before one-time items reached 13.9%, above the top end of the company’s guidance. However, this figure declined from 15.5% a year earlier as higher costs of goods sold, greater use of promotional activity to clear inventory, and elevated tariffs weighed on profitability. Adjusted net income declined, even as the company recognized a one-time $39 million litigation settlement, which temporarily boosted reported profit and GAAP EPS to $2.91.

Inventory (GAAP) rose by nearly 10% to $593 million as of Q2 FY2025, compared to $540 million a year earlier, surpassing the 7% year-over-year revenue growth. Management cited “progress on key inventory initiatives,” but the inventory build is a risk factor if demand weakens, as it could lead to markdowns. Cash and equivalents were down to $573 million compared to $738 million a year earlier and $773 million at the fiscal year start, a result of extensive share repurchase activity and capital expenditures.

The retailer continued to return cash to shareholders, executing $50 million in share buybacks during the quarter, contributing to a 7% reduction in shares outstanding year to date, prior to the vesting impact of stock compensation. Meanwhile, year-to-date net cash from operating activities (GAAP) was $112.9 million for the twenty-six weeks ended August 2, 2025, less than half the $260.1 million figure from the twenty-six weeks ended August 3, 2024, reflecting a combination of higher inventory levels and increased capital spending.

How Abercrombie & Fitch Makes Money and What Matters Going Forward

The company’s core business is selling branded clothing and accessories to young adults and teens through its Abercrombie and Hollister product families. Digital sales, in-store purchases, and international expansion all contribute to its revenue mix.

Key to business success is an effective omnichannel retail strategy, meaning a coordinated approach across e-commerce, mobile, and physical store channels. This is supported by investments in digital systems and store modernization. Building customer loyalty through engagement and targeted marketing, particularly to teenagers and young adults, is an ongoing focus. The business also monitors regional market trends, adapting its approach in areas like the Americas, EMEA, and APAC to capture growth where possible.

Looking Ahead: Guidance and Investor Watchpoints

The company raised its full-year outlook, now expecting net sales growth of 5–7% for FY2025, up from 3–6%. The updated operating margin range is 13.0–13.5% for FY2025, with the lower end of the range increased from prior guidance. Full-year diluted EPS guidance was also increased to $10.00–$10.50 for FY2025. For the upcoming third quarter, management guided to 5–7% net sales growth for the third quarter, 11–12% operating margin, and $2.05–$2.25 in diluted EPS. These projections for FY2025 factor in an estimated $90 million tariff cost (a significant increase from previous estimates), which will negatively impact profitability by approximately 1.7 percentage points.

For investors and followers, areas to watch include inventory trends versus future demand, continued progress in turning around the Abercrombie brand, and overall margin performance as cost pressures and promotional intensity persist. Execution in digital and omnichannel strategy, alongside regional and brand-level growth, will remain in focus as 2025 unfolds.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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Key Points

• - Revenue rose 49.9% year over year to $95.5 million for Q2 FY2026 (GAAP).

• - Non-GAAP earnings per share returned to positive territory at $0.15 in Q2 FY2026, compared to a loss in the prior-year quarter.

• - Management raised full-year fiscal 2026 revenue growth guidance to 31–35%.

• These 10 stocks could mint the next wave of millionaires ›

Ambarella (NASDAQ:AMBA), a fabless semiconductor company known for its video and artificial intelligence (AI) system-on-chips (SoCs), reported notable growth in its Q2 FY2026 results, released on August 28, 2025. Revenue (GAAP) climbed to $95.5 million, marking a 49.9% increase over the prior-year period and surpassing both management’s guidance midpoint and consensus estimates. The company returned to non-GAAP profitability with earnings per share of $0.15, compared to a loss in the previous year. Though gross margins contracted and operating expenses grew, management raised its outlook for fiscal 2026 revenue growth to 31–35%.

Business Model and Strategic Focus

Ambarella designs advanced system-on-chip (SoC) semiconductors mainly for video processing and edge artificial intelligence. These SoCs enable AI-powered capabilities in devices including automotive cameras, driver-assistance systems, security devices, and various industrial or robotics applications. The company operates a fabless model, meaning it focuses on design and partner relationships while outsourcing manufacturing, which helps it remain agile and scale in response to demand.

A central focus for the business is leveraging its proprietary CVflow architecture to power AI applications in two key markets: automotive and Internet of Things (IoT). Success in these sectors depends on delivering high performance, low power consumption, and a strong partnership network that helps win multi-year design contracts with equipment manufacturers.

Quarterly Highlights: Rapid Growth, Margin Dynamics, and Product Milestones

The most prominent achievement for the period was a 49.9% year-over-year increase in revenue (GAAP), which exceeded management’s guidance and set a new quarterly company record. This growth was attributed to strong demand for advanced edge AI products, especially the newer 5-nanometer (5nm) AI SoCs—small, energy-efficient chips specifically designed for running AI algorithms. Management noted, “We are experiencing strong secular growth in the edge AI market, with an expanding breadth of applications driving unit demand, often with our higher priced 5nm AI SoCs.” In addition to topping revenue targets, non-GAAP net income turned positive, in contrast to a loss in the prior-year period.

Gross margins, however, declined to 60.5% (non-GAAP), down from 63.3% in Q2 FY2025. Expenses also remained elevated, largely due to research and development spending of $59.7 million (GAAP, Q2 FY2026) and significant stock-based compensation for employees. Total operating expenses (GAAP) reached $78.2 million, up $3.2 million from the prior-year quarter. While the surge in revenue helped improve profitability on a non-GAAP basis, margin pressure somewhat offset the gains from higher sales volumes.

