Earnings vs. Reality: Q1 2025, pt. 2
Earnings vs. Reality
Hey!
Another busy stretch of earnings calls is behind us, and we’ve got a big batch of Nasdaq-100 companies to dig into today. 32 of them, in fact! If you appreciate all the work that’s gone into preparing my analyses of all of them, and get my honest take on each, subscribe!
What are earnings calls, anyway?
In a nutshell, it’s when companies share how they performed financially in the last quarter and provide clues about future prospects. Management fields questions from analysts and reveals the good, the bad, and sometimes the downright perplexing. For us, these calls offer a treasure trove of data to guide our investing decisions.
What’s Inside Today
This week was a real mixed bag. We saw some tech giants flexing their muscles, especially around AI, while others are clearly feeling the heat from economic uncertainty and those pesky tariffs. Consumer-facing companies are navigating choppy waters, with some showing surprising resilience and others admitting things are tough. Healthcare had its share of drama, with pipeline wins and competitive pressures playing out.
Below, I'll give you the quick rundown of what each company said during their calls. But the real meat – what I think is really going on between the lines, and my final verdict on whether to Buy, Hold, or Sell – is in the [Members Only] section further down. Let's get started.
Airbnb ( ABNB 0.00%↑ )
Airbnb reported a solid first quarter with impressive revenue and cash flow numbers. Nights booked saw decent growth. They've got a mountain of cash and are buying back shares. However, they gave cautious guidance for the next quarter, expecting booking growth to slow down a bit, especially as they spend more on marketing for their big Summer Release. They're still confident about the full year's profitability, even with spending planned for new ventures. Key priorities are making the core service better, growing faster internationally (where things are booming), and launching new stuff soon. They did admit things are slower in North America compared to strong growth elsewhere, like Latin America and Asia.
Apple ( AAPL 0.00%↑ )
Apple reported solid numbers for its March quarter, beating estimates slightly on revenue and setting a record for earnings per share. Services revenue hit an all-time high, which is always good to see. iPad and Mac sales were strong, while iPhone grew modestly. Wearables were down, which they partly blamed on tough comparisons to last year's big launches. The really big news was a massive $100 billion share buyback authorization and a dividend increase. Guidance for the next quarter points to modest single-digit growth. The dominant theme, however, was tariffs. They quantified a hefty $900 million impact expected in Q3, highlighting significant uncertainty. They're actively shifting production for US products out of China to places like India and Vietnam. Their new "Apple Intelligence" AI features are getting positive feedback, but key personalized Siri upgrades are delayed. China sales stabilized compared to previous trends.
Automatic Data Processing ( ADP 0.00%↑ )
ADP delivered steady Q3 results, beating estimates with decent revenue and earnings growth. Margins expanded slightly. They announced a planned CFO change, with the current Treasurer stepping up. Their US business is doing well across the board, but international bookings were a bit soft due to economic uncertainty. Client hiring is positive but slow, reflected in their key "Pays Per Control" metric staying low. They did raise their full-year outlook slightly, expecting revenue towards the high end of their previous range and slightly better earnings growth. Client funds interest continues to provide a nice tailwind. They highlighted progress on strategic initiatives like their newer HCM platform and partnerships.
Amgen ( AMGN 0.00%↑ )
Amgen had a strong start to the year, with good revenue growth driven by impressive volume increases across many of their medicines. Fourteen different drugs grew by double digits. Their newer biosimilars are performing well, contributing significantly to growth. Key drugs like Repatha, EVENITY, and TEZSPIRE posted big gains. Their pipeline is moving along, with their potential obesity drug (MariTide) entering Phase 3 trials and other positive late-stage results. Integrating the big Horizon acquisition seems on track, and they're actively paying down the debt taken on for that deal. They kept their full-year guidance unchanged despite acknowledging uncertainty around potential tariffs and taxes.
Amazon ( AMZN 0.00%↑ )
Amazon put up strong Q1 numbers, beating their own guidance with solid revenue growth and impressive operating profit. Their free cash flow over the last year looks healthy. Retail is benefiting from focusing on selection, value, and faster delivery speeds, helped by network efficiencies. AWS cloud growth was strong at 17%, fueled by cloud migrations and huge demand for AI services – they signed many large deals and said AI is already a multi-billion dollar business growing at triple-digit rates. Advertising also continues to grow nicely. They acknowledged tariff uncertainty but haven't seen a major demand impact yet, possibly helped by some forward buying. Management heavily emphasized AI investment across the board, from Alexa+ to AWS infrastructure.
