Charged Alpha Stock Encyclopedia

Charged Alpha Stock Encyclopedia

By Colton ThomasBusinessInvesting
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Charged Alpha Stock Encyclopedia episodes

  • RBRK Stock: Rubrik Grew Revenue 38% And Its Billings 19% - Q2 FY2027
    Rubrik (RBRK) Q2 FY2027 — Shares fell 13.1% to $93.05 the next session, after running 43% into the print.
    Revenue grew 38%, subscription ARR 33%, the contracted book 31% - and calculated billings just 19%.
    THE CALL: AVOID (3/5, MODERATE) — base-case value ~$60 vs ~$93 today.
    KEY METRICS:
    - Revenue $427.3M, +38% YoY; subscription revenue $407.2M, +37%
    - Subscription ARR $1,660.9M, +33%; net new ARR $95.8M, +35%
    - Calculated billings $898.8M for the half, +19% vs revenue +38%
    - Deferred revenue $1,929.8M; the noncurrent leg fell 3.4% since January
    - Non-GAAP EPS $0.20 vs GAAP loss per share $0.30; 96% of the gap is stock comp
    - Free cash flow $65.7M, 15% of revenue, down from 19%
    - Half-year operating cash flow $158.5M against $174.4M of stock comp
    - 3,084 customers above $100K of ARR, +23%; Cloud ARR $1.48B, +39%
    - FY27 guide raised: revenue $1,685-1,693M, free cash flow $323-333M
    - Our fair value ~$60 vs $93.05 close; Street median $120
    What to watch: billings back within five points of ARR growth for two straight quarters would break our thesis
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    15 min
  • PLAB Stock: Photronics Beat, But $503M Of Its Cash Sits In Joint Ventures - Q3 FY2026
    Photronics (PLAB) Q3 FY2026 — Shares rose 3.2% to $30.25 on the print, then slid to $27.73 by Friday's close.
    Adjusted EPS beat a cut bar by 24% - but the venture partners took $15.0M of the $43.9M consolidated profit, and $503.5M of the $672.8M cash sits inside those ventures.
    THE CALL: BEARISH (3/5, MODERATE) — base-case value ~$23.56 vs ~$27.73 today.
    KEY METRICS:
    - Revenue $216.0M, +2.7% YoY and +2.9% sequentially, vs $208.8M consensus
    - Non-GAAP diluted EPS $0.50 vs a $0.40 bar (+24%) - but $0.51 a year ago
    - GAAP net income to PLAB $28.9M / $0.49 of $43.9M consolidated
    - Non-controlling interests took $15.0M, 34% of consolidated net income
    - Operating profit $45.5M, -5.5% YoY; operating margin 21.1% vs 22.9%
    - IC revenue $154.7M (+5%); FPD $61.4M (-2%); high-end IC mix a record 44%
    - Cash and short-term investments $672.8M; $503.5M sits in the 50.01% JVs
    - Operating cash flow $76.3M; capex $37.0M in the quarter, $130.4M in nine months
    - Q4 FY26 guide: revenue $207-227M, operating margin 19-24%, EPS $0.40-0.56
    - Our fair value ~$23.56 vs $27.73; three dated Street targets $42-55, median $45
    What to watch: one cash distribution out of the joint ventures, or capital spending back under $121M a year, would break our thesis
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    15 min
  • ADSK Stock: Autodesk Grew Revenue 16% And Its Order Book 2% - Q2 FY2027
    Autodesk (ADSK) Q2 FY2027 — Shares fell 3.7% to $260.66 the next session, after rising 6.2% into the print.
    Revenue grew 16%, billings 10%, current RPO 12% - and total remaining performance obligations just 2%.
    THE CALL: AVOID (3/5, MODERATE) — base-case value ~$199 vs ~$261 today.
