Beta Finch - S&P 100 - EN

More earnings analysis: https://betafinch.com
Groups: MAG7 (https://betafinch.com/groups/MAG7), AI_LEADERS (https://betafinch.com/groups/AI_LEADERS)
──────────
MSFT Q4 FY26 script.

ALEX: Welcome to Beta Finch, your AI-powered earnings breakdown. I'm Alex.

JORDAN: And I'm Jordan. Today we're digging into Microsoft's fiscal fourth quarter and full-year FY2026 numbers.

ALEX: Before we get into it — this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

JORDAN: Solid disclaimer out of the way, let's talk numbers, because this was a genuinely strong quarter for Microsoft.

ALEX: Big picture first: full fiscal year revenue crossed $331 billion, up 18%, and that growth actually accelerated through the year. Microsoft Cloud alone did over $214 billion, up 27%, and Azure crossed the $100 billion mark, up 41% for the year.

JORDAN: And for the quarter itself, revenue was $90 billion, up 18%. EPS came in at $4.74, up 23% when you adjust for the OpenAI investment impact. There were some one-time items too — a $3.2 billion gain from their Anthropic investment, some savings from a voluntary retirement program, offset partly by Xbox severance and impairment charges.

ALEX: Azure was really the headline. Growth hit 43% this quarter, and CFO Amy Hood said they expect it to accelerate into the mid-40s next quarter. That's remarkable for a business already this large.

JORDAN: Right, and what stood out to me is *why* it accelerated — it wasn't just demand, which is still outstripping supply, by the way. It was efficiency. They shaved dock-to-live time for new GPUs by nearly 50% over the year, and any capacity they free up gets monetized almost immediately because demand is so far ahead of supply.

ALEX: That supply-demand gap is clearly the story of this whole AI infrastructure buildout. They added 31 new data centers this quarter alone, 88 for the year, and they're on track to roughly double total capacity in just two years.

JORDAN: Which explains the capex number — $41 billion this quarter, and guidance for next fiscal year points to over $175 billion, partly due to an accounting change where more data center leases shift from finance leases to operating leases. That's not new spending, just a reclassification, but it's worth knowing so you don't misread the capex jump.

ALEX: Let's talk Copilot, because the seat growth was eye-catching — over 30 million paid Microsoft 365 Copilot seats, and net seat adds more than doubled quarter over quarter.

JORDAN: What I found more interesting than the seat count was the usage data. Conversations per user nearly doubled year-over-year, and time from deployment to high usage across a customer's workforce dropped from months to just days. Satya Nadella also mentioned the number of customers with 50,000-plus seats grew over 7x year-over-year. NHS England alone is rolling Copilot out to over 500,000 clinicians and staff.

ALEX: And they're clearly trying to move the business model beyond simple per-seat pricing. The new E7 suite bundles Copilot, E5, Entra, and Agent 365 together, and they're layering in usage-based billing on top of seats — same playbook they used with GitHub Copilot, where consumption revenue jumped after a June pricing change and Copilot revenue accelerated over 60% quarter-over-quarter.

JORDAN: That model-choice strategy came up a lot in the Q&A too. An analyst asked Satya directly about open and custom models potentially cutting into Microsoft's own frontier-model partnerships, like OpenAI.

ALEX: And his answer was essentially: enterprises want to control their own "learning machine" — keep the harness, memory, and context separate from any single model so they're never locked in. Microsoft's building itself as the neutral platform where that choice happens, whether it's OpenAI, Anthr

This episode includes AI-generated content.

More earnings analysis: https://betafinch.com
Groups: MAG7 (https://betafinch.com/groups/MAG7), AI_LEADERS (https://betafinch.com/groups/AI_LEADERS)
──────────
ALEX: Welcome to Beta Finch, your AI-powered earnings breakdown! I'm Alex, and joining me as always is Jordan. Today we're diving into Microsoft's absolutely explosive Q3 2026 earnings report that just dropped. Jordan, before we get started, I need to remind our listeners that this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

JORDAN: Thanks Alex, and wow - where do we even begin with these Microsoft numbers? They just reported record results across the board. Revenue hit $82.9 billion, up 18% year-over-year, and earnings per share came in at $4.27. But the real headline here is their AI business - it's now at a $37 billion annual run rate, growing 123% year-over-year!

