Earnings Preview

Welcome to this week’s earnings review newsletter, where we analyze the performance of leading companies across diverse industries to give us a better picture of what to expect in their upcoming earnings releases this week. From technology and cybersecurity to retail and fashion, this edition dives deep into the strategies, challenges, and opportunities shaping the outlook of these market leaders.

This week, we highlight the performances of Zoom Video Communications, Dell Technologies, CrowdStrike, Workday, HP Inc., Best Buy, Dick’s Sporting Goods, Abercrombie & Fitch, and Nordstrom. These companies faced a wide range of dynamics, including evolving consumer behaviors, increasing demand for AI-driven solutions, and ongoing macroeconomic headwinds.

In technology, companies like Dell, Zoom, and CrowdStrike demonstrated resilience by leveraging innovation and AI to drive growth, while retail leaders such as Best Buy and Nordstrom worked to balance inventory optimization with consumer spending shifts. Meanwhile, Abercrombie & Fitch stood out with robust growth in its fashion and international segments, showcasing the power of targeted strategies in challenging markets.

This newsletter offers detailed insights into each company’s financial performance, key trends, and projections for the coming quarter. Let’s explore how these industry leaders are adapting and thriving in an ever-changing economic landscape.

Zoom Video Communications (ZM)

Category: Technology

Zoom reported a solid Q2 FY2025, with total revenue of $1.14 billion, reflecting a 4.5% year-over-year increase. The growth was driven by strong performance in its Enterprise segment, which accounted for 57% of total revenue and grew 7% YoY. Online revenue declined slightly by 1%, reflecting a shift in demand dynamics as businesses prioritize hybrid work solutions. Zoom’s GAAP net income rose to $182 million, a significant 28% increase from $142 million in the prior year, supported by cost optimization and improved operational efficiency. Non-GAAP EPS was $1.34, exceeding market expectations.

The company’s innovation strategy is centered on its expanding product suite, including Zoom AI Companion, Zoom Phone, and Zoom Team Chat, aimed at driving deeper customer engagement. Zoom Phone revenue increased by 100% YoY, and the platform now supports over 10 million active seats globally. Additionally, Zoom Rooms saw double-digit growth in sales, underscoring the increasing adoption of hybrid workplace solutions.

Key Points:

• Total Revenue: $1.14 billion, up 4.5% YoY.
• Enterprise Segment Revenue: 7% YoY growth, representing 57% of total revenue.
• Net Income: $182 million, up 28% YoY.
• Non-GAAP EPS: $1.34, exceeding expectations.
• Zoom Phone Growth: 100% YoY with over 10 million active seats globally.

Projections for Q3 FY2025:

• Revenue Guidance: Zoom expects Q3 revenue of $1.15-$1.16 billion, reflecting YoY growth of approximately 4%-5%.
• Operating Income Margin: Anticipated to remain steady at around 40%, driven by disciplined cost management.
• Earnings per Share (EPS): Non-GAAP EPS guidance is in the range of $1.35-$1.40.
• Drivers: Continued adoption of Zoom Phone and AI-driven solutions, with a focus on increasing enterprise penetration and enhancing product offerings like Zoom AI Companion.

Zoom’s focus on hybrid work innovations and expanding its enterprise portfolio positions the company for sustained growth, even as the broader macroeconomic environment evolves. Analysts will be watching the adoption of AI solutions and new features to gauge long-term growth potential.

Dell Technologies (DELL)

Category: Technology & Hardware

Dell delivered a strong Q2 FY2025, with total revenue of $22.9 billion, up 10% year-over-year, exceeding market expectations. This growth was primarily driven by robust performance in its Infrastructure Solutions Group (ISG), which grew 21% YoY to $9.5 billion, fueled by demand for AI-optimized servers and storage solutions. The Client Solutions Group (CSG) contributed $13.4 billion in revenue, representing a 4% increase YoY, as commercial PC demand showed signs of recovery.