ANSYS ( ANSS 0.00%↑ )
ANSYS reported Q1 results that missed analyst expectations for both revenue and earnings. However, reported revenue still grew compared to last year, and GAAP net income saw a big jump. The main story here is the pending acquisition by Synopsys for about $35 billion in cash and stock. Because of the deal (expected to close in the first half of 2025), ANSYS isn't giving detailed guidance or holding regular earnings calls anymore. Several international regulators have approved the deal, but others are still pending. Management expressed confidence in the deal's logic and underlying demand, still expecting double-digit growth in Annual Contract Value (ACV) for the full year, despite very weak reported ACV growth in Q1 itself.
AstraZeneca ( AZN 0.00%↑ )
AstraZeneca reported a strong start to 2025, with solid growth in revenue, core operating profit, and core earnings per share (which also got a boost from a lower tax rate). Growth was broad-based, driven by demand for innovative medicines, particularly in Oncology and Biopharma. Key drugs like Enhertu and Farxiga performed well, and Emerging Markets outside of China showed strong growth. They highlighted significant progress in their pipeline with key approvals and positive late-stage trial results. They acknowledged headwinds like US Medicare changes impacting pricing, competition in China, and upcoming generic pressure for some drugs, but reiterated their full-year guidance, expressing confidence that volume growth and new products will overcome these challenges.
Biogen ( BIIB 0.00%↑ )
Biogen reported a mixed quarter. Revenue grew and beat expectations, helped by newer launch products and some timing factors. However, earnings per share missed estimates and declined compared to last year (though it would have grown slightly excluding a one-time deal payment). Management talked about a "Tale of Two Companies" – the declining older Multiple Sclerosis business versus the growing newer portfolio focused on Alzheimer's, Rare Disease, and Immunology. Their newest launches (LEQEMBI for Alzheimer's, SKYCLARYS for a rare disease, etc.) are gaining momentum, generating about $200 million in the quarter. The pipeline is advancing, with key trials starting. They lowered their full-year EPS guidance mainly due to the deal payment but kept revenue guidance indicating a mid-single-digit decline overall, as the legacy MS business fall-off is still expected to outweigh new product growth in dollar terms this year. They seem well-positioned to handle potential tariff impacts due to their manufacturing footprint and global sales mix.
Booking Holdings ( BKNG 0.00%↑ )
Booking had a strong first quarter, beating their own forecasts with record room nights booked and healthy growth in revenue, adjusted EBITDA, and earnings per share. Management sees travel demand holding steady globally as we head into Q2, though they are keeping an eye on economic and geopolitical worries. They highlighted good progress in key strategic areas like alternative accommodations (growing faster than rivals), getting more direct bookings, expanding their loyalty program, and seeing explosive growth in newer areas like flights and attractions. AI is a big focus, being integrated across their platforms. They remain disciplined on costs and are returning a lot of cash to shareholders through buybacks and their new dividend.
Cadence Design Systems ( CDNS 0.00%↑ )
Cadence knocked it out of the park in Q1, beating expectations on revenue and earnings by a wide margin. Things look so good they raised their full-year forecasts. Demand is booming, thanks to big trends like AI, cloud computing (hyperscalers), 5G, and self-driving tech pushing customers to spend heavily on R&D. All parts of their business grew strongly, especially hardware used for designing complex chips, which is actually supply-constrained right now. They highlighted big partnerships and are making a major move to expand their critical IP business by acquiring a piece of Arm. Management sounds very confident, saying the macro uncertainty isn't hurting their specific niche yet.