ALEX: That AI growth rate is just staggering. But let's put this in perspective - Microsoft Cloud overall generated $54 billion in revenue, up 29%. So AI is becoming a massive piece of their puzzle. What really caught my attention was Satya Nadella talking about how we're at the beginning of "one of the most consequential platform shifts" as agents become the dominant workload.

JORDAN: Absolutely, and you can see this playing out in their Copilot numbers. Microsoft 365 Copilot now has over 20 million paid seats - that's 250% growth year-over-year. Even more impressive, they're seeing weekly engagement levels that match Outlook. Think about that - people are using Copilot as much as they use email!

ALEX: That's a great point about user engagement. And they shared some fascinating customer wins - Accenture alone has over 740,000 seats, which is their largest Copilot deal to date. Companies like Bayer, Johnson & Johnson, and Mercedes are all committing to 90,000+ seats. But Jordan, what I found really interesting was this shift in business model that Amy Hood kept emphasizing.

JORDAN: Yes! The transition from traditional per-seat pricing to what they're calling "seats plus consumption." It's happening across their portfolio - from productivity to coding to security. GitHub Copilot actually announced they're moving to usage-based pricing starting June 1st. This is huge because it means as customers use these AI tools more intensively, Microsoft's revenue can scale accordingly.

ALEX: And they're seeing that intensity increase dramatically. Copilot queries per user were up nearly 20% just quarter-over-quarter. Usage of their first-party agents is up 6x year-to-date. Amy Hood mentioned that in customer service, nearly 60% of their customers are already purchasing usage-based credits.

JORDAN: The infrastructure side of this story is equally compelling. They added another gigawatt of capacity this quarter and are on track to double their overall footprint in two years. But here's the kicker - they're still capacity constrained and expect to remain so through at least 2026. That's both a challenge and an opportunity.

ALEX: Speaking of infrastructure, their CapEx guidance is eye-popping. They're expecting over $40 billion in Q4 alone, and for calendar 2026, they're projecting roughly $190 billion in capital expenditures. That includes about $25 billion from higher component pricing. When an analyst asked about investor concerns over CapEx growing faster than revenue, Amy Hood made a compelling case.

JORDAN: Right, she pointed to their $627 billion in remaining performance obligations - that's contracted revenue they still need to deliver. With demand consistently exceeding supply and usage intensity growing, they feel confident about the ROI on these investments. Satya added that they want to be ready when model capabilities hit those exponential moments - like when agent mode in Excel suddenly "started wor

This episode includes AI-generated content.

More earnings analysis: https://betafinch.com
Groups: MAG7 (https://betafinch.com/groups/MAG7), AI_LEADERS (https://betafinch.com/groups/AI_LEADERS)
──────────
**Beta Finch Podcast Script: Microsoft Q2 2026 Earnings**

---

**ALEX**: Welcome back to Beta Finch, your AI-powered earnings breakdown where we cut through the noise to bring you what really matters from the latest quarterly reports. I'm Alex.

**JORDAN**: And I'm Jordan. Today we're diving into Microsoft's Q2 2026 results, and wow - what a quarter this was.

**ALEX**: Before we jump in, I need to mention that this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

**JORDAN**: Absolutely. Now Alex, let's talk numbers because Microsoft just delivered some seriously impressive results.

**ALEX**: They really did, Jordan. Revenue hit $81.3 billion, up 17% year-over-year. But here's the kicker - earnings per share came in at $4.14, which is a 24% jump when you adjust for their OpenAI investment impact. Those are the kind of numbers that make investors sit up and pay attention.

**JORDAN**: What caught my eye was Microsoft Cloud crossing that $50 billion milestone for the first time - $51.5 billion to be exact, growing 26%. That's just massive scale we're talking about here. But Alex, there's an interesting paradox happening in the market reaction.

**ALEX**: Right, the stock actually dropped in after-hours trading despite these strong results. Why do you think that happened?

**JORDAN**: It comes down to two main concerns investors have. First, CapEx hit $37.5 billion this quarter - that's enormous spending on infrastructure, mostly GPUs and CPUs. Second, while Azure grew 39%, some investors were expecting even more aggressive growth given all that capital investment.

**ALEX**: That's a great point. Let me break down what Microsoft is doing with all that CapEx spending, because CEO Satya Nadella and CFO Amy Hood had some fascinating explanations during the Q&A.

