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American Eagle Outfitters (AEO 30.10%) reported its Q2 2025 results on July 1, 2025, delivering revenue of $1.28 billion (down 1% YoY) (GAAP), operating income up 2% YoY to $103 million, and diluted EPS up 15% YoY. Management highlighted significant customer acquisition driven by high-profile marketing campaigns, robust turnaround in Aerie brand comps (+3% YoY), and outlined explicit strategies for tariff mitigation, SG&A discipline, and ongoing store optimization. Below are three actionable, insight-driven themes with direct investment impact.

Brand collaborations accelerate AEO customer growth

American Eagle’s Sydney Sweeney and Travis Kelce campaigns generated over 700,000 net new customers since launch, fueling strong positive traffic and denim sellouts. But the combined cross-gender reach and omnichannel impact of these campaigns drove unprecedented new customer acquisition.

“The American Eagle Sydney Sweeney campaign was intended to be a brand and business reset, and it has. Let me be very clear. Sydney Sweeney sells great jeans. She is a winner. And in just six weeks, the campaign has generated unprecedented new customer acquisition. To be clear, that consumer acquisition is coming from every single county in the US. This momentum is national, and it is pervasive. We experienced denim sellouts of items that Sydney has worn. We have strong positive traffic throughout this quarter, and as Jen mentioned, a staggering 40 billion impressions. But a brand campaign is not to be judged in just one day, one week, or even one month. A brand campaign endures. We are off to a start beyond our wildest dreams. As we track consumer sentiment over the past six weeks, we have seen consideration and purchase intent meaningfully up. And now it’s our opportunity to continue to convert this buzz into business and to convert these new customers into repeat customers. That’s the work of the work ahead.”
— Craig Brahmers, American Eagle CMO

Tariff mitigation reduces profit headwinds for AEO

Incremental tariff costs are estimated at approximately $20 million in Q3 2025 and $40 million to $50 million in Q4 2025, the sourcing team reduced unmitigated tariff exposure from $180 million to $70 million for the back half of FY2025 through country-of-origin rebalancing and vendor negotiations. China sourcing will drop to low single-digit penetration in the back half of the year, compared to mid-single digits year-to-date, according to management on the Q2 2025 earnings call.

“Our unmitigated number was closer to $180 million versus the $70 million we are guiding to. So combination of rebalancing, country of origin, cost negotiations with our vendors, optimizing freight between air and ocean costs, some price and then some pricing. So I’d say pricing is down the list. We are taking our shots there. We have increased some tickets. This gives us some flexibility in promoting those items. Where we haven’t seen really any customer resistance to some of those increases, but it’s not real it’s not the largest mitigation strategies. There’s other components I just talked about that the team has done a great job for the mitigating the back half impact and the annual impact go forward. I guess just relative to that, down mid-single digit AUR. The second quarter, what are you expecting for the back half?”
— Mike Mathias, CFO

Effective tariff mitigation minimizes margin erosion and demonstrates disciplined cost management, differentiated positioning, and multi-segment loyalty renewal.

Aerie and men’s initiatives drive AEO’s category renewal

Aerie reversed a negative Q1 by delivering 3% comp growth and record sales in Q2 FY2025, attributed to innovation in intimates and loungewear.

“Starting with Aerie, we drove a nice rebound from the first quarter, delivering comp growth of 3% and achieving record second-quarter revenue. Performance was driven by positive demand across a number of major categories, including intimates, soft dressing, sleepwear, and our activewear collections at offline. While shorts were the most challenging seasonal category, we are focused on driving improvements here as well. Among the highlights, intimate has been a key area of focus within our long-range plan, and we will recapture share in the return of this category to growth. We are pleased to see customers responding to new fits and fabrics in undies and bras and more regular fashion drops. For example, in July, we introduced the Parisian romance fashion capsule, which embraced feminine touches like lace and chic combos of our most loved silhouettes. Our Aerie customers loved it, and it was the page-turner we needed to enter the fall season strong.”
— Jen Foyle, President, Executive Creative Director

Looking Ahead

Consolidated comparable sales for the third quarter to date are up mid-single digits, with management guiding for low single-digit comp growth and operating income of $95 million to $100 million for Q3 2025, despite $20 million in incremental tariffs. The outlook for Q4 FY2025 also calls for low single-digit comp growth and operating profit of $125 million to $130 million, absorbing $40 million to $50 million in tariff impact. American Eagle anticipates closing 35 to 40 stores by year-end, opening 30 Aerie/offline locations, and maintaining capital expenditures at approximately $275 million for the year; no additional share repurchases announced after completion of the $200 million program earlier in 2025.

GitLab (GTLB -1.89%), a leading provider of an integrated platform for software development, security, and operations, reported its Q2 FY2026 results on Sept. 3, 2025. Revenue reached $236 million, exceeding management’s revenue guidance range of $226 million–$227 million. Adjusted EPS came in at $0.24, up from $0.15 in the same period last year and also ahead of guidance offered back in the Q1 report. Adjusted operating margin moved to 17% in Q2 FY2026, up from 10% one year ago.

The quarter underscored robust customer and enterprise expansion and continued focus on AI-driven innovation, although leadership transitions and slight margin pressures introduced areas to watch for the coming quarters.

Source: GitLab. Note: Fiscal 2026’s second quarter ended July 31, 2025. Fiscal 2025’s Q2 ended July 31, 2024.

Business Overview and Strategic Focus

GitLab serves organizations ranging from startups to multi-national enterprises with its all-in-one DevSecOps platform, reflecting GitLab’s core proposition—a single application that helps customers manage every step of the software development lifecycle, from planning to code writing to deployment and monitoring. The platform streamlines workflows, increases code delivery speed, and helps reduce security risks by integrating all these functions into a unified experience.

The company’s open-core approach encourages thousands of community members to contribute improvements and new features, supporting rapid innovation. In recent years, GitLab has moved to enhance its artificial intelligence (AI) capabilities inside its platform, aiming to give customers smarter automation, better code suggestions, and advanced security features. Expanding into enterprise accounts, deepening cloud partnerships, and furthering AI integration have been key areas of focus.

Quarter Highlights: Growth Drivers and Product Developments

The reported quarter saw GitLab achieve a 29% increase in GAAP revenue. Those generating over $100,000 in recurring annual revenue now total 1,344, up 25 % from last year’s reporting period. Total customers spending more than $5,000 annually rose 11% to 10,338.

The platform’s subscription-based model, combining both software as a service (SaaS) and self-managed options, generated $212.7 million (GAAP), up from $163.2 million in Q2 FY2025. Remaining performance obligations, a measure of future contracted revenue not yet recognized, increased by 32% year-over-year. The dollar-based net retention rate, which measures how much recurring revenue is retained from existing customers after accounting for churn, upgrades, and downgrades, held steady at a healthy 121%.

It launched a public beta of GitLab Duo Agent Platform, described as an AI orchestration layer that integrates with multiple external artificial intelligence tools. This product is meant to help customers quickly adopt AI-driven development through their preferred large language models. Strategic expansion continued with a three-year partnership with Amazon‘s AWS to broaden the Dedicated (single-tenant) service, specifically targeting compliance-heavy and public sector environments.

Gross margin, a key profitability indicator measuring the percentage of revenue remaining after direct costs, slipped slightly to 90% on a non-GAAP basis, down from 91% in Q2 FY2025. Although operating margins improved, the company reported a GAAP net loss, influenced by stock-based compensation and other non-cash accounting charges. The cash position strengthened, with cash and equivalents rising to $261.4 million, providing flexibility for ongoing investment and operations.

Looking Ahead: Guidance and Key Watch Areas

For Q3 FY2026, management projects revenue of $238 million to $239 million, implying year-over-year growth of about 30%. Full-year guidance for FY2026 forecasts revenue of $936 million to $942 million. The company provided guidance for non-GAAP operating income of $133 million–$136 million for FY2026, and similarly raised its forecast for non-GAAP diluted earnings per share to $0.82–$0.83 for FY2026. Revenue guidance, however, was maintained at its previous level.

Leadership changes are a notable point going forward. GitLab’s Chief Financial Officer is stepping down as of September 19, 2025, with the interim CFO promoted from within the finance function. Additional new executive appointments may support scaling as the company grows. Investors will likely monitor how the company manages its margin trends, continued enterprise customer gains, and execution on its AI strategy, all while facing strong competition in developer and security software markets. GTLB does not currently pay a dividend.

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

Many investors don’t give Impinj (PI 4.59%) a second look nowadays. It’s easy to gloss over this technology stock when you see a trailing price-to-earnings ratio (P/E) of 695 and a price-to-sales ratio (P/S) just below 15. The company’s RFID tagging technology may be crucial to inventory management and shipping services in this digital era, but that’s still a downright offensive valuation.

Yet analysts agree that Impinj’s stock is a solid buy, and their average price target is roughly in line with current share prices. How is that possible, when Impinj’s valuation could result in nosebleeds and acrophobia?

This chart can clarify the situation, and maybe even change your mind about Impinj’s lofty stock price:

PI Revenue (Quarterly) data by YCharts

Impinj’s sales and free cash flows are soaring right now — despite weak results in the company’s core target markets. Many retailers and shipping specialists are reporting soft or even negative revenue growth and sliding cash flows in this economy. Yet, Impinj is enjoying robust order growth and record-level gross margins right now.

And this looks like the start of a golden age for Impinj. Management set optimistic growth targets for the next quarter and next year, based on strong demand for RFID tags and data management systems.

Image source: Getty Images.

What’s next for Impinj?

In other words, Impinj is breaking through to a new era of consistently positive earnings, for the simple reason that its main customers absolutely require tighter operations nowadays. Accurate and flexible unit-tracking tools are more valuable than ever.

And the incredibly high valuation ratios should subside as Impinj continues to tell this thrilling growth story. P/E ratios can look weird when a bottom-line improvement is passing by the breakeven level, as Impinj’s trailing earnings are doing now. Those headline-writing ratios should look a lot less scary in 2026 and beyond.

There are a number of reasons to believe that Pfizer (PFE -0.90%) is an attractive dividend stock. The lofty 6.9% dividend yield is the obvious first reason, but the healthcare giant also has a long history of being well run. That said, if you are thinking of stepping in to buy Pfizer today, you’ll want to know these three facts before you do.

Image source: Getty Images.

1. Wall Street is worried about normal business gyrations

Pfizer is a pharmaceutical company. The drugs it makes are highly complicated to find, test, and develop. This is why drug makers are granted a temporary monopoly on new discoveries. However, the patent protection that companies like Pfizer get eventually end.

And when that happens competitors bring out generic versions of the products at lower price points. This is what’s known as a patent cliff in the drug sector. Pfizer has a couple of big drugs expected to lose patent protection in the years ahead. As such, investors are closely watching, and worrying about, Pfizer’s drug pipeline.

On top of that, there’s a bit of uncertainty in the healthcare sector right now because of regulatory changes taking place in the United States. The new administration in Washington is viewing the healthcare industry, and particularly drug makers, in a more critical light. That has investors worried about the future, too. And as you might expect, stocks like Pfizer have been performing weakly. That’s why the dividend yield is so high today.

The thing is, drug discovery is lumpy and regulatory changes aren’t abnormal. From a big-picture perspective, Pfizer is just dealing with typical business gyrations. It has successfully done so before and will likely continue to be a long-term survivor this time around, as well. Concern is justified, but these aren’t issues that will spell the end of this industry-leading pharma stock.

2. Pfizer cut its dividend, Merck did not

Pfizer has increased its dividend annually for 15 consecutive years. That streak, however, follows a dividend cut. This isn’t meant as a warning that a another dividend cut is imminent. In fact, that doesn’t seem very likely at all, noting that the adjusted earnings dividend payout ratio was 55% in the second quarter of 2025.

