Good morning. NFP roughly inline with +227k vs expects for 200k, unemployment 411.2% vs 4.1%. Participation down, so the rise in the unemployment rate more likely driven by softer household survey gain. Overall, should provide cover for Fed to cut on 12/18.
QQQs +20bps, BTC -40bps; China +2%. 2 year dn 4bps, 10 year dn 2bps.
Lots to get to today, so let’s get straight to it…
GTLB +10%: Beat and Raise with large rev beat sub acceleration, and cRPO beat
Very solid results here and not much to nitpick (net retention slightly down). Sentiment/positioning had been mixed going in so this is better than a relief for investors
Revenue grew 31% (matching last quarter), ahead of Street's 26%, with particular strength in enterprise and government sectors. Q3 beat guidance by 4%, marking strongest outperformance since Q3'24. cRPO growth at 39% versus previous quarter's 42%, while operating margin reached 13.2%, exceeding Street's 10.6% expectation. Subscription revenues slightly accelerating to grow 34%
Management raised FY25 guidance to 30% revenue growth (from 28%) and ~9% operating margin (from ~8%), with Q4 guidance modestly above consensus. Duo contribution expected to remain minimal this year before accelerating in FY26. Duo platform gaining enterprise traction with notable wins (Emirates, F5, LATAM Airlines), delivering ~25% ARR uplift and significant productivity gains. Ultimate SKU reached 48% of ARR (up from 47%), featured in 7/10 largest deals and 9/10 largest initial purchases.
New CEO Bill Staples takes over as prev CEO stepping down due to healthy reasons
Bulls will take this as validation that growth is likely to stay in ~30% range while new products coming online could materially improve tier conversions and Duo adoption over the next year.
HPE +3%: Mixed with a nice top and bottom line beat but AI rev in line at $1.5B (and below whispers of $1.7B) and orders of 500M missed street at $1.4B. Guide roughly in line. Beat driven by Hybrid cloud and EPS helped by H3C sale
Server biz continues to see momentum but its dragging gross margins down which were -390bps y/y to 39.9% lowest since Q4’20 but hybrid cloud continues to drive upside (Greenlake, storage strength) while Networking is seeing more stability. The fwd guide includes q/q stepdowns in AI server sales (Blackwell impact, Q4 AI order “de-booking” of $700M), but was still in line-ish with consensus. JNPR deal still expected to close early part of 2025.
Print shouldn’t change bulls or bears minds either way. Sentiment has turned slightly more positive here as bulls think HPE positioned for growth across multiple vectors: expected IT spending recovery driving server, storage and networking improvement; Juniper integration synergies; Hybrid Cloud momentum from private cloud AI expansion, Alletra storage, and GreenLake adoption driving ARR growth; and margin expansion potential from increasing Enterprise/Sovereign AI server demand. In addition, bulls will continue to point to valuation disparity with DELL (13x vs sub 10x P/E) and hope for share gains from SMCI’s woes.
Bears will point to continued margin pressure and lack of AI upside.
Gets and upgrade at Citi raising target to $26 from $23, citing multiple growth catalysts: improving mainstream server and enterprise networking demand, expanding AI opportunities, and potential multiple expansion versus peers. Following Q4's earnings beat, firm notes potential for increased enterprise AI and sovereign customer contributions, suggesting positive revenue and margin trajectory. Combined with strengthening core infrastructure spending and Juniper acquisition benefits, Citi likes the r/r here.
3P Roundup:
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