Key company milestones included shipping over 36 million edge AI processors to date, demonstrating Ambarella's growing role as a supplier in edge AI. Product innovations centered around pushing the CVflow-based AI SoCs into a wider set of applications. The quarter also marked upcoming production shipments tied to new wins, including robotic aerial drones (expected by the end of FY2026) and emerging edge infrastructure (expected to enter production in FY2027). These advances point to diversification beyond the company's roots in video security and into fields such as robotics and infrastructure, expanding its addressable market.

Ambarella also maintained financial flexibility, ending the quarter with $261.2 million in cash, equivalents, and marketable securities, compared with $219.8 million at the end of Q2 FY2025—an 18.8% increase.

Looking Ahead: Raised Guidance and Watchpoints for Investors

For Q3 FY2026, management projects revenue in the range of $100.0 million to $108.0 million, with the midpoint, if achieved, representing another record. Gross margin on a non-GAAP basis is expected in the 60.0–61.5% range, which, while stable, remains below the prior year. Non-GAAP operating expenses are expected to rise slightly, tracking ongoing R&D investments. For the full FY2026, leadership raised its revenue growth target to 31–35%, a notable increase from the 19–25% range issued after the prior quarter. If achieved, these results would set all-time highs for both quarterly and annual revenue.

Management did not provide explicit guidance on GAAP profitability for FY2026 but signaled that, as long as revenue growth persists, continued non-GAAP profitability is likely. Investors may wish to watch for the pace of margin recovery, the timing of new product launches such as edge infrastructure and robotics platforms, and management's ability to balance rapid growth with profitability as spending remains high.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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Key Points

• Record GAAP revenue jumped 19% to $29.8 billion, driven by a surge in AI server shipments within ISG.

• Non-GAAP earnings per share rose 19% to $2.32.

• Full-year FY2026 revenue and AI server shipment guidance were raised as management signaled continued AI demand.

• These 10 stocks could mint the next wave of millionaires ›

Dell Technologies (NYSE:DELL), a global leader in IT infrastructure and personal computing solutions, reported financial results for Q2 FY2026 on August 28, 2025. The company announced record GAAP revenue of $29.8 billion, up 19%, outpacing analyst estimates (non-GAAP) and the company’s own prior midpoint guidance of $29.0 billion. Non-GAAP earnings per share rose to $2.32, a 19% increase over the same period last year and above the prior guidance range. The standout was the company’s Infrastructure Solutions Group, where sharp growth in AI-optimized servers set new records. Despite margin pressures, Dell raised its full-year outlook, signaling confidence in continued momentum fueled by AI demand.

Business Overview and Key Success Factors

Dell Technologies is a global provider of technology solutions focused on IT infrastructure, servers, enterprise storage, and personal computers. Its two major operating segments are the Infrastructure Solutions Group (ISG), which covers servers, storage, and networking, and the Client Solutions Group (CSG), which includes commercial and consumer PCs plus related services.

The company's recent strategy emphasizes the fast-growing fields of artificial intelligence (AI) infrastructure, hybrid cloud deployments, and new as-a-Service models for buying technology. Key factors critical to Dell’s ongoing success are its scale, global reach in over 170 countries, ongoing investment in research and development, flexible payment solutions, and a broad portfolio that provides both recurring and transactional revenue streams.

Quarterly Highlights: AI Drives Growth, Mixed Performance Elsewhere

The second quarter showed a shift in Dell’s business mix, with the ISG segment delivering record revenue due to demand for AI servers. Revenue in ISG (GAAP) reached $16.8 billion, a 44% rise from the prior year, sharply accelerating from recent quarters. Servers and Networking sales, which make up the bulk of ISG, climbed 69% as customers continued building AI-enabled data centers. Management reported $10 billion in AI solution shipments in the first half of FY2026, already surpassing the full prior year.

AI-driven growth did not fully carry over into all areas. Storage business revenue fell 3% to $3.9 billion (GAAP), reversing its recent streak of quarterly gains. The company has pointed to the “attach” opportunity—selling storage alongside big AI infrastructure deals—but this connection has not yet delivered higher storage sales. Operating margins in ISG also dropped from 11.0% to 8.8%.

Client Solutions Group results were mixed. CSG revenue edged up just 1% to $12.5 billion (GAAP). Commercial PC revenue rose 2%, while consumer PC revenue declined 7%. causing operating margins in CSG to compress from 6.6% to 6.4% compared to Q2 FY2025.

The company generated robust adjusted free cash flow of $2.5 billion, up 96% from the prior year, and returned $1.3 billion to shareholders through buybacks and dividends. Gross margin, the portion of revenue left after direct costs, increased in total dollars but declined as a percentage of sales, reflecting a greater share of lower-margin AI hardware and weaker pricing in legacy businesses.

Outlook and Investor Considerations

Looking ahead, management raised the full-year FY2026 revenue forecast to between $105.0 and $109.0 billion, with a midpoint that is $4.0 billion higher than its previous full-year revenue guidance midpoint. The midpoint for non-GAAP earnings per share is now $9.55, up from the prior guidance of $9.40 non-GAAP. For Q3 FY2026, revenue is expected to be $26.5–$27.5 billion, and non-GAAP EPS is projected at $2.45. Dell also increased its full-year AI server shipment target to $20 billion, up from $15 billion after seeing outsized demand through the first half of the year.

