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)
──────────
ALEX: Welcome to Beta Finch, your AI-powered earnings breakdown! I'm Alex, here with my co-host Jordan, and today we're diving into Microsoft's fiscal Q1 2027 results, reported on October 28th. This was a big one, folks — Satya Nadella basically came out and said "I've never been more confident in the long-term returns for our investments." That's a strong statement.

JORDAN: It really is, Alex. And before we get into the numbers, let's just say — there's a lot to unpack here, from Azure acceleration to a brand-new unified Copilot experience.

ALEX: Absolutely. But first, the standard reminder: 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 have that out of the way. Let's get into it.

ALEX: Okay, so top line — Microsoft pulled in $92.3 billion in revenue, up 19% year-over-year. Operating income grew 21%, and EPS came in at $4.89, up 18%. Pretty much across the board, they beat expectations on revenue, operating income, and EPS.

JORDAN: And the real headline for me is Microsoft Cloud revenue — it crossed $63.9 billion, with growth *accelerating* to 30%. That's not a typo — accelerating, not decelerating, at this scale. Sequential dollars added nearly doubled year-over-year.

ALEX: Which honestly surprised me a bit given how big the cloud business already is. Usually at this size you'd expect deceleration just from the law of large numbers.

JORDAN: Exactly, and that's what makes this quarter stand out. Azure specifically grew 48% — even with some third-party capacity deliveries getting delayed. Amy Hood pointed to Foundry and better CPU monetization as the drivers there.

ALEX: Let's talk CapEx for a second, because that number jumps out. $45.2 billion this quarter, but guidance for Q2 is now over $50 billion, pushing the calendar-year total to roughly $170 billion.

JORDAN: Yeah, and the reason isn't that demand is weakening — it's the opposite. Management flat out said customer demand continues to exceed available supply. So they're accelerating spend specifically because they can't build data centers fast enough. They added 24 new data centers across five continents just this quarter.

ALEX: That's wild. And free cash flow, for context, was $18.6 billion — still positive, but clearly compressed by all that CapEx.

JORDAN: Now let's get into the strategic story, because this is where it gets interesting. Satya described building an entirely new tech stack centered on what he calls "agentic AI."

ALEX: Right, and the biggest consumer-facing piece of that is the unified Copilot experience — they merged Chat, Cowork, Autopilot, and Code into one product. Satya's framing: Copilot is "the new OS for work."

JORDAN: And the usage numbers back that up. Automated tasks nearly doubled since July. Daily users up almost 50% quarter-over-quarter, over 5x year-over-year. User satisfaction up nearly 20% quarter-over-quarter to an all-time high.

ALEX: What really caught my attention is the enterprise seat expansion — customers with more than 50,000 Copilot seats grew over 8x year-over-year. We're talking Capgemini, Hitachi, Truist, and Volkswagen just announced plans to deploy Copilot to 330,000 employees.

JORDAN: That's one of the largest European deployments to date. And underneath all this consumer-facing stuff is Foundry, which Microsoft is positioning as the real growth engine. Over 120,000 Foundry customers now, with revenue more than tripling year-over-year.

ALEX: And they paired that with Fabric — 44,000 paid Fabric customers, up more than 50%. The pitch is: build your agents right next to your data.

JORDAN: There's also a security and governance la

This episode includes AI-generated content.

More earnings analysis: https://betafinch.com
Groups: CHIPS (https://betafinch.com/groups/CHIPS)
──────────
**ALEX:** Welcome to Beta Finch, your AI-powered earnings breakdown! I'm Alex, joined as always by Jordan, and today we're digging into KLA Corporation — ticker KLAC — and their September quarter results. And Jordan, I'll just say it up front: this one's a blowout.

**JORDAN:** It really is, Alex. Record revenue, record margins, and a 2027 outlook that sounds almost aggressive. I'm excited to get into it.

**ALEX:** Before we do — quick housekeeping. 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:** Important stuff. Okay, let's talk numbers.

**ALEX:** So KLA makes process control and inspection equipment for semiconductor manufacturing — basically the tools that check wafers for defects as chipmakers build increasingly complex chips. This quarter, September 2026, they posted revenue of $4.14 billion. That's a record, up 13% sequentially and 29% year-over-year.

