Costco, Dell, Lululemon, CrowdStrike, & more: Earnings recap

Over the last week, investors had a lot of earnings to digest, including reports from CrowdStrike (CRWD), Bath & Body Works (BBWI), Hewlett Packard Enterprise (HPE), Dollar Tree (DLTR), Campbell Soup (CPB), Lululemon (LULU), and Zscaler (ZS), to name a few.

Yahoo Finance breaks down the earnings results and how companies' stocks reacted to the reports.

For more expert insight and the latest market action, click here.

This post was written by Mariela Rosales.

Video transcript

Earnings season is in full swing, with major companies in banking, tech travel and more all releasing their quarterly results.

We have expert analysis, so you can better understand the numbers and what they say about the health of the American economy.

Let's talk, Neil.

That's another trending ticker here on Yahoo Finance when you take a look at the move lower here, off just about 5% the company reporting a wider than expected loss in the first quarter, vehicle deliveries falling by 3% from a year ago.

The big story here is the increase in competition.

You can see those deliveries falling 3% to just above 30,000, not entirely a massive surprise here from the street.

Remember, Neo did guide the fact that they were expecting or lowered their forecast for deliveries for the quarter.

Back in March, they lowered it down to 30,000 from their previous estimate of 31 to 33,000.

But the real story here is the increase in competition, right?

What exactly?

That means not only for domestic players in China but also what it ultimately means for larger US automakers trying to compete within that space.

We've seen Tesla obviously have a very, very tough time over recent quarters trying to make further inroads, trying to gain market share when you have these, uh, domestic players that are grabbing more of that.

And even you can see from these results here neo also under a bit of pressure given that uptick in competition.

The way to describe that pressure if you're looking at the stock chart is WW as you're taking a look at the shares year to date down by about 37%.

I'm looking at the second quarter, though here going forward, the company expecting vehicle deliveries to be between 54 to 56,000 units, that actually would represent an increase of approximately 100 29% year over year Um, 100 29% to 100 38% on the top end.

It's a range.

So ultimately here, also looking at the revenues, they're expecting that to come in at about 2.3 to $2.37 billion round numbers there.

So all these things considered it is really going to depend upon the movement that we're seeing in the EV market demand as you were mentioning as well.

One of the worst performers in the S and P 500 this year is finally having a good go out, and shares of Lululemon are up right now by about 9% this morning on the back of results that surprised many bears that raided the stock prior to the report, the athletic retailer saw surging demand overseas as it navigates a more cautious consumer here in America and North America, specifically here for the Canadian based company for a deeper dive into the latest results.

We're joined by Jeanine Stitcher, who's the BT IG consumer retail and lifestyle brands analyst.

Great to have you here with us.

Let's break this down because it was interesting, the strength that they're seeing in the non North American parts of the world.

While it seems like there was some flattening here and that could perhaps impact some of the outlook as well, for sure, you have two pieces here.

First, the international piece, which, as you mentioned, was extremely strong, particularly in China, which is a big part of the growth story.

And then you have the Americas and look, the Americas did slow.

We knew it would slow.

They had told us that I think the important thing here was it was less bad than expected.

Uh, the Americas overall were up about 4% in constant currency.

Consensus was about three, but we'd heard numbers looking for a flat to maybe slightly down.

So the big picture is that yes, we know there's some challenges in the US, but it's not getting worse, and it seems like they have a real handle on what they need to fix there.

Do you think this is a big relief here for investors for shareholders?

Given the challenges that Lululemon has faced here over the last couple of quarters, for sure, I think it's a huge sigh of relief.

Um, there were a tonne of nerves coming into this quarter around the the America's business, potentially decelerating more than we expected.

I remember we also had a management change.

We had the chief product officer leaving just two weeks ago to go to bands, which is part of VF Corp. And I think that really spooked people.

So there was a tonne of fear coming into this print.

The bottom line is, it's things are OK.

Things are stable, OK?

And so with all of this in mind, I mean, looking across Lou Lemon's business here, the inventory mix was something that they were very positive and optimistic about.

What's gonna be the driver from an inventory perspective, especially with the pricing strategy that they would have to roll out for anything new.

Yeah, So I think when we came out of the Q four call, they had talked about some potential inventory challenges, not having the right colours and sizes, and they were able to get a better grasp on that as they went through the Q one call.

So they talked about leggings in particular where they didn't have the right in stocks of the colours they needed, um, and accessories, which has been a strong growth driver.

They're seeing growth on top of that now with some of their new or higher price items, but they just didn't have enough.