Investors should monitor a few important dynamics as Dell’s business mix evolves. Rapid growth in AI servers is fueling revenue gains, but also compressing margins for now. The company’s ability to realize more storage and recurring services sales from its AI customer base will be important for long-term profitability. The continued slide in consumer PC demand and the pace of further commercial PC upgrades are also critical trends to watch, as is the durability of the current wave of AI infrastructure spending. No change was disclosed during the period.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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Key Points

• Elastic (NYSE:ESTC) beat its own revenue and earnings forecasts for the quarter, with revenue up 17.0% and non-GAAP EPS up 71.4% in FY2025 compared to FY2024.

• Non-GAAP operating and profit margins improved considerably in FY2025.

• Management issued a conservative outlook for the coming quarter and year, projecting a noticeable slowdown in revenue growth.

• These 10 stocks could mint the next wave of millionaires ›

Elastic (NYSE:ESTC), a software company known for its Search AI Platform that powers search, observability, and security solutions, reported earnings for the quarter ended July 31, 2025, on August 28, 2025. The company’s results did not surpass Wall Street expectations for Q1 FY2026, with reported GAAP revenue of $415.3 million and non-GAAP earnings per share (EPS) of $0.60, compared to analyst estimates centering around $425.73 million in GAAP revenue and $0.64 non-GAAP diluted EPS. Performance was bolstered by robust growth in its cloud-based offerings and strong uptake from enterprise clients. Despite the beat, management set a more cautious tone for the next period, forecasting revenue growth to slow to the mid-teens in FY2026 and projecting nearly flat sequential revenue. Overall, the quarter showed notable progress in margins and cash generation, but forward guidance signals management is bracing for a more measured pace ahead.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q4 2025 earnings report.

The Elastic Business and Recent Strategic Focus

Elastic delivers software to help organizations search, observe, and secure their data. Its main Search AI Platform offers tools for real-time data exploration, security event detection, and application performance monitoring. The company’s core products include Elasticsearch (search software) and Kibana (data visualization), available on a cloud subscription or for customers to run on their own systems.

In recent years, Elastic has put emphasis on its cloud-based services and integrating artificial intelligence features into its platform. The key focus has been growing the Elastic Cloud business, expanding AI-driven capabilities like machine learning and vector search, and deepening partnerships with major cloud providers. Success for Elastic hinges on driving adoption among large enterprises, innovating with AI, and maintaining healthy expansion among existing customers.

Notable Events and Performance in the Quarter

Elastic’s GAAP revenue rose 20% year over year, with revenue exceeding its own forecasts and signaling continued demand for its data search and AI technologies. The cloud segment remained a highlight, with Elastic Cloud revenue growing by 24% year-over-year, accounting for 47% of total GAAP revenue.

Operating income on a non-GAAP basis jumped 75% compared to Q1 FY2025, and the non-GAAP operating margin widened from 10.7% to 15.7%. Adjusted free cash flow, which essentially measures the cash left over after running the business and making capital investments, increased by 81.6% compared to Q1 FY2025 to $116.0 million, and growing sales to large business customers.

Several key product milestones marked the period. The company launched the Elastic AI SOC Engine, an artificial intelligence-powered security tool that helps automate threat detection and investigation for enterprise customers. In its observability product family, Elastic introduced Logs Essentials, a new cloud-based tier for simplifying system monitoring. The company deployed advanced vector search algorithms—BBQ and ACORN-1—which improve search results for AI and large language model workloads. These continued investments support Elastic’s positioning as a leading provider in both the observability and security software markets.

Elastic’s go-to-market focus on enterprise accounts paid off, with the number of customers spending more than $100,000 per year rising to over 1,550. The company maintained a net expansion rate of approximately 112%, showing existing customers were continuing to grow their use of the platform. New partnerships also supported the period, including collaborations with large public-sector clients such as the U.S. General Services Administration and deeper technical ties with technology leaders like Dell and Nvidia. Industry recognition—such as being named a leader in key analyst reports covering observability and security analytics—added credibility to its approach.

Looking Ahead: Guidance and What to Watch

Despite the strong results, Elastic’s management set a more restrained outlook for the upcoming quarter and FY2026. The company forecasts revenue in the range of $415 million to $417 million for Q2 FY2026, representing only 14% growth versus the same period last year and signaling almost no increase from the current quarter. Full-year revenue guidance was set at a midpoint of $1.684 billion for FY2026, up about 14% from last year, but indicates a slowing trend compared to the growth just posted.

Management did not announce any plans to start or increase a dividend. Key areas to monitor include sustained cloud revenue growth and traction among smaller business customers.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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Key Points

• Record GAAP revenue reached $2.006 billion in Q2 FY2026, surpassing the company's own guidance.

• Non-GAAP EPS rose to $0.67 in Q2 FY2026, more than doubling the prior-year figure and at the top end of guidance.

• Data center and AI-related chipset demand fueled segment growth, with data center revenue up 69% year over year.

• These 10 stocks could mint the next wave of millionaires ›

Marvell Technology (NASDAQ:MRVL), a major supplier of semiconductor solutions for data infrastructure and networking, released its Q2 FY2026 results on August 28, 2025. The headline news was record GAAP revenue of $2.006 billion, up 58.0% from a year earlier and $6.0 million above the mid-point of prior guidance. The company also reported non-GAAP earnings per share (EPS) of $0.67, more than double the previous year's $0.30 and at the top end of its guided range. With operating margin expansion and robust results in data center and networking, this quarter showed record-setting sales, AI-driven demand, and strong execution, while also making note of margin pressures and customer concentration as risks to monitor.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2026 earnings report.