    KEY METRICS:
    - Revenue $2,046M, +16% YoY (+14% cc), vs $2,012M consensus
    - Adjusted EPS $3.30 (+26%) vs $3.12 bar; GAAP diluted EPS $2.33
    - Billings $1,854M, +10% YoY
    - Total RPO $7,433M, +2% YoY; current RPO $5,245M, +12%
    - Unbilled deferred revenue $3,175M, -8% YoY
    - Free cash flow $561M, +24%; operating cash flow $575M
    - Adjusted operating margin 41%; GAAP operating margin 29%
    - FY27 guide raised: revenue $8,295-8,345M, adjusted EPS $12.52-12.60
    - MaintainX acquired 3 Aug 2026 for ~$3.53B, funded with $2B of new debt
    - Our fair value ~$199 vs $260.66 close; Street average $315.57
    What to watch: current RPO growing faster than revenue for two straight quarters would break our thesis
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    15 min
  • Veeva (VEEV) Q2 FY2027 Earnings: HOLD Call - A 15% Pop On A 2-Cent Raise
    Veeva Systems (VEEV) Q2 FY2027 — Q2 FY2027 (three months to 31 July 2026): revenue $928.0M, +17.6% YoY; adjusted operating profit $415.9M at a 44.8% margin; adjusted EPS $2.35 against a $2.21-$2.22 guide. The shares closed +15.2% on the print.
    Veeva raised its full-year revenue guide by $44.5M at the midpoint - but $24.5M of that is simply the July quarter beating its own guide and flowing through. The forward raise is $20.0M, or 0.54% of the year, and 2.5 cents of adjusted EPS. The market has added $5.15B of value since the release.
    THE CALL: HOLD (3/5, AN EXCELLENT BUSINESS AT A PRICE THAT ALREADY ASSUMES IT) — base-case value ~$250 vs ~$276.69 today.
    KEY METRICS:
    - CALL: HOLD 3/5, fair value $250 vs the $276.69 close of 28 August (-9.8%). One owner-earnings DCF run three times on growth: bear $188.45, base $251.03, bull $320.24, weighted 30/45/25 at a 9.0% discount and 3.0% terminal.
    - THE RAISE, DECOMPOSED: the FY27 revenue guide went from $3,640.0M to $3,684.5M at the midpoint, a $44.5M raise. But the July quarter was guided to $903.5M and printed $928.0M, so $24.5M of that raise is the quarter itself. The raise BEYOND the beat is $20.0M (0.54% of the year) and 2.5 cents of adjusted EPS.
    - REVENUE $928.0M, +17.6% YoY. Subscription $766.8M (+16.3%), professional services $161.2M (+24.1%). Services is 17.4% of revenue against 16.5% a year ago and a 15.3% low in January: the Vault CRM migration, paid for in services dollars.
    - MARGIN: adjusted operating margin 44.8% (44.7% a year ago). But gross margin FELL to 75.0% from 75.3%, because services carry a 31.5% adjusted gross margin against subscription's 86.6%.
    - CASH: quarterly operating cash flow $238.7M against $238.4M a year ago, flat, but that is an artefact of the prior-year base (a ~$47M deferred-tax add-back, a ~$43M litigation accrual), not deterioration. Half-year OCF $1.37B, +22.4%.
    - BALANCE SHEET: $7.24B net cash (16.2% of market value, $44.73 a share) and NO debt. H1 buyback $467M at an average $175.28 against $256M of stock compensation: 1.82x cover, in cash. Filed share count 161.91M, -1.2% YoY.
    - VALUATION: enterprise value $37.56B = 10.9x trailing revenue and 32.7x owner earnings ($1.15B). 45.4x trailing reported EPS of $6.10; 30.0x the $9.21 FY27 adjusted guide.
    - WHAT THE PRICE ASSUMES: a reverse run says $276.69 needs owner earnings to compound 17.2% in year one, fading to 4.8% by year ten, against a company guiding FY27 revenue to +15.3%.
    - THE STREET: 15 dated targets, all published 27 August, all above the tape. Median $300, range $250 to $330. Across the 13 carrying a prior number the average went $240 to $295 in one day, +22.6%.
    What to watch: UP: services growing SLOWER than subscription for two straight quarters; gross margin back above the 75.3% of a year ago. DOWN: services past 18% of revenue with gross margin still falling.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    15 min
  • Elastic (ESTC) Q1 FY2027 Earnings: The $2.9M Raise That Added $1.7B
    Elastic (ESTC) Q1 FY2027 — Q1 FY2027 (three months to 31 July 2026): revenue $478.1M, +15.1% YoY; adjusted operating profit $77.3M at a 16.2% margin; adjusted EPS $0.70 against a $0.584 estimate. The REPORTED operating result was a $23.6M loss, wider than the $9.4M loss a year earlier. Shares closed +19.3% at $99.91, a new 12-month high.