So I think what we'll be looking for is, as we get through the balance of Q two, that's when we'll start to see those products corrected.

Uh, they also talked about maybe just not having enough newness and innovation, and that sounds like it will really ramp up into the back half of the year.

So right now it's kind of all eyes in the back half as we think about getting some of these inventory imbalances corrected and seeing a greater flow of newness in the assortment.

Jeanine, when you take a look at the international side, I guess my question to you is, Is it going to be enough here to support sales growth to support some of that margin improvement that we have seen?

Or should we expect a bit of a slide here, given some of the struggles that they're facing in the US?

Yeah, I think the international is going to be a huge piece of the growth story and can help them support double digit growth over the medium term.

If you look at China, they have proof of concept there.

It's a billion dollar business just in mainland China, but they're still growing 40% plus annually and we think that can continue for a long time.

With that said, I think as we think about the stock from here, people are really focused on the US business and we need to see that US business re accelerate the way that they're telling us it's going to in the back half for us to get a multiple on this stocks typical to what similar to what we've gotten in the past.

So we're really looking for a re rating in the back half.

As we see the US business re accelerate, we're We're seeing a tonne of new entrants into the golf landscape right now and that Sean is laughing at me right now.

This is serious for me.

I'm surprised it took us this long to get there kind of me, too.

But at the end of the day, this is a major driver that the company is really looking forward to.

As as a catalyst.

How much of a catalyst is golf for Lululemon's business?

I think golf is a catalyst, But more broadly, the men's business, I think, is a is a huge catalyst.

And look, we've heard about a lot of viewers around competition, not just in golf but in men's in particular.

Vio is one that stands out as coming up often in conversations, um, concerns around the growth impacting Lulu's men's business.

But the men's business was still at 15% in Q one.

So it's hard to say that that's having a meaningful impact.

Um, in terms of the competition, we think overall, there's a lot of runway for for the male business, which is historically just been underserved for both Lulu and for the broader landscape.

So I think that men's is still a big growth driver and wouldn't worry as much about the competition.

I think it just kind of speaks to a market that has a a lot of white space in it.

You know, it's interesting, especially over the course of this year.

We've seen a lot of the performance where brands really lean into some of their big athletic profiles and their, you know, worldwide not names, if you will, whether that's new balance leaning into Coco golf or whether that's Nike and the of course treasure trove of different athletes that they work with, Um, over the course of this year, I mean, it's great that the NBA Finals are starting today.

They could probably lean into Luka Danic a little bit more, Uh, or Jason Tatum.

All these things considered.

There's never a huge name that Lulu Lemon has had to hang its hat on.

Do they need to start considering anyone?

Yeah, I think their strategy has historically been more grassroots.

And look, they still have celebrity endorsements.

They still have athletes that they work with who maybe aren't as much household names as some of the other, uh, athletic brands but still are, are relatively well known in their fields and are are known for what they do.

I think they're going to stick with that.

I think it makes sense.

It's more of a broad approach where they're trying to connect with the core consumers of these products.

Having just one name that you attach yourself to and look, there can be risk with attaching yourself to just one or two big names, too.

Um, those celebrity profiles can come and go.

They can have their moments where they are extremely strong and moments where you rather not be as associated with them as much.

So I think it's more of a broad strategy, a little bit more of a grassroots approach.

I think that will continue to work for them versus trying to just sign up one or two big names and really taking a concentrated angle all right Lulu Lemon shares up just about 9% here this morning.

Jeanine ST are BDIG is a consumer retail and lifestyle brands analyst.

Thanks so much for joining us.

Thank you.

Time for some trending tickers.

Dollar Tree shares.

They are slipping after disclosing it is exploring a potential sale or spin off of family dollar as the company struggles to counter weaker demand.

The company also saying it will close an additional 150 family dollar locations by the end of 2024.

You're taking a look at shares right now, pre market down by about 1.9% here and the company as they've released this news.

It came in tandem with their earnings, so you can really kind of compare Family Dollar.

Same store sales are, uh, going up against the dollar tree segment.

Same store sales.

Net growth in this most recent quarter of dollar tree segment That was up by about 1.7%.

Family dollar segment only up 1/10 of a percent here.

And so all of these things considered, it's really this multi year journey to help the company fully achieve potential, the CEO saying and announcing a comprehensive review of the portfolio for family dollar, including plan closures of about 970 UNPROFOR stores.

So this kind of continues in trajectory with what they had already announced there.

Yeah, it's tough.

