revenue

Warner Bros. Discovery reported a $148 million loss in the third quarter, hitting a sour note as the company began fielding interest from would-be buyers as Hollywood braces for a transforming deal.

Earnings for the entertainment company that includes HBO, CNN and the Warner Bros. film and TV studios fell short of analyst expectations. A year ago, the company reported profit of $135 million for the third quarter.

Revenue of $9.05 billion declined 6% from the year-ago period. The company swung to a loss of 6 cents a share, compared to last year’s earnings of 5 cents a share.

Still, Chief Executive David Zaslav spent much of Thursday’s call with analysts touting his company’s underlying strengths — while avoided giving details about the company’s sale.

“It’s fair to say that we have an active process underway,” Zaslav said.

Warner Bros. Discovery on Thursday reiterated it is forging ahead with previously announced plans to split into two separate entities by next spring. However, the Warner board acknowledged last month that it was also entertaining offers for the entire company — or its parts — after David Ellison’s Paramount expressed its interest with formal bids.

Paramount has made three offers, including a $58 billion in cash and stock for all of Warner Bros. Discovery. That bid would pay Warner stockholders $23.50 a share.

The Ellison family appears determined to win one of Hollywood’s most storied entertainment companies to pair with Paramount, which the Ellisons and RedBird Capital Partners acquired in August.

But Warner Bros. Discovery’s board, including Zaslav, voted unanimously to reject Paramount’s offers and instead opened the auction to other bidders, which is expected to lead to the firm changing hands for the third time in a decade.

Board members are betting the company, which has shown flickers of a turnaround, is worth more than the offers on the table. Despite its rocky third-quarter results, Warner’s stock held its ground in early morning trading at around $22.60 a share.

“Overall we are very bullish,” Zaslav said of the company’s business prospects.

“When you look at our films like ‘Superman,’ ‘Weapons’ and ‘One Battle After Another,’ the global reach of HBO Max and the diversity of our network’s offerings, we’ve managed to bring the best, most treasured traditions of Warner Bros. forward into a new era of entertainment and [a] new media landscape,” he said.

But the company’s results underscored its business challenges.

The studio witnessed a major decline in advertising revenue in the third quarter, reporting $1.41 billion, down 16% from the previous year, which executives attributed to declines in the audience for its domestic linear channels, including CNN, TNT and TLC.

Distribution revenue also took a hit, as the company reported sales of $4.7 billion, a decrease of 4% compared to last year.

Studio revenue increased 24% to $3.3 billion, powered by the success of DC Studios’ “Superman,” horror flick “Weapons” and the latest installment of “The Conjuring.” But even those box office wins couldn’t totally offset shortfalls in other areas of its content business.

Last year, the company was able to sub-license its rights to broadcast the Olympics in Europe, which pushed content revenue to $2.72 billion. But this year, revenue was down 3% to $2.65 billion.

Burbank-based Warner Bros. has had a string of success in theaters, with nine films opening at the top spot globally at the box office. The studio recently surpassed $4 billion in worldwide box office revenue, making it the first studio to do so this year. Warner Bros. last achieved that milestone in 2019.

Zaslav would like to continue with Warner’s break-up plans, which were announced last June.

The move would allow him to stay on to manage a smaller Hollywood-focused entity made up of the Warner Bros. studios, HBO, streaming service HBO Max and the company’s vast library, which includes Harry Potter movies and award-winning television shows such as “The Pitt.”

The company’s large portfolio of cable channels, including HGTV, Food Network and Cartoon Network, would become Discovery Global and operate independently.

Beyond Paramount, Philadelphia-based Comcast, Netflix and Amazon have expressed interest in considering buying parts of the company.

The company said its third quarter loss of $148 million was the result of a $1.3 billion expense, including restructuring costs.

Netflix on Wednesday touted a surge in popularity for its low-cost streaming plan with ads, as it looks to tap into the lucrative the world of brands.

The streaming giant said it now has more than 190 million monthly active viewers watching ads through a plan that costs $7.99 a month. The lowest cost ad-free plan costs $17.99 a month.

In May, Netflix said it had 94 million monthly active users watching ads through the cheaper plan. That translated to roughly 170 million monthly active viewers, the company said at the time.

However, the Los Gatos, Calif.-based company is now using a different methodology to measure its audience watching ads, making exact comparison’s difficult.

Netflix now defines monthly active viewers as customers who watched at least 1 minute of ads on Netflix per month. It then multiplies that by the estimated average number of people in a household. Previously, Netflix had measured monthly active users based on the number of Netflix profiles watching content with ads.

The streamer said its previous measurement didn’t illustrate all the people who were in the room watching.

“Our move to viewers means we can give a more comprehensive count of how many people are actually on the couch, enjoying our can’t-miss series, films, games and live events with friends and family,”wrote Amy Reinhard, Netflix’s president of advertising in a post on the streamer’s website on Wednesday.

On Wednesday, Netflix executives said the growth in ad viewers was in line with their expectations.

“We are very satisfied with where we are at,” Reinhard, said in a press briefing. “We think there is a lot of opportunity to grow on this plan around the world, and we’re going to continue to make sure that we are offering our customers a great experience and a great buying experience on the advertising side.”

Netflix began its foray into ad-supported streaming in 2022, after it received pressure from investors to diversify how it makes revenue. Previously, Netflix mainly made money through subscriptions and for many years had been ad-adverse.

The company said last month it was on track to more than double its ad revenue in 2025, but did not cite specific figures. Netflix Co-CEO Greg Peters said in an earnings presentation in October that the ad revenue is still small relative to the size of the company’s subscription revenues, but advertisers are excited about Netflix’s growing scale.

“We see plenty of room for growth ahead,” Peters said.

On Wednesday, Netflix said it is expanding its options for advertisers, including demographic targeting in areas such as education, marital status and household income.

Netflix also said it has partnered with brands including brewing company Peroni Nastro Azzurro in ads for its romantic comedy series “Emily in Paris,” and tested dynamic ad insertion with programs including WWE Raw this quarter and will offer that feature in the U.S. and other countries for NFL Christmas Gameday.

Many streamers have been increasing the cost of their subscriptions in order to become more profitable. Earlier this year Netflix raised the prices on plans.

It’s been a rough few years for Santa Monica.

Businesses have abandoned its once-thriving downtown. Its retail and office vacancy rates are among the highest in Los Angeles County. The crowds that previously packed the area surrounding the city’s famous pier have dwindled.

Homelessness has risen. City officials acknowledge crime incidents had become more visible and volatile.

The breadth and depth of the issues became apparent just last month when the city was forced to declare itself in fiscal distress after paying $229 million in settlements related to alleged sexual abuse by Eric Uller, a former city dispatcher.

Now, Santa Monica is trying to plot a new path forward. A significant first step could come Tuesday.

That’s when the City Council is set to consider a plan to reverse its fortunes.

A shuttered business on Broadway in Santa Monica.

(David Butow/For The Times)

The plan includes significantly increasing police patrols and enforcing misdemeanor ordinances, investing in infrastructure and new community events, and taking a more business-friendly brush to permits and fees. Officials also plan to be more aggressive in making sure property owners maintain unused properties.

The blueprint tackles many “quality of life” issues that critics say have contributed to lower foot traffic in the city’s tourist districts since the COVID-19 pandemic.

It’s far from clear the tactics will work. But given the city’s current trajectory, officials say bold action is necessary.

“We’re trying to usher in a rebirth — a renaissance of the city — by investing in ourselves,” Councilmember Dan Hall said.

Hall, 38, is part of a relatively youthful City Council majority that swept into office in recent years as voters opted for new leadership and a fresh approach. Five of the seven council members are millennials, and six members first joined the council in either 2022 or 2024.

Also new on the scene is City Manager Oliver Chi, who five months ago was hired away from the same position in Irvine.

“The city is in a period of distress, for sure,” said Chi, 45. “We’re not in a moment where the city is broke. The city still has resources. … But right now, if we do nothing, the city’s general fund operating budget is projected to run a structural deficit of nearly $30 million a year, and that’s because we’ve seen big drops” in revenues, such as from hotel taxes, sales tax and parking.

“But part of that is the private sector hasn’t been investing in the city. And we haven’t had people traveling to the city,” Chi said.

Santa Monica is far from the only city — in California or nationwide — to face the pain of a downtown in decline. Brick-and-mortar retailers have long bled business to online offerings, and the pandemic upended the cadence of daily life that was the lifeblood of commercial districts, with many people continuing to work from home at least part of the week.

Birds fly over and people walk on the Santa Monica Pier.

(Allen J. Schaben/Los Angeles Times)

But the hope is through concerted, planned investment that Santa Monica can shine once again and modernize to be competitive in the postpandemic era.

The City Council had already decided to set aside $60 million from its cash reserves to spend over the next four or five years to cover any operating deficits. But with Tuesday’s vote, Santa Monica would instead use those dollars as an investment in hopes of getting the city back on track.

“Those things really are issues related to public safety, disorder in town, the disrepair that we’ve seen in our infrastructure,” Chi said. “All of those things are preventing, I think, confidence in the local economy.”

In downtown, the city’s plan would include doubling the number of police officers assigned to a specialized unit to at least eight to 10 a day, deploying an additional five patrol officers daily, creating a new police substation, adding two workers daily to address homelessness issues, and hiring eight public safety employees to provide a more constant presence across the city’s main commercial district, parks and parking garages.

Staff in the city attorney’s office would also be augmented to boost the ability to prosecute misdemeanor cases.

An unhoused man naps on a bench in Palisades Park.

(David Butow / For The Times)

Also on the agenda: moving the city’s homeless shelter out of downtown; making a one-time $3.5-million investment to address fraying sidewalks and streets and freshen up trees and trash cans; funding monthly events at the Third Street Promenade to attract crowds; creating a large-scale “Santa Monica Music Festival” next year; upgrading restrooms near the pier and Muscle Beach; and increasing operating days for libraries.

Another proposal would require the owners of vacant properties to register with the city, in hopes of addressing lots that remain in disrepair.

The city is also looking to be more business friendly. It’s seeking to upgrade the current permit process, utilizing artificial intelligence to get nearly instantaneous permit reviews for single-family homes and accessory dwelling units, as well as reduce permit fees for restaurants with outdoor dining.

The plan also outlines strategies to boost revenue. Santa Monica is poised to end its contract with a private ambulance operator, McCormick Ambulance, in February and move those operations in house.

“It’s going to cost roughly $2.8 million a year to stand that operation up. But the reality is, once we start running it, it’ll generate about $7 million a year in new ongoing revenues,” Chi said.