**JORDAN:** And here's the headline that really jumped out at me — operating margin above 46% for the first time ever in company history. 46.1%, to be exact, up 240 basis points from the prior quarter.

**ALEX:** That's a remarkable number for a hardware company. Gross margin came in at 62.7%, non-GAAP EPS was $1.22, GAAP EPS $1.18 — both beating the midpoint of guidance. Free cash flow was $1.34 billion. Pretty much every metric beat expectations.

**JORDAN:** And it's not slowing down — guidance for the December quarter is about $4.7 billion in revenue, plus or minus $200 million. That implies the back half of calendar 2026 grows roughly 25% over the first half. That's a massive acceleration.

**ALEX:** Right, and CEO Rick Wallace was clear about why: AI infrastructure investment, leading-edge foundry and logic demand, and rising "process control intensity" — basically, as chips get more advanced and complex, you need more inspection and metrology steps per wafer. That plays directly into KLA's wheelhouse.

**JORDAN:** Let's talk about the big strategic story here, though — because the 2027 outlook is really what's driving the stock. CFO Bren Higgins raised the 2026 wafer fab equipment market forecast to the mid-$150 billion range, and — this is the eye-popping part — they now expect the 2027 wafer equipment market to exceed $200 billion.

**ALEX:** Exceed $200 billion. That's a jump from an already-raised 2026 number. And management said their visibility into 2027 is "unprecedented" — that's a strong word to use on an earnings call.

**JORDAN:** It really is, and it's backed up by tangible stuff — growing backlog, a strengthening sales funnel, and numerous greenfield fab projects across foundry, logic, and DRAM. This isn't just a vibes-based forecast; customers are locking in multi-year capacity commitments.

**ALEX:** One thing I found fascinating from the Q&A was the DRAM conversation. An analyst pointed out that KLA's DRAM-related revenue jumped around $450 million quarter-over-quarter, which is a huge swing for a market where KLA has a relatively modest overall share. Rick Wallace explained it's about rising "intensity" — DRAM makers, especially with HBM for AI chips, are now treating yield almost like "printing money," as Bren put it, so they're buying a lot more inspection equipment per wafer than they used to.

**JORDAN:** That intensity comment stuck with me too. Bren actually said some DRAM products now see process control intensity similar to leading-edge logic — that's a real structural shift, not just a cyclical blip. And they expect memory to be about 60% of the business mix in the second half of 2027.

**ALEX:** Advanced packaging was another bright spot — on track for $1.1 billion in revenue for 2026, growing over 70% year-over-yea

This episode includes AI-generated content.

More earnings analysis: https://betafinch.com
──────────
**ALEX:** Welcome to Beta Finch, your AI-powered earnings breakdown! I'm Alex, joined as always by Jordan, and today we're digging into FedEx's third quarter calendar 2026 results. This one's a bit of a milestone episode because FedEx just completed its switch to calendar-year reporting, so there's a lot of moving pieces to unpack.

**JORDAN:** Yeah, and a lot has happened since we last checked in on them — spin-offs, a CFO transition, the whole works. Should be a fun one.

**ALEX:** Before we jump in, 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:** Solid. Let's get into the numbers.

**ALEX:** So headline-wise, FedEx posted revenue growth of 12% year-over-year, adjusted EPS of $3.74 — up 28% — and adjusted operating income up 16%. That's a really strong quarter, especially the operating income growth outpacing revenue growth.

**JORDAN:** Right, and that's the story FedEx wants to tell — profitable growth, not just growth for growth's sake. Express U.S. Domestic revenue was up 10%, operating income up 7%. But the real star was International: revenue up 17%, and get this — operating income up 52%. That's a massive jump.

**ALEX:** It really is. And they also raised and tightened full-year guidance to $18 to $18.60 in adjusted EPS, which implies about 23% EPS growth for the full calendar year. Plus they're now targeting roughly $4 billion in adjusted free cash flow for the year.

**JORDAN:** Free cash flow is clearly the north star here. Management kept hammering that point — "free cash flow anchors our decision-making." And they've already backed that up with action: $2 billion in share buybacks since June, which was actually more aggressive than their original plan.

**ALEX:** Let's talk strategy, because this quarter was packed with portfolio-shaping moves. They completed the spin-off of FedEx Freight back in June, closed the sale of FedEx Supply Chain to CMA CGM, and they're close to finalizing a deal with InPost in Europe.