And the story behind a company like this, as you talk about so much on your show wealth, Brad, is that this could be a sign of a consumer segment in this economy that is really starting to crack under the economic conditions.

Now, just because that might be a lower income consumer, we may not be seeing it in the broader economic data that we break all the time.

But these earnings give you a really good insight into which segment of the economy are starting to crack.

And this could be a sign that that lower income consumer is starting to crack now.

From the stock perspective, we are getting some analysts notes in bullish investors according to vital knowledge, pointing to decent and margin performance in Q one for this name here.

But the EPS forecast trimmed only because of tornado damage, that is, according to the company, The question is, why are other companies not reporting similar damages there?

So remains to be seen.

How much that is going to impact Dollar tree Moving forward.

We're getting a fresh read on the cautious consumer discount retailer Dollar Tree disclosed it's exploring a potential sale or spin off of family dollar as the company struggles to counter weaker demand amid inflation.

But no matter how many deals, discounts or savings initiatives retailers roll out.

Sometimes it seems like they can't do anything to change shoppers.

Perceptions on prices.

At least that's what our next guest says for more on the consumer and their spending habits.

I'm joined by Sucharita Kalli, who is the Forester research retail analyst.

Citta, great to see you here with us today.

First.

I mean, take us into your thesis right now about where the consumer sits.

I mean it.

It was amazing to hear from the AD P chief economist just minutes ago, saying that this is a battle weary consumer.

What do you make of them and how, um how would you define this consumer?

Yeah, we've had this expression, the Vibe session going on for a while, where the consumer has been feeling really down about the economy for a long time, pretty much um since inflation has been prevalent, uh, the consumer just hasn't felt good about it.

Um, there's also a political overtone as well that, um pretty much dates back almost 10 years.

At this point where whoever does not have their party in the White House, they tend to be very down on the economy.

So in any economy, you're going to have 50% of people just unhappy with the current situation.

So there is that.

But the irony is that retail spending is at a record high, and consumers for a long time were spending at the level of inflation and then some.

Only in recent months, with some of the census census data on monthly retail spend has some of that, uh, spending not exceeded the level of inflation.

So we're seeing that the consumer is finally probably at their saturation point with respect to spending on some of these discretionary goods in particular.

And even with spending at a record high, as you noted a moment ago, it seems like the consumer is being extremely value conscious about where they're spending, which brands are winning out or which retailers are winning out as that decision making process is being enacted.

Well, certainly WalMart, Um, and that is a company that tends to do very well in any economy, but certainly in any in one where they the consumer confidence is particularly low.

Um, you see even warehouse clubs doing well, and that's another element of this economy, which is it's almost it's K. It has a K type of recovery.

K shaped recovery, Um, in which there are the affluent consumers who are doing well.

And even though those consumers, like everybody, are looking for value, they tend to to to really gravitate toward those warehouse clubs.

Um, so warehouse clubs are doing pretty well in this economy.

You have a lot of eCommerce players like Amazon.

Some of the Chinese upstarts like TMU, that seem to be doing particularly well right now.

So those are some of the winners.

You would think the Dollar channel would be doing well in this kind of an economy.

And probably when you look at certain store profiles, they probably are, uh, but at the same time, the dollar channel is incredibly saturated.

There are more dollar stores in the United States than just about any format, and you also have a lot of the dated, dated stores that are part of that family dollar chain dollar tree.

Of course, acquired, that could be part of the reason that people are going to Wal Mart instead, Wal Mart has just spent a tonne of money renovating a lot of its stores, so it's just a more pleasant store environment that also delivers value.

That's really interesting, you know, especially as we're hearing about some of the spin off intentions that Dollar Tree is talking about with Family Dollar, which underneath of it the same store sales, I mean a fraction of what we had seen in terms of the rise year over year for this most recent quarter.

What do you make of that strategy?

Especially as they've already been closing many of the unprofitable or under performing family dollar stores and kind of pivoting dollar tree in in certain elements to getting back towards, um, these prime locations, where it is more focused around selling for a dollar and where they can ultimately kind of retain consumer mind share there?

Yeah, well, typically, um, stores sales are heavily dependent on whether or not, of course, people want to shop there and every few years, whether it's a decade, sometimes even longer.

Stores need to be renovated because if they are not, um, they get very tired.

They get dirty.

It's, um, there There will be things that literally haven't been touched in that period of time that need to be cleared.

And, uh, when a store does not make those changes or it's too expensive to make those changes, which it may not, because you have to remember.

Um, the Family dollar chain has been around since the sixties, so a lot of those locations may just not be great locations anymore.