“That’s part of what we’re thinking through: How do we invest now in order to grow our revenue base moving ahead?” he said.

Parking rates are also going up, which city officials estimate should generate $8 million to $9 million in additional annual revenue — though officials say they still charge a lower rate than those of nearby cities.

The city also plans more traffic safety enforcement and will cut the current 90 minutes of free parking in downtown parking structures to 30 minutes.

There’s also been talk of a new city parcel tax, though no decision has yet been made to pursue that. A parcel tax would need voter approval.

Another priority is building back the city’s cash reserves, which have dwindled over the years, largely on account of legal payments. Eight years ago, Santa Monica had $436 million in cash reserves; today, there’s only $158 million in nonrestricted reserves.

The planned $60 million in spending would further reduce the city’s unobligated cash down to $98 million.

Santa Monica’s annual general fund operating budget is nearly $800 million a year.

Beachgoers enjoying the scene near the Santa Monica Pier.

(David Butow/For The Times)

The city is also looking to redevelop some of its underutilized properties, including a 2.57-acre parcel bounded by Arizona Avenue and 4th and 5th streets, which includes branches of Bank of America and Chase bank, the leases of which are expected to expire in a few years. Also being eyed are a 1.09-acre kiss-and-ride lot southeast of the Santa Monica light rail station; the city’s seismically vulnerable Parking Structure 1 on 4th Street, which sits on 0.75 of an acre; and the old Fire Station No. 1, which sits on 0.34 of an acre and is being used for storage.

No firm plans are in place just yet. The parcels could be sold, leased long term or redeveloped as part of a joint venture. One likely possibility is that the developments would include new housing.

“When you look at any revitalization effort of any vibrant downtown core that’s eroded, there’s always been an element of repopulating the area with people,” Chi said. A smart redevelopment plan for those properties will not only “hopefully help bring back vibrancy to the downtown, but also help replenish the city’s cash reserves.”

The seeds of downtown Santa Monica’s decline actually started before the pandemic. But COVID hit the city hard, and commercial vacancies rose significantly, Councilmember Caroline Torosis, 39, said.

Santa Monica also sustained damage in 2020 from rioters who swarmed the downtown area in what appeared to be an organized attack amid a protest meant to decry the death of George Floyd in Minneapolis.

Tourists never came back in the numbers they had before the pandemic.

Torosis said the new council majority was elected on a promise to boost economic activity in the city.

“We need to absolutely ensure that people feel safe, welcome, invited and included in our city,” said Torosis, who serves as mayor pro tem.

Hall called the plan a bold bet.

“What we’re trying to do here is move us away from a scarcity mind-set, where we’re nickel-and-diming businesses trying to stay open, restaurants trying to open a parklet, residents trying to build an ADU,” Hall said.

The council’s relative youth, he said, is a plus for a city trying to write a bright new chapter.

“I think that that’s something that millennials are finding themselves needing to do as we take ownership of society, and we see a world where past generations have been afraid to make mistakes or afraid to make decisions,” he said.

Oct. 23 (UPI) — Tesla reported profits were down 37% in the third quarter despite a jump in revenue to $28.1 billion on frontloading of sales driven by buyers racing to beat the deadline for a federal tax credit before it expired Sept. 30.

The tax credit, worth up to $7,500 on EV purchases, helped the firm buck a run of declining quarterly sales along with a new six-seat version of its popular Model Y midsize SUV that performed well in the Chinese market.

While sales of competitors, including Ford and Hyundai, still outpaced Tesla’s it also lured in buyers with interest-free finance and insurance contributions.

That helped overall income rise by just under $3 billion, compared with the same period last year, and $1.73 billion more than predicted by analysts, with the largest contribution still coming from vehicle sales.

Revenue from Tesla’s energy generation and storage division surged 44% to $3.42 billion.

However, net profit slumped from $2.17 billion in the third quarter of 2024, to just $1.37 billion this year, with the results sending the stock price lower.

Tesla’s shares were down more than 3% at $424.60 in out-of-hours trade on the NASDAQ before Thursday’s market open — but remained well above the 30-day low of $413.49 they hit Oct. 10. The stock is up 9% year-to-date.

The firm’s performance was dragged down by an ongoing slump in its European market, partly due to a public backlash against Musk and tough competition from rivals from the continent and beyond, such as Volkswagen and China’s BYD.

Tariffs on car parts and raw materials imposed by President Donald Trump and higher research and development costs were also factors as the company embarks on CEO Elon Musk‘s efforts for an increased focus on AI and robotics.

Chief Accounting Officer Vaibhav Taneja told investors on a conference call Wednesday that the hit to Tesla from import duties in the July to September period was in excess of $400 million.

Tesla said it aimed to meet its target to begin “volume production” of Cybercab, heavy-duty electric semi trucks and its new Megapack 3 battery energy storage system in 2026, with Musk saying he expected Cybercab to begin rolling off the production line in the second quarter.

“First generation production lines” for Tesla’s humanoid Optimus robot were currently under construction. Musk said the firm expected to unveil Optimus V3 in the first quarter.

Tesla posted its latest results as shareholders were preparing for a November vote to approve a new remuneration package for Musk of as much as $1 trillion, all in shares.

The deal would be conditioned on his delivering an ambitious turnaround program involving boosting market capitalization from around $1.38 trillion to an unprecedented $8.5 trillion by pivoting Tesla to concentrate on autonomous driving, AI and robotics.

Apple, Microsoft and NVIDIA, the current behemoths of the U.S. tech sector, have market caps in the $2.6 to $3.2 trillion range.

If this World Series is going to turn into a food fight about the economics of baseball, Dave Roberts tossed the first meatball.

The Dodgers had just been presented with the National League Championship trophy. Roberts, the Dodgers’ manager, had something to say to a sellout crowd at Dodger Stadium, and to an audience watching on national television.

“They said the Dodgers are ruining baseball,” Roberts hollered. “Let’s get four more wins and really ruin baseball.”

The Dodgers had just vanquished the Milwaukee Brewers, a team that did everything right, with four starting pitchers whose contracts total $1.35 billion.

The Brewers led the major leagues in victories this year. They have made the playoffs seven times in the past eight years, and yet their previous manager and general manager fled for big cities, in the hope of applying small-market smarts to teams with large-market resources.

The Dodgers will spend half a billion dollars on player payroll and luxury tax payments this year, a figure that the Brewers and other small-market teams might never spend in this lifetime, or the next one.

The Brewers will make about $35 million in local television rights this year. The Dodgers make 10 times that much — and they’ll make more than $500 million per year by the end of their SportsNet LA contract in 2038.

Is revenue disparity a problem for the sport?

The owners say yes. They are expected to push for a salary cap in next year’s collective bargaining negotiations. A cap is anathema to the players’ union. At the All-Star Game, union executive director Tony Clark called a cap “institutionalized collusion.”

The union could say, yes, revenue disparity is the big issue and propose something besides a cap.

But that is not what the union is saying. The union does not agree that revenue disparity is the issue, at least to the extent that the players should participate in solving it. Put another way: Tarik Skubal should not get less than market value in free agency to appease the owner of the Pittsburgh Pirates.

For the most part, the union believes the owners should resolve the issue among themselves.

And the fundamental difference might be this: To most of the owners, the Dodgers’ spending is the big problem, or at least the symptom of a big problem. This was Commissioner Rob Manfred at the owners’ meetings last February: “Do people perceive that the playing field is balanced and fair and/or do people believe that money dictates who wins?”

To the union, the problem is not one of perception. The union believes the problem is that the Dodgers’ spending exposes other owners who would love a salary cap that would give them cover — not to mention cost certainty that could increase profits and franchise values.

“Players across the league show up every day ready to compete and ready to win,” Clark told The Times. “Excuses aren’t tolerated between the lines, and they shouldn’t be accepted outside them either.

“When decision-makers off the field mirror the competitive drive exhibited on it, everybody wins and baseball’s future is limitless. Fans and players alike deserve — and should demand — far more accountability from those to whom much is given.”

Tony Clark, executive director of the MLB Players’ Assn., speaks during a news conference in New York in March 2022.

(Richard Drew / Associated Press)

In its annual estimates, Forbes had the Dodgers’ revenue last season at a league-leading $752 million and the Pirates’ revenue at $326 million. The Pirates turned a profit of $47 million and the Dodgers turned a profit of $21 million, according to those estimates.

The Pirates — and other small-market teams — make more than $100 million each year in their equal split of league revenue (national and international broadcast rights, for instance, and merchandising and licensing) and revenue shared by the Dodgers and other large-market teams. That means the Pirates can cover their player payroll before selling a single ticket, beer, or Primanti sandwich stuffed with meat, cheese and fries.

“The current system is designed so larger markets share massive amounts of revenue with smaller markets to help level the playing field,” Clark said. “Small-market teams have other built-in advantages, and we’ve proposed more in bargaining — and will again.”

The union would be delighted to get a salary floor — that is, a minimum team payroll. The owners would do that if the union agreed to a maximum team payroll — that is, a salary cap.

Whether the owners believe recent and potential future changes — among them a draft lottery, more favorable draft-pick compensation for small-market teams losing free agents, providing additional draft picks for teams that promote prospects sooner and for small-market teams that win — can begin to mitigate revenue disparity is uncertain. Whether the players can condition revenue sharing on team progress also is uncertain.

And, perhaps most critically to owners, the collapse of the cable ecosystem means many teams have lost local television revenue that might not ever bounce completely back, even if Manfred can deliver on his proposed “all teams, all the time, in one place” service.

Whatever the issues might be, fans are not throwing up their hands and walking away. The league sold more tickets this year than in any year since 2017. Almost every week brought an announcement from ESPN, Fox or TNT about a ratings increase, and the league did not complain about the outstanding ratings the Dodgers and New York Yankees attracted in last year’s World Series.

Dodgers fans celebrate after Shohei Ohtani hits the second of his three home runs in Game 4 of the NLCS against the Brewers at Dodger Stadium on Oct. 17.

(Eric Thayer/Los Angeles Times)

Payroll is under the control of an owner. Market size is not.

Of the top 15 teams in market size, six made the playoffs. Of the bottom 15 teams in market size, six made the playoffs.

Is that a reasonable exhibition of competitive balance? Would the Dodgers winning the World Series in back-to-back years define competitive imbalance, even if they would become the first team in 25 years to repeat? The only other team currently dedicated to spending like the Dodgers — the New York Mets — has not won the World Series in 39 years.

The Kansas City Chiefs have played in the Super Bowl five times in six years, winning three times. That is because they have Patrick Mahomes, not because the NFL has a salary cap.

In the past three years, the Dodgers are the only team to appear in the final four twice — more diversity than in the final four in the NFL, NBA or NHL, each of which has a salary cap.