Company Overview and Business Focus

Marvell Technology designs and sells semiconductor devices used to move, store, and process data. Its products help power cloud computing, artificial intelligence (AI), networking, storage, and connectivity platforms in data centers and networks worldwide.

In recent years, Marvell has heavily focused on the data center and enterprise networking markets. Success for Marvell hinges on ongoing innovation in custom silicon, signal processing, and interconnect products, as well as expanding its presence with cloud and AI customers. Key priorities have included rapid R&D investments, building a strong intellectual property (IP) portfolio, and maintaining robust relationships in a competitive landscape.

Quarter Highlights and Segment Performance

During the period, Marvell delivered its highest GAAP revenue on record. The data center segment was the primary engine, generating $1.49 billion, or 74% of total GAAP revenue, a 69% increase from the previous year. Most of this segment's gains were driven by demand for AI-related custom silicon and advanced electro-optics products, as stated by management: ““Marvell’s growth this quarter is being fueled by strong AI demand for our custom silicon and electro-optics products, as well as a significant increase in the pace of recovery in our enterprise networking and carrier infrastructure end markets. Our custom AI design activity is at an all-time high, with the Marvell team now engaged in over 50 new opportunities across more than 10 customers.””

Revenue in this group rose 28% year over year to $193.6 million, making up 10 % of total sales. Carrier infrastructure, which supports wireless and telecom networks, grew by 71% year over year to $130.1 million (GAAP). While the consumer segment showed a large quarterly increase, this business is known for lower average margins. Automotive and industrial revenue (GAAP) was $76.0 million, compared to $76.2 million in Q2 FY2025 but will shrink in coming quarters following the sale of the Automotive Ethernet business, divested on August 14, 2025.

With GAAP research and development investment increasing to $519.0 million, Marvell’s commitment to maintaining its technology leadership is clear. Non-GAAP operating margin climbed to 34.8%, up 8.7 percentage points from Q2 FY2025. Non-GAAP gross margin slipped to 59.4%, down from 61.9% a year ago, consistent with previous statements that a higher share of custom AI silicon programs carries structurally lower gross margins but remains accretive at the operating margin level due to larger revenue contributions.

Inventory levels grew only moderately in Q1 FY2026. The company noted a sizeable increase in accounts receivable, to $1.45 billion (GAAP) as of Q2 FY2026. Security of Marvell’s intellectual property portfolio continues to play a vital role.

However, Marvell did complete the divestiture of its Automotive Ethernet business in August, which will result in a significant one-time gain in Q3 FY2026.

Looking Ahead

For the third quarter of fiscal 2026, management expects GAAP revenue in the range of $2.06 billion plus or minus 5%. Non-GAAP earnings per share are guided at $0.74, while GAAP earnings per share will show an inflated jump due to a one-time $2.10 per share gain on the completed automotive business divestiture. Underlying business earnings are therefore expected to grow only modestly from this quarter’s level.

Key areas for investors to watch include the pace of AI-related product adoption and the evolving mix of custom silicon, which directly impacts margins. Customer concentration in high-volume programs remains a potential risk, as does competition from large chipmakers with overlapping portfolios. The management team has highlighted innovation in next-generation chip architectures and continued investment in IP as important success factors, especially as new design wins with AI and hyperscale customers ramp. Marvell Technology does pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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Key Points

• SentinelOne (NYSE:S) exceeded $1.0 billion in annualized recurring revenue (ARR) as of the second quarter, with

• Non-GAAP operating margin turned positive at 2% but free cash flow remained negative, highlighting the tradeoff between growth and profitability.

• Management raised full-year revenue guidance and projects continued double-digit growth, though growth rates have slowed compared to prior years.

• These 10 stocks could mint the next wave of millionaires ›

SentinelOne (NYSE:S), a cybersecurity company specializing in artificial intelligence-powered security software, announced its results for the second quarter of fiscal 2026 on August 28, 2025. The most notable news from the release was the company reaching $1.0 billion in annualized recurring revenue (ARR), with quarterly revenue climbing to $242.2 million (GAAP)-- a 22% year-over-year increase, and matched internal guidance. Non-GAAP earnings per share rose to $0.04, and the firm achieved a positive non-GAAP operating margin. However, free cash flow remained negative. Management raised its full-year revenue outlook. Overall, the quarter saw continued momentum, but with signs of moderating top-line growth.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2026 earnings report.

Understanding SentinelOne: What the Company Does and Where It’s Focusing

SentinelOne delivers cybersecurity software that uses artificial intelligence to identify and respond to threats in real time. Its core product is the Singularity Platform, an AI-driven suite that autonomously protects cloud, endpoint, and data environments. The platform relies on several AI models for threat detection and rapid incident response without the need for human intervention.

The company’s recent strategy has emphasized broadening platform functionality, expanding into international markets, and deepening penetration among existing customers. Key success factors include AI differentiation, expanding recurring revenue through large enterprise clients, and maintaining operational efficiency as it grows. With cybersecurity threats becoming more complex, market expansion and product integration remain central to its ongoing strategy.