**JORDAN**: Yeah, Amy Hood was really transparent about this. She said if they had allocated all their new GPUs just to Azure customers, Azure growth would have been over 40%. But they're deliberately spreading that capacity across their entire AI ecosystem.

**ALEX**: Exactly. They're using those GPUs to power Microsoft 365 Copilot, GitHub Copilot, Security Copilot, and their R&D efforts. It's not just about maximizing Azure - they're building what Nadella called the "best lifetime value portfolio."

**JORDAN**: And speaking of Copilot, the adoption numbers are incredible. Microsoft 365 Copilot now has 15 million paid seats - that's up 160% year-over-year. Daily active users increased 10x, and the average conversations per user doubled.

**ALEX**: Those usage metrics tell a compelling story about AI actually becoming sticky with enterprise customers. It's one thing to sell seats, but when you see usage intensity growing like that, it suggests real business value.

**JORDAN**: Absolutely. And let's talk about their custom silicon efforts because this was a standout moment. They launched their Maya 200 accelerator chip, which Nadella claims delivers 30% better total cost of ownership compared to their current hardware fleet.

**ALEX**: That's Microsoft's play to reduce their dependence on NVIDIA while optimizing for their specific AI workloads. They're running everything from OpenAI inferencing to their own Copilot services on these chips.

**JORDAN**: The strategic implications are huge. If Microsoft can develop superior custom chips for AI inferencing, that's a massive competitive moat. They're essentially vertically integrating their AI infrastructure stack.

**ALEX**: Now, one thing that raised some eyebrows was Microsoft's commercial remaining performance obligation - essentially their backlog of contracted reven

This episode includes AI-generated content.

More earnings analysis: https://betafinch.com
Groups: PHARMA (https://betafinch.com/groups/PHARMA)
──────────
Welcome to Beta Finch, your AI-powered earnings breakdown for the news that's moving your portfolio.

ALEX: Hey everyone, welcome back to Beta Finch! I'm Alex, here with Jordan as always, and today we're digging into Merck's second quarter 2026 numbers. Before we get into it — quick disclaimer. This podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

JORDAN: Good disclaimer to lead with, because there's a lot to unpack here — this was a noisy quarter on paper but honestly a pretty exciting one underneath the hood.

ALEX: Right, let's start with the headline numbers. Merck posted revenue of $16.6 billion, up 5%, or 4% if you strip out currency effects. Oncology and animal health carried a lot of that weight, plus growing contributions from newer launches.

JORDAN: But here's where it gets interesting — on the bottom line, Merck actually reported a loss of $0.13 per share. That sounds alarming until you realize it's almost entirely a one-time accounting quirk.

ALEX: Exactly. They completed the acquisition of Terns Pharmaceuticals this quarter, picking up a promising CML — chronic myeloid leukemia — drug candidate. That came with a $5.7 billion charge, and because it wasn't tax-deductible, their tax rate for the quarter ballooned to over 160%.

JORDAN: Which tanked EPS by $2.31 a share. Take that out, and the underlying business is actually performing quite well. It's a classic case of "read past the GAAP headline number."

ALEX: They also raised and narrowed full-year guidance — now expecting revenue between $66.3 and $67.3 billion, 2-4% growth, and full-year EPS of $2.66 to $2.76.

JORDAN: Let's talk product performance, because this is really a story of "old reliable" versus "new and exciting." KEYTRUDA, the flagship cancer immunotherapy, grew 4% to $8.4 billion — still the workhorse, but management flagged that U.S. growth is moderating as it approaches peak penetration in a lot of indications.

ALEX: Meanwhile the newer stuff is popping. WINREVAIR, their pulmonary hypertension drug, was up 75% to $588 million. WELIREG jumped 67%. CAPVAXIVE, their pneumococcal vaccine, up 40%.

JORDAN: Those growth rates matter a lot for the bigger narrative here, which is what happens when KEYTRUDA eventually loses patent exclusivity around the end of the decade. CEO Rob Davis addressed this directly in the Q&A — he called it "more of a hill than a cliff," with a shallow dip and a fast return to growth, backed by more than $70 billion in commercial opportunity from over 20 new products.

ALEX: And a big one this quarter was LIPFENDRA — the first oral PCSK9 inhibitor approved by the FDA, for lowering LDL cholesterol. It got fast-tracked through a national priority voucher process.