GAAP operating income reached $1.6 billion, a 31% increase YoY, while non-GAAP operating income rose 25% to $2.2 billion, reflecting operational efficiencies and improved gross margins of 21.5%. Net income was $455 million, up from $307 million in the prior-year quarter, translating to a non-GAAP diluted EPS of $1.74, surpassing guidance.

Key Points:

• Total Revenue: $22.9 billion, up 10% YoY.
• Infrastructure Solutions Group (ISG): $9.5 billion, up 21% YoY.
• Client Solutions Group (CSG): $13.4 billion, up 4% YoY.
• Net Income: $455 million, up 48% YoY.
• Non-GAAP EPS: $1.74, exceeding expectations.

Projections for Q3 FY2025:

• Revenue Guidance: Dell expects Q3 revenue to range between $23.3 billion and $24.1 billion, reflecting YoY growth of 8%-12%.
• Operating Income Margin: Anticipated to remain steady, supported by disciplined cost management and strong demand for ISG products.
• Drivers: Continued demand for AI-ready infrastructure and commercial PC recovery will be critical growth drivers, alongside a focus on expanding ISG market share.

Dell’s strong positioning in AI infrastructure and its ability to capitalize on the recovery in PC demand reflect its adaptability in a rapidly changing market. Analysts will watch how Dell sustains growth in its ISG segment while navigating potential challenges in global macroeconomic conditions.

CrowdStrike Holdings, Inc. (CRWD)

Category: Cybersecurity

CrowdStrike reported impressive Q2 FY2025 results, with total revenue of $787 million, a 37% year-over-year increase, driven by continued demand for its Falcon platform and strong growth in subscription revenue, which accounted for 96% of total revenue. Annual Recurring Revenue (ARR) grew 36% YoY to $3.57 billion, supported by a net new ARR addition of $215 million during the quarter. The company achieved a gross margin of 77%, reflecting the efficiency of its scalable cloud-based platform.

GAAP net income reached $8.5 million, compared to a loss of $49.3 million in the prior year, while non-GAAP net income grew 70% YoY to $150.8 million, translating to a non-GAAP diluted EPS of $0.74. Free cash flow was strong at $225 million, showcasing CrowdStrike’s robust cash generation capabilities. The company also expanded its customer base, surpassing 30,000 total subscription customers, representing a 41% YoY increase.

Key Points:

• Total Revenue: $787 million, up 37% YoY.
• ARR: $3.57 billion, up 36% YoY.
• Gross Margin: 77%.
• Net Income: $8.5 million (GAAP); $150.8 million (Non-GAAP).
• Non-GAAP EPS: $0.74, up 70% YoY.
• Free Cash Flow: $225 million.

Projections for Q3 FY2025:

• Revenue Guidance: CrowdStrike expects revenue between $825 million and $833 million, reflecting YoY growth of approximately 33%-34%.
• Non-GAAP EPS Guidance: Projected in the range of $0.75 to $0.77.
• Drivers: Ongoing adoption of Falcon modules, expansion in small-to-medium business (SMB) markets, and strong demand for AI-driven cybersecurity solutions.

CrowdStrike’s leadership in cloud-native cybersecurity, coupled with its aggressive expansion into new markets and continued customer growth, positions the company for sustained momentum. Analysts will closely monitor the company’s ability to maintain its high growth rate while scaling its operations.

Workday, Inc. (WDAY)

Category: Enterprise Software

Workday reported strong Q2 FY2025 results, with total revenue reaching $1.79 billion, a 16.1% year-over-year increase, driven by continued adoption of its cloud-based enterprise solutions. Subscription revenue rose 19% YoY to $1.63 billion, accounting for 91% of total revenue. The company achieved a 22% YoY growth in its Remaining Performance Obligations (RPO), now at $17.2 billion, signaling strong customer demand and long-term contract momentum. GAAP operating income improved to $101 million, compared to a $35 million loss in the prior year, while non-GAAP operating income was $487 million, representing a margin of 27.2%.