Quarter Highlights: Revenue, Customer Growth, and Platform Progress

SentinelOne's revenue (GAAP) increased 22% to $242.2 million, meeting internal guidance. This reflects not only ongoing demand for its AI-driven cybersecurity platform but also the company’s ability to attract larger customers. Annualized recurring revenue, a measure of predictable, subscription-based sales, surpassed $1.0 billion for the first time. The company also reported that customers generating $100,000 or more in annual recurring revenue grew 23% to 1,513.

The company's non-GAAP operating margin swung from negative to positive, improving from (3%) in the prior year to 2%. Non-GAAP earnings per share climbed to $0.04. On the other hand, free cash flow margin held steady at (3%), as cash generation remained a challenge. GAAP profitability remains elusive, as the company continues to book sizable GAAP losses after accounting for non-cash expenses such as stock-based compensation. Operating cash flow, while flat for the quarter, shows some improvement on a trailing twelve-month basis.

Platform adoption remains a business focus, with ongoing investment in AI—particularly in its AI-powered cybersecurity platform and increasing automation across endpoint, cloud, and data security modules. The release did not detail new product launches or major partnerships this quarter, and cited "robust growth and platform adoption". Competition and lengthening sales cycles were once again mentioned as risks, though no new adverse developments were highlighted.

Share repurchases continued as part of the company’s buyback program. Stock-based compensation (GAAP) rose year over year.

Business, Product, and Customer Context

SentinelOne positions itself around AI-driven security, automating the detection and response to cyber threats across client devices, cloud services, and data storage. Its Singularity Platform, encompassing cloud security, data protection, and endpoint defense solutions, aims to offer a unified approach to cybersecurity. The firm’s focus on AI—citing “relentless focus on innovations unifying AI, data, and security”—aligns with broader enterprise trends requiring rapid response to evolving digital threats.

Customer metrics showed solid progress this period, with the number of clients spending over $100,000 in annual recurring revenue rising to 1,513.

Looking Ahead: Management Outlook and What to Watch

For the third quarter, management forecasts revenue of $256 million. The company raised its full-year revenue outlook to between $998 million and $1.002 billion. Expected non-GAAP gross margin is guided to 78.5% to 79%, with a projected 4% non-GAAP operating margin for the third quarter. Management reaffirmed its commitment to achieving full-year operating profitability and positive free cash flow.

While strong top-line growth and customer traction continued, growth rates have moderated compared to earlier years. Investors will likely focus in future quarters on the sustainability of large customer additions, whether improvements in profitability can be achieved alongside growth, and if free cash flow can turn consistently positive. Persistent GAAP losses and high stock-based compensation remain issues to watch as the company matures and strives for long-term profitability.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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Key Points

• GAAP diluted earnings per share improved to $0.20 in Q4 fiscal 2025, reversing a loss.

• Gross merchandise volume jumped 43% to $10.4 billion in Q4 fiscal 2025, surpassing company guidance.

• Active consumer count rose 24% to 23.0 million as of Q4 fiscal 2025, highlighting accelerating customer adoption.

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Affirm (NASDAQ:AFRM) reported its earnings for the quarter ending June 30, 2025, on August 28, 2025. The company delivered strong results in Q4 fiscal 2025, highlighted by a return to profitability. Earnings per diluted share reached $0.20, reversing a loss of $0.14 per share in the same quarter last year. Revenue climbed to $876 million, up from $659 million a year earlier, exceeding the high end of analyst estimates for revenue. Gross merchandise volume reached $10.4 billion, well above previous company guidance. The quarter stood out for growth in key operating metrics and expanding profitability margins.

What Affirm Does, and What Drives Its Success

Affirm is a financial technology company that lets consumers pay for purchases over time using installment loans, often at a 0% annual percentage rate (APR). Its platform combines payment technology, partnerships with merchants, and risk assessment algorithms to power its buy-now-pay-later service. For shoppers, Affirm offers an alternative to credit cards. For merchants, it provides a way to boost sales and customer satisfaction by enabling point-of-sale financing.

Recently, Affirm has focused on expanding its merchant and consumer network, growing its product lineup, and investing in technology. The company relies on advanced risk management and new checkout options, such as the Affirm Card, which is both a physical and virtual payment card, and adaptive digital checkout tools. Key success factors include growing transaction volume, managing credit risk, maintaining strong merchant partnerships, and operating efficiently through automation powered by artificial intelligence.

Quarterly Developments: What Drove the Performance

This period saw growth across Affirm's main business metrics. Gross merchandise volume rose to $10.4 billion in Q4 fiscal 2025, up 43% year over year, driven by increased use from both existing and new consumers. The number of active consumers reached 23.0 million as of June 30, 2025, an increase of 24%. Transactions per active consumer climbed to 5.8 from 4.9 in the prior year, showing higher engagement with Affirm's services.

Total revenue reached $876 million, up 33% year over year. This outpaced company guidance and reflected both higher transaction activity and expanded adoption of new products, including the Affirm Card. The card, which lets users split payments or pay in full, reached 2.3 million active cardholders, nearly doubling from the prior year. Gross merchandise volume through the card segment more than doubled, rising 132%. Direct-to-consumer channels also grew, with gross merchandise volume up 61% year over year.

Profitability improved significantly. Operating income for the quarter switched to a gain of $58 million, compared to a $73 million loss in the same period last year. The adjusted operating margin reached 27.0%, an improvement of 4.3 percentage points compared to the prior year. Revenue less transaction costs, a company-defined non-GAAP metric that removes funding and processing expenses, rose 37.4% to $425.1 million, though its margin narrowed slightly as the mix of lower-yield, 0% APR loans increased.

