Earnings vs. Reality: Q1 2025, pt. 3
Earnings vs. Reality
Hey!
We’re back with the latest earnings calls from a big slice of the Nasdaq-100.
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.
This week, we’ve got a real mixed bag. Some companies are knocking it out of the park, riding high on new tech trends or smart operational moves. Others? Well, they’re facing some serious headwinds, whether it's from a tough market, inventory issues, or just plain old competition. We’ll see who’s really delivering and who’s just talking a good game.
Later, in the [Members Only] section, you will:
Be able to listen to the whole post as a podcast (over 50 minutes!)!
See what the executives are really saying between the lines!
Get my final verdict on whether these stocks are a buy, sell, or hold right now!
Let’s get to it.
Here’s what the big companies had to say publicly about their recent performance:
AEP 0.00%↑ (American Electric Power)
$AEP kicked off their year with a bang. They reported strong earnings for the first quarter, pulling in $1.54 per share, a nice jump from last year's $1.27. This was better than what the street expected. They’re sticking to their 2025 earnings guidance and their long-term growth targets. The big story here is their massive $54 billion capital plan for the next five years, and they’re hinting at another $10 billion on top of that. Why? Exceptional load growth, folks. Think data centers, factories coming back to the US, and general manufacturing. Their commercial load was up over 12% compared to last year! They’ve also sorted out their equity needs for this huge plan through some smart financial moves, basically like issuing stock at a much higher price than it is now. Regulatory stuff is looking up too.
AMD 0.00%↑ (Advanced Micro Devices)
$AMD came out swinging with a strong first quarter. Revenue was $7.4 billion, up a whopping 36% from last year, and earnings per share hit $0.96, a 55% jump. Both numbers beat what analysts were expecting. Their Data Center business is on fire, with revenue up 57%, thanks to their EPYC CPUs and a big boost from their Instinct AI accelerators. Client and Gaming segments also saw growth. They’re making more money on each sale too, with gross margins up. They even bought a company called ZT Systems to beef up their AI solutions. Their product roadmap for EPYC CPUs and Instinct AI chips looks solid.
APP 0.00%↑ (AppLovin Corp.)
$APP put up some seriously impressive numbers for their first quarter. Revenue shot up 40% year-over-year to $1.5 billion, and their adjusted EBITDA (a measure of profitability) rocketed 83% to $1 billion. Their Advertising segment is the real star, with revenue of $1.16 billion and an incredible 81% EBITDA margin. They’re selling their Games business to focus squarely on this high-margin advertising platform, powered by their Axon AI. They’re also making big strides in e-commerce and web advertising. These guys are incredibly efficient, with their advertising business making about $4 million in adjusted EBITDA per employee annually. They even bought back $1.2 billion of their own stock.
ARM 0.00%↑ (Arm Holdings)
$ARM hit some major milestones. Their fourth-quarter revenue crossed $1 billion for the first time, and their full-year revenue topped $4 billion. Royalty revenue was also a record, especially from their Armv9 technology and Compute Subsystems (CSS), which are getting picked up across data centers, cars, smartphones, and IoT. AI is a huge driver for them, with big names like NVIDIA, Google, Microsoft, and AWS choosing Arm for their AI cloud setups. They expect almost half of new server chips from these hyperscalers to be Arm-based this year. Licensing revenue was also very strong, boosted by AI demand and a big AI partnership with the Malaysian government. They’re guiding for revenue between $1.0 billion and $1.1 billion for the next quarter.
AXON 0.00%↑ (Axon Enterprise, Inc.)
$AXON delivered another strong quarter, with revenue hitting $604 million, up 31% year-over-year. This marks their 13th straight quarter of growing more than 25%. They’re so confident that they’ve raised their full-year guidance for both revenue and adjusted EBITDA. Their new TASER 10 is being adopted twice as fast as the TASER 7, and their AI-powered software, Draft One, is their fastest-adopted software product ever. Their Annual Recurring Revenue is now $1.1 billion, up 34%, and they’re keeping their customers very happy. They’re also making moves on the international front with record bookings.