Retail locations um cha the the success of retail locations changes geographic centres change as neighbourhood are developed.

Um, the uh, the dollar tree at the dollar tree brand is is much newer, and, um, they likely are seeing better comps as a result of just having some of those better locations.

So so certainly the renovation piece is a big part of it, and it sounds like they just don't want to invest right now in some of that renovation, and that's that's part of the reason that they're looking to divest.

But the question then is like, Well, where are you going to make make up the difference?

Well, they did purchase, um, about half of the 99 cent store chain with what's left of it there.

And that could be an interesting one, because 99 cents store is actually has a pretty cult following.

Um, it exists to support essentially food deserts in a lot of the southern California and, uh, South southwester part of the United States.

So, um, that could be some the ways that they they look to to have a a different strategy, situated just lastly, while we have you here, we got a company that's gonna be reporting earnings later on today in Lululemon.

That could be a barometer of to what extent high income is perhaps continuing to spend or middle income might be trading down into, uh, an Athleta, if you will.

Even what are you gonna be looking out for there?

Well, Lulu's been doing pretty well.

They've been growing double digits, so I'd be surprised if we didn't see similar numbers today.

They have been one of the retailers that's absolutely been gaining share.

While the apparel industry overall has struggled, Um and certainly even with with in comparison to other athletic apparel, um, merchants and brands like Nike, Adidas under Armour Lulu's definitely been outperforming them.

So, um, so so But if we do see anything soft, I do think that it suggests it could be a harbinger of, uh, consumer sentiment.

Finally, um, you know, kind of bringing down those inflation numbers probably finally, to the level that the Fed would like, um, in in the coming months.

Soita always a pleasure to get some of your insights and analysis.

Such Rita Kalli, who is the Forester research retail analyst.

Great to see you.

One of the hottest stocks in the market today, our shares of H PE.

After a much better than expected quarter and a pretty upbeat outlook, I made all things a I Let's get right to H PE CEO Antonio Neri Antonio always great to get some time.

You and boy, uh, we were sitting here three months ago.

This was a different story.

We're talking about some delayed orders.

Maybe things slowing down a little bit, But I didn't get that vibe.

Uh, on this quarter, What in the world happened here?

Well, Brian, uh, thanks for having me today.

Uh, actually, we have been a consistent story.

I think the market is finally waking up to the idea that HP has a big role to play in a I.

And I'm very pleased on the fact that we continue to execute the strategy and delivering the results.

We did like in Q two, where you see that we beat revenues and non gap earnings per share on the back of the, uh the, uh a I system revenue conversion, which more than doubled from Q one now exceeding $900 million for the quarter.

So HP is uniquely positioned to capture the A. I inflexion point that we see continue to drive the momentum hybrid cloud.

And obviously, the networking piece of this is super important as the market in that particular segment recovers.

But today is an A I story, no question.

And, uh, as we think about the market evolution, we continue to see very strong demand.

We continue to see that demand accelerating and what I'm really pleased about the demand is now that more than 15% of our cumulative orders now represent enterprise A I you've always been good in in sharing, uh, how much?

In terms of dollar value in orders of a I related, uh, products and services you have.

What's the number now?

Because you have been very consistent with us.

Every quarter we talk to you, Antonio.

That number has gone up pretty significantly.

Yeah, we execute two with a cumulative A I order book of $4.6 billion.

In that number, we converted more than $900 million in revenues.

But what is important to realise is that that revenue had solid gross margins operative margins.

And that's because we have been very prudent in managing our structure, being super disciplined about the deals we pursue where we see path to profitability, but most importantly, drive our portfolio of products and services without just focusing on the server itself.

And you can see in our disclosures, Brian, is that we start disclosing the services pull through, which is now getting bigger and bigger also because in many of these deals we actually not only ship the server but actually provide the full data centre infrastructure, and actually, we run those assists on behalf of customers.

Last time we talked to Antonio.

You really one of the first executives to bring up to me, at least in the in the tech space companies, having trouble implementing the A I stuff they are ordering because of of energy, they couldn't get enough energy into their various systems.

Where does that stand now?

We're still constrained, Brian.

We're still constrained.

And as I think about the future right, we're gonna be constrained.

It's not just the space.

Obviously, there is a lot of new build outs that we see in the market in the US and but also in other geographies.

I think the sovereign clouds will have incremental demands on that data centre capacity.

And obviously we need more clean energy, more sustainable energy as we go forward.

And as you think about this, uh, silicon accelerated computer that's coming next, As you saw in the road maps announced by NVIDIA, for example, they would require 100% directly with cooling.