Technology and cost control played a role in these gains. Management noted that from fiscal 2023 to fiscal 2025, headcount stayed nearly flat while the platform handled almost double the merchandise volume. Artificial intelligence in underwriting and product features supported productivity; for example, machine learning models reduced credit decision times and helped control delinquencies, while new “AdaptAI” tools increased transaction volume by 5% among adopting merchants. There were no major new product launches during the quarter, but network expansion and technology improvements remained a focus.

Inside the Business: How Affirm Works and Where It Focuses

Affirm's operations are built on a payment platform that uses cloud computing and artificial intelligence. It processes thousands of purchases every minute, allowing merchants to offer flexible payment options at checkout. The company's buy-now-pay-later installment loans are designed to appeal to budget-conscious consumers and merchants looking to drive higher sales and conversion rates.

Much of Affirm's recent growth in fiscal 2025 comes from its focus on risk management and network effects. Its credit models analyze hundreds of data points per transaction to assess risk and set terms in real time. By offering more 0% APR loans—where the merchant covers the finance charge—Affirm improves conversion rates and attracts higher-quality, lower-risk consumers, as seen in the quarter. The ability to price risk precisely helps Affirm keep default rates in check, even as it grows quickly.

Detailed Quarterly Performance: Financials, Products, and Trends

Affirm's results this period were strong across both financial and operational measures. It achieved a $0.20 profit per diluted share in Q4 fiscal 2025, up from a loss in the same period last year. Growth in revenue and gross merchandise volume outpaced expectations, thanks in part to an increase in the number of merchants (now 377,000, up 24%) and higher transaction frequency by existing consumers. The company also saw the number of transactions handled through its payment platform rise more than 50% year over year.

Revenue mix shifted further toward lower-yielding, merchant-funded 0% APR loans, which now account for 29% of gross merchandise volume, up from 25%. These loans help attract higher-spending, low-risk consumers, but their shorter duration and lower finance costs pressure margins, as seen for 0% APR monthly installment loans in the prior quarter. Despite this, Affirm’s revenue less transaction costs (non-GAAP) remained at the high end of its long-term range at 4.1% of volume. Technology expenses increased due to ongoing investment, but sales and marketing costs decreased primarily due to a decline in enterprise warrant expense.

From a product perspective, the Affirm Card segment expanded rapidly. Not only did card gross merchandise volume and active users nearly double, but in-store spending also jumped by 187%. The Affirm Card works as both a pay-now and pay-later tool, helping Affirm capture a larger share of its users’ total spend. Direct-to-consumer gross merchandise volume through the app and card also rose sharply, reaching $3.1 billion, up 61% year over year.

Credit quality improved as 30+ day delinquencies fell by 18 basis points year over year, and allowance for credit losses remained stable at 5.6%. Net charge-off rates stayed consistent with the company’s historical average at about 3.5%. Funding costs eased, with the average cost of funds dropping approximately 90 basis points year over year. Merchant concentration remains a concern, with almost half of Affirm’s gross merchandise volume generated by its top five merchant partners, representing about 46% of volume, and the company expects at least one major merchant to leave the platform by early 2026.

Looking Forward: Guidance and Expectations

Management provided financial guidance for the first quarter and full fiscal year 2026. For the next quarter, Affirm expects gross merchandise volume of $10.1 billion to $10.4 billion. Revenue for the quarter is forecast at $855 million to $885 million, or roughly 8.4% of gross merchandise volume. The company also expects an adjusted operating margin (non-GAAP) of 23% to 25% for the quarter, with a full-year margin above 26.1%.

The company’s outlook for fiscal 2026 notes that the mix of 0% APR loans will continue to grow, putting downward pressure on revenue per transaction and margins. Management also disclosed that at least one major enterprise merchant will transition off the platform by the second quarter of fiscal 2026.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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Key Points

• Profitability surged, as diluted earnings per share (GAAP) swung to $0.05 from a loss of $(0.09) in the prior-year period.

• Revenue (GAAP) slipped 2.3% to $1,488,529,000 but was in line with guidance.

• Adjusted EBITDA (non-GAAP) grew 36.4% year over year to $113.9 million, prompting a raised full-year profit outlook.

• These 10 stocks could mint the next wave of millionaires ›

Petco Health and Wellness (NASDAQ:WOOF), a national pet care and retail chain, published its second-quarter fiscal 2025 results on August 28, 2025. The report showed expanding profit margins. Free cash flow improved year over year, and Operating income surged year over year, even as sales modestly declined. Revenue (GAAP) landed at $1.49 billion, down 2.3% compared to last year and matching prior expectations. Earnings per diluted share (GAAP) turned positive to $0.05 from a loss last year. Notable cost discipline drove a 36.4% year-over-year increase in adjusted EBITDA to $113.9 million, which led management to lift its annual profit guidance. The quarter marked a clear step forward on profitability and execution, though sales trends remain under pressure.

Company Overview and Strategic Pillars

Petco Health and Wellness is a nationwide pet retailer with stores and a growing ecommerce platform. It offers a range of pet products, grooming, and training services at more than a thousand U.S. locations. In recent years, it has focused on combining digital shopping with in-store options, growing its veterinary services, and building the Vital Care membership program to keep customers engaged. The company also invests in developing its workforce to provide consistent customer service, referring to employees as "partners" and offering career development programs.

The business is working to differentiate itself through integrated services and flexible shopping methods. Recent strategy centers on expanding services within stores, optimizing its assortment to match customer preferences, and increasing efficiency at all levels. The Vital Care program, offering regular pet care and perks via membership, is central to its long-term plan for building loyalty and encouraging spending across both products and services.