But Pfizer isn’t the only pharma stock you can buy. Competitor Merck (NYSE: MRK) has a lower 3.9% or so dividend yield, but it has a dividend that has trended generally higher over time. Not every year, mind you, but when Pfizer cut its dividend during the Great Recession, Merck did not. The same basic story is in play with Bristol-Myers Squibb, which has a nearly 5.3% yield. If dividend consistency is important to you, you may want to consider stepping down on yield.

PFE Dividend data by YCharts

3. A drug company isn’t the only way to invest in the pharma niche

There’s also a big-picture consideration to make here about drug maker Pfizer. You can get a 6.4% yield from real estate investment trust (REIT) Alexandria Real Estate. Why would a REIT be an alternative to a pharma stock? Alexandria’s business focus is on leasing research space to healthcare companies like Pfizer. OK, Pfizer isn’t one of the REIT’s largest tenants, but Eli Lilly, Moderna, and Bristol-Myers Squibb are the top three tenants. Merck is No. 17.

Investing in Alexandria is a way to get exposure that sidesteps the typical drug cycle, since rent still has to be paid even after a patent cliff. The big story here, however, is that research and development is vital to the pharma industry. So Alexandria’s tenants can’t simply stop their research efforts if they want to remain competitive. 

To be fair, Alexandria’s yield is historically high today because it is working through a difficult period. Notably, occupancy has dropped around four percentage points in just six months. But it is still a well-positioned business (occupancy remains over 90%) and likely to survive without the need for a dividend cut. If you are looking at Pfizer, you should at least take the time to consider this REIT as a high-yield alternative.

Pfizer is fine, but not the only option

The upshot here is that buying Pfizer is probably not a huge mistake, even for more conservative investors. But the dividend history has a material blemish on it that you won’t find with some of its direct competitors. And if you don’t like the inherent volatility of the drug discovery process, there are “picks and shovels” alternatives, like Alexandria, that you might want to consider instead.

Basically, Pfizer is OK, but not the only dividend choice you have at your disposal to get exposure to the pharmaceutical sector.

Lululemon Athletica (LULU -0.80%) is suing Costco Wholesale (COST 1.08%) for selling similar, knock-off products in its warehouses. For the high-end apparel company, how this ends up playing out could be a make-or-break moment for its stock.

Shares of Lululemon are down close to 50% this year as investors have grown concerned with the company’s lackluster growth and worrisome exposure to China. The stock hasn’t been trading at these levels since 2020, and depending on your outlook for the business in the long run, Lululemon could either be a steal of a deal right now, or nothing more than a value trap.

What could end up determining that is its battle with Costco.

Image source: Getty Images.

Why the Costco lawsuit could be critical for Lululemon

Lululemon is alleging that Costco has been selling “dupes” of its products and that they are confusing its customers. The suit claims that Costco has infringed on Lululemon’s intellectual property due to how similar the items are, and that they go beyond just selling similar types of clothing. It says that Costco is also using the same color names, such as “Tidewater Teal,” which Lululemon says, “is an important component” of its business.

If Costco is able to fend off the lawsuit and continue selling the products, it could pose a serious threat to Lululemon’s growth at a time when it’s already struggling to grow sales at a high rate. Consumers have been cutting back on discretionary expenditures and if Lululemon has to also compete against Costco and its low prices, that could exacerbate its current woes.

Many Lululemon pants frequently retail at more than $100, and if consumers can buy similar products at their local Costco, that could hurt the company’s pricing power, possibly forcing it to reduce prices, which would hurt its gross margins and impact its overall level of profitability.

Lululemon’s growth rate has been falling sharply in recent years

In recent quarters, Lululemon has been growing its sales by just single digits, which is down significantly from how well the business did in previous years — when it wasn’t uncommon for its growth rate to be in excess of 20%.

LULU Revenue (Quarterly YoY Growth) data by YCharts

If you factor in the potential for Costco to provide customers with similar-looking products, that could further erode its growth rate in the future. And with tariff uncertainty still looming with respect to China, a key market for Lululemon and where it also imports many of its products from, there are multiple headwinds for investors to consider before buying the retail stock.

Why I’d avoid Lululemon stock right now

Lululemon’s intellectual property and overall competitive advantage faces a big test with its suit against Costco right now. If consumers can buy similar-looking clothing at just a fraction of the price, it could lead to even worse growth prospects for the company in future quarters. And with macroeconomic conditions not looking all that great, consumers may still be tempted to look for lower-priced alternatives. The declining growth rate does seem to suggest that demand may be constrained right now.

Although Lululemon stock may look cheap, trading at a price-to-earnings multiple of around 14, given the uncertainty the business faces in both the short and long term, this is not a company I’d invest in today. It all hinges on how much value consumers place on the brand and the willingness to pay significantly more for Lululemon products. Right now, things aren’t looking too good, and unless Lululemon’s growth prospects drastically improve or it wins its suit against Costco, I’d avoid the stock.

Published on
03/09/2025 – 8:00 GMT+2

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MEPs are set to complain widely about the EU-US trade agreement when they confront Commission trade chief and agreement negotiator Sabine Weyand during a Parliamentary hearing on the deal on Wednesday.  

“While clearly we understand that the EU has chosen stability, diplomacy and to keep a cool-minded approach, however this cannot translate into the acceptance of an unfair and asymmetric trade relation with our American friends and partners,” Italian MEP Brando Benifei.

“As it is now, it is not acceptable,” Benifei told Euronews, speaking on behalf of his Socialists & Democrats group.

Last week the Commission proposed reducing tariffs on most US industrial goods, as well as less sensitive agricultural products, to 0%, as it began implementing the agreement reached with the US at the end of August. At the same time, the agreement provides that the EU will pay a 15% tariff on its exports to the US.

The Commission’s legislative proposal must now navigate its way through the Parliament and the EU Council for approval.

The Greens are also speaking out against an unbalanced agreement and rejecting the Commission’s argument that it will ensure stable trade relations with the US.

“The deal has major disadvantages for the EU,” German Green MEP Anna Cavazzini said, adding: “The only ‘gain’ that the Commission is selling us is stability. However, Trump’s incessant demands and new tariff threats are turning this process into a waste of time.”

Just after the agreement was concluded, US President Donald Trump threatened countries with digital legislation — like the EU — with tariffs, accusing them of directly targeting Big Tech.

According to the German MEP, the proposal to reduce EU tariffs on US imports will clearly “not have a smooth sailing through the European Parliament.”

The agreement, which is still under discussion within the Parliament’s largest group, the centre-right EPP, has nonetheless failed to win the full support of some of its individual members within the parliamentary committee on trade.

“Capitulation”

“This is an outright capitulation — we’re committing to colossal sums for investments and pledges to purchase billions worth of chips and military equipment, while granting the US 0% tariffs,” French MEP Celine Imart (EPP) said, “all this for the reindustrialisation of the US !”

Swedish MEP Jörgen Warborn, who coordinates the work of the EPP within the trade committee, is more cautious.

“It is hard to put yourself in the situation of the negotiators of the Commission,” he told Euronews, adding: “It is good that we have a framework agreement, because hopefully this can give us more stability. But at the same time, I don’t see the deal as balanced as I would have hoped it to be.”

Within Renew, the liberal group at the Parliament, some MEPs are also angry. The treatment granted to US agricultural products — benefiting from 0% tariffs or favourable quotas for certain items — is not going down well.

“I’m outraged by the whole situation. Yes, of course, there are the US’s promises when it comes to defence, but this agreement truly exposes our total dependence, which forces us to sign just about anything,” Belgian MEP Benoit Cassart (Renew), who is also a farmer, said, adding: “I disagree with those who think the EU has ‘won’ just because things didn’t turn out worse. If that’s the logic, then next time the US will start at 50% and we’ll end up with 40% tariffs on all our exports.”

French MEP Marie-Pierre Vedrenne, who coordinates Renew in the committee, considers too that “there is a widespread feeling that we [the EU] failed to put any real leverage on the table.”

Four Marine League football coaches who had their teams forfeit games against Narbonne last season in protest of the City Section and Los Angeles Unified School District failing to investigate alleged rule violations in the Gauchos’ program are feeling a bit of vindication after a Narbonne booster said he paid parents of players to transfer to the Harbor City school.

They believe their actions were warranted to highlight the issues seen off the field in high school football despite receiving criticism from some. An LAUSD investigation eventually determined a group of Narbonne players were ineligible, and the City Section imposed a three-year playoff ban on Narbonne for rule violations.

Mike Christensen, the former Carson football coach, said he’s “sad” that the booster Brett Steigh has admitted involvement in the ongoing Bishop Montgomery football scandal that has resulted in the team’s season coming to an end. Steigh also helped finance St. Bernard’s football program, which shut down its team in 2021, 2022 and 2023 following the resignation of coach Manuel Douglas, a former Narbonne coach.

Christensen said coaches who participated in the forfeits last year faced repercussions from school district personnel, “but it needed to be done.”

“My relationship with my principal was never the same,” Christensen said.

Perhaps the coach under the most pressure was former Banning coach Raymond Grajeda, who was the first to forfeit his league game to Narbonne. Then the three others followed.

“We got punished hard from the district office,” Grajeda said. “It was one of the reasons for me quitting.”

He said all the rumors about money changing hands and school officials declining to investigate without evidence was motivation to the coaches as a unit to try to stop the rule violations.

“Everything was true,” Grajeda said. “We live in the community. Some of those deals that went down, they were in our backyard. If you’re going to do the transfer thing, do it right. I feel some sense of relief. The future of football in this area, we want to be competitive and fair.”

Former Gardena coach Monty Gilbreath said, “I think it turned out to be good because we were able to bring attention what was going on and caused the City Section to take a closer look. We knew as coaches it was a fact. We didn’t have the means to prove it.”

Christensen retired, Gilbreath resigned as did Grajeda, who now spends his time watching his freshman daughter play flag football for Banning.

Only San Pedro coach Corey Walsh kept coaching this season.

“I do not care at all,” Walsh said of the reaction to the booster accepting responsibility for the illegal payments. “We’re playing Great Oak this week. I was trying to see the bigger picture. I knew where this was headed if something didn’t change.”

Christensen said last January he was attending a coaches’ convention when several coaches came up to him and thanked him for taking a stand last fall.

“This has to stop,” he said.

Asana (ASAN 2.48%), the work management software company known for its cloud-based platform that helps teams organize and track projects, reported its second quarter fiscal 2026 results on Sept. 3, 2025. The most important news was that revenue (GAAP) totaled $196.9 million, up 9.9% from the same period last year, beating analyst estimates. Adjusted earnings per share were $0.06, a swing from a $(0.05) loss in the same period last year, while adjusted operating margin improved notably to 7.1%.

The company also raised its full-year guidance, signaling greater confidence in Asana’s ability to drive long-term, durable growth and sustained profitability. The quarter showed strong cost discipline, higher profitability, and ongoing innovation.

Source: Asana. Note: Fiscal 2026’s second quarter ended July 31, 2025. Fiscal 2025’s Q2 ended July 31, 2024.

Business Overview and Recent Focus

Asana delivers a cloud-based work management platform that enables organizations to plan, track, and manage tasks and projects across teams. The platform helps streamline workflows, break down complex initiatives, and improve team collaboration in businesses of all sizes. Its core functionality unites task management with progress tracking, goal setting, and automation — all delivered through a user-friendly interface.

Recently, Asana has prioritized expanding its AI-driven feature set, deepening security certifications, and scaling its platform for large enterprises. The company has focused on integrating artificial intelligence to automate tasks, provide predictive insights, and improve workflow adaptability, aiming to attract larger customer cohorts and address complex business needs. Key success factors include driving customer retention, accelerating adoption of AI-powered offerings, and maintaining security and compliance as more highly regulated industries become customers.

Key Achievements and Developments in the Quarter

Revenue grew 9.9% over the prior year period, slightly outpacing the high end of the company’s own guidance. Asana also achieved its highest-ever non-GAAP operating margin of 7.1%, marking a sharp improvement from a negative 8.7 % a year earlier. The company posted non-GAAP net income of $15.1 million, or $0.06 per diluted share, turning around from an $11.1 million non-GAAP net loss in the prior year and $(0.05) per share in the prior year. Adjusted free cash flow reached $35.4 million, compared to $12.8 million in the prior year period.