CCEP 0.00%↑ (Coca-Cola Europacific Partners)
$CCEP reported their first quarter results, which were broadly in line with what they expected, though it's usually their smallest quarter. Reported sales volume was down a bit, mainly because Easter was later this year, they had fewer selling days, and they strategically got out of the Capri Sun business. Adjusted for that, volumes were almost flat. The good news is that revenue per unit case was up over 3%, thanks to smart pricing. Europe saw volumes dip slightly, but Great Britain did well with new launches. Australia Pacific Southeast Asia (APS) saw volumes go up, especially in the Philippines. They reaffirmed their full-year guidance, expecting 4% revenue growth and 7% operating profit growth, with at least €1.7 billion in free cash flow. They’re also buying back shares and paying dividends.
CDW 0.00%↑ (CDW Corporation)
$CDW had a strong first quarter, with net sales of $5.2 billion, up 8% from last year. Gross profit and operating income were also up nicely, and their non-GAAP earnings per share jumped 12%. A big reason for this was a boom in client devices – think laptops and PCs – as businesses refreshed their old gear and got ahead of potential tariffs. All their customer segments grew, with Healthcare being a standout. Hardware sales were up, software sales grew thanks to software-defined networking, and services revenue saw a nice jump. They did say about $100 million in sales was pulled forward into Q1 due to those tariff concerns. They kept their full-year outlook the same, expecting the US IT market to grow by low-single-digits, with $CDW doing a bit better than that.
CEG 0.00%↑ (Constellation Energy Corporation)
$CEG reported a solid first quarter, with adjusted operating earnings per share of $2.14, a nice increase from last year. They’re sticking to their full-year guidance. Management is very bullish on the demand for electricity driven by data centers and AI, and they see their nuclear and gas plants as perfectly positioned to benefit. Their acquisition of Calpine is moving along and is expected to add significantly to earnings and free cash flow once it's done. The Nuclear Production Tax Credit is also a big plus for them. They’ve been doing a great job running their nuclear fleet efficiently. They also hinted at some "great news" coming soon, likely related to new customer contracts.
DASH 0.00%↑ (DoorDash, Inc.)
$DASH made some big moves this quarter. They announced a formal offer to buy Deliveroo, which would seriously boost their international presence, especially in Europe. They also snapped up SevenRooms, a company that will help them offer more services to merchants. They’re laser-focused on growing their Gross Order Volume and monthly active users, and pushing hard into new areas, particularly grocery. Their grocery business is showing strong user growth, and they’re aiming to be a leader in that space. DashPass, their subscription service, is at an all-time high for subscribers. They’re not just chasing margin percentages; they want to maximize actual profit dollar growth.
DDOG 0.00%↑ (Datadog, Inc.)
$DDOG reported strong revenue growth, hitting $762 million, up 25% year-over-year, which was better than they had guided. They’re also adding more customers, especially high-value ones who are spending $100,000 or more a year with them. Customers are using more of their products, which is exactly what $DDOG wants to see. Some of their new products are real hits, like "Flex Logs" and "Database Monitoring," both raking in significant recurring revenue. They’re also seeing a lot of traction with AI-native customers, and their AI-related products are getting more use. Bookings were strong, especially with large enterprise deals. They also generated healthy free cash flow and made a couple of strategic acquisitions.
EA 0.00%↑ (Electronic Arts Inc.)
$EA finished their fiscal year with a strong fourth quarter, beating expectations. This was driven by a re-acceleration in their EA SPORTS FC franchise, good momentum in American Football, and a standout performance from The Sims, which had its best fourth quarter ever. They also launched a new game, Split Fiction, which sold nearly 4 million units. For the full year, net bookings were $7.36 billion. Their live services took a bit of a hit from softness in Apex Legends. Looking ahead to fiscal year 2026, they’re expecting net bookings to be between $7.6 billion and $8.0 billion, driven by EA SPORTS, The Sims, and upcoming launches of new Battlefield and Skate games. They’re also focused on returning cash to shareholders.
FANG 0.00%↑ (Diamondback Energy, Inc.)
$FANG announced a leadership change with their CEO retiring and the President stepping into a bigger role. They’re also cutting their 2025 capital spending by $400 million and reducing drilling activity. This is a response to a tough oil market, OPEC adding more supply, and a slowing global economy. This will mean a slight dip in their 2025 production, with a noticeable drop in Q2 oil output. Their big focus now is on shareholder returns – buying back shares and paying down debt. The variable dividend is off the table for now. They’re dealing with higher steel costs due to tariffs but are finding ways to be more efficient in their drilling. They believe US oil production is set to decline.