CoStar Group ( CSGP 0.00%↑ )
CoStar reported strong headline numbers for Q1, beating expectations with double-digit revenue growth (for the 56th quarter in a row!) and a huge jump in adjusted EBITDA compared to last year. Their core commercial real estate data businesses remain very profitable. Apartments.com saw solid growth and benefited from a competitor exiting the space. The big story is their massive investment in Homes.com, their residential portal aimed at challenging Zillow. They're spending heavily on marketing, driving big gains in brand awareness and traffic, and rapidly scaling their sales team for a new agent-friendly product. They also closed the Matterport acquisition. Bookings improved, especially for LoopNet. They reaffirmed their full-year outlook, expecting revenue to accelerate later in the year, though overall profitability is currently weighed down by the heavy Homes.com spending.
Cognizant Technology Solutions ( CTSH 0.00%↑ )
Cognizant had a strong start to the year, beating expectations on revenue and profit margins. Their organic growth picked up speed, especially in Healthcare and Financial Services, which is a good sign. The acquisition of Belcan also helped results. They made a big deal about using AI internally to be more productive, which they say is helping them win large deals where clients want to cut costs. Bookings look healthy overall, though Q1 was down compared to a tough prior year. They did acknowledge things slowed down a bit in April, which is reflected in their Q2 guidance, but they maintained their full-year outlook and plan to return a good chunk of cash to shareholders.
DexCom ( DXCM 0.00%↑ )
DexCom reported accelerating organic revenue growth for the second quarter in a row, driven by a record number of new patients using their continuous glucose monitors (CGMs). This surge is fueled by expanded commercial reach and, importantly, major new insurance coverage wins (with big Pharmacy Benefit Managers) for Type 2 diabetes patients who don't use insulin – a huge new market opportunity. Their new over-the-counter CGM, Stelo, is gaining traction and is now available on Amazon. They also got FDA clearance for an improved 15-day sensor launching later this year. However, they hit a snag with supply chain recovery costs from a previous issue, forcing them to lower their full-year gross margin forecast significantly. Despite this, they maintained their operating margin and profit guidance, indicating strong cost control elsewhere. They also announced a share buyback program but disclosed an FDA warning letter related to past facility inspections, which they are addressing.
Exelon ( EXC 0.00%↑ )
Exelon reported a strong first quarter, beating earnings expectations significantly compared to last year. They reaffirmed their full-year guidance and long-term earnings growth targets, aiming for 5-7% annual growth through 2028, backed by a huge $38 billion capital investment plan focused on upgrading their utility infrastructure. They've already locked in most of their financing needs for the year, reducing risk. Their utilities (ComEd, PECO, etc.) showed strong operational performance. They also highlighted positive legislative progress in Maryland and are actively involved in regulatory discussions about handling the massive potential demand increase from data centers – confirming a pipeline of 17 GW with another 16 GW under study. Management noted some Q1 earnings benefit was due to timing that will reverse later, but underlying growth remains robust.
GE HealthCare ( GEHC 0.00%↑ )
GE HealthCare delivered a strong Q1, beating expectations on revenue and adjusted earnings per share. Organic revenue growth was decent, and importantly, organic orders grew at a double-digit pace, suggesting healthy demand and potential market share gains, especially in US imaging. Their Pharmaceutical Diagnostics unit also performed very well with strong growth and margins. They launched a new radiopharmaceutical product. However, the big news was the significant negative impact of tariffs. Due solely to current and anticipated tariffs, they slashed their full-year guidance for adjusted EPS, operating margin, and free cash flow. Revenue guidance remains unchanged, indicating the underlying business demand is still there, but profitability will take a major hit this year. Management expressed confidence in plans to mitigate the tariff impact over time (supply chain shifts, etc.) and expects the hit in 2026 to be less severe. They are protecting R&D spending and announced a new $1 billion share buyback.
Honeywell International ( HON 0.00%↑ )
Honeywell reported a strong Q1, beating expectations on sales, margins, and earnings per share. Demand looks solid with a growing backlog. Aerospace and Building Automation were the growth leaders, while Industrial Automation and Energy/Sustainability lagged. They raised their full-year adjusted EPS guidance slightly, citing the Q1 beat but offset by caution about the rest of the year. They've been aggressively buying back stock, made an acquisition (Sundyne), and are moving faster than expected to divest their PPE business. Progress continues on the complex plan to spin Honeywell into three separate companies (Automation, Aero, Advanced Materials). Management sounded cautious despite the good quarter, highlighting economic uncertainty and a significant potential headwind from tariffs, mainly related to China.