Expenses as a percentage of sales fell across core functions: research and development dropped to 24.2% of revenue from 31.5% last year (non-GAAP), and sales and marketing dropped to 44.8% from 50.9% (non-GAAP). This tighter cost control helped produce both margin expansion and a $27.3 million reduction in operating loss on a GAAP basis.

Product innovation remained central. During the quarter, Asana launched the Smart Workflow Gallery, a suite of prebuilt, AI-powered workflows aimed at making it easier for customers to embed artificial intelligence in their daily work routines. Further, management referenced upcoming releases such as “Teammates” and expanded partnerships, including Asana’s presence in the Amazon Web Services Marketplace. AI Studio, Asana’s tool for embedding workflow automation and insights, continued to gain traction, especially among larger enterprise clients.

On the customer side, large enterprise customer momentum persisted. The number of customers spending $100,000 or more annually rose 19% year over year to 770, with 42 net additions since the prior quarter. Core customers, defined as those spending $5,000 or more annually, grew 9% year over year to 25,006, and revenue from this group rose 12% compared to the prior year period. Despite these gains, management noted that net retention rates — a measure of customer renewal and expansion — have plateaued at 96%.

Security and compliance advanced as differentiators. Asana achieved “FedRAMP In Process” designation, signaling its intent to serve more public sector and regulated industry clients. Ongoing certifications such as ISO compliance and annual SOC 2 Type II reporting were cited as ways the company maintains trust with larger organizations. Management also called out the integration of Asana’s platform in environments demanding strict security requirements as a foundation for future enterprise expansion.

Looking Ahead: Guidance and Strategic Considerations

Management forecast revenue of $197.5 million to $199.5 million, implying year-over-year growth of 7.4% to 8.5%. Full-year revenue guidance increased slightly to a range of $780.0 million to $790.0 million. The full-year non-GAAP operating margin target was raised to 6%. However, top-line growth is slowing: management anticipates revenue growth slipping to high single digits (7% to 9%). Non-GAAP operating income is expected in the $12 million to $14 million range, with non-GAAP earnings per share of $0.06 to $0.07.

Company leadership highlighted that sustaining margin gains now relies on both continued cost discipline and improvements in net retention and expansion, as discussed in the context of non-GAAP results. The company’s net retention rate was 96%. Product innovation, especially in AI, will be crucial in driving increased usage and contract sizes with large enterprise customers. Investors should monitor adoption of AI Studio features, international expansion, customer cohort growth, and any material customer contract renewals or downgrades, as in the $100 million-plus renewal that occurred last quarter.

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

Image source: The Motley Fool.

DATE

Wednesday, September 3, 2025 at 5 p.m. ET

CALL PARTICIPANTS

President & Chief Executive Officer — Antonio Neri

Chief Financial Officer — Marie Myers

Head of Investor Relations — Paul Glaser

Need a quote from a Motley Fool analyst? Email [email protected]

RISKS

Marie Myers noted that networking operating margin declined to 20.8%, down 160 basis points year over year for fiscal Q3 2025 (period ended July 31, 2025), including both Intelligent Edge and Juniper, driven by variable compensation and product-related costs.

GAAP diluted net earnings per share of $0.21 was below guidance of $0.24–$0.29, with $326 million in net costs primarily attributed to Juniper-related acquisition costs, stock-based compensation, and amortization of intangibles, excluded from non-GAAP results.

Net leverage ratio increased to 3.1x pro forma post-acquisition at fiscal Q3 2025; management targets a reduction to around 2x by fiscal 2027, emphasizing debt paydown as a strategic priority.

Marie Myers highlighted that the inclusion of Juniper had an unfavorable impact on the cash conversion cycle, which increased to 35 days from last quarter, and noted “costs that I believe are commented on in Q3 and Q4 and also the increase in OI and E.”

TAKEAWAYS

Total Revenue— $9.1 billion, up 18% year over year and sequentially, with $480 million from one month of Juniper included.

Networking Revenue— $1.7 billion, up 54% year over year; Intelligent Edge revenue alone up 11% year over year, and the networking segment contributed nearly 50% of non-GAAP consolidated operating profit.

Annualized Recurring Revenue (ARR)— $3.1 billion, up 75% year over year including Juniper; Excluding Juniper, ARR grew 40% year over year, mainly driven by software and services.

Server Revenue— $4.9 billion, an all-time high, up 16% year over year and 21% sequentially, with AI systems revenue at $1.6 billion (up 25% year over year and 57% sequentially).

Operating Margin— Non-GAAP operating margin at 8.5%, down 150 basis points year over year, but up 50 basis points quarter over quarter (non-GAAP). Excluding Juniper, non-GAAP operating margin was 8.1% (down 190 basis points year over year, up 10 basis points sequentially).

Free Cash Flow— Free cash flow was $719 million, a significant sequential improvement aided by inventory reduction and higher AI backlog conversion.

AI Orders— Nearly doubled quarter over quarter, with sovereign AI orders up approximately 250% sequentially; record AI backlog at $3.7 billion.

Cost Synergy Commitment— Management affirmed at least $600 million in acquisition-related cost synergies over the next three years, with $200 million expected to be realized next year.

Guidance Updates— Full-year non-GAAP EPS outlook for fiscal 2025 raised to $1.88–$1.92. GAAP EPS revised to $0.42–$0.46 for fiscal 2025; projected constant-currency revenue growth of 14%–16% for fiscal 2025. Fiscal Q4 2025 networking revenue expected to be up over 60% sequentially due to full Juniper inclusion.

Hybrid Cloud Revenue— $1.5 billion, up 11% year over year; Segment operating profit dollars grew 26% with a 70 basis point increase in margin year over year.

SUMMARY

Hewlett Packard Enterprise(HPE 0.75%) reported record total revenue of $9.1 billion following the acquisition ofJuniper Networks(NYSE:JNPR), with all major segments experiencing year-over-year revenue growth and margin expansion in select product lines. Gross margin pressure emerged due to mix shifts in server, networking, and hybrid cloud. Networking became nearly half of consolidated non-GAAP operating profit, demonstrating outsized profitability from business realignment. Robust demand for AI offerings, with a record-setting backlog and new order growth, materially improved free cash flow, which helped lower inventories and better position working capital. Management reaffirmed synergy targets and improved its non-GAAP EPS outlook for fiscal 2025, while also explicitly highlighting the impact of acquisition-related costs and leverage on earnings and capital allocation.

CEO Neri stated, “Our improved profitability flowed through to non-GAAP diluted net earnings per share of $0.44.” near the high end of guidance for non-GAAP diluted net earnings per share, emphasizing earnings quality amid major portfolio shifts.

Management outlined plans for salesforce harmonization by year end, targeting synergy realization and expanded channel reach.

Marie Myers clarified that “free cash flow generation is paramount” underscoring debt reduction and restoring leverage ratios as HPE’s capital allocation priorities post-acquisition.

HPE’s ARR mix is increasingly tilted toward software and services, which now exceeds 81%.

Neri indicated HPE will detail its networking and longer-term AI strategy at the October Securities Analyst Meeting.

INDUSTRY GLOSSARY

ARR (Annualized Recurring Revenue): Run-rate metric measuring recurring subscription, service, and lease revenue accumulated over the prior quarter, scaled to a full year.

SASE (Secure Access Service Edge): Security framework that combines wide area networking (WAN) and network security services in a cloud-native offering.

AUP (Average Unit Price): Average selling price per unit, relevant for analyzing mix shifts and pricing trends in product segments.

SMB (Small and Medium Business): Segment of customers defined by Hewlett Packard Enterprise as organizations smaller than large enterprises, a key networking target.

Gen 11/Gen 12 servers: Hewlett Packard Enterprise’s eleventh and twelfth generation server platforms featuring new processor architectures and enhanced AI capabilities.

Full Conference Call Transcript

Operator: Good afternoon. And welcome to the Fiscal 2025 Third Quarter Hewlett Packard Enterprise Earnings Conference Call. All participants will be in a listen-only mode. Please note that today’s event is being recorded. I would now like to turn the conference over to Paul Glaser, Head of Investor Relations. Please go ahead, sir.

Paul Glaser: Good afternoon. I am Paul Glaser, head of investor relations for Hewlett Packard Enterprise. I would like to welcome you to our fiscal 2025 third quarter earnings conference call with Antonio Neri, HPE’s president and chief executive officer, and Marie Myers, HPE’s chief financial officer. Before handing the call to Antonio, let me remind you that this call is being webcast. A replay of the webcast will be available shortly after the call concludes. We have posted the press release and the slide presentation accompanying the release on our HPE Investor Relations webpage.

Elements of the financial information referenced on this call are forward-looking and are based on our best view of the world and our businesses as we see them today. HPE assumes no obligation and does not intend to update any such forward-looking statements. We also note that the financial information discussed on this call reflects estimates based on information available at this time and could differ materially from the amounts ultimately reported in HPE’s quarterly report on Form 10-Q for the fiscal quarter ended July 31, 2025. For more detailed information, please see the disclaimers on the earnings materials relating to forward-looking statements that involve risks, uncertainties, and assumptions.

Please refer to HPE’s filings with the SEC for a discussion of these risks. For financial information, we have expressed on a non-GAAP basis we have provided reconciliations to the comparable GAAP information on our website. Please refer to the tables and slide presentation accompanying today’s earnings release on our website for details. Throughout this conference call, all revenue growth rates unless noted otherwise, are presented on a year-over-year basis and adjusted to exclude the impact of currency. Antonio and Marie will reference our earnings presentation in their prepared comments.

Finally, I would like to clarify that in the discussion today, any mention of HPE Intelligent Edge will refer to HPE’s prior business segment and network will refer to the combination of Intelligent Edge and Juniper Networks. With that, let me turn it over to Antonio.

Antonio Neri: Thank you, Paul. Good afternoon, everyone. In Q3, we delivered solid results and completed a major milestone. Closing our acquisition of Juniper Networks. Together with Juniper, we will accelerate our momentum across our three strategic business pillars. Networking, cloud, and AI, building a stronger, leaner, and more profitable HPE. In Q3, HPE achieved record-breaking revenue with and without Juniper. Revenue was $9.1 billion, up 18% year over year fueled by strong momentum across AI, networking, and hybrid cloud. We grew revenues year over year across our three largest business segments. Demand was broad-based across our products and services. We increased sequential operating profit dollars in server hybrid cloud and both Intelligent Edge and the new combined networking segment.

We also grew operating profit dollars in financial services on a year-over-year basis. The new combined networking segment accounted for nearly 50% of HPE’s non-GAAP consolidated operating profit. We also improved sequential operating profit margins in server, and hybrid cloud. Our improved profitability flowed through to non-GAAP diluted net earnings per share of $0.44. Free cash flow was $719 million as we significantly lowered our inventory driven by higher AI backlog conversion to revenue and strong supply chain execution. We continue to transform our business through Catalyst, the structural cost-saving program we announced last quarter, including enhancing operational efficiency, simplifying our portfolio, adopting AI, and optimizing our workforce. In Q3, customers continued to demonstrate strong demand for our AI portfolio.

We nearly doubled our AI orders sequentially, driven by sovereign opportunities up approximately 250%. Cumulative orders since Q1 2023 for sovereign and enterprise now account for more than 50% of total AI systems net orders. We exited the quarter with record AI backlog at $3.7 billion. Marie will provide more details on the quarter and our Q4 fiscal year 2025 guide. But first, I would like to provide key Q3 highlights across our business segments. I am incredibly pleased that we closed the Juniper acquisition in July. Integration is progressing well. I have been spending time with Rami and the new combined networking leadership team, which is world-class.