JORDAN: This is a big deal because current injectable PCSK9 drugs only reach about 5% of the eligible market — mostly because doctors and patients don't love needles for a chronic condition. An oral pill could meaningfully expand that market. Davis was clear they're not trying to steal share from injectables, they're trying to grow the whole pie — 30 million Americans are on lipid therapy but not hitting their LDL targets.

ALEX: There's also real pipeline momentum beyond LIPFENDRA. Sac-TMT, their Trop-2 antibody-drug conjugate for cancer, put up positive Phase III results in endometrial cancer — ahead of schedule. Same with tulisokibart, their ulcerative colitis drug, which hit positive Phase III results faster than expected too.

JORDAN: Dr. Dean Li, their research chief, made a point of saying their confidence is actually higher now than it was back in January, because so many of these pipeline bets are reading out early and positive. That's not something yo

This episode includes AI-generated content.

More earnings analysis: https://betafinch.com
Groups: PHARMA (https://betafinch.com/groups/PHARMA)
──────────
# Beta Finch Podcast Script: Merck Q1 2026 Earnings

**ALEX:** Welcome to Beta Finch, your AI-powered earnings breakdown. I'm Alex, and joining me as always is Jordan. Today we're diving into Merck's Q1 2026 results, and wow - there's a lot to unpack here.

**JORDAN:** That's right, Alex. And before we jump in, I need to share our standard disclaimer. This podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

**ALEX:** Thanks, Jordan. Now, let's talk about the headline numbers. Merck reported revenue of $16.3 billion for Q1, which represents 5% growth year-over-year, or 3% excluding foreign exchange impacts. But here's the kicker - they actually posted a loss of $1.28 per share.

**JORDAN:** Right, and that loss is entirely due to a massive one-time charge. Merck took a $9 billion hit related to their acquisition of Cidara Therapeutics. Without that charge, they would have been profitable. In fact, they raised their full-year guidance, which tells you management feels pretty good about the underlying business.

**ALEX:** Exactly. They bumped up their revenue guidance to between $65.8 billion and $67 billion for the full year, and raised their EPS guidance to $5.04 to $5.16. But Jordan, let's talk about what's really driving this growth - because it's not just KEYTRUDA anymore.

**JORDAN:** That's the big story here, Alex. Yes, KEYTRUDA sales were still strong at $8 billion, up 8%, but what caught my attention was how diversified their growth drivers are becoming. WINREVAIR, their pulmonary arterial hypertension drug, hit $525 million in sales. That's a relatively new product showing real traction.

**ALEX:** And then there's WELIREG, their oral HIF-2-alpha inhibitor, which saw 43% growth to $199 million. Management highlighted they have over 20 new products launching with what they called "blockbuster potential." CEO Rob Davis mentioned a potential commercial opportunity of over $70 billion by the mid-2030s from these new growth drivers alone.

**JORDAN:** Those are big numbers, Alex. But let's talk about some challenges too. GARDASIL sales dropped 22% to $1.1 billion, mainly due to lower demand in China and Japan. And their new RSV prevention drug ENFLONSIA had minimal sales in Q1, though that was expected due to seasonality.

**ALEX:** True, but management seemed confident about the RSV product ramping up in the second half of the year. What really stood out to me from the call was their focus on AI and partnerships. They announced a multi-year deal with Google Cloud for AI capabilities, plus expanded collaborations with Tempus AI and the Mayo Clinic.

**JORDAN:** That's a smart move, especially in drug development where AI could potentially accelerate research timelines. Speaking of their pipeline, they had some interesting updates. The FDA approved their HIV drug IDVYNSO, and they're expecting several priority reviews in the coming months for cancer treatments.

**ALEX:** The pipeline discussion was fascinating. Dr. Dean Li, their research chief, mentioned they have 17 Phase III studies ongoing for their antibody-drug conjugate sac-TMT, with 13 of those in "first mover" indications. That could be huge if those trials are successful.

**JORDAN:** And let's not forget the Terns Pharmaceutical acquisition they're working on. They're paying about $5.8 billion for TERN-701, a chronic myeloid leukemia drug candidate. Management thinks it has "multibillion-dollar commercial potential."