IDEXX Laboratories ( IDXX 0.00%↑ )
IDEXX described Q1 as a "solid start," reporting modest organic revenue growth and beating earnings estimates. Their core Companion Animal diagnostic business grew, though it was held back slightly by having fewer business days in the quarter compared to last year. A key challenge remains declining vet clinic visits in the US. Strengths included strong international growth, continued placement of their diagnostic instruments, and good momentum in veterinary software. They launched a new cancer diagnostic test with strong initial interest and are ramping up placements of their new inVue Dx analyzer. They maintained their full-year guidance for organic revenue growth and margin expansion but did raise reported guidance due to favorable currency exchange rates and a one-time legal benefit. They acknowledged tariff impacts but stated they are manageable and factored into their outlook.
Kraft Heinz ( KHC 0.00%↑ )
Kraft Heinz reported Q1 results that met expectations, but they lowered their full-year guidance, citing growing market pressure. Revenue was basically flat, and while cash flow was strong, the overall picture suggests challenges. They are increasing spending on marketing and innovation through their "Brand Growth System" to try and revive growth, focusing on "offense with discipline" rather than just chasing low-quality volume. A major concern is rising costs, with inflation outlook increased, partly due to potential tariffs impacting costs later in the year. They expect Q2 profitability to be pressured by promotions and peak commodity costs. Management highlighted that their revised guidance midpoint doesn't even assume volume turns positive this year, indicating a significant reset of expectations.
KLA Corporation ( KLAC 0.00%↑ )
KLA reported strong results for the March quarter, beating their previous guidance, and their outlook for the June quarter looks stable. The big driver for them is AI – building the chips and infrastructure for it requires their specialized equipment, especially for advanced packaging, which is growing very fast. Their services business also continues to be a reliable grower. They believe they're gaining market share and are aiming to be number one in advanced packaging this year. They boosted their dividend and announced a big new share buyback plan. While they expect the overall chip equipment market (WFE) to grow modestly in 2025, they think KLA will do better. They did flag a hit to margins from tariffs but still raised their full-year margin forecast slightly, suggesting they can manage it.
Linde plc ( LIN 0.00%↑ )
Linde delivered resilient Q1 results, slightly beating earnings guidance despite acknowledged economic headwinds. Adjusted earnings per share grew nicely, and operating margins expanded significantly, hitting over 30%. Management maintains a cautious view of the global economy, seeing sluggish industrial activity, but emphasized the strength of their operating model – relying on defensive sales contracts, pricing power, and productivity gains to drive results even in weak markets. Their project backlog remains strong, providing visibility. They continued their track record of dividend growth and share buybacks. Guidance for Q2 and the full year remains prudent, assuming weak market conditions persist, with earnings growth expected to come primarily from self-help measures rather than market recovery.
Mondelez International ( MDLZ 0.00%↑ )
Mondelez reported "solid" Q1 results, though the story was complex. Organic revenue grew, but this was entirely driven by price increases needed to cover soaring cocoa costs. Volumes actually declined due to this pricing, some planned product resizing, Easter timing, and retailers reducing inventory. Chocolate revenue grew strongly on price, but biscuit revenue was flat, hit by softness in the US market where consumers are feeling pressured. Adjusted profits (Gross Profit, EPS) were down significantly due to the record cocoa prices. Europe performed well, but North America was weak. Emerging Markets were mixed. Despite the Q1 profit hit, they reaffirmed their full-year guidance for revenue, earnings, and cash flow, expressing confidence in managing the cocoa situation and benefiting from their global diversification. They generated strong cash flow and bought back a lot of stock.
Meta Platforms ( META 0.00%↑ )
Meta reported strong Q1 results with solid revenue growth and high operating margins. User growth continues across Facebook, Instagram, and WhatsApp. AI is the absolute top priority, driving huge investments and showing up in improved ad performance and user engagement. Their new AI features like Meta AI are being rolled out. Threads continues to grow users but isn't expected to make money this year. Business messaging on WhatsApp is seen as the next big revenue source, helped by AI. However, Reality Labs (VR/AR) continues to lose billions. The big news was a massive increase in planned capital expenditures for 2025, signaling an enormous bet on building out AI infrastructure. Q2 revenue guidance suggested a slight growth slowdown, and they flagged significant regulatory risk in Europe concerning their ad-free subscription model, which could materially impact results later this year. They returned a lot of capital through buybacks and their new dividend.