The league used to happily distribute information like that. After the winter chants about the Dodgers ruining baseball, the league started talking about how no small-market team had won the World Series in 10 years.

Payroll itself should not define competitive balance, but that becomes a self-fulfilling prophecy if an owner decides competing with the Dodgers would be no less futile by spending another $25 million on players.

It is premature to count heads now. However, at this point, you wonder whether any team besides the Dodgers and Mets would lobby against the league pursuing a salary cap in negotiations. If the owners really want a salary cap, they need to be prepared to do what the NHL did to get one: shut down the league for an entire season.

We should be talking about the magic of Shohei Ohtani and Mookie Betts. Instead, on its grandest stage, the talk around baseball will be all about whether its most popular team is ruining the game to the point of depriving us of it come 2027. Well done, everyone.

In late August, I was listening to Nvidia‘s (NVDA -4.84%) earnings call for its fiscal second quarter (ended July 27). When Colette Kress, CFO of the artificial intelligence (AI) tech leader, gave quantifiable data about the company’s sovereign AI business, I thought, “Finally!” as such data is only rarely shared.

Nvidia’s sovereign AI business is growing like gangbusters. It appears to be the biggest growth engine of the company’s AI-driven data center platform, which accounts for the bulk of Nvidia’s total revenue. Yet, it gets little coverage in the financial press.

“Sovereign entities” are those that are independent and have total or at least significant control within their borders. This includes many nations, U.S. states, and the European Union (EU).

Image source: Getty Images.

Nvidia “on track to achieve over $20 billion in sovereign AI revenue this year”

From Kress’ remarks on last quarter’s earnings call:

Sovereign AI is on the rise as the nation’s ability to develop its own AI using domestic infrastructure, data, and talent presents a significant opportunity for NVIDIA Corporation. NVIDIA Corporation is at the forefront of landmark initiatives across the UK and Europe. …

We are on track to achieve over $20 billion in Sovereign AI revenue this year, more than double that of last year.

I’ll put the $20 billion in context below.

Kress said that the EU plans to invest 20 billion euros to establish 20 AI factories in France, Germany, Italy, and Spain. This will include five gigafactories, and it will increase its AI compute infrastructure by 10-fold.

A “gigafactory” means that the AI compute facility will contain the number of Nvidia’s graphics processing units (GPUs) — which dominate the market for AI chips — that require at least 1 gigawatt of power. For context, 1 gigawatt (or 1,000 megawatts) equates to about the power output of a large-scale nuclear power plant.

Nvidia CEO: “Nations are investing in AI infrastructure like they once did for electricity and the Internet.”

The above quote is from CEO Jensen Huang’s remarks on Nvidia’s fiscal first-quarter earnings call in May. Here are more Huang snippets from that call:

I was honored to join him [President Donald Trump, in May] in announcing a 500-megawatt AI infrastructure project in Saudi Arabia …

[In May,] we announced Taiwan’s first AI factory … Last week, I was in Sweden to launch its first national AI infrastructure. Japan, Korea, India, Canada, France, the UK, Germany, Italy, Spain, and more are now building national AI factories to empower startups, industries, and societies. … [N]ations are investing in AI infrastructure like they once did for electricity and the Internet.

All the countries that Huang rattled off as building sovereign AI infrastructure are using Nvidia’s GPUs and related technology. Talk about big customers!

Putting the sovereign AI business’ projected annual growth in context

For the current fiscal year (fiscal 2026, which ends in late January), Wall Street expects Nvidia’s revenue to be $206.5 billion, up 58% from $130.5 billion last fiscal year. If that estimate proves relatively accurate and the sovereign AI business brings in revenue of $20 billion, it will account for about 9.7% of total revenue. And Kress said “over $20 billion,” so the percentage could be higher.

Below are more stats for further context.

Data source: Nvidia. *Calculations by author.

The above are half-year stats, but they give you an idea of what a standout performer Nvidia’s sovereign AI business is. Given the annual projections Kress shared, this business probably generated first-half revenue in the ballpark of $8 billion, or 10% of the data center’s revenue, and likely grew 100%-plus year over year.

Why Nvidia’s sovereign AI strategy is particularly brilliant

Nvidia is not only selling its technology to sovereign entities, it’s also assisting them in their massive undertakings. These relationships should make Nvidia’s sovereign AI business especially “sticky.” Countries that are happy with Nvidia are likely to stick with Nvidia when they want to upgrade or expand their AI infrastructure.

The sovereign AI business should also lead to other opportunities for Nvidia. Companies, researchers, and technology students that use and become familiar with a country’s sovereign AI infrastructure will probably be more likely to buy Nvidia’s offerings if and when they need their own AI-enabling tech.

Taiwan Semiconductor Manufacturing Company (TSM 1.50%), also known as TSMC, is one of the premier manufacturers of advanced processors, many of which are used for artificial intelligence. The company’s strong position in this space and its growth over the past few years have resulted in its stock price soaring nearly 200% over the past three years.

Recent research from The Motley Fool sheds some light on how TSMC’s manufacturing technology is a step ahead, how it makes the majority of its revenue, and where most of its customers are located. Importantly, all of these factors work together to set TSMC apart from the competition and make its stock a smart one to own for years to come.

1. The company is a leader in advanced chip manufacturing

TSMC manufactures some of the world’s most advanced processors, and the breakdown of the company’s revenue shows just how much comes from its different manufacturing capabilities. Chip companies use the term chip node to describe how many transistors will fit onto a semiconductor, with the unit of chip measurement being nanometers (nm). Generally speaking, the smaller, the more advanced the processor.

Here’s a snapshot of Taiwan Semiconductor’s top five revenue generators, by chip size:

Data source: Taiwan Semiconductor.

This revenue composition is important to highlight because it shows that a whopping 60% of the company’s semiconductor sales are from the smallest and most advanced processors (3nm and 5nm) on the market.

No other company compares to TSMC’s manufacturing prowess, and it’s likely to continue outpacing the competition. TSMC has already sign 15 deals with tech companies for 2nm semiconductor manufacturing, leaving rivals, including Samsung, far behind.

2. Its advanced processors are driving its growth

Just as important as the technology behind TSMC’s revenue is what technologies those processors power. If we go back five years, smartphones were the driving revenue force for TSMC. Now, it’s high-performance computing (think AI data centers).

The company has dominated the manufacturing of advanced processors so well, in fact, that TSMC makes an estimated 90% of the world’s most advanced processors.

Here is the company’s revenue distribution over the past four quarters:

Data source: Taiwan Semiconductor.

TSMC’s making the majority of its revenue from high-performance computing is important because it shows that the company successfully adapted with the times, moving from its previously dominant smartphone segment to sales from chips to AI data centers.

More growth could be on the way, too, considering that semiconductor leader Nvidia believes technology companies could spend up to $4 trillion on AI data center infrastructure over the next five years.

3. U.S. tech giants drive demand

Taiwan Semiconductor is based in, you guessed it, Taiwan, but the vast majority of its sales come from selling processors to North American companies. About five years ago, North America accounted for just over half of TSMC’s sales, but that’s jumped to 75% currently. China and the Asia-Pacific region tie for second place with just 9% each.

Why does this matter? Some of the most advanced artificial intelligence companies, including Nvidia, OpenAI, Microsoft, Meta, and Alphabet, are based in North America. Taiwan Semiconductor’s shift toward sales in this geographic area is a reflection of the company successfully attracting the world’s leading AI companies to have their chips made by TSMC.

Is Taiwan Semiconductor a buy?

With TSMC making an estimated 90% of the world’s most advanced processors, the company outpacing its manufacturing competition, and artificial intelligence companies poised to spend trillions of dollars to build out and upgrade data centers, TSMC is well positioned to be a great AI stock for years to come.

Just keep in mind that the stellar gains TSMC stock has experienced over the past several years have been a result of the early AI boom, which means future returns may not be quite as impressive.

YouTube TV dropped Univision’s Spanish-language networks late Tuesday, a contentious turn in a simmering dispute that has already drawn scrutiny from members of Congress.

“Google’s YouTube TV has refused to ‘Do the Right Thing’ and dropped Univision from its platform — stripping millions of Hispanic viewers of the Spanish-language news, sports, and entertainment they rely on every day,” parent company TelevisaUnivision said in a statement, alluding to its campaign slogan.

The outage began about 7 p.m. PDT, shortly before the federal government shutdown — a newsworthy event that Univision journalists have been covering.

The impasse occurred as another deadline loomed in separate contract talks between YouTube TV and NBCUniversal, raising the possibility of a second blackout. Both Univision and NBCUniversal’s distribution agreements were set to expire Tuesday night. But at the deadline, NBCUniversal granted YouTube TV a short-term extension to allow the two sides to continue working on a new deal.

NBCUniversal owns Telemundo, the other major Spanish-language broadcast network.

Prominent members of Congress, including Sen. Ted Cruz (R-Texas), Sen. Bernie Moreno (R-Ohio) and Rep. Mario Diaz-Balart (R-Fla.), have demanded answers from Google executives, including Chief Executive Sundar Pichai.

A major sticking point was YouTube TV’s proposal to shift the Univision network from its basic plan, which is available to all subscribers, and put the channel on a more expensive Spanish-language add-on package.

Univision cried foul, saying the switch would amount to an 18% fee increase for its Spanish-language viewers. The move would also dramatically cut the revenue that Univision receives because YouTube and other distributors pay fees based on the number of subscribers that have access to a channel.

“Google shouldn’t be abusing its monopoly power by forcing millions of Texans & Americans to pay extra for Spanish-language programming,” Cruz said in a message on X. “That’s not right & it’s not fair.”

YouTube is flexing its market muscle. The Google platforms have become the dominant video service in the U.S., according to Nielsen, with YouTube attracting more than 120 million active daily users.

The YouTube TV service has become a major draw with more than 10 million customer homes that receive its traditional TV channel packages that include NBC, ABC, Fox News and Comedy Central.

A YouTube spokesperson downplayed Univision’s departure, saying the Spanish-language company continues to have a massive following on its main YouTube site with more than “160 million subscribers and billions of views across YouTube, where they generate ad revenue from their content.”

However, on the paid service, YouTube TV, the Spanish-language programming “only represents a tiny fraction of overall consumption,” the YouTube spokesperson said.

The blackout comes a month after YouTube avoided a collision with Rupert Murdoch’s Fox Corp. The two companies hammered out a new distribution deal a few days after the August deadline.