Workday’s key growth drivers included strong adoption of Workday Financial Management and Workday Adaptive Planning solutions, along with expanding customer wins across Fortune 500 companies. The company closed 38 new Fortune 500 deals during the quarter and continues to focus on generative AI innovations to enhance its product capabilities.

Key Points:

• Total Revenue: $1.79 billion, up 16.1% YoY.
• Subscription Revenue: $1.63 billion, up 19% YoY.
• Operating Income: $101 million (GAAP); $487 million (Non-GAAP).
• RPO: $17.2 billion, up 22% YoY.
• Non-GAAP EPS: $1.45, up from $0.93 YoY.

Projections for Q3 FY2025:

• Revenue Guidance: Workday expects Q3 revenue between $1.82 billion and $1.83 billion, reflecting a YoY growth of 15%-16%.
• Subscription Revenue Guidance: Anticipated at $1.66 billion to $1.67 billion, representing 17%-18% growth YoY.
• Operating Margin: Non-GAAP operating margin guidance is approximately 23.5%.
• Drivers: Continued strength in financial and human capital management solutions, enhanced by AI-driven features and expanding enterprise adoption.

Workday’s focus on leveraging AI and providing integrated solutions for enterprise planning and management positions it for sustained growth. Analysts will monitor its ability to maintain robust subscription revenue growth and further capitalize on its expanding market share.

HP Inc. (HPQ)

Category: Technology & Hardware

HP Inc. reported Q3 FY2024 revenue of $13.2 billion, reflecting a 9.8% year-over-year decline, as persistent macroeconomic headwinds and softer demand impacted both the Personal Systems and Printing segments. Personal Systems revenue fell 11% YoY to $8.9 billion, driven by a 13% decrease in Consumer revenue and a 6% decline in Commercial revenue. Printing segment revenue declined by 7% YoY to $4.3 billion, primarily due to reduced Consumer hardware sales and lower Supplies revenue.

GAAP operating income for the quarter was $894 million, representing an operating margin of 6.8%, down from 7.2% in the prior year. Non-GAAP diluted earnings per share came in at $0.86, in line with company guidance but reflecting a YoY decline of 16%. HP generated $400 million in free cash flow during the quarter and returned $1.0 billion to shareholders through share repurchases and dividends.

Key Points:

• Total Revenue: $13.2 billion, down 9.8% YoY.
• Personal Systems Revenue: $8.9 billion, down 11% YoY.
• Printing Revenue: $4.3 billion, down 7% YoY.
• GAAP Operating Income: $894 million, with a margin of 6.8%.
• Non-GAAP EPS: $0.86, down 16% YoY.
• Free Cash Flow: $400 million.

Projections for Q4 FY2024:

• Revenue Guidance: HP expects a continued revenue decline in the low-to-mid single digits YoY, reflecting ongoing demand challenges in PCs and printers.
• Non-GAAP EPS Guidance: Estimated at $0.85 to $0.97.
• Drivers: Stabilization in Commercial PC demand and targeted growth in higher-margin product categories, offset by broader market weakness and channel inventory adjustments.

HP’s focus on cost optimization and prioritization of premium product categories positions it to navigate the challenging macro environment. Analysts will closely monitor its progress in stabilizing revenue and its efforts to drive profitability amid ongoing industry pressures.

Best Buy Co., Inc. (BBY)

Category: Retail

Best Buy reported Q2 FY2025 revenue of $9.58 billion, down 7.1% year-over-year, reflecting ongoing softness in consumer electronics demand. Comparable sales declined by 6.2%, driven by weaker performance across key product categories, including home theater, computing, and mobile phones. However, online revenue accounted for 31% of total Domestic revenue, demonstrating the continued importance of digital channels in driving sales.

The company’s GAAP operating income was $301 million, down from $362 million in Q2 FY2024, reflecting tighter gross margins and elevated SG&A expenses. Non-GAAP diluted EPS was $1.22, exceeding expectations but still reflecting a decline from $1.54 in the prior-year quarter. Despite the challenges, Best Buy returned $243 million to shareholders through share repurchases and dividends, signaling confidence in its long-term strategy.