Microsoft ( MSFT 0.00%↑ )
Microsoft delivered a record quarter, beating expectations across the board with strong growth in revenue, operating income, and earnings per share. The Microsoft Cloud continues to be a juggernaut, with revenue surpassing $42 billion in the quarter, growing over 20%. Azure growth was particularly impressive at 33% (35% constant currency), with AI services contributing a significant 16 percentage points to that growth. Importantly, demand for non-AI Azure services also accelerated. Adoption of AI tools like Copilot is surging across their products. Growth was broad-based, even in the personal computing segment boosted by search advertising. The outlook for Q4 is strong, though they warned that booming AI demand might lead to capacity constraints beyond June. Despite heavy AI investments pressuring cloud gross margins, overall operating margins actually increased due to strong cost control.
MicroStrategy ( MSTR 0.00%↑ )
MicroStrategy doubled down again on its Bitcoin strategy, reporting it now holds over 553,000 BTC worth around $52 billion (as of late April). They bought a massive amount of Bitcoin in the first four months of 2025, funded by raising an incredible $10 billion through selling stock and issuing convertible notes and new preferred shares. They adopted fair value accounting for Bitcoin, which means huge swings in reported earnings based on Bitcoin's price (a $5.9B loss reported in Q1). Management remains extremely bullish, presenting complex models to justify their strategy and the stock's significant premium valuation compared to its Bitcoin holdings. They announced an incredibly ambitious new plan ("42-42") to raise another $84 billion by 2027 to buy more Bitcoin. The underlying software business saw revenue decline slightly, clearly taking a backseat to the Bitcoin accumulation strategy.
NXP Semiconductors ( NXPI 0.00%↑ )
NXP reported Q1 results that beat lowered expectations, though revenue was still down significantly compared to last year. Guidance for Q2 suggests the decline is slowing, with slight sequential growth expected. Automotive and Industrial markets were a bit soft in Q1 but are expected to grow in Q2, while Mobile is expected to decline further. A major announcement was the upcoming retirement of CEO Kurt Sievers at year-end, with an internal executive promoted to succeed him, ensuring strategy continuity. NXP is also making several acquisitions totaling $1.1 billion to strengthen its position in Auto, Industrial, and Edge AI. Management sees early signs of market recovery but remains cautious due to high uncertainty around tariffs and the broader economy, refusing to provide guidance for the second half of the year. Inventory levels remain high.
PACCAR ( PCAR 0.00%↑ )
PACCAR reported Q1 results showing sequential declines in revenue and adjusted profit, impacted by a softening North American truck market, though results included a significant charge for EU litigation. Parts and Financial Services continued to perform well, providing stability. Truck deliveries were guided lower for Q2, and crucially, gross margins are expected to compress significantly due to the full impact of tariffs hitting costs before price increases can fully catch up. Management noted uncertainty around a US investigation into truck tariffs, which could potentially provide relief later in the year. While truckload carrier demand is soft, vocational and LTL segments are holding up. Management expressed confidence in the long term, supported by their strong brands and profitable Parts/Financial segments.
PayPal ( PYPL 0.00%↑ )
PayPal delivered a strong Q1, beating expectations handily with impressive 23% growth in non-GAAP earnings per share. Transaction Margin dollars, a key profitability metric under new CEO Alex Chriss, grew nicely for the fifth straight quarter. Growth was particularly strong in their branded checkout experiences, Venmo (which saw 20% revenue growth), Buy Now Pay Later volumes, and debit card usage. Active account growth was modest. Management highlighted an intentional slowdown in lower-margin Payment Processing volume to focus on profitability. Despite the strong start, they maintained their full-year guidance, citing macro uncertainty. The strategic focus is clearly on profitable growth, winning at checkout, monetizing Venmo, and innovating with AI, Ads, and Crypto. Their revamped checkout experience is rolling out rapidly.