That's a unique opportunity for H PE, because H PE is one of the only companies that can actually do all type of cooling air cool, which is the traditional way to do it today.

But that's not going to be sufficient when you exceed the 1000 watts per socket and the next generation is going to be close to 1700 watts.

Then you have what I call the hybrid, which is most of the companies do today.

There is a 70% liquid cool but also using funds to cool the environment.

NHP does both, but what HP is unique is the 100% direct liquid cooling.

And we have done this for many customers.

And in fact, through three of the largest system we have deployed for generative A. I are today 100% direct liquid cooling.

So it's a combination of space cooling and the technology used to cool this.

This cool down the systems with direct liquid cooling.

Yeah, it sounds like you got a lot of cool stuff working, Antonio.

Why?

Why were the margins down in your various segments and when did those start to improve?

Well, I think overall margins, uh, were now because of the mix of the business, right?

So obviously, as we know, the the networking market is going through a transition, and we have done a fantastic job over the last two years, adding $2 billion of revenue in our networking segment, which obviously comes with a different structural growth margin profile.

And as the market is going through, the, uh, what I call digestion of the inventories, by the way, we expect a modest demand improvement in networking as we go forward here, which is a positive news.

Obviously, that drives the entire company's margin.

But if you look at our server segment, we grew revenues 18% and we deliver 11% operating profit, which is in the ranges.

We guided the street between 11 and 13% so it's very, very positive, since you worked so closely with NVIDIA Jensen for a while.

I imagine how important is that company to the the A. I build out around the world because all we hear about Media Land is, uh, maybe there's an A I bubble.

Uh, they can't get off chips out.

We see a MD doing chips.

But just from an NVIDIA perspective, like how important are they?

I think they are changing the world with an amazing innovation, obviously, that the company and Jensen himself have been driving for more than two decades.

You know when you hear him talking about it, right?

It has taken him personally two decades to get where we are today.

I think we're all a little bit surprised about the advancement of generative A I from the algorithm perspective.

But from the silicon perspective, I'm no surprise at all.

And so I think, you know, together with a company like us, we will change the world for better in my mind.

And HP has unique value to bring to the table through our expertise of decades.

You know, deploying a I, a scale to our services organisation to the ability to build this system.

Brian So HP today is one of the largest companies that has the water cool, uh, infrastructure to build the system.

It's not just cooling the systems, but to build the systems.

You need a lot of water capacity and power to build it.

NHP has one of the largest footprint, so Jensen understands that, but ultimately we engineer solutions in a way that is easy to deploy.

This is going to come down to the experience, not just the system performance and the sustainability of the systems and the return on investor capital.

But it's going to be that experience and enterprises need a simplified experience to deploy this amazing technology, which is going to change the world forever.

Pretty amazing.

Time to Be in Tech Well, good session for shares of HP After a better than expected quarter and relatively upbeat Alec Antonio N, we'll talk to you soon.

Thank you, Brian Company name that were watching in the consumer space Campbell Soup that company shares, after reporting third quarter net sales grew over 6% from a year ago, are moving to the downside here.

The company is nearly 15% jump in food and beverage sales, offsetting it's 2% decline in snacks now.

Interesting to see the meal and beverage sales coming in above estimates at 1.2 billion.

That is above the estimate of 1.2 billion snack sales, though, as I mentioned coming in a full percentage point down, the estimate was that they would be nearly a full percentage point up.

So that is clearly a big miss here and interesting to see that given that again, this is a name that you do is kind of the opposite story of a dollar tree because sometimes you expect Campbells to do well when people are switching that they like a soup, for example, in tough economic times.

But maybe cutting back on snacks, transitioning over to meals.

Yeah, pantry staple here, a good Camden, New Jersey, company shout out to East Philadelphia.

Everybody, the real ones now but all the end.

At the end of the day, it really does come back to what they're looking at and some of the sequential volume improvement that they're trying to deliver here, plus organic net sales.

And that's what the company's president and CEO Klaus, who's a good friend of Yahoo Finance as well talked about in this most recent, uh, quarter here also gotta remember that they just finally were able to integrate sass SOS brands.

I'm still gonna forever have questions about the pronunciation of that, but they're also already saying that that's bringing some of the incremental growth as they continue to navigate the pace of consumer recovery.

As you were mentioning a moment ago here, let's get to another report, though, and that is from crowd strike that stock down a little more than 1% or just for share in the first quarter, beating estimates, revenue also of $921 million.

Also a beating estimates here.