NBCUniversal’s talks with Google have also been rocky. The tech behemoth has expressed a desire to fold Peacock programming onto its YouTube TV platform rather than the current stand-alone service. But NBCUniversal has balked because it has spent billions of dollars building Peacock and it wants to remain the conduit for its customers.

YouTube TV launched in April 2017 for $35 a month. The package of channels now costs $82.99.

In a bid for more sports fans, YouTube TV took over the NFL Sunday Ticket premium sports package from DirecTV, which had been losing more than $100 million a year to maintain the NFL service. YouTube TV offers Sunday Ticket as a base plan add-on or as an individual channel on YouTube.

Sept. 20 (UPI) — The election of Pope Leo XIV in carried special meaning for Peru, particularly for the city of Chiclayo in the Lambayeque region, where the then-priest Robert Francis Prevost spent decades as a missionary and nearly 10 years as bishop.

Although Prevost was born in Chicago, he became a Peruvian citizen in 2015 when he was named bishop of what he called his “beloved diocese of Chiclayo,” a phrase he delivered in Spanish in his first words to the world after being elected pope.

The impact of his election has been not only spiritual, but also economic, with a significant boost to tourism in the city.

Lambayeque Gov. Jorge Pérez said Thursday that the region recorded an additional $42 million in revenue from tourism tied to the pope’s history in the area.

“No marketing agency, not even the most powerful in the world, could have achieved what Pope Leo has accomplished,” Pérez said in a television interview with CanalB.

Peru’s Ministry of Foreign Trade and Tourism officially launched the “Path of Pope Leo XIV” tourist route in late July, highlighting the Peruvian cities in which the pontiff carried out his missionary and pastoral work.

“This tourist route is not just an itinerary of more than 35 attractions in the regions of Lambayeque, La Libertad, Piura and Callao. It is a spiritual path and an invitation to rediscover who we are, where we come from and what unites us as Peruvians,” the ministry said.

As part of its plan to promote the route, the Peruvian government released a promotional video titled The Route of Leo, aimed at encouraging both domestic and international tourists to visit the destinations.

The official route includes historic churches, landmark museums and natural sites, such as the Santa María Cathedral in Chiclayo, the Pómac Forest Historic Sanctuary, the adobe pyramids of Túcume, the ruins of the former San Agustín Convent in Zaña, the Royal Tombs of Sipán Museum and the Chaparrí Ecological Reserve.

This is complemented by the rich cuisine of northern Peru, known for its diverse flavors and ancestral traditions, with dishes that blend seafood, agriculture and the pre-Hispanic heritage of the Mochica and Chimú cultures.

Some of the region’s most famous dishes include arroz con pato (rice with duck), cabrito a la norteña (northern-style goat and one of Pope Leo XIV’s favorites), stingray omelet and black clam ceviche.

For the first stage of the route, which required coordination across four regions and 20 municipalities, the Peruvian government allocated $151 million.

The Ministry of Culture also announced a second stage of the project, with $2.5 million set aside to upgrade the Sicán National Museum and to reinforce the preservation of Chiclayo’s Cathedral and La Verónica Chapel.

In addition, plans are underway to expand the Royal Tombs of Sipán Museum, one of Peru’s most important archaeological museums, which is known for its historical value, the preservation of its artifacts and the quality of its exhibits.

The museum houses the funerary treasures of the Lord of Sipán, a Moche ruler from the third century A.D., which were discovered in 1987 at Huaca Rajada near Chiclayo.

The discovery is considered one of the most significant in the Americas because it was the first intact royal Moche tomb found without looting, offering researchers a detailed view of the hierarchy and splendor of that culture.

Lakeland (LAKE -3.73%) reported fiscal second quarter 2026 earnings on September 3, 2025, posting record revenue of $52.5 million, up 36% year-over-year driven largely by fire services growth and recent acquisitions, and adjusted EBITDA of $5.1 million, up 90% year-over-year. Net income turned positive at $800,000 versus a $1.4 million loss in fiscal Q2 2025, but adjusted gross margin (non-GAAP) contracted to 37.4% from 41.1% a year prior due to tariffs and acquisition-related margin dilution. This analysis provides three actionable insights on strategic integration, margin management, and operational discipline taken from executive commentary and Q&A.

Acquisitions accelerate Lakeland’s revenue and market share

Recent deals, including Meridian, LHD, and Jolly, contributed $9 million of the $14 million total year-over-year revenue growth, with fire services products increasing by 113% year-over-year and comprising 47% of total revenue year-to-date. Lakeland’s exposure now spans the U.S., Europe, and Asia Pacific, and the company is actively engaged in multiple new M&A opportunities in the fire suit rental, decontamination, and services sector, especially within the United States.

“With the four recently completed acquisitions, which added product line extensions either made of new products and expanded our global footprint, We are well-positioned to grow our global head-to-toe buyer portfolio and generate long-term value for our shareholders.”
— Jim Jenkins, President, CEO, and Executive Chairman

These integrations enhance Lakeland’s competitive moat in consolidated fire and industrial protective markets by creating cross-selling opportunities and recurring revenue streams.

Tariffs and acquisition mix pressure Lakeland gross margins

Adjusted gross margin fell 370 basis points year-over-year to 37.4%, primarily due to lower acquired company margins, increased material costs, new tariffs, and inventory purchase accounting impacts, though it rose sequentially by 220 basis points, primarily due to a partial reversal of purchase price variance expense and some cost reductions. Tariff effects were prominent in Latin America and caused $3.6 million in year-over-year sales declines in that region, while U.S. and European revenues soared.

“Adjusted gross profit as a percentage of net sales in the second quarter was 37.4% versus 41.1% in the comparable year-ago period but increased 220 basis points sequentially from 35.2% in the first quarter. Our adjusted gross margin percentage decreased in the second quarter for fiscal 2026 compared to the same period last year. Primarily due to lower acquired company gross margins, increased material costs, and tariffs.”
— Jim Jenkins, President, CEO, and Executive Chairman

Lakeland’s near-term profitability will remain tied to its ability to offset input cost inflation and tariffs through price realization, operational efficiency, and a more favorable sales mix as newly acquired service businesses ramp up.

Lakeland ramps cost savings and working capital discipline

Operating expense reductions began contributing in the quarter, with adjusted OpEx declining 8.1% from Q1 to Q2 and identified savings of at least $1 million annualized to date for the remainder of the year; further cost initiatives are forecasted to yield an additional $3 million in annualized savings taking effect through the second half of the year. The company’s inventory balance increased 33% year-over-year to $90.2 million from $67.9 million, a key focus for improvement by optimizing working capital in line with demand and recent acquisition absorption.

“We have further identified and are executing initiatives expected to yield an additional $3 million in annualized savings. With the benefits anticipated to materialize in 2026. We believe these efforts will enable higher margins and build a more agile, and cost-effective Lakeland in the longer term.”
— Jim Jenkins, President, CEO, and Executive Chairman

Disciplined cost management and inventory optimization are vital for supporting margin recovery and EBITDA growth, strengthening Lakeland’s ability to self-fund continued M&A and platform reinvestment.

Looking Ahead

Management guided revenue to the lower end of the $210 million to $220 million range for fiscal 2026, with adjusted EBITDA excluding FX between $20 million and $24 million, reflecting Latin American sales weakness and tariff-driven uncertainty. The company expects sequential improvement in gross margin and adjusted EBITDA (non-GAAP) in the third quarter, and is targeting organic growth in the high single-digit to low double-digit range over the medium term. Over the next three to five years, Lakeland aims to expand EBITDA margin into the mid to high teens, driven by efficiency gains, strategic acquisition synergies, and a more profitable business mix.

AeroVironment (AVAV -2.38%), a provider of unmanned systems and defense technologies, reported results for Q1 FY2026 on September 9, 2025. The headline news was a record quarterly revenue of $454.7 million for Q1 FY2026, driven largely by the recent BlueHalo acquisition. Profit margins were compressed by large non-cash amortization and integration expenses. Overall, the quarter showcased strong top-line growth and a significant backlog expansion, but profitability and cash flow were negatively affected by integration and acquisition costs.

Business Overview and Strategic Priorities

AeroVironment is known for developing unmanned aircraft systems, robotic platforms, and defense technologies used by military and government customers. Its core strength lies in autonomous systems, including drones and related products like Switchblade loitering munitions. The BlueHalo acquisition immediately broadened AeroVironment’s focus into new areas such as directed energy (energy weapons), space technologies, cyber solutions, and advanced radio frequency (RF) and electronic warfare (EW) systems.

The company’s current strategy centers on innovation, integrating advanced technologies from BlueHalo, and meeting the evolving requirements of defense customers. Key performance drivers are its ability to win and scale large government contracts, continuous product development in areas such as artificial intelligence-enabled drones and electronic warfare, and the efficiency with which it integrates acquisitions and expands production capacity. Strong relationships with the U.S. Department of Defense and allied governments are also a cornerstone of AeroVironment’s business, guiding both growth and technology investment.

Quarterly Results and Developments

The quarter set a new revenue record primarily because of the BlueHalo acquisition, which closed on May 1, 2025. Legacy AeroVironment grew its organic revenue by 16%. The result reflected both acquisition-driven expansion and organic demand for the company’s established unmanned systems.

Performance by business segment revealed most profit contribution continued to come from the Autonomous Systems area. That segment, which includes legacy drone and loitering munitions products as well as BlueHalo’s unmanned offerings, posted $285.3 million in revenue. The newly created Space, Cyber and Directed Energy segment brought in $169.4 million in revenue, but margins there lagged as integration continued. The revenue figure represents a sharp acceleration from the prior year. Management reported that these results meant “Record revenue of $454.7 million, up 140% year-over-year; legacy revenue of $219.5 million up 16% year-over-year”

Despite the revenue growth, gross margin dropped to 21% from 43% in the prior year, a significant decline. Management attributed this to high purchase accounting adjustments, $37.4 million in non-cash intangible amortization, and a much larger portion of service revenue, which tends to have lower profit margins than product sales. Operating expenses rose sharply as well, particularly selling, general and administrative costs associated with the acquisition and integration work, which were $97.5 million higher than last year. As a result, the company posted a loss from operations of $69.3 million, compared to a $23.1 million operating profit in Q1 FY2025.

Earnings per share on a non-GAAP basis dropped to $0.32, down 64% from $0.89 in Q1 FY2025. The decrease was due to both higher costs—especially amortization and acquisition charges—and dilution resulting from the increase in shares outstanding after the BlueHalo transaction. Adjusted EBITDA, which removes many of the acquisition-related charges, increased by over 50%, indicating some underlying improvement in core cash-generating ability when nonrecurring costs are excluded. Net cash outflow from operations was $123.7 million, compared to an inflow of $28.4 million in Q1 FY2025. The cash balance, however, rose sharply to $685.8 million as a result of financing tied to the BlueHalo deal.