Qualcomm ( QCOM 0.00%↑ )
Qualcomm reported strong Q2 results, beating guidance for both revenue and earnings. The core chipset business performed well, driven by better-than-expected results in Handsets, Automotive, and the Internet of Things (IoT). Growth in Auto (+59% YoY) and IoT (+27% YoY) was particularly impressive, highlighting successful diversification. Guidance for Q3 indicates continued strength, especially in chipsets. AI is a major focus, with the company integrating AI capabilities across all its product lines (phones, PCs, cars, IoT devices) and making acquisitions to bolster its Edge AI position. They also announced plans to return 100% of their free cash flow to shareholders this fiscal year via dividends and buybacks, signaling strong confidence. Management acknowledged macro and trade uncertainty but stated it's factored into their solid outlook.
Regeneron Pharmaceuticals ( REGN 0.00%↑ )
Regeneron described their Q1 performance as "mixed." The big challenge is their flagship eye drug, EYLEA, which saw significant sales declines in the US due to lower demand and inventory adjustments. Increased competition from lower-cost Avastin, especially due to issues with patient co-pay assistance funding, was cited as a major factor. The newer high-dose version, EYLEA HD, held steady quarter-over-quarter but also faced inventory pressures. They received a regulatory setback (a CRL) for a pre-filled syringe version of EYLEA HD due to a supplier issue. On the positive side, their blockbuster drug Dupixent continues its strong global growth, boosted by new indications like COPD. Libtayo sales also grew nicely. The pipeline remains active with multiple potential approvals and data readouts expected soon. They continued buying back shares and initiated a quarterly dividend, signaling confidence despite the EYLEA headwinds, also backed by massive planned investments in US manufacturing.
Roper Technologies ( ROP 0.00%↑ )
Roper reported solid Q1 results with good revenue growth (helped by acquisitions) and 5% organic growth, meeting expectations. Earnings per share beat guidance. They closed the $1.65 billion acquisition of CentralReach, a cloud software provider for autism care, expecting strong future growth from it. Reflecting this deal, they raised their full-year total revenue growth forecast but modestly raised the EPS guide, absorbing some initial dilution. Organic growth guidance for the year remains unchanged at 6-7%. Management highlighted the resilience of their software-focused business model and strong cash flow generation (though Q1 FCF was temporarily lower due to timing). They have over $5 billion available for more acquisitions. Application Software performed well, Network Software was slow but expected to improve, and Tech-Enabled Products were solid. Tariff impacts were deemed manageable.
Starbucks ( SBUX 0.00%↑ )
Starbucks reported what management themselves called "disappointing" Q2 results, missing expectations. Revenue dipped, and comparable store sales fell globally and in the US. Earnings per share dropped sharply by 38%. They are implementing a "Back to Starbucks" strategy focused on improving the customer and employee experience, fixing store operations, and revitalizing the menu. A key shift involves pausing expensive equipment rollouts and instead investing more in labor and technology like better order sequencing to speed up service. Partner (employee) turnover is at a record low, which they see as a positive sign. China comps were flat but saw transaction growth. The new CFO emphasized that the turnaround will take time and require cost discipline. Management is asking for patience, focusing on operational improvements while financial results remain weak near-term.
Atlassian ( TEAM 0.00%↑ )
Atlassian reported strong Q3 revenue, driven by continued 25% growth in their cloud business. Free cash flow generation was exceptionally strong, with a margin of 47%. Their strategic focus is on winning larger enterprise customers, integrating AI (called 'Rovo') across their products (like Jira and Confluence), and building an interconnected 'System of Work'. Rovo adoption is growing rapidly, helping drive strong sales of their premium and enterprise software editions. They launched new cloud offerings for government and regulated industries to capture more sensitive customers. They reaffirmed long-term growth targets. Management noted some large enterprise deals closed later than expected in Q3, pushing some revenue into Q4. They are also actively encouraging migration from their older 'Data Center' products to the Cloud by limiting contract lengths, which creates a near-term headwind for Data Center revenue but accelerates their strategic shift. They remain confident despite citing macro factors in their Q4 guidance approach.
[Members Only] Earnings Analysis
Okay, let's get past the corporate speak and break down what these earnings really mean for investors. Below is my take on what's happening "Between the Lines" and my verdict on each stock based on the latest info.