Going forward, we will refer to the combination of our HPE Intelligent Edge segment and Juniper as our new HPE networking segment. Our vision for this segment is clear. To build the best network in business providing customers with a modern secure and AI-driven networking portfolio. Rami and I will discuss our networking strategy in more detail at our upcoming securities analyst meeting in October. On the demand front, the networking market recovery continues. In enterprise, we continue to see robust demand in campus and branch, driven by the wire and wireless refresh, SASE, and data center switching. Wi-Fi seven demand is ramping with orders up triple digits sequentially. In cloud, we see strong demand for networking for AI.

Particularly in data center switching and Juniper PTX routing. Revenue of $1.7 billion increased 54% year over year driven by strong performances in both Intelligent Edge and Juniper. Intelligent Edge revenue increased 11% year over year and 8% quarter over quarter. We generated double-digit year-over-year revenue growth in Campus and Branch, data center switching, automated one, and services. We also grew SASE and security revenue. These strong results contributed to sustained momentum in networking SaaS support services. Operating profit for the networking segment was $360 million up 43% year over year. Benefiting from one month of Juniper results and operating profit dollars expansion in Intelligent Edge. Networking innovation is accelerating across the entire networking portfolio.

Just last week, we introduced new Mist AgenTiC AI native innovations for campus and branch data center switching and automated one. These complement the new agentic AI mesh technology from our HPE Aruba networking portfolio that we announced alongside GreenLake Intelligence at HP Discover in June. Our innovation is being noticed by the market. HPE and Juniper Networks were both recognized again as leaders in the latest 2025 Gartner Magic Quadrant for Enterprise wire and wireless LAN infrastructure. Customers are already taking advantage of the power of our full HPE portfolio with the inclusion of HPE Juniper solutions. For example, early this year, HPE won a multimillion-dollar deal with Spar Austria Group. A leading retailer in Central Europe.

SPAR is building out a digital business services platform underpinned by GreenLake. The full IT stack solution is designed and implemented by HPE Professional Services. It will be fully managed by HPE managed services and includes Aruba switches, Juniper firewalls, Alletra MP storage, plus HPE Clouds ops software including Zerto, OpsRamp, and Morpheus. The solution will enable a cloud-native and AI-driven platform experience. Finally, with respect to integration synergies, we are reiterating at least $600 million in cost synergies over the next three years. In the server segment, market demand is robust across our portfolio.

Revenue of $4.9 billion was an all-time high, increased 16% year over year and 21% quarter over quarter driven by strong conversion of AI orders and solid demand for traditional servers. AI systems revenue of $1.6 billion was also an all-time high. As we completed delivery of a large GB 200 system. Server operating margin improved sequentially benefiting from the changes we made in pricing and discounting early in the year. Which returned traditional server product margins to historical levels. This was partially offset by higher AI mix, including a large deal. As we enter Q4, we continue to expect total server operating margin to be around 10% for the quarter.

AI systems orders increased nearly 100% quarter over quarter, including Middle East sovereign winds and continued traction in enterprise. We have grown enterprise AI orders year over year every quarter. Since the beginning of fiscal 2024. From an innovation perspective, we continue to keep pace with new accelerators technology and time to market customer demands. Last month, we launched HPE servers with the new NVIDIA Pro 6,000 Blackwell and NVIDIA Blackwell Ultra accelerated computing platforms. In traditional servers, customers are continuing to refresh edge infrastructure with more powerful, richly configured servers. As a result, revenue increased double digits year over year on mix shift to HPE Gen 11 and Gen 12 servers.

During the quarter, we expanded the Gen12 compute portfolio to include the latest AMD fifth-generation EPYC processors. The new servers include support for HP compute management with AI-driven lifecycle management. We expect the Gen 12 adoption to accelerate through 2026. In Q3, we also released our next HP nonstop compute solutions for mission-critical workloads. We doubled the memory capacity and doubled the system interconnect bandwidth. Finally, hybrid cloud performance was solid. Revenue of $1.5 billion increased year over year for the fourth consecutive quarter. In addition, operating profit margins were up 70 basis points and operating profit dollars increased 26% year over year. ARR increased 75% compared to Q3 2024 with the inclusion of one month of Juniper results.

On an organic basis, AIR increased 40% in line with our guidance of 35% to 45% CAGR. In storage, we saw robust growth in our IP product portfolio. HPE Alletra MP storage revenue increased triple digits year over year. We have now shipped more than 5,000 Alletra MP arrays to date. We continue to successfully migrate our customer installed base while gaining new customer logos resulting in a one-point gain in the most recently released IDC market share report. Private cloud, we continue to ramp sales of our enterprise AI factory solutions. During Q3, we added twice the number of new private cloud AI customers compared to Q2 with particular interest in our developer configuration.

Software is a core differentiator for our GreenLake cloud for our private cloud portfolio, which is a key contributor to our AIR growth. In June, we announced our new HPE hybrid cloud ops suite software bringing together Morpheus, VM Essentials, OpsRamp, and Zerto. To assist customers from hybrid cloud orchestration virtualization, and observability to continuous data protection. Our cloud software revenue in the quarter increased strong double digits year over year. At Discover Las Vegas, we unveiled GreenLake Intelligence. Our framework for deploying AI agents across cloud and infrastructure to simplify customers’ hybrid IT operations. We also expanded our agentic AI capability in OpsRamp networking and storage. Innovations like these continue to attract new customers to our GreenLake cloud.

In Q3, we added approximately 2,000 new customers bringing our GreenLake cloud customer count to approximately 44,000. In closing, as we look ahead, I am excited for HPE’s next chapter. The completion of our Juniper acquisition, positions us to win in networking as the market enters a new era of IT and business transformation where AI cloud and networking converge. We launched a new brand for HP to reflect this potential. The brand is modern, expresses what our technology and talent make possible and reinforces our relevance with our customers. Our vision for the company is clear. To lead in the AI era through a modern secure cloud-native and AI-driven networking portfolio that accelerates our profitable growth.

We are focused on executing with precision capitalize on the growing opportunities in the market, deliver strong value to our customers and our shareholders. I look forward to providing more details about our strategy our long-term value creation framework at our Securities Analyst Meeting on October 15 at the New York Stock Exchange. I would like now to turn it over to Marie to provide more insights into our quarterly results and full fiscal year guide. Marie?

Marie Myers: Thank you, Antonio, and good afternoon. I’m pleased with our performance this quarter while navigating an evolving market environment. Regarding our results, first, all segments of our business performed well. Our server business has moved past the pricing and discounting issues we reported earlier this year in compute. Hybrid cloud posted its fourth consecutive quarter of year-over-year top-line growth and operating margin expansion. And revenue growth in our Intelligent Edge business is improving as the networking market recovery continues. Second, I’m pleased that we completed our acquisition of Juniper, which will shift our revenue mix towards a higher growth higher margin networking business.

We continue to expect the acquisition to be accretive to our non-GAAP results in year one, enhancing our profitability as we capture synergies and drive new market opportunities with our increased scale. And finally, we made solid progress on our cost reduction initiatives announced last quarter. I’m looking forward to sharing more about the next chapter of our company at our security analyst meeting next month. Let’s talk about the details of the quarter. Third-quarter revenue of $9.1 billion which included Juniper, was up 18% year over year and quarter over quarter. And up 11% excluding Juniper revenue of $480 million. Excluding Juniper, total revenue of $8.7 billion exceeded the high end of our outlook range.

Demand was strong this quarter, and we did not see material demand pull in. Our reported annualized recurring revenue run rate was $3.1 billion including $590 million contributed by Juniper. Reported ARR was up 75% year over year or up 40% excluding Juniper. Software and services ARR, including Juniper, doubled year over year as the mix of this higher margin revenue improves sequentially by 640 basis points to over 81%. Including Juniper, non-GAAP gross margin was 29.9%, down 190 basis points year over year and up 50 basis points quarter over quarter.

On a year-over-year basis, gross margin was impacted by an unfavorable mix within server, networking, and hybrid cloud, which more than offset the benefit margin contribution from one month of Juniper. Excluding Juniper, gross margin was 28.3%. Non-GAAP operating expense, including Juniper as a percentage of revenue, was flat sequentially and declined 40 basis points year over year, reflecting strong revenue performance and disciplined cost management, partially offset by variable compensation. We will continue to manage costs rigorously as we target efficiencies through Catalyst, complemented by at least $600 million at expected Juniper-related cost synergies over the next three years with $200 million expected to be realized next year.

Excluding Juniper, non-GAAP operating expense as a percentage of revenue was 20.2%, down 160 basis points year over year and down 120 basis points sequentially. Driven by strong cost discipline as we grew revenue faster than expenses. Non-GAAP operating margin, including Juniper, was 8.5%. Down 150 basis points year over year primarily due to lower gross margins partially offset by cost management. The 50 basis point sequential improvement was primarily due to the inclusion of Juniper’s results. Excluding Juniper, operating margin was 8.1%, down 190 basis points year over year, but up 10 basis points sequentially.

During the quarter, we generated free cash flow of $790 million including approximately $200 million of deal-related costs, and higher net interest expense, partially offset by improved inventory management. Non-GAAP diluted net earnings per share of $0.44 was toward the high end of our guided range of 40 to 45¢. Our non-GAAP diluted net EPS includes a $0.01 net attributable to consolidating one month of Juniper’s results and the impact of net interest cost related to the acquisition. Q3 GAAP diluted net earnings per share was $0.21 below our guidance of $0.24 to $0.29.

In terms of these results, non-GAAP diluted net earnings per share excludes $326 million in net costs primarily due to Juniper-related acquisition costs, stock-based compensation expense, amortization of intangible assets and acquisition disposition, and other charges. Partially offset by adjustments for taxes, gain from litigation settlement, and other adjustments. Now let’s turn to our segment results. Starting with networking, As previously mentioned, we closed our acquisition of Juniper on July 2. So our Q3 earnings report includes only one month of Juniper’s results. Our Q4 networking results will include our first full quarter of consolidated Juniper financials. We will provide more details regarding our near-term and longer-term strategy and outlook for our networking business and our security analyst meeting.

Next month. Networking revenue for the quarter was $1.7 billion, up 54% year over year up 48% sequentially, and up 11% year over year, excluding Juniper. Strong networking revenue growth was driven by the ongoing recovery in the networking market and consolidation of Juniper’s results for the month of July. While it’s early days, we are pleased with our order growth, and revenue performance we generated across the combined networking business. Reported orders grew strong double digits year over year, including double-digit growth in both campus switching and the SMB markets. Excluding Juniper, Intelligent Edge orders grew a mid-teens percent year over year, Demand in Q3 was strong as sellout increased sequentially and year over year.

Networking operating margin was 20.8%, down 160 basis points year over year. This is inclusive of a 22.7 operating margin from HPE’s former Intelligent Edge business and 15.8% operating margin from Juniper’s networking business. Excluding Juniper, operating margin was down 90 basis points sequentially primarily due to variable compensation, and product-related costs. Server revenue was $4.9 billion, up 16% year over year and up 21% sequentially, above the high end of our guidance range. The quarter-over-quarter revenue increase was driven largely by a double-digit increase in AI systems revenue due to a large AI deal we shipped in the quarter. Augmented by higher AUP from a favorable mix shift in core compute.

In traditional server, revenue increased sequentially driven by volume increases and AUP strings supported by the continued shift to Gen 11 service. Augmented by early yet improving sales of our Gen 12 service. In AI systems, we signed $2.1 billion in net new orders, driven by robust growth in sovereign net new orders, which increased by triple digits both year over year and sequentially, while enterprise net new orders were also up year over year. Together, enterprise and sovereign constitute greater than 50% of our cumulative AI orders since Q1 2023. We generated $1.6 billion of revenue during the quarter up 25% year over year and up 57% sequentially.