**ALEX:** During the Q&A, analysts were clearly focused on the pipeline readouts coming this year. There was a lot of discussion about their ophthalmology programs and cancer combination therapies. One thing that struck me was how confident manag

This episode includes AI-generated content.

More earnings analysis: https://betafinch.com
Groups: PHARMA (https://betafinch.com/groups/PHARMA)
──────────
**BETA FINCH PODCAST SCRIPT - MERCK Q4 2025 EARNINGS**

---

**ALEX:** Welcome to Beta Finch, your AI-powered earnings breakdown where we cut through the noise to bring you what really matters from corporate America's quarterly reports. I'm Alex.

**JORDAN:** And I'm Jordan. Today we're diving into Merck's Q4 2025 earnings - and folks, this one's got some really interesting moving parts.

**ALEX:** Before we jump in, I need to mention that this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

**JORDAN:** Absolutely. Now Alex, let's start with the headline numbers because Merck delivered some solid, if not spectacular, results.

**ALEX:** Right, so Q4 revenue came in at $16.4 billion - that's 5% growth year-over-year, or 4% if you strip out foreign exchange impacts. But what's really interesting here is the story behind these numbers.

**JORDAN:** Exactly. Keytruda, their blockbuster cancer drug, continues to be the workhorse with $8.4 billion in sales, up 5%. But here's what caught my attention - CEO Rob Davis mentioned they now see a path to over $70 billion in potential commercial opportunity by the mid-2030s. That's $20 billion more than just a year ago!

**ALEX:** That's a massive increase in their pipeline projections. And Jordan, this gets to the heart of what investors are really worried about with Merck - what happens when Keytruda loses patent protection?

**JORDAN:** Bingo. The so-called "patent cliff." But here's where it gets interesting - Davis dropped some news about potentially extending Keytruda's protection. They have additional patents that could push the loss of exclusivity from December 2028 out to May or even November 2029.

**ALEX:** That's huge if it holds up. An extra year of Keytruda exclusivity could be worth billions. But let's talk about some of the challenges they're facing. Gardasil, their HPV vaccine, saw sales drop 35% to $1 billion, largely due to lower demand in China and Japan.

**JORDAN:** Yeah, that's a significant headwind. And looking at their 2026 guidance, they're projecting pretty modest growth - just 1% to 3% revenue growth to between $65.5 and $67 billion. That includes dealing with about $2.5 billion in headwinds from generic competition and pricing pressures.

**ALEX:** Speaking of 2026, there's this massive one-time charge of about $9 billion related to their acquisition of Sidera Therapeutics. This deal is all about MK1406, a potentially first-in-class flu prevention drug.

**JORDAN:** This acquisition really stood out to me. Management thinks MK1406 has greater than $5 billion in revenue potential. It's designed as a long-acting antiviral that could prevent influenza in high-risk individuals - basically a once-per-season shot instead of the traditional annual flu vaccine approach.

**ALEX:** The timing is interesting too, given we're in the middle of what seems to be a pretty severe flu season. Dr. Dean Li, their R&D chief, mentioned they've completed enrollment in the Northern Hemisphere for their Phase 3 trial and are now enrolling patients in the Southern Hemisphere.

**JORDAN:** Let's pivot to some of their other growth drivers. Winrevair, their pulmonary arterial hypertension drug, continues to impress with $467 million in global sales. They had over 1,500 new patients start treatment in the U.S. alone this quarter.

**ALEX:** And they just launched Ohtuvayre for COPD after acquiring Verona Pharma. That brought in $178 million in just part of the quarter. These respiratory drugs are clearly becoming a key growth pillar for Merck post-Keytruda.

**JORDAN:** What I found fascinating in the Q&A was the discussion around their HIV programs. They have this two-drug combina

This episode includes AI-generated content.

More earnings analysis: https://betafinch.com
Groups: INCOME (https://betafinch.com/groups/INCOME)
──────────
ALEX: Welcome to Beta Finch, your AI-powered earnings breakdown! Today we're diving into Altria Group's second quarter 2026 results. I'm Alex, joined as always by Jordan. And before we get into it — this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

JORDAN: Good to be here, Alex. And there's actually a lot to unpack this quarter — Altria raised guidance, but the story underneath it is more nuanced than the headline suggests.

