After Nvidia, We're Watching These 5 Earnings Reports Next

After Thursday's market close, we have quarterly results from Elastic NV ESTC as well as reports from Dell DELL, HP HPQ, Redfin RDFN and Tudor Perini TPC.

When we examine those latter four that are not in the Portfolio, we’ll be focused on comments about the AI PC and data center server markets from Dell and HP. With Redfin, we’ll be interested in what it has to say about the housing market but, following recent comments from Toll Brothers TOL and the like, we’re not expecting anything that will signal a sharp turn higher. With Tudor Perini, a construction company that specializes in civil projects, we’ll be interested in its comments about mega projects in the U.S. and the corresponding ramp in activity over the coming quarters.

Elastic Earnings

Similar to Axon AXON, Elastic has a track record of delivering beat-and-raise earnings reports. That and the growing number of AI adoption data points, including bullish comments this week from Workday WDAY, set the stage for what the company will say after Thursday's market close.

Consensus expectations call for EPS of $0.47 on revenue of $368.85 million, up from $0.36 and $328 million in the year-ago quarter. As we saw with Nvidia NVDA, we’ll want to be mindful of any “whisper numbers” out there and with that in mind, we’ll share the EPS range for the January quarter spans $0.44 to $0.50 and $367 million to $374.6 million for its revenue.

When we dig through the earnings release and listen to management’s comments on the earnings call, the items we’ll be focused on are subscription revenue and customer growth, deferred revenue, remaining performance obligations and subscription revenue per customer. In addition to those business metrics, we will also want to see continued margin expansion in the quarter’s figures. What this collection of pieces will tell us is if the company’s business continues to grow at a brisk pace, how likely management’s revenue guidance is, and if economies of scale are being achieved.

As we said earlier today and hinted at above, because we are still in the relatively early stages of AI adoption across enterprises, we would be disappointed if we see something other than favorable figures for those metrics. When we discussed Elastic’s October quarter earnings we shared the following about its guidance for the current quarter:

"…Elastic guided the current quarter to earnings per share of $0.46 to $0.48 compared to the market forecast of $0.40. It also lifted its fiscal year EPS outlook to $1.68 to $1.72 from $1.52 to $1.56, which implies EPS of $0.28 to 0.32 for its April-ending, 2025 quarter. As we look at these EPS figures for the current quarter and the April one, they imply continued strong year-over-year growth.

"Our suspicion is those figures are conservative, owing to management’s operating margin guidance for the next two quarters being softer than the 14.2% posted in the first half of the fiscal year. Some of that could be chalked up to Elastic’s investment in bringing more AI capabilities to market across its search, security, and cloud offerings. Because we are still in the early inning of AI adoption and all indications are companies are poised to spend more on AI in 2025 than this year, that investment makes sense as it should help drive subscription revenue per customer even higher down the road while helping expand the overall customer base. To the extent that margin guidance is conservative, it would mean even more profits falling to Elastic’s bottom line, which is certainly not a bad thing given our position in the shares."

With ESTC shares well off their recent high near $118 and strong support between $98 and $100, it would take a big shortfall either in the quarter or its outlook to really hammer the shares. A modest miss relative to the whisper numbers could lead to a modest sell-off, but if support levels that could give members an opportunity to pick up some shares.

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At the time of publication, TheStreet Pro Portfolio was long ESTC, AXON and NVDA.