Quarter In Review: Profitability, Revenue, and Segment Performance

Revenue (GAAP) dipped 2.3%, landing squarely within management’s prior forecast for a modest decrease. Comparable sales slipped 1.4% Product revenue dropped 3.0% year over year on a GAAP basis. Service and other revenue edged up 0.8% year over year (GAAP). Services remain the fastest-growing business line.

Profitability improvement was the standout. Gross profit margin rose 1.2 percentage points to 39.3%, marking the second consecutive quarter of margin gains. Operating income (GAAP) hit $43.0 million, making a dramatic reversal from near-flat results a year ago. Free cash flow (non-GAAP) improved to $53.8 million, supported by disciplined expense management and well-controlled inventory levels, which ended at $608.5 million, down from $653.3 million at FY2025 year start. Cash and cash equivalents also climbed to $188.7 million.

Underlying this shift, management worked to reduce costs and improve pricing across product categories. Product cost of sales (GAAP) fell by about $40 million year over year.

Store closures continued, with management planning approximately 25 net closures for FY2025—a move aimed at optimizing profitability but one that could weigh on future sales capacity.

Petco’s Service Portfolio and Product Mix

Services offered at Petco locations include veterinary care—covering checkups, vaccinations, and surgeries—along with grooming and training. These services expand the company’s reach beyond typical retail sales and shield the business from some pressures that affect purely product-driven retailers.

On the product side, the company continues to adapt its offerings and pricing to keep shoppers engaged, especially as economic pressures shift where consumers spend. Adjustments have included adding more national brands and reducing less popular products, known as SKUs (stock keeping units). This realignment aims to appeal to value-conscious customers. In the past, Petco’s leadership highlighted improvements to appointment booking software and operational processes in the services group—a trend that appears to continue, supporting margin gains.

Looking Ahead: Guidance and Watchpoints

Management again expects revenue for FY2025 to decline in the low single digits, reaffirming its prior sales outlook. However, improved profitability in the first half led the company to raise full-year adjusted EBITDA (non-GAAP) guidance to a range of $385 million to $395 million for FY2025, up from the earlier forecast of $375 million to $390 million. For Q3 FY2025, guidance calls for adjusted EBITDA (non-GAAP) of $92 million to $94 million. No new quantitative targets were provided for sales or margins beyond these figures.

No forward-looking revenue inflection is visible in the company’s FY2025 guidance, keeping expectations measured through year-end. Investors will likely watch for further updates on store closures, progress in core digital initiatives, and new details about the relaunch of the Vital Care membership program, which remains pushed out to 2026. With gross margin expansion and cost controls driving most of the current-year gains, the key question for future quarters is when—or if—these gains can be paired with a return to growth in top-line sales.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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Key Points

• Ulta Beauty exceeded GAAP revenue and earnings expectations in Q2 FY2025, and revised full-year sales and profit guidance upward for FY2025.

• Comparable sales rebounded by 6.7% in Q2 FY2025, with strong growth in both store traffic and average transaction size.

• Margins came under pressure as expenses grew faster than sales, driven by higher payroll, increased incentive compensation, and greater corporate overhead.

• These 10 stocks could mint the next wave of millionaires ›

Ulta Beauty (NASDAQ:ULTA), a leading beauty retailer known for its expansive in-store and online product selection, released results for the quarter ended August 2, 2025, on August 28, 2025. The company reported GAAP revenue of $2.79 billion in Q2 FY2025, up 9.3% from the same period last year, and diluted earnings per share of $5.78 (GAAP), reflecting a 9.1% increase. Both top- and bottom-line GAAP figures surpassed market expectations. Comparable sales—an industry metric reflecting year-on-year growth from stores and digital platforms open at least a year—jumped 6.7%, reversing a rare decline in the prior year's quarter. Despite this strength, higher operating expenses led the operating margin to decline to 12.4%, from 12.9% in Q2 FY2024. Overall, the quarter showed a strong sales comeback backed by robust customer engagement and an upgraded financial outlook, even as costs rose more quickly than revenue.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Ulta Beauty’s Business Model and Growth Focus

Ulta Beauty operates as a specialty retailer offering cosmetics, skincare, haircare, fragrance, and beauty services across more than 1,400 U.S. stores and an omnichannel digital platform. It stands out by combining mass-market and prestige brands, often carrying exclusive products and private-label lines. This broad assortment gives it a competitive edge.

The company’s business relies heavily on drawing customers into its stores for hands-on experiences and personalized advice, while also developing robust digital offerings. Key focuses include expanding its store footprint, investing in its loyalty program, introducing new and exclusive brands, and constantly enhancing the customer experience. Building and maintaining a strong loyalty program has become increasingly important, as more than 95% of sales now come from members.

Quarter Highlights: Sales Surge, Margin Pressures, and New Initiatives

The quarter saw a significant sales upswing. Revenue jumped to $2.79 billion in the quarter ended August 2, 2025, while comparable sales—a key measure tracking growth from stores and online platforms open at least a year—increased by 6.7% after a 1.2% decline in the prior year period. This growth was fueled by a 3.7% rise in customer transactions and a 2.9% increase in average ticket size, reflecting more visits and higher per-visit spending. Management directly attributed these gains to increased comparable sales, contributions from new stores, and the integration of Space NK, a luxury beauty retailer acquired in July.