**JORDAN:** The InPost piece is interesting — it's basically FedEx saying, "let someone who's great at European B2C handle B2C there, so we can focus our own network on higher-margin B2B and cross-border freight." That's a theme that runs through this whole call, honestly — doubling down on B2B.

**ALEX:** Totally. CEO Raj Subramaniam kept emphasizing B2B verticals — health care, automotive, aerospace, and especially AI data centers. There was this great anecdote about winning new airfreight business with an AI data center customer after a 40-year relationship that had been mostly parcel-focused.

**JORDAN:** And a 15-fold increase in aircraft engine moves — that's not a typo, fifteen-fold. It shows how they're pulling heavier, more specialized freight away from traditional logistics players and into their network.

**ALEX:** Network 2.0 also got a lot of airtime. They're now at nearly 65% of eligible volume flowing through about 630 optimized stations, and they've closed over 260 facilities. They're targeting roughly $1 billion in savings from Network 2.0 by the end of this year, and $2 billion cumulative by the end of 2027.

**JORDAN:** That's real operational transformation, not just cost-cutting on the margins. And similarly, they're restructuring Europe — closing stations in France, moving Italy from an 8-hub to a 3-hub model. They're targeting $650 million in International operating income improvement from Europe by 2029.

**ALEX:** Now, there was also a leadership change announced — Jamere Jackson, formerly CFO of AutoZone, is coming in as the new CFO effective November 30th, taking over from interim CFO Claude Russ.

**JORDAN:** That's worth watching. AutoZone background means he's got real operational and

This episode includes AI-generated content.

More earnings analysis: https://betafinch.com
Groups: CHIPS (https://betafinch.com/groups/CHIPS)
──────────
**ALEX:** Welcome to Beta Finch, your AI-powered earnings breakdown! Today we're diving into a genuinely wild quarter from Amphenol — ticker APH. Jordan, I don't think I'm overstating it when I say this might be one of the most eye-popping prints we've covered.

**JORDAN:** Yeah, this one's got some real "wait, what?" numbers in it. I'm excited to get into it.

**ALEX:** Before we do — quick housekeeping. 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:** Important stuff. Okay, so let's set the scene — this is Amphenol's third quarter of fiscal 2026, reported October 28th.

**ALEX:** Let's start with the headline number: $10.2 billion in sales. That's a record, and it's the company's first-ever $10 billion quarter. Sales were up 65% year-over-year, and even stripping out acquisitions and currency effects, organic growth was 37%.

**JORDAN:** Thirty-seven percent organic growth for a company this size is just staggering. And the driver is pretty much one word: AI.

**ALEX:** Right, the IT Datacom segment — which now makes up 48% of total company sales — grew 100% in dollar terms and 77% organically. Management said AI-related demand now represents roughly three-quarters of that entire IT Datacom business, which itself has more than doubled year-over-year.

**JORDAN:** That's the story in a nutshell. CEO Adam Norwitt put it well on the call — he said customers building next-gen AI architectures just need "more interconnect, period." More copper, more optical, more power. And Amphenol sits right in the middle of all three of those categories.

**ALEX:** Let's talk profitability, because growth without margins is only half the story. Adjusted operating margin came in at 29.7%, up 22 basis points year-over-year. Adjusted diluted EPS hit $0.80, up 74% from last year.

**JORDAN:** And free cash flow was $1.6 billion for the quarter — that's 80% of net income, which CFO Craig Lampo called "excellent" given how fast they're growing. Usually rapid growth eats into cash flow because you need working capital, but Amphenol's really controlling that.

**ALEX:** Now here's a number that really stood out to me — orders. Bookings hit a record $12.17 billion, basically doubling year-over-year, giving a book-to-bill ratio of 1.19-to-1.

**JORDAN:** Book-to-bill above 1 means they're booking more orders than they're shipping — so the backlog is growing. And positive book-to-bill in nearly every end market tells you this isn't just an AI story, it's broad-based demand.

**ALEX:** Speaking of broad-based — let's hit the other six end markets quickly, because the diversification story is still very real here. Defense was up 30% organically, driven by what Norwitt called a "technology inflection" plus rising geopolitical tension globally. Industrial grew 25% organically — just about every sub-segment, from factory automation to oil and gas, was in double digits.