ALEX: Let's start with the numbers. Adjusted diluted EPS came in at $1.48 for the quarter, up 2.8%. For the first half of the year, that's $2.80, up a healthier 4.9%. And on the back of that first-half strength, Altria narrowed — and actually raised the low end of — full-year guidance to a range of $5.61 to $5.72, which works out to 3.5% to 5.5% growth off last year's base.

JORDAN: Right, but here's the interesting wrinkle — one analyst on the call pointed out that even with that raised low end, it's still below what they delivered in the first half. So the second-half math implies things moderate a bit. CEO Sal Mancuso's answer basically boiled down to: the consumer is still under pressure — elevated gas prices, inflation — and they're stepping up investment behind new launches, so don't expect the same pace of growth to just continue in a straight line.

ALEX: That's a good instinct as a listener — when a company raises guidance but the low end still trails first-half performance, it's worth asking why. In this case it sounds like a mix of planned investment spend and just conservative phasing.

JORDAN: Exactly. Now let's talk about where the real growth engine is: smokeable products. That segment's adjusted operating income grew 4.2% in the first half, with margins expanding to nearly 65%. Cigarette volume declines are actually moderating — down about 5% industry-wide when you adjust for inventory, and that's the fourth straight quarter of that decline rate improving.

ALEX: Why is that happening? Management pointed to something pretty specific — fewer smokers switching over to illicit flavored disposable vapes, largely because of stepped-up enforcement. Federal seizures topped $250 million this quarter alone, plus a Minnesota AG lawsuit against a major illicit vape manufacturer.

JORDAN: Which is a fascinating dynamic — Altria's traditional cigarette business is getting a tailwind from regulators cracking down on unregulated vape products. That's basically the whole thesis of tobacco harm reduction policy playing out in real time, just not in the direction some might expect.

ALEX: Meanwhile, within cigarettes, there's a real trade-down story happening. Discount segment share grew 2.6 points as lower-income consumers feel the pinch. Marlboro held its premium leadership — 59.6% share of premium — but its overall share dipped 1.5 points as some smokers shift to value options.

JORDAN: And Altria's playing both sides of that. They launched Marlboro Cowboy Cut — a value-oriented Marlboro line tied to America's 250th anniversary, clever branding there — while also growing their Basic discount brand, which saw share up 2.3 points year-over-year. Management was clear: the strategy is to participate in discount without accelerating the category's growth, protecting Marlboro's premium position as much as possible.

ALEX: Let's shift to the smoke-free side, because this is where the long-term story lives. The oral tobacco segment actually had a rough quarter on paper — adjusted OCI down 8% — but that's largely due to tough prior-year comparisons and heavy investment behind on! PLUS, their new nicotine pouch line.

JORDAN: Right, and context matters here. Nicotine pouches are now nearly 60% of the enti

This episode includes AI-generated content.

More earnings analysis: https://betafinch.com
Groups: INCOME (https://betafinch.com/groups/INCOME)
──────────
**BETA FINCH PODCAST SCRIPT**

---

**ALEX:** Welcome to Beta Finch, your AI-powered earnings breakdown where we turn complex financial reports into clear, actionable insights. I'm Alex.

**JORDAN:** And I'm Jordan. Today we're diving into Altria Group's Q1 2026 earnings call - and wow, there's a lot to unpack here, including a CEO transition and some fascinating market dynamics in both cigarettes and nicotine pouches.

**ALEX:** Before we jump in, I need to mention that this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

**JORDAN:** Absolutely. Now, let's talk numbers first. Altria delivered a solid start to 2026 with adjusted diluted EPS growing 7.3% in Q1. They're maintaining their full-year guidance of $5.56 to $5.72 per share, which represents 2.5% to 5.5% growth.

**ALEX:** That's a strong performance, but what really caught my attention was the underlying story about consumer behavior. Jordan, can you break down what's happening in the cigarette market?

**JORDAN:** Sure thing. So there are two major trends colliding here. First, we're seeing moderation in the e-vapor category - particularly those illicit flavored disposable products that have been stealing cigarette smokers for years. Federal and state enforcement is finally having an impact, and it looks like the category may have hit a saturation point.

**ALEX:** Which is helping cigarette volumes, right? They declined only 4% when adjusted for trade inventory movements, compared to much steeper declines we've seen in recent years.

