NetApp (NTAP)
First quarter EPS was $2.58, well above the $2.12 street estimate. Adjusted gross margin hit 70.6%, one point better than expected. Net revenue was $2.03 billion versus a $1.883 billion estimate - a clear beat on all key metrics.
Guidance for the current quarter: revenue $2.03-$2.18 billion against a $1.85 billion estimate, so at worst in line with this quarter and possibly much stronger. EPS $2.54-$2.64 versus a $2.16 estimate, roughly in line with the current quarter. Full fiscal year revenue raised to $7.98-$8.23 billion from a prior $7.33-$7.58 billion. Full year EPS raised to $9.73-$10.30 from a prior $8.70-$9.00. Full year gross margin guided to 68.1-69.1%, a slight miss against the 69.3% estimate.
All flash array net revenue, a key metric, set a record at $1.3 billion, up 47% year over year. Public cloud revenue also set a record. The story in the reported numbers was strong: better margins, a large revenue beat, EPS expanded by margins. The guide reads as conservative but strong, leaving room for upside, since a 70.6% margin quarter is being followed by a guide near mid-68%. If the company holds first quarter levels, full year EPS lands well.
The stock jumped more than 6.5% at first, then faded to about 1% up, and by the end reversed completely to down almost 10%. The street preferred the HPE report over NetApp's.
Five Below (FIVE)
EPS came in at $1.68, beating the roughly $1.40 consensus and up more than 100% year over year. Net sales rose close to 23% year over year to $1.261 billion, beating a $1.22 billion estimate. Comp sales surged 14% (14.1%) against a 10.6% estimate - roughly a 30-35% beat on the most predictive retail metric. GAAP diluted EPS was $3.99. Adjusted operating income was $113.2 million; adjusted net income $93.4 million. Store count reached 2,022, up 8.8% year over year, with 52 net new stores opened in the quarter.
Full year net sales outlook raised to $5.63-$5.71 billion from $5.4-$5.48 billion. Full year EPS guided to $9.83-$10.31 from a prior $8.65-$9.05. Comp sales guidance raised to up 10-12% from a prior 9%. For the current quarter, EPS guided to $1.01-$1.13 versus $0.87 consensus, revenue $1.2-$1.23 billion versus $1.15 billion consensus, and comp sales up 8-10%. A $600 million share repurchase program was announced.
Margins held or ran better than expected, given the large EPS beat. The stock rose about 3%. Retailers are hard to surprise the way Dell did a day earlier, but a 30% comp beat is a big deal. The modest reaction suggests the market wants to hear more from management on the call.
Hewlett Packard Enterprise (HPE)
Q3 EPS was $1.11, well above the $0.93 estimate. Revenue set a record at $12.21 billion, up 34% year over year, above the $11.9 billion estimate. Q3 GAAP operating profit rose 464% year over year; non-GAAP rose 155%.
Full year EPS guidance raised to $3.75-$3.85 from $3.35-$3.45, above the $3.45 estimate. Free cash flow guidance raised to at least $3.75 billion from $3.5 billion. Revenue growth outlook raised to 34-37% at constant currency. Adjusted operating profit seen up 100-105% for the year. Current quarter EPS guided to $1.20-$1.30 versus a $1.17 estimate, with net revenue of $13.9-$14.8 billion against a $12.88 billion street view.
The company is expanding its networking deal with Oracle (ORCL) for AI data centers and issuing Oracle warrants to buy HPE common stock, deepening a network partnership to speed gigawatt-scale AI infrastructure. Those warrants can cause dilution later if HPE shares keep rising, which likely soured the reaction slightly. Being close to big-spending hyperscalers like Oracle matters, since much of AI hardware demand comes from them, as seen with Nvidia (NVDA).
Dell (DELL) holds the leading AI server market share, but only a fraction ahead of HPE. The market was also watching the Juniper Networks integration. Supply chain worries persist due to high component prices. Morgan Stanley (MS) issued upgrades in this space going into earnings, admitting it had been on the wrong side of the trade by expecting record component inflation to quickly stall the hardware spending recovery. Its surveys show the cycle is driven by an AI refresh pull-forward, still a cyclical infrastructure upcycle.
Dell's strong report a day earlier set the stage, so HPE was a tough act to follow and some upside may have been priced in. The stock was up almost 2% in regular trading and added about 2% after hours, then slipped, and finished down about 6.75%. The call was set for about 15 minutes later.
Snowflake (SNOW)
EPS was $0.62, beating the $0.45 estimate by 38%. Revenue was $1.55 billion, a beat. Product revenue, a key metric, was $1.49 billion, up 37% year over year, also a beat. Net revenue retention rate was 126%. Remaining performance obligations stood at $9 billion, up 30% year over year. The company had 828 customers with trailing 12-month product revenue over $1 million, up 27% year over year, and 829 Forbes Global 2000 customers.
Full year product revenue guidance raised to $6.07 billion from $5.84 billion, above consensus and implying about 36% growth. Operating margin guidance raised to 14.5% from 13.5%. Q3 product revenue forecast of $1.588-$1.593 billion implies about 38% year over year growth, better than estimates.
The expected move was plus or minus 12%, but the stock jumped almost 20%, reaching 22.7% up. The stock had already risen 36.5% at the prior earnings, so backing that up with another strong quarter is impressive. Software companies all face the question of how to weave in AI while holding margins and growing fast; Snowflake seems to have found that mix in its niche. Beating both its margin guidance and this quarter's margins is the core of the story and builds street confidence that AI is not a big risk for the name.
Broadcom (AVGO)
Third quarter EPS was $3.32 versus a $3.23 estimate, nearly a 10-cent beat. Revenue was $29.59 billion versus a $29.45 billion estimate - a beat on top and bottom lines. Operating income was $20.1 billion, topping a $19.7 billion estimate. GAAP operating income was $16 billion. Semiconductor solutions revenue, a key metric, was $20.84 billion, better than the $20.51 billion expectation.
The misses: Q4 revenue guided to about $34.8 billion versus a $35.05 billion expectation, and infrastructure revenue of $8.75 billion missed a $8.88 billion estimate. This was roughly the first time one of the major AI names actually missed some figures.
AI semiconductor revenue was $16.7 billion, up 221% year over year and 54% quarter over quarter, above what the company had guided. CEO Hock Tan said demand for custom AI accelerators and networking stays very strong. AI semiconductor revenue is forecast to accelerate to $21.7 billion next quarter, which would be 236% year over year growth. The full year guidance and the discussion of a $100 billion AI revenue target had not crossed yet and could shift the narrative on the call.
The stock fell close to 6%, settling around 5% down. The miss was not a full surprise since shares had been under heavy pressure, down over 10% in the prior couple of weeks and well off highs. Last quarter's guidance was seen as underwhelming and drew the worst earnings reaction ever, with the stock down over 10%. Even with the misses, growth and valuation math remain strong; this is not growth falling off a cliff, just the street finally catching up to the stock. Ben Emmens flagged AI semiconductor revenue as the key swing factor, coming in above $16 billion at more than 200% year over year on hyperscaler demand. Hock Tan is not an outspoken public figure like Jensen Huang or Tim Cook, so his call comments carry weight; he has reassured investors before with strong long-term agreements and been rewarded for that visibility. The call was set for about 40 minutes later.
Scorecard
At the close of this run: Broadcom (AVGO) down about 5%, Snowflake (SNOW) up 22.7%, HPE down about 6.75%, Five Below (FIVE) up 3%, and NetApp (NTAP) reversed to down almost 10%. AI workloads are driving demand for servers and networking gear, pushing fiscal year raises across the hardware names.