**JORDAN:** Mobile devices surprised to the upside too — up 29% organically on wearables and laptops. The one soft spot was communications networks, where organic sales actually declined 28% due to weakness in broadband spending — though that market still grew overall thanks to the CommScope acquisition.

**ALEX:** Right, let's talk CommScope, because that acquisition keeps getting better. Management upgraded their outlook — now expecting CommScope to do $5.1 billion in revenue this year, up from the original $3.6 billion deal-signing estimate, and contribute 18 cents to full-year EPS.

**JORDAN:** And get this — CommScope's own IT Datacom exposure is now expected to represent about half of their sales, up from roughly a third last year. Norwitt was pretty blunt on the cal

This episode includes AI-generated content.

More earnings analysis: https://betafinch.com
──────────
ALEX: Hey everyone, welcome back to Beta Finch, your AI-powered earnings breakdown where we take the dense, jargon-filled earnings calls and turn them into something you can actually enjoy with your morning coffee. I'm Alex.

JORDAN: And I'm Jordan. And Alex, today's episode is a big one.

ALEX: Before we dive in, 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: Got it. And yeah, today we're talking GE Vernova — ticker GEV — their Q3 2026 results, which dropped on October 28th. This is the power equipment and electrification spinoff from GE, and honestly, Alex, this quarter had a little bit of everything.

ALEX: Everything is right. Let's start with the headline numbers because they're pretty stunning. Orders came in at $29.3 billion for the quarter — that's up 96% year-over-year. Their book-to-bill ratio was more than 2-to-1, meaning they're booking way more business than they're actually billing out right now.

JORDAN: Which is the good kind of problem to have. That pushed their total backlog up to $197 billion — nearly $200 billion, up from $176 billion just last quarter.

ALEX: And revenue grew 18% year-over-year, with adjusted EBITDA more than doubling — up 123% to $1.9 billion. Margin expanded a whopping 690 basis points.

JORDAN: Let's put some color on where that's coming from, because it's not one segment carrying the whole load. Power segment margins hit 21.4% — and remember, Q3 is historically their weakest seasonal quarter for services. CEO Scott Strazik made a point of calling that out.

ALEX: Right, because this is the first quarter they're shipping gas turbine equipment at the new, higher prices they locked in — they hit that 5-gigawatt quarterly shipment target. Strazik basically said: this is the beginning, not the peak.

JORDAN: Electrification also impressed — 19.1% EBITDA margin, up 470 basis points, even while they're ramping R&D spend. And Wind — Wind actually turned profitable this quarter, Alex. That's the segment that's been a headache for years.

ALEX: A real milestone. They resolved that Vineyard Wind litigation dispute with only a modest P&L hit, and onshore services performance has been improving steadily. CFO Ken Parks noted they're even pulling forward some scheduled maintenance from 2027 into Q4 because the team's executing so well.

JORDAN: Okay, now let's get to the big strategic news, because this is what analysts spent most of the call asking about: the $9 billion acquisition of Trench Group.

ALEX: Trench makes high-voltage grid components — bushings, instrument transformers, coils. GE Vernova already buys from them, but this vertically integrates a critical piece of their supply chain right as demand for grid infrastructure is exploding, partly thanks to data centers and AI.

JORDAN: And the price tag — 13 times 2028 EBITDA before synergies — isn't cheap, but management framed it as immediately accretive. Trench is expected to hit roughly $2 billion in revenue by 2028 with margins around 36%.

ALEX: What stood out to me in the Q&A was when analyst Nigel Coe asked how much of Trench's business is actually tied to GEV today versus external customers. Strazik's answer: GEV is currently a small slice of Trench's $1.4 billion revenue — but bushings alone make up 5-8% of a transformer's bill of materials, and customers often specify the bushing supplier by name. So owning that technology could pull forward a lot more transformer business.

JORDAN: It's a classic "control your supply chain to meet surging demand" story — similar to what they did last year with the Prolec acquisition, which management says is already outperforming expectations.

ALEX: And in the same breath as announcing Trench, they doubled thei

This episode includes AI-generated content.