**JORDAN:** Exactly. But here's the fascinating part - all of this volume improvement is happening in the discount segment, not premium. Consumers are under serious economic pressure. Gas prices spiked, inflation is still biting, and people are trading down to cheaper brands.

**ALEX:** And Altria is capturing that trade-down with their Basic brand. The numbers here are pretty impressive - Basic grew 2.4 share points year-over-year in the discount segment. Meanwhile, Marlboro actually lost 1.4 share points overall but gained in the premium segment specifically.

**JORDAN:** That's the beauty of their portfolio strategy. They're essentially playing both ends of the market. When premium smokers stay loyal, Marlboro captures them. When economic pressure forces people to trade down, Basic is there waiting.

**ALEX:** Now let's talk about the growth story - oral nicotine pouches. This category is absolutely exploding. Jordan, what's happening with their on! brand?

**JORDAN:** The oral nicotine pouch segment now represents 58% of the total oral tobacco category - that's remarkable growth. Altria's on! portfolio shipped nearly 18% more volume, hitting over 46 million cans in Q1. They launched on! PLUS nationwide in March, and it's already in about 100,000 stores.

**ALEX:** What makes on! PLUS special?

**JORDAN:** Two things: it's the first and only product authorized under the FDA's pilot program for nicotine pouches, which should give them a regulatory advantage. And they're marketing it as "the softest pouch on the planet" using their proprietary NICOSILK technology. They're really trying to differentiate on the user experience.

**ALEX:** Speaking of the FDA, there was interesting commentary about the regulatory environment. CEO William Gifford - and by the way, this was his final earnings call - was pushing hard for the FDA to streamline authorizations for e-vapor products.

**JORDAN:** Right, and his logic makes sense. The e-vapor category is still about 70% illicit products. Gifford argued that faster authorizations combined with sustained enforcement could create a compliant marketplace where authorized manufacturers can serve

This episode includes AI-generated content.

More earnings analysis: https://betafinch.com
Groups: INCOME (https://betafinch.com/groups/INCOME)
──────────
**Beta Finch Podcast Script: Altria (MO) Q4 2025 Earnings**

ALEX: Welcome to Beta Finch, your AI-powered earnings breakdown. I'm Alex, and I'm joined by my co-host Jordan. Today we're diving into tobacco giant Altria's fourth quarter 2025 results. Before we get started, I need to mention that this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

JORDAN: Thanks Alex. And wow, what a quarter for Altria. The company delivered some solid financials but also took a massive $1.3 billion impairment charge on their e-vapor business. That's not exactly chump change.

ALEX: Absolutely not. Let's start with the big picture numbers. Altria grew adjusted earnings per share by 4.4% for the full year and returned a whopping $8 billion to shareholders through dividends and share buybacks. That's serious cash returning to investors.

JORDAN: Right, and they're guiding for 2026 EPS between $5.56 and $5.72, which represents 2.5% to 5.5% growth. But here's the interesting part - CEO Billy Gifford said that growth will be "weighted to the second half of the year." That suggests a slower start to 2026.

ALEX: That timing issue ties into one of their big strategic moves. Altria is investing heavily in what they call "import-export capabilities" - basically a duty drawback program where they can manufacture cigarettes for international markets and then reimport them to get tax benefits. It's a complex play, but CFO Sal Mancuso said it has a payback period of less than a year.

JORDAN: That's actually pretty clever from a financial engineering standpoint. But let's talk about the elephant in the room - that $1.3 billion e-vapor impairment. They acquired NJOY to get into the vaping space, but the market is absolutely dominated by illegal flavored disposables from China.

ALEX: Exactly. Gifford said illegal products represent about 70% of the e-vapor category. Think about that - seven out of ten vaping products sold in the US are essentially operating outside FDA regulations. That makes it nearly impossible for legitimate companies like Altria to compete profitably.

JORDAN: But there might be a silver lining here. The company is seeing early signs that federal enforcement is starting to bite. Disposable e-vapor volume growth slowed from over 50% in 2024 to about 30% in 2025. Plus, Congress allocated at least $200 million in tobacco user fees specifically for enforcement activities.

ALEX: That enforcement angle is crucial for understanding Altria's strategy. They're basically saying "we'll wait on the sidelines until the government cleans up the illegal competition." Meanwhile, they're focusing on their nicotine pouch business, which is actually performing pretty well.