FTNT 0.00%↑ (Fortinet, Inc.)
$FTNT reported strong first-quarter results, with revenue and billings both growing 14%. They hit a record non-GAAP operating margin and generated very strong free cash flow. Key growth drivers were their Unified SASE solutions and AI-driven Security Operations (SecOps). Product revenue and service revenue both saw healthy growth. They’re particularly strong with large enterprise customers. Management is confident in their market leadership and their tech advantages. They expect a firewall refresh cycle to pick up steam in the second half of the year. They also bought back a good chunk of their shares. A CFO transition was also announced.
GFS 0.00%↑ (GlobalFoundries Inc.)
$GFS delivered solid first-quarter results, with revenue, gross margin, and earnings per share all hitting the high end of their guidance. They saw year-over-year growth in key areas like Automotive, Communications Infrastructure & Data Center, and IoT. They generated strong free cash flow and are seeing good momentum with design wins, especially in Auto and CID. Their global manufacturing footprint is a key strength in the current geopolitical climate. Their Q2 guidance suggests continued quarter-over-quarter growth. Their balance sheet is strong, and they’ve been paying down debt.
MAR 0.00%↑ (Marriott International, Inc.)
$MAR had a strong first quarter. Global RevPAR (Revenue Per Available Room, a key hotel metric) rose 4.1%, beating their guidance, thanks to higher room rates and more people staying. They had a record quarter for development, with a big jump in global signings and their pipeline of new hotels at an all-time high. They’re also acquiring CitizenM, which will add more rooms to their portfolio. International markets were particularly strong, especially Asia Pacific. The US and Canada saw more mixed results, but their luxury and full-service hotels did well, and group bookings were a standout. They did trim their full-year global RevPAR growth guidance slightly due to a more cautious outlook for the U.S., but they maintained their earnings per share guidance.
MCHP 0.00%↑ (Microchip Technology Incorporated)
$MCHP is in turnaround mode. Their CEO, Steve Sanghi, returned late last year and put a 9-point recovery plan in place. They’ve been restructuring, including closing a fab and reducing their workforce, to cut costs. They’re also working through a big inventory correction. For their fourth quarter, non-GAAP net sales were $970.5 million, which was down from the previous quarter but beat their guidance. Non-GAAP earnings per share also beat expectations. The CEO is "calling the last quarter as a revenue bottom," and their book-to-bill ratio is healthy. Their guidance for the first quarter of fiscal 2026 is for a nice sequential increase in sales and a big jump in earnings per share. They’ve also taken steps to reduce debt.
MELI 0.00%↑ (MercadoLibre, Inc.)
$MELI continued its rapid growth in the first quarter, across both e-commerce and fintech. Brand preference hit all-time highs in key markets like Brazil and Mexico. Their fintech services saw monthly active users grow over 30% year-over-year to 64 million. Their credit business is booming, with the portfolio growing 75% and delinquency levels comfortable. Argentina was a superstar performer, with U.S. dollar revenues more than doubling. They’re also strategically rebranding Mercado Pago to align better with the overall MercadoLibre ecosystem. Their advertising business is also growing strongly.
MNST 0.00%↑ (Monster Beverage Corporation)
$MNST reported a slight dip in first-quarter net sales, down 2.3% year-over-year to $1.85 billion. They attributed this to bottler ordering patterns, foreign exchange headwinds, lower alcohol sales, weather, and one less selling day. Adjusted for currency, sales were actually up slightly. The big positive was a significant improvement in gross margin, which rose to 56.5% from 54.1%, thanks to pricing and supply chain improvements. Operating income was up, and earnings per share also increased. Their alcohol segment struggled, but management heavily emphasized that April sales saw a strong rebound, suggesting Q1 issues were temporary. Co-CEO Rodney Sacks also announced he's stepping down from that role to become Chairman.