More earnings analysis: https://betafinch.com
Groups: HEALTHCARE (https://betafinch.com/groups/HEALTHCARE)
──────────
**ALEX:** Welcome to Beta Finch, your AI-powered earnings breakdown! I'm Alex, joined as always by Jordan, and today we're digging into Boston Scientific's third quarter 2026 results. And folks, there's a lot going on here — a cyber incident, competitive pressure, and some pretty candid talk about 2027 being a tough year. But 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:** Alright, let's set the scene. Boston Scientific, ticker BSX, has been a Wall Street darling for years — consistent growth, strong execution. But this quarter was rough.

**ALEX:** Rough is right. Organic revenue grew just 1.5%, way below their guided range of 3% to 5%. Adjusted EPS came in at 73 cents, down 3% year-over-year, versus a guide of 80 to 82 cents.

**JORDAN:** And the big culprit here is this cybersecurity incident that forced an operational outage. For about two weeks, they literally couldn't manufacture or ship product in some cases.

**ALEX:** Right, management says that knocked off roughly 300 basis points of revenue growth and about 7 cents of EPS in the quarter. The good news — operations were fully back online by September 8th. But here's the kicker: the pain doesn't stop there. They're expecting another 200 to 300 basis points of headwind in Q4 because customers over-ordered at the end of Q3 to restock inventory, and now that has to normalize.

**JORDAN:** It's like a hangover from the outage. You binge-order to protect your supply chain, and then the following quarter you're just burning through that excess inventory instead of placing new orders.

**ALEX:** Exactly. And that's part of why Q4 guidance is actually a revenue *decline* — negative 1% to negative 3% organically, with EPS of 77 to 79 cents. For the full year 2026, they're now looking at about 4% organic growth and EPS of $3.16 to $3.18.

**JORDAN:** Now, cyber incident aside, there's a bigger structural story here, and I think this is really the headline of the call. Two of their biggest growth engines over the last few years — Watchman, the left atrial appendage closure device, and their electrophysiology business built around FARAPULSE — are now dragging down total company growth.

**ALEX:** Yeah, let's talk about EP first because that one's a bit alarming. Sales declined 5% year-over-year, down 8% in the U.S. Management openly admitted they're losing share as new pulsed-field ablation competitors enter the market with different catheter designs. And here's the thing — they don't expect real relief until they launch FARAWAVE Ultra, which got pushed to early 2028. Originally that was supposed to be sooner.

**JORDAN:** And it's not just Ultra — their next-gen wide-area catheter, FARAFLEX, is now a 2029 launch. CEO Mike Mahoney and CFO John Monson were pretty transparent that pipeline timing has been a problem. Executive Joe Fitzgerald explained some of the delays — Ultra's held up by design verification and validation work, while FARAFLEX has had FDA negotiation delays and some operational hurdles in scaling up the clinical trial.

**ALEX:** And then there's Watchman — down 7% in the U.S., though international grew 4%. Management's take is that physicians are reassessing referral patterns based on recent clinical evidence, and that's slowing the whole left atrial appendage closure market down, not just Boston Scientific specifically.

**JORDAN:** They're throwing resources at it though — over 200 medical education events last quarter alone, more dedicated sales reps, and they've got a next-gen Watchman FLX Pro platform in a clinical trial now, aiming for a 2029 launch.

**ALEX:** So here's where it gets really interest

This episode includes AI-generated content.

More earnings analysis: https://betafinch.com
──────────
**ALEX:** Welcome to Beta Finch, your AI-powered earnings breakdown! I'm Alex.

**JORDAN:** And I'm Jordan. Today we're digging into Visa's fiscal fourth quarter and full-year 2026 results, reported on October 27th. And Alex, I'll just say upfront — this was a big one.

**ALEX:** It really was. But before we jump in, the standard reminder: 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:** Okay, with that out of the way — let's talk numbers.

**ALEX:** So Visa closed out fiscal 2026 with full-year net revenue of $45.9 billion, up 15% year-over-year. And here's the headline stat: that's the strongest revenue growth rate Visa has posted in over 15 years, excluding the post-pandemic recovery bounce and acquisition effects.

**JORDAN:** That's a huge claim for a company this size. We're talking about a payments giant processing 281 billion transactions this year, and they're still finding ways to accelerate growth.