JORDAN: Speaking of nicotine pouches, their ON! brand is interesting. They got FDA authorization for ON! PLUS in December - that's their premium product with what they call "innovative pouch material and smooth flavor." They're positioning it as a premium option that can command higher prices than their classic ON! pouches.

ALEX: The numbers back that up. Helix, which makes the ON! products, shipped over 177 million cans for the full year, up about 11%. And while competitors were cutting prices - down 12% year-over-year according to Altria - they actually raised ON! prices by 3%.

JORDAN: But let's be real about the core business. Cigarette volumes declined 10% for the full year. That's a serious headwind. Even more concerning, Marlboro's retail share dropped below 40% for the first time ever.

ALEX: That Marlboro number caught my attention too. But Gifford pushed back on concerns during the Q&A, saying they're focused on "maximizing profitability over the long term" rather than

This episode includes AI-generated content.

More earnings analysis: https://betafinch.com
Groups: INCOME (https://betafinch.com/groups/INCOME), INDUSTRIALS (https://betafinch.com/groups/INDUSTRIALS)
──────────
ALEX: Welcome to Beta Finch, your AI-powered earnings breakdown! Today we're digging into 3M's second quarter 2026 results, and there's a lot to unpack here. Before we get into it, quick disclaimer: this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

JORDAN: And Alex, this was genuinely a strong quarter for 3M. Organic growth of 5.4%, operating margin at 24.9% — that's their highest ever, by the way — EPS of $2.40, up 11% year-over-year, and free cash flow of $1.3 billion with 107% conversion. That's about as clean a beat as you'll see.

ALEX: Right, and they didn't just beat expectations, they raised guidance across the board. Full-year organic growth guidance moved from 3% to greater than 3.5%. EPS guidance went from $8.50-$8.70 up to $8.80-$8.95. Free cash flow guidance ticked up $100 million to $4.7-$4.9 billion.

JORDAN: What stood out to me is CEO Bill Brown was pretty emphatic this isn't a macro tailwind story. CFO Anurag Maheshwari basically said the same thing on the call — this is internal execution. Commercial excellence initiatives, better sales force effectiveness, cross-selling that's running 40% ahead quarter-over-quarter, and customer attrition improving about 200 basis points, mostly in their Safety & Industrial business.

ALEX: And the innovation piece is a big part of the story too. They launched 92 new products in the quarter, up 44% year-over-year, putting them on pace for more than 350 new products this year. They're targeting over 1,000 new product launches by 2027, and development cycle time is down about 20%.

JORDAN: The segment breakdown really tells the story. Safety & Industrial — that's SIBG — grew 8.2%, with double-digit growth across electrical markets, adhesives and tapes, abrasives, and industrial specialties. Transportation and Electronics grew 5.9%, helped by strength in semiconductors, aerospace, and data centers. But Consumer was the soft spot, down 2.1% for the quarter because of some retailer destocking in late June.

ALEX: Now let's talk about the headline strategic news, because this is the part that got analysts excited. 3M announced a partnership with Microsoft — they're the first hyperscaler to deploy 3M's Expanded Beam Optical technology, or EBO, in Azure data centers.

JORDAN: This is fascinating from a materials science angle. EBO is basically a more durable, dust-resistant fiber optic connector that Brown said can cut installation time in data centers by about 85%. They've got 100 patents already, 50 more pending. Revenue this year is only in the $40-50 million range, but Brown said it could scale 4x or 5x — or more — over the next few years as the broader market shifts from copper to optical.

ALEX: And they're not trying to own the whole ecosystem either. They formed a 44-player multi-supplier agreement across hyperscalers, chip makers, and connector manufacturers. Brown was clear — they won't succeed as a sole provider, this is about industry-wide adoption.

JORDAN: There was also the Madison Fire & Rescue deal — they closed on July 1st, folding it into their Scott SCBA business as a majority-owned joint venture, and picked up $700 million in cash in the process. That JV does about $800 million in revenue, growing high single digits with above-average margins. Classic example of reshaping the portfolio toward higher-growth, higher-margin businesses.

ALEX: One thing I want to flag from the Q&A — China came up, and it's a much better story than a lot of people expected. Double-digit growth in the quarter, about 8% for the first half, and that's the seventh straight quarter of double-digit growth in India specifica

This episode includes AI-generated content.