Driven by the previously disclosed large AI system that we shipped in the quarter. We finished Q3 with our pipeline at multiple of our $3.7 billion ending backlog. Server operating margin of 6.4% was consistent with our outlook. Margin performance improved sequentially benefiting from the changes we made in pricing and discounting earlier in the year which returned traditional server product margins to historical levels. This was partially offset by higher AI mix, including a large deal and AI inventory. Moving to hybrid cloud. Revenue was $1.5 billion, up 11% year over year the fourth consecutive quarter of double-digit growth. Sequentially, revenue increased 1% consistent with our outlook.

In storage, our HPE Eletro MP platform continues to drive robust growth, achieving triple-digit year-over-year revenue growth for the third consecutive quarter while high double-digit margins expanded sequentially again. In Q3, new logos were up more than three hundred and fifty and grew over 70% year over year. In private cloud, revenue grew strong double digits year over year as we see continued growth in our pipeline for PCAI, where the number of new enterprise customers doubled quarter over quarter. Also, our VM Essentials solutions closed over 120 customers in Q3 and has generated a pipeline exceeding 1,000 interested since its launch last November.

Hybrid cloud operating margin increased 50 basis points sequentially to 5.9% and increased 70 basis points year over year the fourth consecutive quarter that our OP margin has expanded on a year-over-year basis. Lastly, our financial services business generated revenue of $886 million down 1% year over year and flat quarter over quarter. Financing volumes increased 2% year over year to $1.5 billion. Our Q3 loss ratio was 0.7%, and return on equity improved sequentially and year over year to 17.7%. Operating margin of 9.9% increased 90 basis points year over year primarily due to a higher mix of financing versus operating leases. But declined 50 basis points quarter over quarter driven by unfavorable operating expenses despite the higher revenue.

Last quarter, we announced Catalyst, a series of initiatives designed to accelerate growth. Increase efficiency, and make it easier to do business with HPE. Our starting point was at approximate 5% workforce reduction from the exit of Q1 with gross savings of at least $350 million by fiscal year 2027. We are executing well against our plan and expect to achieve our target of 20% of the total savings by fiscal year end 2025. We are taking an AI-first approach to reimagine our key workflows I have started in my own finance organization leveraging AI to increase productivity. Turning to cash flow and capital allocation.

We generated $1.3 billion of operating cash flow in the quarter and free cash flow was a positive $719 million a significant improvement sequentially as expected. At the end of fiscal Q3, inventory totaled $7.2 billion down $933 million sequentially, Excluding July ending Chewterbury inventory of approximately $1 billion Q3 ending standalone HP inventory was $6.2 billion down $1.9 billion sequentially. Reducing inventory levels has been a key priority and we exited q with our balance near our normalized level. Our Q3 cash conversion cycle was positive thirty-five days, up nine days from last quarter.

The inclusion of Jurupa unfavorably impacted our CCC calculation this quarter as it includes only one month of Juniper’s revenue and cost of sales results versus the consolidation of Juniper’s July ending balances. This timing issue obscures both the progress we made improving our CCC and the positive contributions for working capital the business generated on a sequential basis when excluding Juniper. We expect our CCC will improve in Q4 four with a full quarter’s consolidation of Juniper’s financials. As we expect the amount of free cash flow we generate to increase sequentially consistent with typical seasonality.

We returned $171 million to shareholders through dividends but were unable to repurchase shares during the quarter because we were in possession of material non-public information that we have since disclosed. As we prioritize debt reduction, we remain committed to our dividend policy and expect quarterly share repurchases comparable to levels reported in the 2025, partially offsetting share dilution resulting from stock-based compensation. At quarter end and including incremental debt associated with the transaction, our pro forma combined net leverage ratio was 3.1 times. We remain committed to our investment-grade credit rating and intend to reduce our net leverage ratio back to our target in the two times range by the 2027. Now let’s turn to guidance.

We are revising our FY 2025 outlook to incorporate four months of contributions from Juniper Networks. For revenue, we expect constant currency growth of 14% to 16%, estimate currency impacts of 30 basis points up nominally versus last quarter’s estimate. With the inclusion of Chudapur, we expect our non-GAAP gross margin outlook for Q4 to be in the mid-thirty percent range and fiscal 2025 to be above 30%. We expect operating expense to increase sequentially driven by full quarter inclusion of Juniper.

We expect full-year non-GAAP operating margin to be in the upper 9% range at the midpoint benefiting from a sequential improvement in Q4 to the upper 11% range driven by the continued improvement in server margins and the accretive contributions from Juniper. We are revising our FY 2025 GAAP EPS range to $0.42 to $0.46 which includes the impact of Juniper. Are raising our non-GAAP EPS range to $1.88 to $1.92 which reflects accretive contributions from Juniper though minimal for the year. We are reaffirming our estimate of a 2¢ impact from tariffs in the second half of the year. Lastly, we are revising our free cash flow outlook to approximately $700 million.

Excluding Juniper, we expect to generate approximately $1 billion of free cash flow in line with the guidance we provided last quarter. Through the end of Q3, year-to-date free cash flow was a $934 million use of cash. We expect Q4 free cash flow to be up materially quarter over quarter due to better net earnings, in addition to favorable working capital driven by significant improvements in accounts receivable collections. For Q4, we expect revenue to be between $9.7 billion and $10.1 billion. For networking, we expect revenue will be up over 60% quarter over quarter, reflecting a full quarter of Juniper. Expect our networking operating margin in Q4 and fiscal 2025 to be in the low 20% range.

For hybrid cloud, we expect revenue to be roughly flat quarter over quarter with a sequentially improved operating margin in the mid to high single digits. For server, we forecast a mid to high single-digit decline in revenue quarter over quarter driven by a greater than 30% sequential decline in AI systems revenue Following the large deal that shipped in Q3. We expect server operating margin to improve sequentially to around 10% for the quarter, reflecting continued momentum behind our improved execution and an improved mix towards enterprise and sovereign as we continue to focus on profitable growth.

Going forward, we will remain focused on profitable growth in the service segment we’ll continue to assess the optimal balance between volume growth, and margins. We expect GAAP diluted net earnings per share to be between $0.50 and $0.54 and non-GAAP diluted net earnings per share to be between $0.56 and $0.60. Our Q4 EPS outlook reflects a sequential increase in diluted shares outstanding to 1.44 billion, attributable to the conversion of Juniper-related stock-based compensation shares and forward awards. Following the acquisition of Juniper, we now expect Q4 OI and E in the $180 million to $200 million range. We expect Q4 free cash flow to be up sequentially, reflecting typical seasonality, favorable working capital, and increased net earnings.

With that, I look forward to seeing you at SAM in October. And now let me open the floor for questions.

Operator: Thank you. We will now begin the question and answer session. And your first question today will come from Aaron Rakers with Wells Fargo. Please go ahead. Yes. Thanks for taking the question and congrats on the close of the Juniper acquisition.

Aaron Rakers: I guess I want to just dive a little bit deeper into the server margin profile that you guys see. I think Antonio, in your prepared comments, you said that we’ve returned to more of a normalized operating margin on the traditional server line. I guess if I look back, I would assume that’s kind of in that low double-digit, let’s call it, 11% to 13% range I guess if I’m to do that math, it leads me to question the profitability of the AI server business. And so I guess, you know, as you think about that 10%, maybe you can unpack the drivers of getting to that level.

And I you know, how should we think about that AI server you know, margin profile? Thank you.

Antonio Neri: Thank you, Aaron, for the question. First, we are very pleased with the progression we made between Q1 to Q2 to Q3 based on the challenges we experienced in Q1 with price and discounting and as you said, we resolved those issues and the traditional server is back to historical levels around 10-12% as you talked about it. We believe that’s consistent with we see going forward. Remember there is a mix shift in addition to those pricing and discount changes. To GEN-eleven and GEN-twelve the structural of those products is different than gen 10 or gen 10 and a half. Obviously, it has higher AUP, different attach rates and the like.

And that’s gonna be a core foundation as we enter Q4. For delivering at the total server segment the around 10% for the quarter. Now this quarter obviously the mix of AI and in particular one deal and the work we did on inventory had a short term impact that ultimately took that what I call the overall server down to the 6.4% but as we exit that which already recognized then you’re going to get the natural lift into that higher single digit to close to 10%. And then therefore also you have the mix of sovereign and enterprise in the AI revenue conversion.

Because as we move from more a server provider centric revenue conversion to more a sovereign and enterprise revenue conversion in AI obviously we’re going to convert less in aggregate numbers it’s gonna have a different margin profile. And that’s why Maria and I the team are very confident that in Q4, the total server operating margin will be around 10%. So that’s the walk. Aaron.

Marie Myers: I’d just add, Aaron, we also have a robust internal framework that guides us in how we evaluate these AI related deals and prioritize them as well.

Operator: Very good. Thank you, Aaron. Operator, next question please.

Operator: Your next question today will come from Wamsi Mohan with Bank of America. Please go ahead.

Wamsi Mohan: Yes. Thank you so much. Now that Jennifer is closed, can you maybe just talk about some of the early progress on integration and go to market changes that we should expect? And any top line synergies and early customer feedback And Marie, maybe if you could talk about just the longer term opportunity for HPE in AI or Antonio. Just relative to networking versus servers, where do you see the larger opportunity for AI both from a revenue TAM and from a margin or profitability standpoint? Thank you so much.

Antonio Neri: Thank you, Wamsi. So first, we are incredibly pleased we closed the transaction of Juniper I think it was closed at the right time because obviously market recovery is taking place but also we see demand across sub segment of the networking market. And as we commented during my remarks and Marie’s remark, every subsegment on networking had a very strong performance. Whether it was HPE Intelligent Edge standalone or Juniper standalone and obviously on a combined basis, it’s even very, very strong. If you look at Compass and Branch, both companies are doing very well. Both company growing double digits, so that’s very strong. In data center switching and we talked about this during the July 9 call.

Juniper had that record breaking performance in data center switches and also a very good performance in routing which we call it the automated one Security was also up in the single digit year over year revenue growth driven by SASE. Then progress we have made is that is very strong, meaning integration is progressing really well. We have a series of milestones which we call it the employee day one, which is onboarding the employees into our systems. That’s a combination of benefits and other things that have to take place.

And then we have the harmonization of the Salesforce which we call it sales day one and that takes place at the end of this calendar year We already are incentivizing both sales forces to sell both products. And I can tell you the channel community is super excited to be able to sell both products. Because the combination of both products allows them to cover every vertical, every use case in every geography. And the fact of the matter is that the complementarity of the two portfolio allows us to drive strong security integration in our stack in addition to the integration with the rest of the portfolio with server and storage.

So we will be able to talk more about this Wamsi the securities analyst meeting. Rami, will take center stage and walk through the strategy. Early views of the proverb map, how we are driving the Salesforce integration, including our channel ecosystem. And we believe that’s going to be an opportunity as we 2026 and then obviously 2728. Your question about AI, as I think about the AI space, I always ground on three very distinct customer segments. In the service provider segment, and model builders Our strategy is to lead with networking or AI. The opportunity is significant. Juniper is getting traction.

It’s becoming the de facto standard in many of those customers and the opportunity with HP is to expand that footprint. And then we will sell these server products in that unique segment where it makes sense from an accretion from a margin perspective and working capital perspective. If you go to the sovereign space, which we saw this quarter of 200 plus percent growth on a year over year basis, and that sovereign also includes Neo Clouds, We will lead with an integrated rack scale architecture. Meaning networking plus the server business and all the services that comes with it.

And that will allow us to cover multiple type of offerings as customers in that segment may have the need to drive optionality and flexibility. And we have unique conversations with our partners. Then in the enterprise space, through the AI factory engagement with our private cloud AI portfolio which this quarter added 300 plus new logos double from last quarter we will lead with a full integrated stack. And that’s what we did with NVIDIA, the integration. Their software with our GreenLake plus the integrated infrastructure with our IHP Proline and Cray for the GPUs and then our Alletra MP storage or fast object and file plus all the services around it. To lifecycle manage that solution.