The acquisition also transformed the company’s future business visibility. Funded backlog at the end of the period reached a record $1.1 billion, up from $726.6 million as of April 30, 2025. This reflects both the strong order book brought by BlueHalo and continued high demand for the company’s legacy unmanned systems portfolio. Bookings totaled $399 million. Management stated that, as of September 9, 2025, AeroVironment had “Visibility of 82% to the midpoint of the FY2026 revenue guidance range” This means a large part of the year’s projected revenue comes from orders already in hand, providing a measure of predictability for the next several quarters.

The company continued to invest in research and development (R&D), with R&D expenses rising to $33.1 million. This maintains AeroVironment’s longstanding focus on developing new technologies for defense customers. Among the newer offerings are the P550 unmanned aircraft system (an artificial intelligence-driven modular drone), the JUMP 20X (a vertical takeoff and landing drone), and Red Dragon (an autonomous, single-use drone). BlueHalo’s specialties in advanced RF, directed energy, and space-qualified electronics add significant new competencies, and management expects ongoing integration of these capabilities to open further market opportunities. Still, the cost and complexity of absorbing such a large acquisition have introduced execution risk, both operationally and financially.

The period also saw significant balance sheet changes. Total assets grew to $5.6 billion, up dramatically from $1.1 billion as of Q4 FY2025, mostly due to the addition of goodwill and intangibles from the BlueHalo transaction. Share count rose by 77% between April 30, 2025, and August 2, 2025, and long-term debt increased from $30.0 million as of April 30, 2025, to $725.7 million as of August 2, 2025. The capital raised provides flexibility but also brings a substantial increase in financial leverage and dilution for existing shareholders.

AVAV does not currently pay a dividend.

Looking Ahead: Outlook and Watchpoints

For FY2026, management maintained its previous revenue outlook of $1.9 billion to $2.0 billion. It projects continued losses, with a net loss of $77 million to $72 million for FY2026, and a loss per share of between $1.63 and $1.53. On an adjusted basis—removing non-cash and non-recurring expenses—management expects EBITDA in a range of $300 million to $320 million, and non-GAAP earnings per share of $3.60 to $3.70. The company stated that visibility to the revenue midpoint stood at 82% as of September 9, 2025. But actual profitability may remain pressured until integration costs and purchase accounting impacts begin to diminish.

Key areas for investors to monitor include the pace and effectiveness of integrating BlueHalo, control of operating and working capital expenses, and the conversion of the record backlog and bookings into profitable future revenue. Management flagged that intangible asset amortization will continue to weigh on reported earnings until those assets are fully written down over several years, and cash flow from operations will require careful management as receivables and inventories expand alongside the larger business. Defense-contract timing risks and strong competition from larger established players remain watchpoints. The scale of the recent acquisition means that AeroVironment’s performance over the next several quarters will be closely tied to its ability to deliver on the promise of its expanded technology portfolio while navigating higher operating complexity and integration challenges.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

Cognyte(CGNT -12.29%) reported second-quarter fiscal 2026 results on Sept. 9, 2025, with revenue rising 15.5% year over year to $97.5 million and adjusted EBITDA increasing 33% to $11 million. Management raised full-year guidance, now projecting $397 million in revenue (up 13% year over year at midpoint) and $45 million in adjusted EBITDA, while reiterating a $500 million revenue target for the fiscal year ending Jan. 31, 2028, and signaling continued margin expansion.

The following analysis highlights execution on strategic wins, margin expansion, and the path to U.S. market growth.

Major military intelligence wins accelerate Cognyte’s momentum

Cognyte secured two $10 million deals with military intelligence customers in Asia-Pacific and EMEA, including a successful displacement of a regional incumbent in EMEA. New business wins contributed to short-term remaining performance obligations (RPO) increasing to $355 million, supporting 12-month revenue visibility amid heightened global security spending.

“In Asia-Pacific, we signed a $10 million follow-on deal with a longstanding customer. They operate in a complex border environment and use our border security solutions to stop infiltration attempts by hostile actors, clear proof of the ongoing trust they place in us and the tangible operational results we deliver. In EMEA, we won a competitive deal worth about $10 million with a new Tier 1 military intelligence organization, beating several global vendors, including the regional incumbent. They chose Cognyte Software Ltd. for our proven tactical intelligence solutions to modernize operations and address emerging threats.”
— Elad Sharon, CEO

Winning large, competitive contracts and demonstrating follow-on demand validate the company’s technology differentiation and strengthen the long-term growth narrative through increased market share in core government verticals.

Gross margin expansion demonstrates operational leverage at Cognyte

Non-GAAP gross margin improved to 72.1%, expanding 81 basis points year-over-year, while non-GAAP gross profit increased 16.8% year-over-year to $70.3 million. Annual non-GAAP gross margin guidance was raised to 72%, with a new long-term target of 73% non-GAAP gross margin for the fiscal year ending Jan. 31, 2028, driven by a software revenue mix projected to reach 87% in fiscal 2026.

“Our total software revenue for the quarter was approximately $83.3 million, representing 85.5% of total revenue. We continue to expect software revenue to be about 87% of total revenue on an annual basis.”
— David Abadi, CFO

Sustained mix shift toward higher-margin software, and disciplined cost management, improve profitability, signaling the company’s capacity to drive long-term free cash flow generation and strategic reinvestment without impairing financial flexibility.

U.S. expansion strategy advances but remains a future growth lever

Despite the U.S. accounting for a small portion of current revenue, the company highlighted recent state and local customer acquisitions, the start of a strategic LexisNexis Risk Solutions partnership, and successful proof-of-concept (POC) engagements with federal agencies in the U.S. Management reiterated that budget constraints and procurement delays in U.S. federal markets are built into guidance, but confirmed strong product-market fit and growing partner interest.

“The U.S. represents a significant opportunity for us, given that it’s a large territory with many security agencies. We continue to make investments in order to expand presence, increase market reach, expand the partner network, and invest more in marketing. Having said that, in the shorter term, the U.S. presents a small portion of our business, so we are not relying in our guidance heavily on the U.S. We do believe that the U.S. will become a more significant portion of our business over time.”
— Elad Sharon, CEO

Cognyte’s measured U.S. go-to-market investments, combined with low near-term guidance dependence, preserve upside optionality, allowing the company to capture growing demand as federal agency budget normalization occurs over the next several years.

Looking Ahead

Management projects approximately $397 million in revenue for fiscal 2026 (plus or minus 2%), $45 million in adjusted EBITDA, 72% non-GAAP gross margin, and $0.23 in annual non-GAAP EPS. Sequential quarterly revenue growth is expected in both Q3 and Q4. Strategic financial targets for the fiscal year ending Jan. 31, 2028, remain unchanged, including $500 million in revenue, a 73% gross margin target, and adjusted EBITDA margins above 20%.

eGain(EGAN 6.00%) reported fourth quarter 2025 results on Sept. 4, 2025, with total revenue (GAAP) rising 11% sequentially and 3% year over year to $23.2 million, and a record non-GAAP Software-as-a-Service (SaaS) gross margin of 80%. The company announced a marquee design partnership with JPMorgan Chase (NYSE:JPM) in April, outlined the sunset of its legacy messaging product, and guided for a return to full-year revenue growth in fiscal 2026 (period ending June 30, 2026), with annual recurring revenue (ARR) in its core AI knowledge business expected to grow 20% or more.

AI knowledge ARR accelerates as legacy messaging sunsets

ARR from AI knowledge customers increased 25% year over year, reaching nearly 60% of total company ARR as of September 2025. Net dollar-based SaaS retention for these customers improved to 115% for the last twelve months, up from 98% a year earlier. Management guided for approximately $4.7 million in current ARR from the legacy messaging product to run off throughout fiscal 2026, beginning in the second quarter.

“SaaS ARR from knowledge customers increased 25% year over year or 22% in constant currency, while SaaS ARR for all customers increased 11% year over year or 9% in constant currency. Turning to our net retention rates, LTM dollar-based SaaS net retention for knowledge customers was 115% or 112% in constant currency, up from 98% a year ago, while net retention for all customers was 105% or 103% in constant currency, up from 88% a year ago.”
— Eric Smith, CFO

This rapid growth in AI knowledge ARR and improved retention rates (now at 115%) highlights the company’s successful transition away from legacy products and its ability to drive higher-value, recurring revenue streams.

JPMorgan Chase partnership expands eGain’s strategic reach

The partnership with JPMorgan Chase represents one of the largest deals in company history, expanding eGain’s footprint from discrete business units to a company-wide AI knowledge hub. The agreement included collaborative product development, warrant grants to JPMorgan Chase in August, and the addition of a JPMorgan Chase board observer to inform next-generation product direction for the broader market.

“Our AI Knowledge Hub will now serve all bank employees in their U.S. Chase business. What is exciting for us is that we are now actively partnering with JPMorgan Chase to improve customer experience and drive AI efficiencies across the business. To strengthen this partnership, we issued warrants to JPMC in August, and they agreed to nominate a senior executive to join our eGain board as an observer.”
— Ashu Roy, CEO

This strategic relationship positions eGain to benefit from JPMorgan Chase’s scale and expertise, while also accelerating product innovation and enhancing credibility with other large enterprise customers.

Gross margin expands as cloud migration and automation drive efficiency

Total gross margin rose to 73% in the fourth quarter, up from 71% a year ago, with non-GAAP SaaS gross margin reaching 80%, up from 76%. Non-GAAP operating costs declined 2% year over year, even as research and development (R&D) spending increased 15% for the full year. The migration of all customers to a new cloud architecture and increased AI-driven automation have resulted in sustained improvements to the company’s cost structure.

“We completed our migration of all clients over to the new architecture, the new cloud platform that we have been working on for a few couple of years now. So we had mentioned that in the past. So that is one place where we are seeing benefits, which now will continue to be there. Right? So, that’s one. But the second one is, with not just AI, but also our ability to develop new product and capabilities faster, we are automating the process of supporting and operating our cloud and being much more efficient on the cloud resources that we are using. All three of those. And so that is another big chunk of improvement if we are able to create on a sustainable basis.”
— Ashu Roy, CEO

These operational improvements are expected to support further gross margin expansion and enable continued investment in product development without increasing the overall cost base.