**ALEX:** Right, and full-year EPS came in at $13.27, up 16%. For the fourth quarter specifically, net revenue was $12.1 billion, up 13%, and EPS was $3.48, up 17% — though Jordan, that EPS beat had a little asterisk on it.

**JORDAN:** Yeah, a chunk of that outperformance came from a lower-than-expected tax rate — 18.4% versus what they'd guided — thanks to some claim-of-right tax benefits tied to legal settlements. So it's a real beat, but not entirely an operating story.

**ALEX:** Good catch. Now let's talk about where the growth is actually coming from, because this is where it gets interesting. Visa's got three engines now: core consumer payments, commercial and money movement solutions — they call that CMS — and value-added services, VAS.

**JORDAN:** And CMS and VAS together now make up more than 40% of total net revenue. VAS alone grew 30% in constant dollars to $14 billion for the year — basically doubling since 2023. CMS grew 19%. These aren't side businesses anymore, Alex, they're becoming the growth engine.

**ALEX:** Totally. And cross-border volume — always a bellwether for Visa — was up 12% for the year excluding intra-Europe, with travel up 11% and e-commerce up 15%. In Q4 specifically, cross-border accelerated even more, up 14%, partly thanks to the FIFA World Cup bump in July.

**JORDAN:** Oh, the World Cup effect was real. U.S. host cities saw inbound cross-border card-present spend jump over 20% year-over-year during the tournament window, with fans from Argentina and Colombia leading the charge. That's a nice one-time tailwind, though CFO Chris Suh was clear they're lapping that in fiscal 2027.

**ALEX:** Let's get into the strategic stuff, because there's a lot here. First — Mainland China. Visa got initial approval from the People's Bank of China to begin preparing to process domestic transactions there. That's a potentially massive long-term market opening up.

**JORDAN:** Huge if it plays out. China's domestic payments market has been largely closed to foreign networks, so this is a meaningful crack in the door, even though it's early days — "preparing to prepare," essentially.

**ALEX:** Then there's the blockchain and stablecoin push, which honestly dominated a lot of the call. Visa now supports 10 different blockchains, more than double last year. Their stablecoin settlement run rate surpassed $25 billion annualized — that's up 10x year-over-year.

**JORDAN:** And they're not picking favorites — Ryan McInerney was explicit on the call that Visa is stablecoin-agnostic and blockchain-agnostic. They support five different stablecoins now, including USDC, PYUSD, and their own Open USD, which launched September 30th and already has over $800 million in circulation.

**ALEX:** They're also leaning hard into agentic commerce — A

This episode includes AI-generated content.

More earnings analysis: https://betafinch.com
──────────
**ALEX:** Welcome to Beta Finch, your AI-powered earnings breakdown! I'm Alex, joined as always by Jordan, and today we're diving into Verizon's third quarter 2026 results. And Jordan, I'll just say upfront — this is not the Verizon we've been talking about for the last few years.

**JORDAN:** Yeah, this one's a bit of a head-turner. There's a real turnaround story happening here.

**ALEX:** 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 to get that out of the way, because there's a lot to unpack here.

**ALEX:** There really is. Let's start with the headline number that jumped out at me: postpaid phone net additions were up 820% year-over-year — 406,000 new phone lines, their best Q3 in five years.

**JORDAN:** That number is wild on its own, but what really caught my attention was the account growth — 137,000 net account additions, the best quarterly performance in over a decade. That's a different kind of growth than just phone lines.

**ALEX:** Right, and CEO Dan Schulman was very clear about why that distinction matters. He basically said, "I don't consider free lines to even be net adds — I think they're churn waiting to happen." Verizon didn't buy this growth with freebies and heavy subsidies.

**JORDAN:** That's the real story here. Cost of acquisition was down 41% year-over-year, cost of retention down 30%. So they're growing faster AND spending less to do it. That's the kind of operating leverage that shows up directly in margins.

**ALEX:** And it did — adjusted EBITDA margin hit 40.2%, up 240 basis points year-over-year, a record for the company. Adjusted EPS came in at $1.31, up 8.3%.

**JORDAN:** And they raised guidance across the board. Full-year EPS growth guidance moved up to 7% to 7.5% from 6% to 7%. Free cash flow guidance jumped to "approach 12%" growth, up from 9-10%. And they're now expecting $7.8 billion in quarterly free cash flow — their best quarter since 2020.