So I think at the portfolio level we can service every segment and find the right balance but I think networking us make us now stronger in the AI space because one of the key elements of that IT stack is the network at scale Juniper brings amazing technology both for the data center switching and the routing piece because once you integrate this in a large AI deployment, you need to core aggregate all of this through the leaf and spine into the data center footprint. And that requires also a routing product. So more to come at SAM. Okay. Thank you, Wamsi.

Operator: Next question please.

Operator: Your next question today will come from Samik Chatterjee with JPMorgan. Please go ahead.

Samik Chatterjee: Yes. Hi, thanks for taking my question. Antonio, you talked about just following up here on the Juniper sort of line of topics. Your networking overall margins are taking a bit of a step down to the sort of low 20 range. Where the segment historically has been about mid-twenties. How should we think about with the synergy road map that you have when the segment gets back to that sort of mid-twenties level? Because some of the back of the envelope math and the synergies would suggest you could actually probably go north of that as well long term.

But maybe just lay out the road map for us in terms of how to think about the progress on the margin front from the new set of level that you have post consolidation of Juniper? And, Murray, if I can quickly squeeze in one on cash, get the headwinds terms of closing Juniper on the cash flow this year, but how should we think about of the impact in on next year’s cash flow in relation to any closing costs or integration costs?

Antonio Neri: So I will pass it to Marie because I think will be able to answer both questions.

Marie Myers: Yeah, no worries. Thanks Antonio. Hey Sami, good afternoon. So Just to preface my answer before I get started, I’m going to answer both questions in the context of Q4 and full year ’25 guide. We will provide longer-term update to your questions, particularly around cash as we get into security analyst meeting in early October. So let me unpack first of all, the networking margin rate. So in the quarter, as you recall, we integrated a month of Juniper’s results and our intelligent edge business. We combine them now into one segment called the networking segment. And the combined operating margins were twenty point eight. If you look I think your question was focused specifically at the edge business.

Edge margin, actually, I disclosed in my prepared remarks, was 22.7, and we did see a sequential reduction, and that was really due to two primary factors. One’s variable comp expense, and the other one product related costs. And I did guide the Q4 op range to the low twenties as we get into the quarter. And the reason for that Samik, is obviously Juniper’s rate was a few points below our Intelligent Ed business. So just bear that in mind as you think forward to the networking margin rates. Now with respect to your question on cash flow, you know, we’re confident in our guide for the year.

And I would just say, you think about cash, there’s puts and takes. Now, obviously, you brought up Juniper costs, and we will give more clarity on that as we get through to Sam. Even as we get into Q4, there’s obviously costs that I believe are commented on in Q3 and Q4 and also the increase in OI and E. So all of that taken into account when you think about cash flow. And I just add, look. You know, we are absolutely focused on free cash flow. We’ll give you a lot more detail as we head to security analysts. As you know, our leverage has gone up, and so free cash flow generation is paramount for us.

Antonio Neri: Thanks. I want to reinforce the last point. Because of the integration of Juniper, the ability to generate earnings but also pay down the debt. Our main focus going forward in addition to drive the right balance of growth and operating margins is really free cash flow generation. And so we will be able to talk more about this at some.

Operator: Thank you for the question, Samik. Operator, next question please.

Operator: And your next question today will come from Amit Daryanani with Evercore. Please go ahead.

Amit Daryanani: Good afternoon. Thanks for taking my question. I guess, Antonio, I wanted to get sort of go back to the networking discussion. It sounds like, know, both Intelligent Edge and also Juniper are doing fairly well from a revenue basis. Guess simplistically, do you think about the growth rates for the combined business as we go forward, if you think networking market grows five, 6% a year, how do you think HPE plus Juniper can do And then, you know, really over time, how do you think about product integration on a campus side between Aruba and Mist? Do you think we need to Mist to Aruba, or and have a single product?

Or you think you can have both the products support in the marketplace simultaneously? Thank you.

Antonio Neri: Yeah. Thanks, Amit. Rami and I and the team are very pleased with the momentum both businesses have in the market. That’s a reflection that both offers are very strong. And let’s remind ourselves that’s true for campus and branch but when you go to data center switching and, obviously, the one business that’s 100% Juniper Then in the security space, we have a robust security portfolio because we need to lead with a secure network approach and that’s inclusive of Juniper firewalls, and the secure access service edge or the SSC which both company have very strong offerings. As you recall, in 2020, we acquired Silver Peak. To drive the convergence between SD WAN and security.

But as I think going forward, our goal is to build the best network in business. And that means we’re gonna grow above market. And that’s the reality. We’re gonna explain how that’s gonna be the case over the next three years. And we have an opportunity across AI and cloud and across the infrastructure itself. When I think about the Campos and Branch question, we were very clear with Rami. We’re gonna thoughtfully integrate the Juniper platform and the Aruba Central platform because you need to think about that layer Everything below that, is very straightforward.

There is no confusion because the reality is that we have a very strong robust campus switching portfolio which obviously has a lot of that has the wire piece which is Aruba silicon then Wi Fi access points. I don’t think that’s too complicated, and we’re gonna show what that looks like. And then finally, is the extension into IoT probably five gs which obviously HPE has unique offers. That integration of the cloud and AI ops is where that experience will evolve. But we are not going to leave any customer behind. We’re going to sell both products and you’re gonna see an integration that suddenly happen over time through the AI ops layer.

And that’s the opportunity we have here. And the good news customers want both today and we can serve every market vertical and we can also deploy any type of solution whether it’s cloud based virtual private cloud, meaning sovereign and then on prem. And that’s the opportunity we have ahead of us. And then last but not least on the data center switching side, in addition to networking for AI, we are also working integration in the private cloud, portfolio with the software defined networking components that Juniper brings. Through Fidelma’s hybrid cloud ops suite And then obviously in our storage and server business which require the switch along the way.

Operator: Very good. Thank you, Amit. Operator, next question please.

Operator: Your next question today will come from David Vaught with UBS. Please go ahead.

David Vaught: Great. Thanks guys for taking the question. So Antonio, I want to go back to the networking piece and maybe Marie can chime in on this. I think you talked about the traction that Juniper is getting with some these AI model builders and sort of that part of the network. How much of sort of the opportunity to grow is predicated on traction with those customers? And then maybe along those lines, I think Marie mentioned some product related costs. Was that mix in the networking section? To more, you know, AI centric offerings?

And how do we think about that mix shift going forward from a more enterprise campus centric model to one more hopefully, one more towards an AI model building sort of cloud model going forward? Thank you. Yeah. Thank you.

Antonio Neri: No, the AI opportunity is across all the three segments I mentioned earlier. Right, in networking, which is the service provider where we have the vision to lead with networking there because there is unique value proposition performance, cost, simplicity, lifecycle management. And AI driven capabilities. When you go to the sovereign space, same thesis. That’s even more important because you now drive rack scale integration with the rest of the server business. And then at the enterprise layer, course, we want to integrate the Juniper switch in everything we do in cloud and AI going forward by giving customers choice and flexibility. So the opportunity for networking in AI is across all three segments.

Now in the service provider space, obviously once you lay down the simple analogy I made, you laid the pipes inside the data center and you connect the data center to the rest of the interconnect process then obviously you become the standard And then from that, that solution, hang these amount of GPUs that comes with those deployments.

And so this is why the opportunity is significant and the benefit for Juniper which already had good traction is access to a very a larger number of customers that were not able to access before because we are strategic in many deals Remember, we cover 172 countries and also our heritage in countries and geographies where our mix is shifted to those example Europe and Asia versus North America. There is an opportunity here as we integrate the Salesforce but also integrate the architecture.

Marie Myers: And then, David, just to add on to your question around the product cost that was actually in the Intelligent Edge business that I mentioned that was on a sequential basis. And it was related to a platform transition. Thank you.

Operator: Thank you, David. Operator, next question please.

Operator: Your next question today will come from Eric Woodring with Morgan Stanley. Please go ahead.

Eric Woodring: Hey, guys. Thanks so much for taking my question. Antonio, was wondering if you could maybe just take a step back and share some details on you’re hearing from customers, what you’re seeing in the pipeline as it relates to kind of end market growth for your three core end markets, networking, server, and end And really, what I’m trying to understand is, there are some maybe concerns that the markets could be rolling over. There’s a lot of age infrastructure that can be refreshed. What are you hearing from your customers about prioritizing those types of upgrades?

And from the HPE perspective, you know, if we put network into the side because you’ve talked ad nauseam there, just where do you see the biggest opportunity to take share with the core HPE portfolio in those respective end markets? Thanks so much.

Antonio Neri: Well, you, Eric, and welcome. I know you are starting the coverage of our company just few weeks ago. So we appreciate you spending time with us. My view is that the market is robust We saw that throughout the Q3 order linearity was very consistent. There was nothing unnatural despite sometimes the true tariffs, no tariffs, but Marie commented on that the net impact of that is very minimal for us. At this point in time. And I will say on the server side, let’s start with that. On the traditional server side. There is a refresh going on We saw double digits year over year revenue growth in traditional servers.

Customers are refreshing edge infrastructure with more richly configured servers because they can reduce space and cooling on an aggregate basis. So with introduction on Gen 12 servers, we demonstrate that we can replace seven gen 11 servers and 14 Gen10 servers. And at the same time reducing the power consumption by 65% in addition to increase the security in their because now we support our own internal aisle of seven, which is basically the quantum proof encryption. And so that’s an example of what we see. And that was consistent across all three geos.

Now, there we participate with discipline, and ultimately, it’s a question of volume and margins we demonstrated in Q3 that we can do after the challenge we had in Q1. That’s one example and we believe over time, we believe we are poised to potentially gain share in enterprise. In the hybrid cloud space, huge opportunity through the transition of the virtualization layer. One of the areas people are focused on AI obviously for good reasons, but I can tell you one of the most exciting areas we see is the ability for customers to update or change their virtualization layer because of the rising costs they have seen in the last call it two years.

We have an enormous amount of proof of concepts going on with our Morpheus and VM Essentials. What we really focus there is the conversion from POCs to revenue This quarter we had double digit growth in our entire software portfolio. Which includes ops ramp provides deep observability inside the data center and outside the data center in a multi and multi vendor so that they can use our AI co pilot capabilities that we built inside GreenLake reduce OpEx. So they can reduce OpEx on licenses and can reduce OpEx on running that infrastructure in the way it is observed. So that’s another example of growth that we expect. Private cloud is another areas we expect to grow.

And then storage on our transition to our IP portfolio. This was the third consecutive quarter of triple digits year over year revenue growth in AlletraMP Why that’s happening is because we architected a new platform. That’s totally disaggregated. That provides the most effective block solution for those structural databases while at the same time leverage the same infrastructure and grow that in a scale out architecture into the unstructured data for fast object which is necessary for training or fine tuning rack models especially if you do that on prem and then eventually to do file ingestion. That value proposition is resonating with customers That’s why we gained one point of share in the last report from IDC.

And then in networking, you’re right, we spoke of Notion but I do believe there is a transition anyway in the wire switching. Remember we grew triple digits in Wi Fi seven and when you go to WiFi seven also you need more power at the port level to support those access points. And I believe that’s going to be also another opportunity for us.

Operator: Very good. Thank you, Eric. Welcome. Last question please, operator.

Operator: And your final question today will come from Simon Leopold with Raymond James. Please go ahead.

Simon Leopold: Thanks for taking the question. I wanted to see if you could revisit the topic of Juniper’s position in AI. On the call you hosted in July, Rami had indicated that Juniper had landed some deals in the back end. I’m wondering if you could unpack and give us a little bit more detail on that particular part of the business. Thank you.

Antonio Neri: Yeah. Simon, I think Ron and team have done a great job in lending several customers to become the reference in the networking space above the deployment of NVIDIA Spectrum So obviously inside the rack you have Spectrum SpectrumX all the way down to the NBLINK. With the NVIDIA Blackwell GPUs and the Grace Hopper GPUs. But above that, we have become the standard in some of these very large deployments And we are in a number of conversations with Neo Clouds and other service providers where we want to become the standard in that space. That’s why we believe is a big opportunity in leading with networking for AI in that particular couple of segments.