Looking Ahead

Management guides for total revenue of $90.5 million to $92 million in fiscal 2026 (ending June 30, 2026), GAAP net income of $3.5 million to $5 million, adjusted EBITDA of $10.4 million to $11.9 million, and non-GAAP net income of $8.3 million to $9.8 million. Gross margin is forecasted to expand to 74% to 75%, and core AI knowledge ARR is expected to grow 20% or more year over year, partially offset by the full-year wind-down of approximately $4.7 million ARR from legacy messaging. R&D investment will increase by about 6% year over year, while adjusted EBITDA is targeted to rise by 20% to 40% year over year.

Pro-Dex (PDEX -1.03%), a developer and manufacturer of powered surgical instruments for medical device OEMs, released its Q4 FY2025 earnings on Sept. 4, 2025. The company reported GAAP revenue of $17.5 million, up from $15.0 million a year earlier, but faces margin pressure as gross margin contracted to 20%. Net income (GAAP) fell to $1.2 million, with diluted earnings per share at $0.36. These results showed top-line growth in line with recent management emphasis, but also highlighted new cost and margin risks facing the business.

Overall, the quarter demonstrated growth momentum, with caution signals on profitability and working capital.

Source: Pro-Dex. Note: Fiscal 2025’s fourth quarter ended June 30, 2025. Fiscal 2024’s Q4 ended June 30, 2024.

Business Overview and Focus Areas

Pro-Dex specializes in designing and manufacturing powered surgical devices, with a core focus on products that rely on its patented adaptive torque-limiting technology. These tools are primarily marketed to original equipment manufacturers (OEMs), especially for orthopedic, cranio-maxillofacial (CMF), and thoracic surgery applications.

The company’s recent strategic objectives emphasize deepening customer penetration, especially among its top accounts. Investment in R&D continues to be a priority, seeking to expand its torque-limiting technology into broader surgical markets. Success depends on continued product innovation, managing customer concentration risk, and maintaining robust regulatory compliance for quality and safety.

Quarterly Performance Details: Key Metrics and Drivers

Revenue (GAAP) grew sharply in Q4 FY2025, led by increased shipments to a small group of existing customers. In the company’s words, “revenue to our top three customers” accounted for the majority of the gain. Sales of a next-generation powered surgical handpiece to its largest customer contributed meaningfully during FY2025, driving both quarterly and full-year growth. While higher sales indicate progress in leveraging existing relationships, the narrow customer base remains a structural risk. The largest customer accounted for 75% of FY2025 revenue, while the top three comprised 94% of sales.

Gross margin, which measures profit after production costs, contracted significantly from 27% to 20% in Q4 FY2025 compared to the prior year. Management attributed the drop in Q4 FY2025 to a less favorable product mix — a shift back toward legacy device shipments rather than newer, higher-margin models — and to new tariff costs that increased indirect manufacturing expenses. Despite this quarterly pressure, full-year gross margin (GAAP) improved to 29% in FY2025, thanks to gains earlier in the year and stronger sales of newly launched products. However, margin weakness in Q4 FY2025 highlights vulnerability to production mix and external cost headwinds.

Operating expenses increased by $409,000 from a year ago, reaching $2.1 million in Q4 FY2025, due to higher personnel costs across selling, general and administrative, and engineering functions. These investments support future growth and product development, but add to cost pressure when gross profit is under strain. This rise in ongoing expenses contributed to a 43% drop in operating income in Q4 FY2025.

Net income (GAAP) decreased from $1.6 million in the prior-year quarter to $1.2 million, influenced by both lower gross profit and higher operating costs. On a diluted per-share basis, earnings (GAAP) fell to $0.36 from $0.46. Management notes that full-year net income (GAAP) for FY2025 rose more sharply, aided in part by unrealized gains from investments, but warns that such non-operating swings can add volatility and do not reflect ongoing core business trends.

Looking Ahead: Guidance and Watch Points

Management reported a record order backlog of $50.4 million as of June 30, 2025 (FY2025). Management described this backlog as supporting expectations for continued revenue and operating income growth in FY2026. The earnings release also mentioned plans to cooperate with customers on tariff cost sharing and intentions to further strengthen management and manufacturing processes. However, no specific financial guidance for revenue or earnings was provided for the next quarter or the coming fiscal year.

Investors should monitor several key areas in upcoming quarters. These include: trends in margin recovery or further erosion from cost or product mix effects; the pace at which inventory and accounts receivable return to more normal levels; and how quickly Pro-Dex can diversify its customer base to reduce dependency on a single large buyer. Close attention to working capital and liquidity will be important, given the sharp decrease in cash balances in Q4 FY2025 as funds were absorbed by increased inventory and accounts receivable.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

GitLab (GTLB -1.89%), a leading provider of an integrated platform for software development, security, and operations, reported its Q2 FY2026 results on Sept. 3, 2025. Revenue reached $236 million, exceeding management’s revenue guidance range of $226 million–$227 million. Adjusted EPS came in at $0.24, up from $0.15 in the same period last year and also ahead of guidance offered back in the Q1 report. Adjusted operating margin moved to 17% in Q2 FY2026, up from 10% one year ago.

The quarter underscored robust customer and enterprise expansion and continued focus on AI-driven innovation, although leadership transitions and slight margin pressures introduced areas to watch for the coming quarters.

Source: GitLab. Note: Fiscal 2026’s second quarter ended July 31, 2025. Fiscal 2025’s Q2 ended July 31, 2024.

Business Overview and Strategic Focus

GitLab serves organizations ranging from startups to multi-national enterprises with its all-in-one DevSecOps platform, reflecting GitLab’s core proposition—a single application that helps customers manage every step of the software development lifecycle, from planning to code writing to deployment and monitoring. The platform streamlines workflows, increases code delivery speed, and helps reduce security risks by integrating all these functions into a unified experience.

The company’s open-core approach encourages thousands of community members to contribute improvements and new features, supporting rapid innovation. In recent years, GitLab has moved to enhance its artificial intelligence (AI) capabilities inside its platform, aiming to give customers smarter automation, better code suggestions, and advanced security features. Expanding into enterprise accounts, deepening cloud partnerships, and furthering AI integration have been key areas of focus.

Quarter Highlights: Growth Drivers and Product Developments

The reported quarter saw GitLab achieve a 29% increase in GAAP revenue. Those generating over $100,000 in recurring annual revenue now total 1,344, up 25 % from last year’s reporting period. Total customers spending more than $5,000 annually rose 11% to 10,338.

The platform’s subscription-based model, combining both software as a service (SaaS) and self-managed options, generated $212.7 million (GAAP), up from $163.2 million in Q2 FY2025. Remaining performance obligations, a measure of future contracted revenue not yet recognized, increased by 32% year-over-year. The dollar-based net retention rate, which measures how much recurring revenue is retained from existing customers after accounting for churn, upgrades, and downgrades, held steady at a healthy 121%.

It launched a public beta of GitLab Duo Agent Platform, described as an AI orchestration layer that integrates with multiple external artificial intelligence tools. This product is meant to help customers quickly adopt AI-driven development through their preferred large language models. Strategic expansion continued with a three-year partnership with Amazon‘s AWS to broaden the Dedicated (single-tenant) service, specifically targeting compliance-heavy and public sector environments.

Gross margin, a key profitability indicator measuring the percentage of revenue remaining after direct costs, slipped slightly to 90% on a non-GAAP basis, down from 91% in Q2 FY2025. Although operating margins improved, the company reported a GAAP net loss, influenced by stock-based compensation and other non-cash accounting charges. The cash position strengthened, with cash and equivalents rising to $261.4 million, providing flexibility for ongoing investment and operations.

Looking Ahead: Guidance and Key Watch Areas

For Q3 FY2026, management projects revenue of $238 million to $239 million, implying year-over-year growth of about 30%. Full-year guidance for FY2026 forecasts revenue of $936 million to $942 million. The company provided guidance for non-GAAP operating income of $133 million–$136 million for FY2026, and similarly raised its forecast for non-GAAP diluted earnings per share to $0.82–$0.83 for FY2026. Revenue guidance, however, was maintained at its previous level.

Leadership changes are a notable point going forward. GitLab’s Chief Financial Officer is stepping down as of September 19, 2025, with the interim CFO promoted from within the finance function. Additional new executive appointments may support scaling as the company grows. Investors will likely monitor how the company manages its margin trends, continued enterprise customer gains, and execution on its AI strategy, all while facing strong competition in developer and security software markets. GTLB does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

Asana (ASAN 2.48%), the work management software company known for its cloud-based platform that helps teams organize and track projects, reported its second quarter fiscal 2026 results on Sept. 3, 2025. The most important news was that revenue (GAAP) totaled $196.9 million, up 9.9% from the same period last year, beating analyst estimates. Adjusted earnings per share were $0.06, a swing from a $(0.05) loss in the same period last year, while adjusted operating margin improved notably to 7.1%.

The company also raised its full-year guidance, signaling greater confidence in Asana’s ability to drive long-term, durable growth and sustained profitability. The quarter showed strong cost discipline, higher profitability, and ongoing innovation.

Source: Asana. Note: Fiscal 2026’s second quarter ended July 31, 2025. Fiscal 2025’s Q2 ended July 31, 2024.

Business Overview and Recent Focus

Asana delivers a cloud-based work management platform that enables organizations to plan, track, and manage tasks and projects across teams. The platform helps streamline workflows, break down complex initiatives, and improve team collaboration in businesses of all sizes. Its core functionality unites task management with progress tracking, goal setting, and automation — all delivered through a user-friendly interface.

Recently, Asana has prioritized expanding its AI-driven feature set, deepening security certifications, and scaling its platform for large enterprises. The company has focused on integrating artificial intelligence to automate tasks, provide predictive insights, and improve workflow adaptability, aiming to attract larger customer cohorts and address complex business needs. Key success factors include driving customer retention, accelerating adoption of AI-powered offerings, and maintaining security and compliance as more highly regulated industries become customers.

Key Achievements and Developments in the Quarter

Revenue grew 9.9% over the prior year period, slightly outpacing the high end of the company’s own guidance. Asana also achieved its highest-ever non-GAAP operating margin of 7.1%, marking a sharp improvement from a negative 8.7 % a year earlier. The company posted non-GAAP net income of $15.1 million, or $0.06 per diluted share, turning around from an $11.1 million non-GAAP net loss in the prior year and $(0.05) per share in the prior year. Adjusted free cash flow reached $35.4 million, compared to $12.8 million in the prior year period.

Expenses as a percentage of sales fell across core functions: research and development dropped to 24.2% of revenue from 31.5% last year (non-GAAP), and sales and marketing dropped to 44.8% from 50.9% (non-GAAP). This tighter cost control helped produce both margin expansion and a $27.3 million reduction in operating loss on a GAAP basis.