And it looks like the company second quarter forecast for both earnings and the revenue is well above what analysts had been anticipating.

It's also raising its forecast for full year earnings per share and full year revenue.

But the stock is down.

Yeah, I you know, expectations were high, you know, heading into this one, Julie and the stock was up, like, more than 20% year to date.

Um, and it it I think for this sector, we've we Listen, we've talked a lot about the names in this sector as a reported earnings.

It has been kind of choppy, right?

Choppy environment if you're bullish.

And there are a lot of bulls on this name by the ring, I mean, it's like NVIDIA like love for crowd strike.

I mean, more than 90% of analysts have a buy ring.

Um, I think it's because you must.

You're betting.

Listen, the the company can kind of execute through that choppiness on the call.

You can have a lot of questions about new products and obviously for CO. George Kurtz, you know, lots of questions about pricing.

Competition shares kind of dip in here, at least in the Yeah.

I mean, as you said, they've done well into this report, but not crazy.

Well, I mean, they're up about 20% a year to date.

Kurtz, by the way, in this statement here talked about the company's momentum and strength.

Um, going into this quarter, he talked about the competitive moat that the company has from its falcon platform, Um, and the customer that they're seeing demand from customers of all size here.

So, you know, unclear where there is any disappointment, if any.

The company also is talking about record free cash flow of $322 million.

That revenue number, by the way, for the quarter up 33% year over year.

And so you just moved the stock.

You flipped it into the green that I did it.

Julie Hyman.

There you go.

And body work shares are sinking this morning after its second quarter sales forecast coming in below expectations now expecting a decline of 2% to flat moving forward now, the company did slightly boost the bottom end of its earnings guidance for the full year.

But we all know we're always looking for that top line number for these companies, and they did not deliver on that top line number.

That is why we're seeing Bath and Body works down over seven.

And in the pre market trade here, they again have better than expected results across the board.

But their Q one outlook was spooky for investors, and we're seeing shares down off of that.

Their net sales were also down.

We're seeing nearly 8000 call options on this name ahead of the market.

Open bread.

Yeah, it kind of stinks honestly.

And and here's why.

You look at the broader environment from the amount of people that are spending in little luxuries right now.

That scented candle little luxury that added, you know, hair wash or any of the kind of body gels that you might be using a little luxury that people are tapping into.

You're hearing success in parts of other businesses, and bath and body works is signalling, and it's outlook that it's gonna be weaker than expected.

That's not good for shareholders who are trying to evaluate OK, if a consumer spending into this, that means that they're trading away from your brand right now, especially if other companies are saying something that is counter to the guidance that you're putting out as of this time.

So all of that in mind, uh, putting a little bit of a number on this?

They said it was a strong start to the year please, though, to narrow their full year guidance range while raising the midpoint for the top and bottom line.

So it's gonna be interesting to see how they meet that end, where, ultimately some of the consumer sentiment shifts towards when you're spending into, uh, the little luxuries of everything from body scrubs, facial oils and I. I don't know whatever makes people self care Saturday come to life.

Well, it's a great point, and I know you talk about this a lot on your show wealth as well, right?

It's this idea that consumers are starting to struggle, particularly on the low end and a bath and body works is a more economic brand.

So it's not really that surprising when you see this stock struggling a little bit today.

Z Scaler, reporting a strong third quarter on the top and bottom lines last week, the company also boosted its fiscal year guidance against the backdrop of more cautious guidance from peers in the cyber security sector.

For more we're now bringing in Z scaler.

CEO Jay Choudhry.

Jay, it is good to have you on the show.

And you know, Jay, this is the first time we've had a chance to talk to you since you reported results.

Jay, you reported you beat the stock jumped.

Maybe.

Start that there, Jay.

Walk us through what drove the quarter.

So cyber is the number one concern for CIO C, SOS and boats.

But they also have to worry about cost savings.

Uh, market is tight.

There's a lot of deal scrutiny.

C skier is a unique provider where we provide the best cyber security with zero trust architecture.

But we also reduce cost because we eliminate a bunch of legacy security point products, firewalls, VPN, S and more.

So that's why we're able to close business.

Uh, by doing both at the same time.

Hey, Jay, it's Julie here.

It's good to see you.

Um, you guys recently reported a cyber breach, I believe.

What can you tell us about that?

And did that have any kind of effect in the quarter or or in the present quarter.

So there's no breach per SE.

There's a claim breach, so to speak.

The social media can do all kinds of stuff.

Yes, we we did have, uh, an engineer trying to play with a new server in a Q environment.