And so that’s our strategy going forward. And then obviously that will make our servers more attractive because also we will have more integration of the rack scale the sovereign space. And Juniper when the transaction closed had a very nice backlog that they built prior to the acquisition and we expect to unwind up back and new orders as we go forward. And so Rami will be able to explain more about this as we go to the security analyst meeting from a pure architecture perspective and how we are approaching that from a sales perspective. So thank you. Yeah, sorry we’re running out of time but we appreciate your time today.

I hope you take away that we are executing with precision. That we have a clear vision for the company, I am and the management team is very excited about the next chapter of HPE after the closing of the Jouvert transaction. You see the results of Juniper in our numbers with just one month and we’re excited to share more about this when we get at the security analyst meeting in New York, which I know everybody’s wanting to get a framework for twenty six, twenty seven, twenty eight. But beyond that, I’m excited to share our vision and the strategy for the company with this amazing portfolio we built. Thank you very much for your time.

Operator: Conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

Wednesday might have been a Hump Day of a slog to some investors, but not for those holding shares of Immunovant (IMVT 10.82%). On some rather encouraging news from the laboratory, the clinical-stage biotech‘s shares gained almost 11% in value, easily topping the 0.5% rise of the benchmark S&P 500 (^GSPC 0.51%).

Proven results

That afternoon, Immunovant shared data from a proof-of-concept study of its batoclimab. This is an investigational drug targeting Grave’s disease (GD), an autoimmune disorder that results in the body producing too much thyroid hormone (also known as hyperthyroidism).

Image source: Getty Images.

The study, which lasted nearly one year, saw 17 of the 21 patients dosed with the drug maintain normal thyroid function six months after the completion of treatment. Eight of the 17 also did not require anti-thyroid drugs to keep the hormone in check.

The participants in the study suffered from Grave’s disease, and continued to experience hyperthyroidism despite taking standard anti-thyroid medication.

In the press release trumpeting these results, Immunovant quoted its CEO Eric Venker as saying, “We believe these data have the potential to be transformative for patients and practice-changing for physicians, if approved by the Food and Drug Administration, by addressing a significant unmet need in Grave’s disease.”

A flexible drug?

As Grave’s disease is a chronic condition, it is an appropriate target for an advanced treatment like batoclimab. Immunovant is also investigating the treatment for other indications, such as Sjögren’s syndrome, a disorder of the salivary and tear glands. The company is in the early stages of development for these.

After breaking out in July, Opendoor Technologies (OPEN 0.98%) soared again in August, climbing on the thesis that the business would turn around on new signs that the Fed would cut interest rates. Investors also reacted positively to news that CEO Carrie Wheeler would be stepping down, showing hopes that a new leader could help drive a turnaround.

That general momentum was able to overcome a weak second-quarter earnings report, and the stock is now up nearly 1,000% since it bottomed out in early July.

According to data from S&P Global Market Intelligence, the stock jumped 142% over the course of the month. As the chart shows, it was a volatile month for Opendoor, but the upward movements clearly outnumbered the pullbacks.

OPEN data by YCharts

Retail investors are still in

Toward the end of July, there were signs that the rally in the stock was fading after trading volume had soared earlier in a meme stock rally that seemed to begin with an argument on social media platforms like X and Reddit. Hedge fund manager Eric Jackson argued that the stock could be the next Carvana, since Opendoor was essentially left for dead as investors gave up on the home flipper’s business model due to a weak housing market and disappointing financial results.

Opendoor stock got a second wind in August after a subpar unemployment report kicked off August, sending the stock higher on hopes that it would lead the Fed to cut interest rates. The stock then pulled back after its second-quarter earnings report showed the business is still struggling, and its guidance called for revenue to fall on a sequential basis in the third quarter. It began a new rally in the second week of the month as an inflation report added to hopes that the Fed would cut interest rates, and Wheeler announced her resignation.

Finally, Opendoor stock jumped nearly 40% on Aug. 22 after Fed Chair Jerome Powell signaled in his Jackson Hole address that it would be appropriate to cut interest rates in September. The stock pulled back over the rest of August, but jumped again to start September.

Image source: Getty Images.

Can Opendoor keep gaining?

It’s been a remarkable rally for a stock that has now topped $5 a share, just two months after it was trading around $0.50 a share. 

Opendoor is still a small company at a market cap of $3.8 billion, but at some point, the business will have to show real improvement. Still, for now, if interest rates do come down and the housing market starts to show signs of life, the stock is likely to move higher. 

Nokia (NOK 3.43%) was the subject of an analyst’s recommendation upgrade Wednesday, and investors expressed their appreciation by bidding up the telecom’s stock. In late-session trading it was up by more than 3% in price, well ahead of the S&P 500 index’s 0.2% gain at that point in the day.

A recent acquisition could be a game changer

Well before market open, BNP Paribas Exane‘s Jakob Bluestone changed said recommendation, pushing it up a notch to outperform (buy, in other words) from his previous neutral. His price target on Nokia’s Europe-listed stock is 4.30 euros ($5.01) per share.

Image source: Getty Images.

According to reports, Bluestone’s new outlook on Nokia derives largely from its latest big-ticket acquisition. Last June it acquired U.S. tech and telecom equipment supplier Infinera in a $2.3 billion deal; this closed in February.

The analyst believes that absorbing Infinera positions Nokia to benefit from investments into artificial intelligence (AI) capabilities, which go hand in hand with the current wave of data center build-outs (as those facilities are modified and expanded to handle the increased resource requirements of AI).

Bluestone pointed out that at the moment, Nokia’s revenue from hyperscaler projects comprises only 5% of its overall top line. Given the high demand from such clients, that percentage could go well higher.

Business metamorphosis

At the dawn of the cellphone era, Nokia reigned supreme, particularly as a producer of handsets. It did not adjust well in the subsequent Age of the Smartphone, and since then has refashioned itself into a provider of the networking technology and associated offerings that underpin the telecom industry.

With Infinera it certainly has a chance of capturing lightning in a bottle; given that, Bluestone’s new, bullish take feels realistic.

Shares of The Trade Desk (TTD -1.14%) fell by a sharp 37.1% in August, according to data from S&P Global Market Intelligence. As of this writing on Sept. 3, The Trade Desk is down 55% this year and in the middle of its worst price drawdown ever.

Investors are concerned about slowing revenue growth for this advertising innovator, which has previously traded at a premium valuation. Here’s why The Trade Desk slipped yet again in the month of August.

Slowing growth, high expectations

On Aug. 7, The Trade Desk reported its second-quarter earnings. The advertising technology company that provides solutions for ad buyers outside of the large internet walled gardens had 19% year-over-year revenue growth in the quarter. Sales hit $694 million, with net income of $90 million for a margin of 13%.

In the same period a year ago, The Trade Desk reported revenue growth of 26%. Growth has begun to slow for this advertising disruptor, and even slower growth is expected in the third quarter, with guidance calling for 14% year-over-year gains to $717 million. In recent years, The Trade Desk has been a much faster grower. The company claims a huge addressable market for its decentralized targeted advertising across internet assets like connected TV, webpages, and even podcasts as an alternative to the likes of Google or Instagram.

In fact, Meta Platforms grew its advertising revenue by 21% year over year last quarter, which was actually faster than The Trade Desk at a much larger scale. Whatever gains The Trade Desk made in targeted digital advertising are now going in reverse, and investors are worried. The stock previously traded at a high valuation, with a price-to-sales ratio (P/S) of 20 before this dip.

Image source: Getty Images.

Is The Trade Desk stock a buy?

Even after this 37% drop in August, The Trade Desk still trades at a P/S ratio of 10, which is significantly above the S&P 500 index average of 3.2.

This is a company with an extremely high gross margin — 80% or so over the last 12 months — but one that has failed to see significant expansion of its bottom-line net income margin even though it has now reached a large scale. A P/S ratio of 10 is not cheap unless you believe that The Trade Desk will grow quickly or have sky-high bottom-line margins.

It has neither. For this reason, the stock is probably one you should not buy the dip on right now.

After skyrocketing on its opening day of trading on July 31, Figma (FIG 1.14%) gave back some of those early gains last month as the software stock searched for equilibrium following the year’s biggest initial public offering (IPO).

According to data from S&P Global Market Intelligence, the stock finished the month down 39%. As you can see from the chart below, it tumbled early in the month as it pulled back from the initial frenzy, and shares traded mostly flat over the duration of the month after it fell.

FIG data by YCharts.

Figma gets its feet wet

IPO stocks tend to be volatile, so it’s no surprise to see Figma fall sharply after the stock more than tripled on its opening day, going from an IPO price of $33 to closing at $115 a share.

The stock jumped again the following day, Aug. 1, hitting a peak at $142.92, before pulling back on Aug. 4 as IPO buyers took profits.

Trading volume faded over the course of the month as the stock gradually declined, finally stabilizing in the last week of August.

There was little company-specific news on Figma last month, coming directly after its IPO, but a number of Wall Street analysts did weigh in on the stock, giving it mostly hold-equivalent ratings, though there were a couple of buy ratings in the mix.

Piper Sandler, for example, rated it overweight with a price target of $85, crediting its “differentiated” platform and “attractive” business model. Others were more skeptical of the company’s valuation, including Goldman Sachs, which said there is limited visibility into its momentum and revenue growth.

Image source: Getty Images.

What’s next for Figma

The cloud software specialist will deliver its first report as a publicly traded company after hours today, and the stock is likely to move on the news.

The Wall Street consensus calls for revenue of $248.7 million, up 40.3% from the quarter a year ago. On the bottom line, the company expects $0.08 in earnings per share.

Even after last month’s pullback, Figma stock remains expensive, trading at a price-to-sales ratio of 36, though the company is growing rapidly, delivering a profit, and has a stamp of approval from Adobe, whose earlier $20 billion acquisition of the company was blocked.

While its valuation should act as a headwind, at least in the near term, the future looks bright for Figma.

Shares in ConocoPhillips (COP -3.85%) were lower by more than 4% at noon today. The decline comes on the day news broke that eight OPEC+ members will meet on Sunday and discuss a production hike. While there’s no guarantee that a production increase will be agreed upon, or that any such increase will put pressure on the price of oil, the threat of it is enough to spook oil investors.

Why ConocoPhillips is uniquely exposed

Because ConocoPhillips isn’t an integrated oil major (meaning it doesn’t have substantive midstream or downstream assets), investors tend to value it based on its reserves (mainly crude oil and natural gas), an assumption about the long-term oil price (which many investors assume is the current price), and an approximation of its break-even price of oil (the price at which its costs and financial obligations are covered).

OPEC+ is reportedly considering raising production to lower the price of oil, as its collective competitive advantage as a relatively lower-cost producer would result in its winning market share back from producers in higher-cost countries like the U.S. Those producers include ConocoPhillips, which generates the majority of its earnings from the U.S.

For example, last year the United States, excluding Hawaii and Alaska, generated $5.2 billion in earnings for the company, with Alaska contributing $1.3 billion, while the pre-corporate-expense company total was $10.1 billion.

Image source: Getty Images.

OPEC+’s actions could result in competitive pressure on ConocoPhillips, particularly at a time when it is integrating Marathon Oil, a company it recently acquired for $22.5 billion to consolidate its presence in the U.S.

Campbell Soup(NYSE: CPB) reported fourth quarter fiscal 2025 earnings on September 3, 2025, with organic net sales down 3% and adjusted EBIT down 2% year-over-year, but results slightly exceeded internal expectations. Management raised its enterprise cost savings target by 50% to $375 million by fiscal 2028, while fiscal 2026 guidance anticipates adjusted EPS will decline 12%-18% due to significant tariff headwinds and elevated input costs. The following insights highlight key strategic developments, risk factors, and competitive strengths from the call.