Product innovation remained central. During the quarter, Asana launched the Smart Workflow Gallery, a suite of prebuilt, AI-powered workflows aimed at making it easier for customers to embed artificial intelligence in their daily work routines. Further, management referenced upcoming releases such as “Teammates” and expanded partnerships, including Asana’s presence in the Amazon Web Services Marketplace. AI Studio, Asana’s tool for embedding workflow automation and insights, continued to gain traction, especially among larger enterprise clients.

On the customer side, large enterprise customer momentum persisted. The number of customers spending $100,000 or more annually rose 19% year over year to 770, with 42 net additions since the prior quarter. Core customers, defined as those spending $5,000 or more annually, grew 9% year over year to 25,006, and revenue from this group rose 12% compared to the prior year period. Despite these gains, management noted that net retention rates — a measure of customer renewal and expansion — have plateaued at 96%.

Security and compliance advanced as differentiators. Asana achieved “FedRAMP In Process” designation, signaling its intent to serve more public sector and regulated industry clients. Ongoing certifications such as ISO compliance and annual SOC 2 Type II reporting were cited as ways the company maintains trust with larger organizations. Management also called out the integration of Asana’s platform in environments demanding strict security requirements as a foundation for future enterprise expansion.

Looking Ahead: Guidance and Strategic Considerations

Management forecast revenue of $197.5 million to $199.5 million, implying year-over-year growth of 7.4% to 8.5%. Full-year revenue guidance increased slightly to a range of $780.0 million to $790.0 million. The full-year non-GAAP operating margin target was raised to 6%. However, top-line growth is slowing: management anticipates revenue growth slipping to high single digits (7% to 9%). Non-GAAP operating income is expected in the $12 million to $14 million range, with non-GAAP earnings per share of $0.06 to $0.07.

Company leadership highlighted that sustaining margin gains now relies on both continued cost discipline and improvements in net retention and expansion, as discussed in the context of non-GAAP results. The company’s net retention rate was 96%. Product innovation, especially in AI, will be crucial in driving increased usage and contract sizes with large enterprise customers. Investors should monitor adoption of AI Studio features, international expansion, customer cohort growth, and any material customer contract renewals or downgrades, as in the $100 million-plus renewal that occurred last quarter.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

Two major digital platforms — YouTube and Hulu + Live TV — have agreed to carry C-SPAN two months after the nonprofit organization made a public plea for wider distribution.

Changing industry economics have taken a toll on C-SPAN, prompting the U.S. Senate to urge streaming companies to begin offering customers the privately funded television service, which has provided nonpartisan gavel-to-gavel television coverage of congressional hearings and roll call votes for decades.

“All television providers, including streaming services, should make delivery of C-SPAN a priority so Americans can watch Congress in action, in real time,” senators said in their June resolution.

On Wednesday, C-SPAN announced separate distribution agreements with YouTube and Hulu + Live TV.

The agreements expand “access to C-SPAN’s unfiltered coverage of U.S. government for millions of subscribers nationwide, further strengthening the network’s role as an indispensable source of public affairs programming,” C-SPAN said in a statement.

C-SPAN stands for Cable-Satellite Public Affairs Network. It relies heavily on revenue generated from license fees paid by cable, satellite and other multi-TV channel operators. But as the number of traditional pay-TV homes continues to shrink, C-SPAN found itself running a troubling financial deficit.

Last year, C-SPAN collected $46.3 million in revenue, a 37% decline from $73 million in 2015. That’s largely because C-SPAN and other basic cable channels were available in more than 100 million homes 10 years ago.

Since then, the number of homes has been cut nearly in half.

The three C-SPAN channels — C-SPAN, C-SPAN2 and C-SPAN3 — will be added to YouTube TV’s base package of channels this fall, the companies said. The channels will also run on the main YouTube video platform.

In addition, Google-owned YouTube will sponsor the network’s coverage of “America 250” — the celebrations to mark the nation’s founding two and a half centuries ago.

“For nearly half a century, C-SPAN has partnered with cable and satellite providers who recognize the value of our important public service,” C-SPAN Chief Executive Sam Feist said in a statement. “We now look forward to working closely with YouTube to bring C-SPAN’s unfiltered coverage of the democratic process to millions more Americans.”

C-SPAN uses its own cameras in the Capitol, enabling the service to catch the action when government-operated audio and visual equipment is cut off.

Earlier this summer, Feist told The Times that C-SPAN should be able to close its budget gap if YouTube TV and Walt Disney Co.’s Hulu + Live TV would carry its feeds.

Around 20 million households subscribe to such online subscription platforms, known as virtual multichannel video program distributors, which stream broadcast and cable channels.

Times staff writer Stephen Battaglio contributed to this report.

The most densely packed section inside the Rose Bowl on Saturday was filled with fans wearing the colors of the visiting team.

Swathed in red and white, they crammed into one corner of the century-old stadium for what amounted to a nightlong celebration.

Fans cheering for the home team were more subdued and scattered throughout a stadium that seemed about one-third full, outnumbered by empty seats, visiting fans and those massive blue-and-gold tarps covering most of each end zone. Deliberately or not, Fox cameras inside the stadium showed those watching from home only wide shots filled with graphics that obscured the paltry crowd.

By late in the third quarter, the only suspense remaining in UCLA’s 43-10 blowout loss to Utah was waiting for the announced attendance. Reporters in the press box were given a figure of 35,032, which seemed inflated given so many empty seats below them.

It was.

The scan count, a tally of people actually inside the facility, was 27,785, according to athletic officials.

Creative accounting is the norm in college football given there are no standardized practices for attendance reporting. The Big Ten and other conferences leave it up to individual schools to devise their own formulas.

UCLA defines its announced attendance as tickets distributed — including freebies — plus non-ticketed and credentialed individuals such as players, coaches, staff, vendors, cheerleaders, band members, performers and even media. Across town, USC’s announced attendance includes only tickets distributed, according to an athletic department spokesperson, which was 62,841 for the season opener against Missouri State.

In recent seasons, UCLA’s announced attendance was sometimes more than double the scan count, according to figures obtained by The Times through a public records request.

For UCLA’s home opener against Bowling Green on a sweltering September day in 2022, the announced attendance was 27,143, a record low for the team since moving to the Rose Bowl before the 1982 season.

The actual attendance was much lower. UCLA’s scan count, which represented people who entered the stadium (including the aforementioned non-ticketed and credentialed individuals) was 12,383 — 14,760 fewer than the announced attendance. The scan count for the next game, against Alabama State, was just a smidgen higher at 14,093.

Those longing for an on-campus stadium could quip that UCLA might as well hold some games at Drake Stadium given the track facility holds 11,700 and could probably accommodate several thousand more with temporary bleachers placed opposite the permanent grandstands.

Empty seats aren’t just a game day buzzkill given their correlation to lost revenue.

“Since we are now in the era of NIL and revenue sharing, where cash is king,” said David Carter, an adjunct professor of sports business at USC, “every school hoping to play competitive big-time football needs to generate as much revenue and excitement around its program as possible. But since empty seats don’t buy beer or foam fingers, let alone merchandise and parking, any and all other forms of revenue are needed to offset these chronic game day losses in revenue.”

Declining revenue is especially troublesome at a school whose athletic department has run in the red for six consecutive fiscal years. The Bruins brought in $11.6 million in football ticket revenue during the most recent fiscal year, down nearly half from the $20 million they generated in 2014 when the team averaged a record 76,650 fans at the Rose Bowl under coach Jim Mora. But one athletic official said the school in 2025 could come close to matching the $5.5 million it generated in season ticket revenue a year ago.

Low attendance is a deepening concern. UCLA’s five worst home season-attendance figures since moving to the Rose Bowl in 1982 have come over the last five seasons not interrupted by COVID-19, including 46,805 last season. That figure ranked 16th among the 18 Big Ten Conference teams, ahead of only Maryland and Northwestern, which was playing at a temporary lakeside stadium seating just 12,023.

Recent attendance numbers remind some longtime observers of the small crowds for UCLA games in the late 1970s at the Coliseum, which was part of the reason for the team’s move to Pasadena. During their final decade of calling the Coliseum home, the Bruins topped 50,000 fans only six times for games not involving rival USC.

“Now, disappointingly, it would appear that the same attendance challenges that UCLA football faced at the Coliseum in the 1970s are repeating themselves at the Rose Bowl,” said John Sandbrook, a former UCLA assistant chancellor under chancellor Chuck Young and one of the primary power brokers in the school’s switch to the Rose Bowl.

Attendance woes are hardly confined to UCLA. Sixty-one of 134 Football Bowl Subdivision teams experienced a year-over-year decline in attendance last season, according to D1ticker.com.

UCLA faces several unique challenges, particularly early each season. Its stadium resides 26 miles from campus and students don’t start classes until late September. Other explanations for low turnouts have included late start times such as the 8 p.m. kickoff against Utah, lackluster nonconference opponents and triple-digit heat for some September games.

Quarterback Nico Iamaleava said he appreciated those who did show up Saturday, including a throng of friends and family from his hometown Long Beach.

“Fan base came out and showed their support, man,” Iamaleava said. “You know, it felt great going out there and playing in front of them. Obviously, we got to do our part and, you know, get them a win and make them enjoy the game.”

On some occasions, UCLA’s attendance figures have closely reflected the number of people in the stadium, including high-interest games such as Colorado coach Deion Sanders’ appearance in 2023. For that game, the announced attendance (71,343) only slightly exceeded the scan count (68,615).

The rivalry game also gets fans to show up. The announced attendance of 59,473 last season for USC’s 19-13 victory at the Rose Bowl wasn’t far off from the scan count of 51,588.

See all those empty seats? There were fewer than 13,000 fans in attendance to see quarterback Dorian Thompson-Robinson, right, and wide receiver Titus Mokiao-Atimalala celebrate a touchdown against Bowling Green in 2022.

(Mark J. Terrill / Associated Press)

Still, as traditions go, creative accounting might predate the eight-clap. Similar to fudging practices known to be widespread at other schools, UCLA officials have been known to embellish attendance figures, sometimes rounding far enough past the next thousand not to strain credulity, according to two people familiar with operations who spoke on condition of anonymity because of the sensitivity of the matter.

Additionally, according to a former university administrator who observed the practice, a member of the athletic department staff would show a slip of paper with a suggested attendance figure for basketball games at Pauley Pavilion in the 1960s and 1970s to athletic director J.D. Morgan, who would either nod or take a pen and change the number to one more to his liking. That practice continued under subsequent athletic director Peter Dalis, the administrator said.

While declining to comment for this story, current athletic administrators have acknowledged the challenge of drawing fans in an increasingly crowded sports landscape that now includes two local NFL teams. Among other ventures, UCLA has created a new fan zone outside the stadium that can be enjoyed without purchasing a ticket and will hold a concert on the north side of the stadium the day of the Penn State game early next month.