**ALEX:** Postpaid phone net adds guidance for the full year also moved up to 1.1 to 1.2 million, more than triple what they did last year. This is a company that's been raising the bar every single quarter for the past year.

**JORDAN:** Let's talk strategy, because there were two things in this call that I think investors should really pay attention to beyond the quarterly numbers. First: AI Connect.

**ALEX:** Yes! This is Verizon's play into AI infrastructure — selling dark fiber and edge computing capacity to hyperscalers. They announced a new agreement with Amazon Web Services worth over $2 billion, building on a Google deal from last quarter. All told, they've got about $4 billion in signed long-term contracts now.

**JORDAN:** And what's interesting is the margin profile — these are described as high-margin, long-duration contracts with modest, success-based capital requirements. Dan Schulman called it a "rapidly growing TAM" — total addressable market — and said this starts hitting the P&L meaningfully in 2027, not this year.

**ALEX:** So it's a 2027 story, but the groundwork is clearly being laid now. The other big strategic nugget was this millimeter wave spectrum pivot for fixed wireless broadband.

**JORDAN:** This one surprised me. Verizon has roughly 1,700 megahertz of millimeter wave spectrum that's been sitting around underutilized, and they've found a way to use it to deliver gigabit-speed fixed wireless broadband in metro areas — as a cheaper alternative to digging up streets for fiber.

**ALEX:** Schulman was pretty blunt about the philosophy shift here too. He said if a customer needs a gig of speed and they can only offer 300 megabits, they shouldn't sell it at all — even if that costs them a net add i

This episode includes AI-generated content.

More earnings analysis: https://betafinch.com
Groups: INDUSTRIALS (https://betafinch.com/groups/INDUSTRIALS)
──────────
ALEX: Welcome to Beta Finch, your AI-powered earnings breakdown. I'm Alex.

JORDAN: And I'm Jordan. Today we're digging into UPS, ticker U, third quarter 2026 results, reported October 27th.

ALEX: Before we get into the brown truck details, 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: Alright, so Alex, let's set the scene. UPS has been going through this massive, deliberate transformation—shrinking on purpose, specifically cutting back Amazon volume to chase higher-margin business. This quarter is where we start seeing the payoff.

ALEX: Yeah, and the headline numbers back that up. Consolidated revenue came in at $22.9 billion, up 6.7% year-over-year. Operating profit hit $2.1 billion, with a consolidated operating margin of 9%. Diluted EPS was $1.69.

JORDAN: And here's the kicker—revenue grew across ALL three segments: US Domestic, International, and Supply Chain Solutions. That's the first time we've seen that kind of synchronized growth in a while.

ALEX: Right, and because of this strength, UPS actually raised full-year guidance. They're now expecting full-year revenue of approximately $92.6 billion and operating profit of about $8.75 billion, which implies full-year EPS around $7.28.

JORDAN: Let's talk about US Domestic specifically, because that's really the heart of this turnaround story. Operating profit there grew over 14% year-over-year—second straight quarter of strong growth. Operating margin expanded 60 basis points to 7%.

ALEX: And the interesting nuance is total US volume was actually DOWN 3.3%—but that's entirely because of the planned Amazon reduction. Strip that out, and SMB and enterprise customer volume grew 1.8%, with SMB specifically up 3.7%.

JORDAN: SMBs now make up a record 35.1% of total US volume. That's up 240 basis points year-over-year. This is UPS's whole "better not bigger" philosophy playing out in real numbers—smaller, higher-margin customers replacing one giant, lower-margin customer.

ALEX: CEO Carol Tomé put it really memorably on the call: "Better is truly better than bigger." She said they're past the inflection point now.

JORDAN: Let's hit International too, because that was actually a bit of a surprise. Operating profit returned to year-over-year growth for the first time in six quarters, and margin came in at 14.9%—above expectations. This despite total international volume declining 8.7% due to geopolitical and trade policy headwinds.

ALEX: The story there is quality over quantity again—revenue per piece jumped 15%, half of that from fuel surcharges, but the real driver was that China-to-US and Asia-to-Asia trade lanes kept strengthening. September inbound US volume actually turned positive.