Key Points:

• Total Revenue: $9.58 billion, down 7.1% YoY.
• Comparable Sales: Declined 6.2% YoY.
• GAAP Operating Income: $301 million, with a margin of 3.1%.
• Non-GAAP EPS: $1.22, exceeding expectations.
• Online Revenue: Represented 31% of Domestic revenue.

Projections for Q3 FY2025:

• Revenue Guidance: Best Buy expects a mid-single-digit decline in comparable sales, reflecting continued consumer spending constraints on discretionary electronics.
• Non-GAAP EPS Guidance: Projected in the range of $1.03 to $1.13.
• Drivers: Stabilizing demand for premium electronics, improvements in inventory management, and focus on higher-margin services like Geek Squad are expected to mitigate pressures.

Best Buy’s strategic investments in omnichannel capabilities and focus on premium product offerings aim to position the company for steady performance amid challenging market conditions. Analysts will be watching for signs of demand recovery as well as progress in improving profitability.

Dick’s Sporting Goods, Inc. (DKS)

Category: Retail

Dick’s Sporting Goods faced headwinds in Q2 FY2024, reporting total revenue of $3.22 billion, a 3% decline year-over-year. Comparable store sales were down 4.3%, attributed to weaker-than-expected demand in outdoor categories and team sports equipment. The company noted a shift in consumer spending toward value-driven purchases, impacting premium product sales. Despite the sales decline, Dick’s continued to invest in its long-term growth strategy by expanding its store footprint and enhancing its omnichannel capabilities.

GAAP net income for the quarter was $244 million, or $2.82 per diluted share, compared to $319 million, or $3.25 per share, in Q2 FY2023. Operating income was $314 million, reflecting a margin of 9.8%, down from 12.4% in the prior-year quarter. The company reaffirmed its focus on inventory management, with inventory levels down 5% YoY, supporting its margin stabilization efforts.

Key Points:

• Total Revenue: $3.22 billion, down 3% YoY.
• Comparable Store Sales: Declined 4.3%.
• Operating Income: $314 million, with a margin of 9.8%.
• Net Income: $244 million, or $2.82 per diluted share.
• Inventory Levels: Decreased by 5% YoY.

Projections for Q3 FY2024:

• Revenue Guidance: Dick’s expects comparable store sales to decline by 3%-4%, reflecting continued consumer spending shifts.
• Operating Margin: Anticipated to remain under pressure, but inventory discipline and promotional strategies may help mitigate declines.
• Earnings per Share (EPS): The company projects EPS for the full year to range between $11.50 and $12.00.
• Drivers: Strength in e-commerce growth and expansion of the value-focused “House of Sport” concept stores, alongside improving inventory management, will be key priorities.

Dick’s Sporting Goods remains focused on balancing near-term challenges with long-term growth initiatives. Analysts will watch how the company navigates evolving consumer behaviors while maintaining profitability and pursuing its strategic objectives.

Abercrombie & Fitch Co. (ANF)

Category: Retail

Abercrombie & Fitch delivered strong Q2 FY2024 results, reporting total revenue of $935 million, a 16% year-over-year increase, driven by robust performance across its Abercrombie and Hollister brands. Comparable sales grew 13%, marking the fifth consecutive quarter of double-digit growth in Abercrombie's segment, fueled by strong demand in key categories such as denim, dresses, and activewear. International markets saw particularly strong growth, with revenue up 18%, reflecting successful localized marketing strategies.

GAAP net income for the quarter was $56.9 million, or $1.10 per diluted share, a significant improvement from a net loss of $16.8 million, or $(0.33) per share, in Q2 FY2023. Gross profit margin expanded to 63.2%, up from 57.9% in the prior year, driven by reduced freight costs, higher full-price selling, and favorable product mix. Operating income was $75 million, representing an operating margin of 8.0%, compared to 1.9% in the same period last year.