While there’s no promotion like winning, as the saying goes, there also may be no salvaging the situation for the Bruins’ next home game. UCLA will face New Mexico on Sept. 12 for a Friday evening kickoff that will force fans to fight weekday traffic to see their favorite team face an opponent from the Mountain West Conference.

Brave souls who look around and hear the announced attendance might experience inflation on the rise once more.

Agilent Technologies (A 0.33%), a global leader in laboratory instruments and scientific solutions for life sciences and diagnostics, released its Q3 fiscal 2025 results on Aug. 27, 2025. The company delivered revenue of $1.74 billion, coming in over its own projected revenue guidance and achieving a 10.1% increase over the prior year period. Non-GAAP earnings per share were $1.37, which was at the high end of management’s forecast and matched analyst expectations. Profitability also improved compared to last year.

However, operating margins narrowed in all business units due to increased costs, including tariffs and higher operating expenses. Overall, the quarter demonstrated broad-based growth across the company, with management responding by raising both annual revenue and profit forecasts for fiscal 2025.

What does Agilent Technologies do?

Agilent Technologies provides analytical instruments, software, and consumables for laboratories worldwide. Its customers work primarily in life sciences, pharmaceutical research, diagnostics, food testing, and chemical analysis. The company’s products help scientists analyze everything from new medicines to food safety and environmental samples. Its technology range includes mass spectrometry systems, which identify molecular structures; liquid chromatography platforms, which separate chemical mixtures; and automated pathology diagnostics used in hospitals.

It operates through three main segments: Life Sciences and Applied Markets, Diagnostics and Genomics, and Agilent CrossLab. It has strengthened its position through sustained investment in new technologies, a broad portfolio of instruments and software, and a global footprint. Key drivers of success include technological leadership, regulatory compliance, access to emerging markets, and the flexibility to reorganize segments in line with growth opportunities.

Quarter in review: Growth, margins, and market trends

During the quarter, Agilent achieved notable top-line gains, with revenue growing 10.1% year over year, well above its own guidance. All three major business units and every geographic region posted year-over-year increases in sales, underscoring both resilient demand and the effectiveness of its execution initiatives.

The Life Sciences and Diagnostics segment, which includes laboratory instruments and automated diagnostic tools, posted the fastest growth at 14%. This reflects demand for technologies used in scientific research, biopharmaceuticals, and hospital labs. The Applied Markets unit, which provides testing systems for food, environmental, and chemical analysis, and Agilent CrossLab, which offers services and consumables that support overall laboratory workflow, also saw revenue increases.

The broad-based growth was coupled with a sequential and year-over-year decline in operating margins across segments. In the Life Sciences and Diagnostics group, higher sales were accompanied by a decrease in both gross and operating margins, with gross margin down to 50.5% from 54.4% a year ago.

The CrossLab segment’s operating margin slipped to 33.3%, down from 35.9% a year earlier, while Applied Markets diminished as well. Tariffs and higher costs, including an increase in the cost of goods sold and operational expenses, were cited as factors affecting profitability. Even though overall operating income improved in dollar terms, the reduced operating margin as a percentage of revenue points to elevated cost pressures that management is committed to addressing.

The company reported both strong cash and a solid balance sheet, with operating cash flow for the first nine months of fiscal 2025 totaling $1,014 million, down 20% compared to the same period a year earlier. The company noted that the cash flow decrease was mainly due to inventory building as a strategy to manage ongoing supply chain and tariff risks, as well as higher capital spending. Cash and cash equivalents rose to $1.54 billion as of the end of the quarter. Research and development spending decreased 12.6% compared to the same period last year.

The company continued its regular share repurchase and dividend programs.

What’s new and what stands out this quarter?

The most significant theme was continued strong demand from biopharma firms and hospitals in both developed and emerging markets. The Life Sciences and Diagnostics segment in particular, linked to testing tools and systems for analyzing biological samples and automating clinical workflows, delivered both the fastest growth rate and the largest sales increase. Applied Markets, supplying instruments for food safety, environmental, and forensics labs, and CrossLab, focused on laboratory consumables and support, both contributed to broad revenue gains.

While the quarter was marked by revenue growth, each segment also experienced some profit margin compression. This was attributed to ongoing tariff exposure and increases in operating expenses, including supply chain investment. To hedge against these risks, Agilent continued its Ignite Transformation initiative, aimed at driving operational efficiencies, expanding its innovation pipeline, and mitigating cost increases. While Ignite has helped offset some headwinds, cost inflation and tariffs have outpaced some efficiency benefits, as reflected in lower segment gross and operating margins. Management indicated it would continue focusing on price realization, localized manufacturing, and supply chain adjustments in future quarters.

Management reaffirmed continued investment in new technologies, including advanced mass spectrometry products, which are devices for analyzing molecules. Prior quarters emphasized portfolio expansion in life sciences instrumentation and informatics, and the company reiterated its commitment to innovation. All global regions contributed to growth.

There were no new sustainability or environmental disclosures in the quarter. The company’s public goal to achieve net-zero greenhouse gas emissions by 2050 remains in place, though no new progress updates were provided. Agilent reported no regulatory compliance issues or fines; compliance remains a critical factor because its diagnostic and analytical tools must meet health and safety regulations in all relevant markets.

Looking ahead: Guidance and key areas for investors

Management raised its full-year guidance for fiscal 2025, now expecting revenue of $6.91–$6.93 billion and non-GAAP earnings per share of $5.56–$5.59, both meaningfully higher than previous projections. For the fourth quarter of fiscal 2025, Agilent projects revenue between $1.822 billion and $1.842 billion, with non-GAAP earnings between $1.57 and $1.60 per share. This stronger guidance points to continued broad demand across end markets and signals confidence in ongoing portfolio and geographic expansion.

Investors should keep an eye on margin trends, as inflation, tariffs, and supply chain dynamics continue to present risks to profitability. The company is prioritizing operational resilience through supply chain strategy, efficiency programs like Ignite, and targeted price increases. Emerging markets, new product launches, and ongoing regulatory compliance will remain important watchpoints.

Agilent Technologies pays a regular dividend and continued its dividend program during the quarter.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

Phibro Animal Health (PAHC -1.56%), a veterinary pharmaceutical and nutrition provider, reported earnings for Q4 FY2025 on August 27, 2025, covering the three months ending June 30. Driven by its largest-ever acquisition and strong international appetite for its medicated feed additives, the company’s sales, adjusted earnings, and profit margins all surpassed expectations. GAAP revenue reached $378.7 million, up 39% from the previous year. Adjusted diluted earnings per share (EPS) climbed to $0.57 from $0.41, also beating consensus expectations. Management described the result as a step-change, reflecting both solid underlying product demand and successful integration of new product lines, though a decline in gross margin showed that rising input and distribution costs remain a concern.

Phibro Animal Health’s Business and Strategies

Phibro Animal Health manufactures and sells products that support animal health and nutrition across more than 90 countries. Its main product lines include medicated feed additives, which help prevent disease in livestock; nutritional specialty products that enhance animal health; and vaccines to combat specific animal diseases. The company’s clients include food producers, veterinarians, and animal health distributors.

Recently, Phibro has focused on expanding its reach and product portfolio through acquisitions and global growth. The October 2024 purchase of Zoetis’s medicated feed additive portfolio added 37 products and six new manufacturing sites to its business. Success in this market relies on regulatory compliance, strong product innovation, and a global presence, with about 55% of animal health sales coming from outside the United States.

Quarter Highlights: Growth, Product Mix, and Margin Trends

The quarter marked a pivotal moment for Phibro, with GAAP revenue climbing 39% compared to the prior year. The acquisition of Zoetis’s medicated feed additive (MFA) products played a central role, contributing $94.5 million in additional sales. Animal Health segment sales increased by 53%, primarily due to the Zoetis MFA acquisition. Vaccine revenues grew 21%, fueled by high demand in Latin America, while nutritional specialties posted solid gains of 11%.

Adjusted EBITDA, a measure of profit excluding both non-cash and one-off items, rose faster than revenue, up 49%, reflecting successful integration of acquired assets and improvements in operating leverage. Adjusted net income followed suit, reaching $23.2 million. Phibro’s ability to quickly benefit from the recent acquisition shows its execution on large, cross-border deals and boosts its long-term earnings potential.

Not all trends were positive, however. Gross margin, a measure of how much profit remains after covering production costs, slipped from 31.9% to 29.0% (GAAP). Management cited several causes, such as higher distribution costs, inventory write-offs, and a less favorable product mix. Despite these cost pressures, adjusted gross margin for the full fiscal year rose slightly, showing that the cost impact was most pronounced in the fourth quarter.

Looking at the company’s broader portfolio, Mineral Nutrition sales (GAAP) inched up 3%, while Performance Products rose 13%. Mineral Nutrition and Performance Products Adjusted EBITDA increased $4.4 million and $2.9 million, respectively, with Mineral Nutrition’s adjusted EBITDA up 4% and Performance Products by 38%. Free cash flow was $41.8 million, just below the previous period. Phibro maintained its quarterly dividend at $0.12 per share, continuing a stable return to shareholders.

Business Segments and Drivers: Product Lines Explained

The company’s core Animal Health segment is built on three main product lines: medicated feed additives (medicines delivered in animal feed), nutritional specialties (products that enhance animal health and growth), and vaccines (biological products to prevent livestock disease). The recent strength in this segment has been driven mostly by medicated feed additives, especially the new Zoetis-acquired products, which led to a 77% year-over-year jump in sales for this line. Vaccines saw demand rise due to success in international poultry markets.

Mineral Nutrition products supply trace minerals like copper and zinc, important for healthy livestock. Growth here was modest but steady, driven by broader demand for feed minerals. Performance Products comprise specialty chemicals used in industrial applications, rounding out Phibro’s diversified offerings. Each of these areas supports the company’s efforts to reduce dependence on any single customer group or geographic market.

Financial Outlook and What to Watch

For FY2026, management expects continued double-digit growth. Guidance points to net sales between $1.43 billion and $1.48 billion, representing about 12% projected growth. Adjusted EBITDA is anticipated to rise 25%. This outlook reflects management’s confidence in continued growth across all segments.

Investors should watch margin trends closely. The drop in quarterly GAAP gross margin, if it continues, could signal sustained cost or mix pressures. Free cash flow and leverage levels are also important to monitor, as integration and expansion require capital, and gross leverage ended the year at 3.1x. Management made no notable changes to its dividend policy, with a quarterly payout of $0.12 per share continuing as before.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.