ON 0.00%↑ (onsemi)
$ON reported first-quarter revenue of $1.45 billion and non-GAAP earnings per share of $0.55, with non-GAAP gross margin at 40%. All these numbers beat the midpoint of their guidance. However, they’re operating in a challenging environment with macroeconomic headwinds and inventory issues. They’re focused on streamlining operations ("Fab Right"), investing in R&D, and targeting Automotive (especially SiC and image sensors), Industrial, and AI Data Centers. They’ve reduced internal fab capacity and their global workforce. They bought back $300 million in shares and plan to increase that. Their Q2 guidance is for revenue to be flat quarter-over-quarter, with gross margin and earnings per share expected to be down.
PLTR 0.00%↑ (Palantir Technologies Inc.)
$PLTR is seeing booming growth in the U.S. Their US Commercial revenue grew an incredible 71% year-over-year, and US Government revenue was up 45%. Overall US revenue now makes up 71% of their total. Their Artificial Intelligence Platform (AIP) is the main driver of this success, with what they call "unrelenting demand." They reported a strong adjusted operating margin of 44% and a very healthy Rule of 40 score. They’ve raised their full-year revenue guidance and are expecting their US Commercial revenue to grow more than 68% for the year. They’re closing deals fast and seeing customers significantly expand their use of Palantir’s products. They also generated strong free cash flow.
TTD 0.00%↑ (The Trade Desk, Inc.)
$TTD had a strong first quarter, with revenue growing 25% year-over-year to $616 million, better than they expected. Adjusted EBITDA was $208 million, a 34% margin. Their Kokai platform is seeing great adoption and delivering significant performance improvements for clients. Management is very bullish on recent regulatory actions against "walled gardens" like Google, believing it will create a fairer market for $TTD. CTV (Connected TV) remains their largest and fastest-growing channel. They’re focused on gaining market share and have initiatives like OpenPath and the newly acquired Sincera to improve transparency in the ad supply chain. They also brought on a new COO and bought back $386 million of their stock.
VRSK 0.00%↑ (Verisk Analytics, Inc.)
$VRSK reported a strong first quarter with 7.9% organic constant currency revenue growth, powered by an impressive 10.6% growth in subscription revenue. Adjusted EBITDA margins expanded nicely, and their adjusted earnings per share were up. They reiterated their full-year 2025 guidance. Key growth drivers include strong price realization, expanded client relationships, and new solution sales. The insurance industry, their main client base, is facing challenges that increase demand for Verisk’s data and analytics. They’re focused on delivering more insights and connecting datasets for their clients. They also increased their dividend and completed a share repurchase program.
VRTX 0.00%↑ (Vertex Pharmaceuticals Incorporated)
$VRTX reported first-quarter revenue of $2.77 billion, a 3% increase year-over-year. U.S. revenue grew 9%, but ex-U.S. sales declined due to an issue in Russia. Non-GAAP earnings per share were $4.06, down from last year and missing analyst estimates, mainly due to increased R&D and commercial launch expenses. They have several new product launches underway: ALYFTREK for cystic fibrosis is off to a strong start in the U.S., JOURNAVX for acute pain is also seeing good early uptake, and CASGEVY for sickle cell and beta-thalassemia is progressing globally. Their pipeline is advancing well, with multiple programs in late-stage development. They raised their full-year revenue guidance and bought back shares. Their cash position is very strong.
WBD 0.00%↑ (Warner Bros. Discovery, Inc.)
$WBD saw its streaming service, Max, add over 5 million subscribers in the first quarter, reaching $339 million in EBITDA for the segment. The company is on track for at least $1.3 billion in streaming EBITDA for 2025 and aims for 150 million subscribers by the end of 2026. They’re focusing on their quality IP, like DC, Harry Potter, and HBO shows, to drive growth. They’re also aiming to get their Studios segment back to $3 billion in EBITDA. Their linear networks continue to generate cash. They highlighted that 2025 will see increased costs due to their NBA contract, but expect significant savings in 2026 when the current deal ends. They’ve also reorganized into two divisions, Streaming/Studios and Linear Networks, to provide "full optionality" for future strategic moves.
🔒 [Members Only] Earnings Analysis
Alright, you’ve heard the official story. Now, let’s get into what I really think. This is where we separate the PR spin from the reality on the ground. I’ll tell you what I’m seeing between the lines in these earnings calls and give you my straight-up verdict on each stock. Is it a buy, a sell, or a hold? Let’s dig in.