Key Points:

• Total Revenue: $935 million, up 16% YoY.
• Comparable Sales: Increased by 13%.
• Gross Margin: 63.2%, up 530 basis points YoY.
• Net Income: $56.9 million, or $1.10 per diluted share.
• Operating Income: $75 million, with an 8.0% margin.

Projections for Q3 FY2024:

• Revenue Guidance: Abercrombie expects Q3 revenue growth in the high single-digit percentage range YoY, supported by continued strength in its core categories and geographic expansion.
• Operating Margin: Projected at 8.5%-9.0%, reflecting ongoing improvements in pricing and inventory management.
• Drivers: Growth in international markets, increased digital penetration, and the expansion of Abercrombie's activewear and accessories lines.

Abercrombie & Fitch’s strategic investments in product innovation, targeted marketing, and international expansion have positioned the company to sustain momentum in the coming quarters. Analysts will be watching its ability to maintain growth while navigating broader macroeconomic challenges.

Nordstrom, Inc. (JWN)

Category: Retail

Nordstrom reported Q2 FY2024 revenue of $3.77 billion, a 7.8% year-over-year decline, reflecting weaker consumer spending and soft demand in discretionary categories. Comparable sales dropped 8.3%, with Nordstrom Rack underperforming the full-price segment. Despite revenue challenges, the company improved its gross profit margin to 38.3%, up 30 basis points from the prior year, driven by disciplined inventory management and reduced markdown activity.

Net income for the quarter was $137 million, or $0.84 per diluted share, compared to $126 million, or $0.77 per share, in Q2 FY2023. Operating income increased 4% to $260 million, supported by cost-saving initiatives and operational efficiencies. The company reaffirmed its full-year outlook, highlighting its focus on improving Rack performance and driving growth in digital channels.

Key Points:

• Total Revenue: $3.77 billion, down 7.8% YoY.
• Comparable Sales: Declined 8.3%.
• Gross Profit Margin: 38.3%, up 30 basis points YoY.
• Net Income: $137 million, or $0.84 per diluted share.
• Operating Income: $260 million, up 4% YoY.

Projections for Q3 FY2024:

• Revenue Guidance: Nordstrom expects a mid-single-digit decline in revenue, reflecting continued macroeconomic pressures and efforts to rebalance inventory levels.
• Operating Margin: Anticipated to remain steady at 5.1%-5.3%, supported by cost management.
• Earnings per Share (EPS): Full-year EPS guidance reaffirmed at $1.80 to $2.20.
• Drivers: Improvements in Nordstrom Rack’s inventory mix, expansion of digital sales, and targeted investments in customer experience.

Nordstrom’s ability to navigate a challenging retail environment through strategic cost control and improved inventory management positions it for steady performance. Analysts will monitor the company’s progress in reviving Rack’s growth trajectory and enhancing digital operations.

Conclusion: Resilience and Adaptation in a Dynamic Market

This quarter’s earnings reveal the diverse strategies companies are employing to navigate a challenging economic environment. From the technological innovation driving growth at Dell and CrowdStrike to the inventory discipline and targeted strategies of Nordstrom and Abercrombie & Fitch, each company demonstrates a unique approach to balancing short-term pressures with long-term opportunities.

The retail sector showcased the importance of flexibility, with leaders like Dick’s Sporting Goods and Best Buy focusing on consumer behavior shifts, while Abercrombie & Fitch leveraged its brand strength to deliver standout growth. In technology, companies such as Workday and Zoom emphasized the power of AI-driven solutions and customer engagement, while HP faced headwinds but remained committed to premium offerings and cost efficiencies.

As we look ahead, these companies’ abilities to innovate, optimize, and execute their strategies will be critical in maintaining momentum and capturing future growth. Stay tuned for the next edition, where we’ll continue to analyze the forces shaping industries and uncover key trends influencing markets.