Single machine that was out there discovered that was being set up.

So there's a lot of basis for it.

There's none to it.

We're very transparent with customers.

We kept in communication, but it had no impact.

Rather, customers came and said, Wow, you guys had great transparent communication.

We love it, Jay, when we have you, it's always worth getting your kind of broader take on the threat landscape, Jay.

I mean, a lot of threats, rogue states, bad actors, criminal gangs.

What are you seeing out there, Jay?

They the two main areas.

One.

The people who want to make money quick, so ran somewhere on the rise.

And then there are nation states trying to steal secrets.

Those are the two big buckets, and they are leveraging by getting on the network of the company.

Moving laterally find high value assets and going after that.

So zero trust architecture is being clearly looked at as the primary solution for it.

The reason zero zalar growth is happening is because companies are embracing zero trust architecture that we pioneered.

You talked about China just now.

The big threat from China is that all large companies who are present in China, they have a network coming from China all the way to the US or Europe.

Bad guys can get on the network in China, travel and try to infect stuff out there.

We allow you not to have a network connected to China or other countries and still have secure communication.

Those are the type of things enterprises and fed government organisations need to do to secure themselves.

And Jay, of course, Um, this is an election year not only in the US.

We just had an election in Mexico.

We just had an election in India, and I know that when you're talking about breaches or insecure communications, that's a very different issue than misinformation and disinformation.

But I'm just curious what you are seeing if anything sort of linked to geopolitics around the globe.

So we do track it though it's not our primary focus.

We are seeing uptake of this information.

Uh uh.

We have a research team that actually tries to figure out what content is generated by Gen. A. I and what what content is created by people.

It's fascinating to see you can actually tell the difference.

And we're seeing a lot more content that's being put out Put out there that Gen A. I is creating.

So all of us have to need need to worry about it.

Jay, I wanna talk to you on on competition real quickly and specifically Microsoft, uh, moving into your world.

You know, I. I was checking with an analyst, Jay, who covers, uh, the company.

And he was saying, Listen, that that is, in his opinion, creating some noise in the market and on the street.

Um, what are you seeing, Jay?

Well, large companies like Microsoft, they want to expand in all areas, right?

So I'm not surprised that they're trying to expand in our area.

They have had overlapping products for a while.

Microsoft windows has VPN built in for a long, long time.

But when I talk to large enterprises, they asked for two things.

Number one, they said.

I want a security provider like a Switzerland who can equally support my security to access office 365 azure AWS, GCP and scores of SAS applications.

We are in a better position to do that than an application provider like Microsoft number two with all the issue you're seeing out there with midnight blizzard.

I'm sure you saw the report that came from federal government about some of those issues.

More and more customers want application provider to be different from security provider separation of applications and security is a better thing.

You don't want a fox was the henhouse Jay.

We always appreciate you coming on the show.

Thank you.

Josh and Julie, Thank you for the opportunity.

Hope to talk to you again.

There was another strong quarter for Costco.

Same store sales increased the most in five quarters as consumers continue to look for value in groceries, and the retailer also said more members are purchasing more discretionary at a time where inflation remains sticky.

For a deeper dive into the Costco results.

We're joined Oliver Chen TD Cowan, senior research analyst, here.

All right, is that Is that a Kirkland.

Uh, wait a minute.

That is a Costco sweater crew neck sweater.

My goodness.

OK, man dresses the part.

Stays with the time here, Oliver.

I mean, just take us into your thesis here.

Brad, we're really excited about the results at Costco.

Costco is a really unique company.

As you know, that focuses on value.

It's one of our big ideas.

They'll be at our conference next week.

But what's really happening is continued graphic momentum, which is quite positive.

Renewal rates at 93% which is quite high, and customers are looking for value.

This is Costco's core competency.

The Kirkland brand is also famous for offering outstanding value across the portfolio.

That's about 30% of the business.

So overall, um, we we are impressed with these strong results.

And, as you know, the consumer is facing many cross currents.

You mentioned in your comments that Costco is seeing some benefits from non-food product.

That's a huge positive, too, because we're not yet seeing that at other retailers such as target.

So as inflation starts to cool a bit, uh, Costco is an early sign of this, and this company is benefiting a new CFO as well.

Oliver, When it comes to, I'm curious to your take on the stock reaction here, with it being off 2% it looks like a strong quarter.

Is that just reflective of current valuation?

The fact that we close at an all time high heading into this print?

Yes, that's true.

The PE multiples at 45 times the three year average, is closer to 35 and Walmart's at 22 times.