Cost savings target rises for Campbell Soup

Campbell increased its enterprise-wide cost savings program target from $250 million to $375 million by fiscal 2028, following $145 million in realized savings in fiscal 2025, primarily from Sovos Brands integration and network optimization. This expanded target reflects a more aggressive approach to efficiency, digital transformation, and indirect spend management, supporting reinvestment in core brands.

“Today, we are increasing our cost savings target to $375 million by the end of fiscal 2028, a 50% increase over the previous estimate. PEEK will continue to focus on four areas: network optimization, integration synergies, technology and organization effectiveness, and indirect spend management.”
— Carrie Anderson, Chief Financial Officer

This step-up in cost savings ambition provides Campbell with greater flexibility to offset inflationary pressures and fund marketing and innovation, but also raises execution risk if integration or productivity initiatives underdeliver.

Tariff headwinds pressure Campbell Soup margins

For fiscal 2026, gross tariffs are projected at approximately 4% of cost of products sold, with about 60% of the impact from Section 232 steel and aluminum tariffs affecting the soup can supply chain, and the remainder from global IPEA tariffs and Rao’s imports from Italy. Management expects to mitigate only 60% of these tariffs through supplier collaboration, alternative sourcing, productivity, and targeted pricing actions.

“Gross tariffs are projected at approximately 4% of cost of products sold, approximately 60% related to Section 232 steel and aluminum tariffs, and the remainder largely from global IPEA tariffs. Despite the ongoing uncertainties around the IPEA tariffs, we are still assuming that they remain in place for the year. We expect to mitigate approximately 60% of this impact through a number of actions,”
— Carrie Anderson, Chief Financial Officer

Persistent tariff-related cost inflation will weigh heavily on Campbell’s margins in fiscal 2026, requiring further pricing, supply chain, or structural changes to protect profitability if mitigation efforts fall short.

Brand leadership and innovation drive Campbell’s resilience

In fiscal 2025, Campbell’s 16 leadership brands represented about 90% of total net sales, with meals and beverages gaining 0.2 share points and delivering 1% dollar consumption growth, offsetting softness in snacks. Rao’s brand net sales rose at a high single-digit rate on a pro forma basis, and recent innovation contributed approximately 3% to consolidated net sales, led by Milano White Chocolate and health-forward broth offerings.

“Our stronghold in the Italian sauce category continues as Rao’s, which will soon become our fourth billion-dollar brand, and Prego hold the top two spots in dollar share, and we are excited about the prospects for future growth with these great brands.”
— Mick Beekhuizen, Chief Executive Officer

Campbell’s ability to maintain category leadership and drive measurable growth through innovation and brand investment underpins its long-term market position, even as short-term volumes remain pressured by cautious consumer behavior.

Looking Ahead

Management guided fiscal 2026 adjusted EBIT down 9%-13% and adjusted EPS down 12%-18%, primarily due to tariff headwinds and increased investment in marketing and innovation, with organic net sales expected to range from down 1% to up 1%. Capital expenditures are projected at 4% of net sales in fiscal 2026, with planned cost savings of approximately $70 million. All forecasts are on a comparable 52-week basis, excluding the extra week from fiscal 2025 and divestiture impacts, and no additional quantitative guidance was disclosed regarding segment profit or volume mix.

Both Class A and C shares of Alphabet (GOOG 8.59%) (GOOGL 8.34%) popped about 8.4%, as of 10:48 a.m. ET today, after a federal judge ruled that the conglomerate will not have to divest its massive Chrome search business.

A big win for big tech

In 2023, the U.S. Department of Justice filed a landmark lawsuit against Google for monopolistic practices in the search engine space, specifically related to its digital advertising practices. Last year, a federal judge sided with the DOJ and found that Google had run an illegal monopoly. The DOJ then requested that a judge require Google to divest its Chrome browser, a big driver of the company’s search business that makes up more than half of the company’s total revenue.

Image source: Getty Images.

While many believed this was unlikely to happen, U.S. District Judge Amit Mehta made it official yesterday, ruling that Google will not have to divest Chrome. Furthermore, Google can keep paying large partners like Apple to feature it as the default search engine on web browsers like Safari. However, Mehta also ruled that Google cannot propose exclusive contracts that prevent competitors from being able to fairly compete in the space. Google will also have to share some data that will supposedly help competitors get on more of an even playing field.

“This is a monster win for Cupertino and for Google its a home run ruling that removes a huge overhang on the stock,” Wedbush’s Global Head of Tech Research Dan Ives in a recent research note, according to CNBC.

A catalyst for the cheapest Mag Seven name

This year, Alphabet has traded at the cheapest valuation in the “Magnificent Seven,” largely due to the DOJ’s lawsuit and other issues with the search business including how artificial intelligence chatbots might disrupt the business.

But within the massive tech conglomerate are several incredibly fast-growing and strong businesses like Waymo, YouTube, Google Cloud, and even a chip business. Even after the nice move today, investors can still buy the stock.

Hertz Global (HTZ -2.01%) and Amazon (AMZN -1.55%) recently announced a deal in which the former will sell used cars on the latter’s website. Investors clearly believe the deal will help Hertz’s business. They sent the share price up 12.5%, from $5.20 to $5.85, from Aug. 19 through Aug. 27.

What has investors so excited? And, more importantly, is the deal a long-term value-creating opportunity for Hertz? It’s time to look closer at the deal and Hertz’s fundamentals.

Image source: Getty Images.

Deal details

Hertz will list its used vehicles for sale on the Amazon Autos website. However, it’s only a test right now, and it’s being rolled out in the metro areas of Dallas, Houston, Los Angeles, and Seattle. Car buyers can go on the site and browse used vehicles to purchase. Once they find something and complete the purchase, the new car owner can pick up the vehicle at various Hertz locations.

The benefits to Amazon Auto, which launched less than a year ago, are clear. The site previously offered car buyers with limited options. Under this arrangement, Amazon will greatly expand the number of listings across many more brands.

How does Hertz benefit?

If car buyers are willing to shop online for used cars, they’ll get an easier and more convenient process with a broad selection of automobiles. That could expand Hertz’s car sales.

Currently, Hertz sells its rental fleet cars through company-operated U.S. retail locations. This also produces other revenue, such as from selling warranties and providing financing. It’s unclear how many used vehicles Hertz sells, however. The company has mentioned that it sells thousands, but that makes it challenging to pinpoint the impact on Hertz’s cash flow.

Still, if the arrangement with Amazon proves mutually beneficial, Hertz will be able to scale the used car business and diversify its revenue stream. It’s also a step toward executing CEO Gil West’s plan to expand its retail business and raise awareness of the Hertz used car brand

Should you buy Hertz’s stock?

Hertz operates two segments: Americas RAC and international RAC. Each division rents vehicles and sells services like insurance and satellite radio. Right now, Hertz’s core rental business has been struggling, with shrinking sales and declining profitability. The company’s total second-quarter revenue dropped 7% to $2.2 billion, and it lost $104 million after adjusting for certain items.

It seems challenging to expand into other areas while its core rental business has struggled. Still, if Hertz can pull it off, shareholders could see a lot of upside based on the company’s valuation. You can use the price-to-sales (P/S) multiple rather than the more traditional price-to-earnings (P/E) ratio, since the company doesn’t report a profit. Hertz’s share price zoomed up 74% in the past year, and the P/S ratio doubled in the last year, but remains low at 0.2. Small capitalization stocks, as measured by the Russell 2000 index, trade at about a P/S ratio of over 1.

However, while the deal with Amazon may prove advantageous, it’s only in the test phase. Hence, long-term investors may wish to hold off, at least until results from the test markets have come in. You’ll know whether it’s going well if Amazon and Hertz decide to expand the program.

As much as some people dread the idea of growing older, there can be benefits. For example, when I was younger, I grew anxious every time there was a shake-up in the stock market, positive that we were about to lose everything.

With time, I realized that investing in the market is like riding a Tilt-a-Whirl operated by a distracted carnival worker. Like a Tilt-a-Whirl, the market tends to be up and down, then up again (followed by another drop).

Image source: Getty Images.

Historically, it’s worked out for investors over the long term, but that doesn’t mean it’s not scary. It’s tempting to read a deeper meaning into every move the market makes.

Rather than stressing out over each economic hiccup that impacts our investments, time has taught me to focus on the things I can control: frequently rebalancing our portfolio to ensure our asset allocation includes both high- and low-risk investments, and building buffer assets we won’t touch until retirement.

What are buffer assets?

Buffer assets are very low-risk assets we can draw from when and if our portfolio goes into the toilet following retirement. While high-quality corporate bonds, Treasury securities, and municipal bonds are all considered lower risk, I can purchase those through my solo 401(k), so I don’t include them in my buffer basket.

I’m putting our buffer assets into a high-yield savings account. It won’t make us rich, but my objective is not to live like a 19th-century Rockefeller. The buffer assets exist solely to get us through the bear markets and recessions we experience following retirement. The goal is to avoid pillaging our retirement accounts.

However, other places to access money when you need a buffer include the cash you’ve built in a cash-value life insurance policy, multiyear guaranteed annuities, fixed indexed annuities, and CD ladders.

While it’s easy to confuse the two, buffer assets and an emergency savings account are two different things. An emergency account is specifically designed to pay for emergency situations, so you don’t end up having to charge new tires or a water heater to a credit card. Your buffer account is meant to prevent you from taking money from your retirement account when those dollars could be better spent beefing up your portfolio.

How buffer assets can preserve wealth

As Dan Egan, director of behavioral finance at investing platform Betterment, told the AARP, “Negative news sells, because people are looking for things to worry about.” Egan says that people tend to pay attention when the market is tumbling but pay far less attention when things are going well. As humans, it’s natural to look out for scary things.

It’s that very human reaction to bad news that causes so many people to sell off investments, even if doing so costs them hundreds of thousands of dollars over time. I hope to zig when every instinct tells me to zag. When others are panic-selling, I want to stay the course.

Let’s say our post-retirement budget requires us to withdraw $12,000 annually from our retirement account. Because those stocks and other assets are less valuable during a bear market or recession, we would have to sell more to come up with the $12,000 we’re counting on. The more assets we sell, the less money we’ll have left to take advantage of the bargains available on high-quality assets during each market downturn.

Even though we’ll trim our budget for the duration of the downturn (which is a good idea during bear markets and recessions), we’ll need another reserve of money to draw from. And that’s where our buffer account comes in. It’s money we can dip into so the funds in our retirement account can be used to invest in well-priced assets.

Here’s my rationale: On average, stocks lose 35% in a bear market (helping to explain the bargain-basement prices). However, as the market regains steam and moves into bull territory, stocks gain an average of 111%. Long-term investors who stay the course are in the best position to profit from the ups and downs of the market.

How large should a buffer be?

There’s no one-size-fits-all formula for how large a buffer a retiree might need. It depends on how much you count on withdrawing from a retirement account. The average bear market lasts 289 days, or just shy of 10 months. The average recession in the 20th and 21st centuries has lasted 14 months. Ideally, your buffer account would be large enough to cover you throughout those events.

Realistically, how can anyone know how many bear markets or recessions they will experience throughout retirement? Some experts suggest building a buffer account with one to three years’ worth of essential living expenses, minus your guaranteed income.

For example, suppose your total monthly living expenses in retirement are $3,000 and you have $2,000 coming in from Social Security, a pension, or some other source of guaranteed income. In that case, you’ll need an extra $1,000 per month. If you were to follow the experts’ advice, you would want to build a buffer account totaling $12,000 to $36,000.

Believe me, I understand how difficult it can be to save even more money, especially when you’re still building a retirement account and paying ever-higher everyday living expenses. If you can’t meet the goal of one to three years’ worth of essential living expenses, chip away at it the best you can.

Any amount you tuck into a buffer account is money you won’t have to take from your retirement account when the market is in the dumps.