Skincare, wellness, and fragrance product types increased their share of overall sales to 25% and 12%, respectively. Cosmetics and haircare—the traditional margin drivers—saw modest declines in their sales mix. Strategic launches of exclusive and new brands drove interest, supported by a pipeline that has included 19 brand introductions in recent months. The company also completed the acquisition of Space NK, expanding its physical presence into the U.K. and Ireland with 83 new stores. While this broadens Ulta’s assortment and international reach, it also introduces new integration and balance sheet risks.

Gross margin (GAAP) ticked up to 39.2%, thanks in part to “lower inventory shrink” (a reference to losses from theft or damage) and higher merchandise margins. However, operating expenses rose faster than sales, with selling, general, and administrative costs climbing 15% to $741.7 million (GAAP). The main drivers were higher payroll, incentive compensation, and corporate overhead related to ongoing investment in store experiences and digital capabilities. As a result, the company’s operating margin slipped by half a percentage point to 12.4% of net sales (GAAP). Net income (GAAP) grew to $260.9 million, though this gain was modest compared to revenue growth as spending increased.

The brand’s omnichannel approach remained a cornerstone, with ongoing enhancements to digital experiences. The company opened 24 new locations, bringing its U.S. count to 1,473. Loyalty engagement remains strong, with more than 95% of sales from registered members in FY2024. However, management did not provide updated membership figures for this quarter. Store events, new fulfillment options, and digital partnerships helped drive both traffic and engagement.

Outlook and Investor Considerations

Ulta Beauty raised its expectations for FY2025, now guiding for net sales of $12.0 billion to $12.1 billion, comparable sales growth of 2.5% to 3.5%, an operating margin of 11.9% to 12.0%, and diluted EPS between $23.85 and $24.30. These upgrades reflect strong year-to-date performance and sustained customer demand. However, management noted ongoing caution about how consumer demand might evolve going into the second half of FY2025, especially as operating expenses are expected to remain elevated due to investments in integration, new store growth, and technology.

Inventory (GAAP) grew 20.5%, outpacing sales growth, due to new store openings and inventory needs for recently launched brands. Short-term debt increased to $289.1 million after funding the Space NK acquisition, and cash balances declined to $242.7 million.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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Movado Group(NYSE:MOV) reported second quarter fiscal 2026 results on September 4, 2025, posting a 3.1% sales increase to $161.8 million compared to the prior-year period and more than doubling adjusted operating profit to $7 million compared to the prior-year period, despite a $2.2 million tariff headwind. Management highlighted advances in licensed brand performance and operating expense reductions, while navigating elevated U.S. tariffs on Swiss imports and continued uncertainty in key markets. The following analysis unpacks strategic inventory moves, brand performance dynamics, and cost-saving execution affecting the long-term investment thesis.

Inventory buildup mitigates supply chain and tariff risks

Inventory at quarter-end was up $28.3 million, or 15.5%, over the same period last year, with $16 million of this positioned in the U.S. at quarter-end, as the company proactively shifted Swiss-made watches stateside ahead of new 39% tariffs on Swiss imports. This move followed a period of low inventory at year-end and enables the company to fulfill a substantial portion of this year's needs with reduced tariff exposure on existing stock, even as the company anticipates continuing uncertainty in tariff policy.

"During the second quarter, we have built a strong position in inventory of Swiss-made watches in the United States and would expect a substantial portion of the year's needs are covered. We are hopeful that over the next several months, the United States and Switzerland will agree to lower tariff rates."
-- Efraim Grinberg, Chairman and Chief Executive Officer

This inventory strategy helps offset some of the tariff impact and provides flexibility to respond to further changes in trade policy.

Licensed brands drive sales growth for MOV

Licensed brands grew sales 9.5% year-over-year as reported (6.5% in constant currency). This surge was driven by Gen Z engagement via digital platforms, product innovation in women’s and men’s collections, and strong cross-regional results, particularly in Europe and Latin America.

"In our licensed brands, we grew by 6.5% on a constant currency basis or 9.5% on a reported basis. Overall, we reported gross margins of $54.1 million versus 54.1% versus 54.3% in Q2 of last year despite the 130 basis point impact of additional tariffs in the U.S."
-- Efraim Grinberg, Chairman and Chief Executive Officer

The licensed portfolio is showing momentum with new collections and effective digital channel execution, supporting overall top-line growth despite margin pressures from tariffs.

Cost savings improve MOV profitability

Operating expenses fell by $2 million year-over-year to $80.6 million, primarily through strategic reductions in marketing, despite higher performance-based compensation. These expense controls, alongside revenue growth, resulted in a $4.4 million increase in adjusted operating income to $7 million compared to the prior-year period, with annualized savings from restructuring actions expected to deliver approximately $10 million, spread evenly throughout the year.

"We would expect to see approximately $10 million of annualized savings spread evenly throughout this year as a result of the actions we took late last year to reduce operating expenses."
-- Efraim Grinberg, Chairman and Chief Executive Officer

These ongoing cost reductions are expected to support margin expansion and provide a buffer against external headwinds such as tariffs and currency fluctuations.

Looking Ahead

Management declined to provide fiscal 2026 outlook due to continuing macroeconomic uncertainty and the unpredictable impact of tariffs, but confirmed that inventory levels are expected to be in line by year-end and a substantial portion of this year's U.S. Swiss-made watch needs is covered. Share repurchases will be selectively deployed to offset dilution, with $48.4 million remaining under the authorized program.

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This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.