So as we think about Costco's valuation, it's expensive.

But in our opinion, it's worth it.

It's a different kind of retailer and that it's a membership model and about half of the profitability is membership.

So that's very sticky and recurring.

And also this is one of the few retailers that's a US retailer that's very global.

Unit growth in Asia and China is also impressive.

So, Oliver, what do you think that upside, then looks like shirts are already up over 20% since the start of the year?

Yeah, we're excited about this because it's a defensive name in terms of the food exposure and this real core competency for value.

But there's also a technology angle here, too, in terms of Costco's personalization, their mobile app, their partnerships with Instacart and uber and the marketplace model as well as digital advertising.

So a lot can be ahead, and Costco has a very loyal, engaged customer.

Also, you can't get any prices lower than what you can get at Costco, given that the business model is set around 11% markups, and it's very strict.

So you're getting the best deal possible on this sweatshirt as well as this jewellery and the food.

And it's also a treasure hunt.

Um, the future of retail is about these in-store treasure hunts, and that's what you really need to captivate customers to get in store as well.

Wait, The chains are from Costco to Oliver.

Yeah, they are a top jewellery seller.

They're actually one of the top diamond sellers.

So you know, this company really surprises and delights.

And when you go into a Costco, as you know, you find things you never knew you needed or wanted.

And that's part of the magic of Costco.

I think we're witnessing Pete Oliver trend right now.

Oliver, I think you're in your zone.

You're in your element.

You feel you look comfortable.

You look good.

At the end of the day, you think about where Costco sits among the broader universe that you cover right now.

How do you look at them versus some of the competition?

Yeah, What we see is bifurcation.

So Brad Costco's household income on our survey data is much higher than Walmart or Target or Sam's Club.

Um, that's a big benefit.

And as you know, I do cover a wide range of stocks.

But we like very, uh, strong luxury stocks, Uh, such as LV MH.

And then we look for value stocks such as Walmart, which is offering a very exceptional value to customers.

Costco is a offering exceptional value to customers, but it also has a higher household income customer.

And there's a technology personalization opportunity, too.

So it fits a lot of boxes in terms of our themes.

Um, the bottom line is that we are in this consumer environment that's somewhat bumpy and cautious, and inflation is still bothering consumers.

So everybody's looking for low prices, and Costco squarely fits in here as well as this merchandise execution, which is really to to what Costco does.

The other point is, Costco only has about 3500 items.

Walmart has 200,000 plus.

So Costco can be very agile and how they manage these items and also deliver a lot of expertise and precision in terms of a great item at a great price, such as this chain, such as a sweater such as a lot of the liquor.

It's great.

All right, Oliver Chen, you sold us.

TD.

Cowan, senior research analyst.

Thanks so much for joining us here again.

Costco shares Sea Quarter, but the stock under a bit of pressure here, off just about 2% in early trading.

Let's take a look at Dell.

Those shares they're actually plunging after its gross margins fell 2.5% during the first quarter.

A surging demand for its A I servers took a toll.

Dell shares, though still up over 100 and 20% so far this year.

So, yes, the massive decline that we're seeing at the Open that clearly is catching investors' attention it off just around 18%.

But you gotta remember that this is a stock that has been off to the races since the start of the year and taking a look inside this quarter.

Some of the concerns, obviously very lofty expectations.

You can see by the results or by the reaction that we're getting here in the street.

They weren't satisfied here with these numbers.

When it comes to what exactly we heard here, sales did increase 6.3% to 22.2 billion here for the quarter.

When you take a look at profit excluding items, that was a dollar 27 to share, compared to the average projection of just around a dollar 23.

But again, we're looking at losses here at the open, with shares off just about 17%.

Yeah, some hit on operating income.

That was down by about 14% during the quarter.

Uh, no doubt they were paying close attention to that.

Investors paying close attention to that.

And then I was looking at one other element of the business here.

Uh, where was the operating income within ISG Infrastructure Solutions group here.

And so, uh, kind of, uh, a larger question mark of within the continued expansion or kind of focusing in on a I optimising, uh, a I optimisation here across their business units and their segments where companies like Dell, like some of the others over the course of this earning season, have said that they need to spend more in order to continue to make more or capitalise more on a run rate that they are forecasting at this juncture.

So, um, hopefully some continued updates on that front and by Donna saying, I think summarising it pretty well here.

Results weren't bad, but expectations were very high in these numbers.

Just simply were not strong enough to stop a further near term or strong enough to spur further near term upside, and as a result, you're seeing the shares off just about 17%.