JORDAN: And Supply Chain Solutions—forwarding revenue up 17.5%, logistics up 17.2%, driven by healthcare and high-tech demand. UPS Digital, which includes Roadie and Happy Returns, grew nearly 50%.

ALEX: Speaking of healthcare—that's become a real pillar here. Healthcare revenue topped $3 billion for the third straight quarter, growing in every single segment.

JORDAN: Now let's get into some of the Q&A color, because there were some juicy moments. One analyst asked point-blank about Amazon's new in-house delivery push, given all the headlines about Amazon raising prices and expanding its own network. Carol Tomé's answer was pretty confident—she said UPS hasn't seen any "measurable or meaningful impact" from Amazon's moves, partly because the networks are just fundamentally different. UPS offers reverse logistics, guaranteed ground delivery—Amazon's network is more linear, two-to-five-day reliable, not guaranteed.

ALEX: That's a big deal

This episode includes AI-generated content.

More earnings analysis: https://betafinch.com
──────────
ALEX: Welcome to Beta Finch, your AI-powered earnings breakdown, where we take the long, jargon-heavy earnings calls and turn them into something you can actually enjoy with your coffee. I'm Alex.

JORDAN: And I'm Jordan. And Alex, today we've got a big one.

ALEX: We really do. Before we dive in, the 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.

JORDAN: Okay, with that out of the way—S&P Global, ticker SPGI, Q3 2026. And the headline isn't even really the numbers, though the numbers were good. It's that they just announced a strategic review of Capital IQ and its associated Kensho data businesses, including a potential separation.

ALEX: Right, this is the big one. Basically, S&P Global is saying, "we want to double down on where we're the undisputed leader—credit, equities, and commodities—and we're exploring spinning off or selling Capital IQ and the Kensho data platforms that sit inside Market Intelligence."

JORDAN: Which is wild, because Kensho was actually the standout performer this quarter. CEO Martina Cheung called it Market Intelligence's fastest-growing business.

ALEX: Exactly, and that's the paradox here—they're not cutting this because it's underperforming. They're saying it could grow even faster with dedicated ownership and focus, while S&P proper gets to concentrate capital on ratings, indices, and energy.

JORDAN: Let's talk numbers before we get too deep into the strategic stuff. Revenue grew 7% organically, consistent with reported growth since currency and M&A were basically a wash. Adjusted EPS grew 9%, operating profit up 8%, and margins expanded 60 basis points to 53.5%—or 120 basis points if you strip out a divested business called Astra.

ALEX: And they raised guidance across the board. Full-year organic growth guide moved up to 7.5% to 8.5%. Margin expansion guidance bumped up to 75-100 basis points. And adjusted EPS guidance now sits at $17.70 to $17.95.

JORDAN: Let's go division by division quickly because there's a lot of divergence here. Ratings—their bread and butter—grew revenue just 2%, which sounds soft, but context matters. Bond issuance was up 8%, and year-to-date they're having their three strongest quarters for bond issuance on record. They're just lapping really tough comparisons from earlier in the year.

ALEX: And hyperscaler debt issuance—meaning the big tech companies borrowing money to fund AI infrastructure—was a massive driver. Year-to-date around $240 billion, and they expect $250 to $300 billion for the full year.

JORDAN: That's a number worth sitting with. These companies are forecasting almost $900 billion in capex this year just from the six largest hyperscalers—nearly double 2025. That's rippling through every single S&P Global division.

ALEX: Indices was the real star though. Revenue up 20%, their 14th straight quarter of record revenue. ETF assets under management hit $6.5 trillion. And they extended their exclusive options licensing deal with Cboe through 2051—so another 25 years locked in on SPX and VIX products.

JORDAN: That Cboe deal won't move the needle in 2026, but management said expect a couple points of incremental growth starting in 2027.

ALEX: Energy rebounded nicely too—6% growth, helped by stabilizing conditions in the Middle East. Remember, the Iran conflict had been weighing on their Global Trading Services business, and now renewals are basically back to pre-war levels.

JORDAN: And Market Intelligence—where Capital IQ and Kensho actually live—grew 7%, an acceleration. Kensho Data specifically was growing in the double digits.

ALEX: Let's talk AI for a second, because the numbers here are honestly kind of staggering. API call volume was up over 4,000% year-over-year.

This episode includes AI-generated content.