Good afternoon. QQQs +1.4%, helped by NVDA +9% after a stellar print, while software +5% had a night to remember with across-the-board goodness from OKTA, CRM, CRWD & VEEV earnings lifting the whole space. Sentiment hasn’t done a full 180 from six months ago, but maybe a 120, with software investors slowly remembering they’re allowed to be bullish. Dario’s appearance on CRM’s earnings call was also telling. Some investors had worried the eventual Anthropic roadshow in Sept/Oct would feature Dario & Co. explaining how they planned to swallow the entire enterprise software stack; instead, his presence alongside Benioff reinforced a much more collaborative, partner-not-predator stance.
Software outperformed semis by ~5%, though there was still plenty of green across semis. NVDA was notably bid, with positioning short into the print and the name widely used as a funding short, so some of the strength looked like covering while investors sold down other longs, although our sense is longs left the print feeling a lot better. Overall, volumes pretty thin across the board so tough to read too much into the tape.
Post-close earnings:
ESTC +17%: Better cloud trends and margin leverage will put bears on the backfoot
Takeaway not just top line upside, but evidence that cloud and sales-led subscription trends are stabilizing while cRPO remains healthy. Positioning/sentiment here had become increasingly cautious around competition — doesn’t take much these days to squeeze SMID software name... The FY raise more than covered the quarterly upside.
Print | Revenue $478M vs. ~$469M; EPS $0.70 vs. $0.58; subscription revenue $449M vs. $442M; Elastic Cloud $235M vs. $231M.
Guide | Q2 revenue $486-487M vs. $484M; EPS $0.80-0.82 vs. $0.79. FY revenue $2.00-2.01B vs. $2.00B; EPS $3.29-3.37 vs. $3.24; operating margin raised to 19.4% from 19.0%.