    Elastic added $1.7 billion of market value in one session, then raised its guidance for the remaining nine months of fiscal 2027 by $2.9 million. The full-year revenue guide moved $11.5M at the midpoint - but the July quarter alone landed $8.1M above the TOP of its own guide, so nearly the whole raise is the quarter flowing through, and the implied adjusted EPS for the rest of the year actually fell four cents.
    THE CALL: BEARISH (3/5, THE WHOLE VALUATION SPREAD IS ONE ACCOUNTING LINE) — base-case value ~$79.79 vs ~$99.91 today.
    KEY METRICS:
    - CALL: BEARISH 3/5, fair value $79.79 vs the $99.91 close of 28 August (-20.1%). One DCF on the company's own FY27 guidance, run three times, changing only how much of ~$310M of annual stock compensation is charged: bear $56.86 (charged in full), base $81.54 (half), bull $104.15 (not charged). Weighted 30/45/25.
    - THE RAISE: FY27 revenue guide $1.985B-$2.000B up to $1.998B-$2.010B. Q1 beat the top of its own guide by $8.1M, so the implied guide for the remaining nine months rose only $2.9M, and implied adjusted EPS for those months FELL $0.04.
    - MARGIN: GAAP gross margin 74.5% from 76.7% (-2.2 pts); non-GAAP 76.6% from 78.7%. Subscription cost of revenue +32.4% against subscription revenue +15.5%. The operating-margin improvement is funded by a 7% workforce reduction announced 24 June 2026.
    - THE BULL CASE IS REAL: cRPO $1.153B +21%, RPO $1.854B +27% against +15.1% in revenue. Over 1,800 customers above $100K ACV (from 1,720 in April) - the company's highest first-quarter net additions ever. Net cash $889.8M.
    - STOCK PAY: FY2026 free cash flow $322.0M against $298.4M of stock compensation - 93%. 2.79M shares went out gross last year; buying those back at $99.91 costs $279M, about 73% of this year's cash flow.
    - MULTIPLES on the FILED 105.12M share count: market value $10.50B, enterprise value $9.61B = 4.8x guided FY27 revenue, 22.3x guided adjusted free cash flow, 30.0x guided adjusted EPS. Rule of 40 = 34.6.
    - STREET: four targets dated 28 August 2026 - Guggenheim $120, Stifel $107, UBS $105, Cantor Fitzgerald (Neutral) $100. Median $106. We are 24.7% below it. Morgan Stanley's $66 Equalweight of 21 July has not been refreshed.
    What to watch: UP: subscription cost of revenue growing SLOWER than subscription revenue for two consecutive quarters; the monthly self-serve cloud line returning to double-digit growth from +1%; gross share issuance under 2M a year. DOWN: gross margin falling another two points; cRPO growth converging back to the revenue line; the FY27 adjusted operating margin guide of 19.4% being cut.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    15 min
  • Gorilla Technology (GRRR): Revenue Doubled And The Gross Line Went Negative
    Gorilla Technology (GRRR) H1 2026 — H1 2026 (six months to 30 June): revenue $78.4M, up 99.3%; gross profit $3.8M, down 71.4%; gross margin 4.9% from 34.2%. IFRS operating loss $47.2M, net loss $46.9M, loss per share $1.74; adjusted EPS -$0.58. The June quarter, derived by subtracting the filed Q1 from the filed half: revenue $50.1M (+138% YoY, +78% QoQ) and gross profit of MINUS $2.11M. Adjusted EPS -$0.40 against a +$0.03 bar. FY2026 guidance raised to at least $200M. The stock fell 11.31% to $14.04 on 25 August and closed the week at $14.41.
    Gorilla's June quarter was the largest it has ever printed and the first in which it sold goods for less than they cost: gross profit of minus $2.11M on $50.1M of revenue. Every dollar of the growth is a hardware line that did not exist a year ago ($52.5M, against $0 external in H1 2025), while the service business that carried all of the historic margin shrank 34.2%.
    THE CALL: BEARISH (3/5, THE BIGGEST QUARTER EVER, SOLD BELOW COST) — base-case value ~$12.7 vs ~$14.41 today.
    KEY METRICS:
    - CALL: BEARISH 3/5, fair value $12.70 vs the $14.41 close of 28 August (-11.8%). Bear $5.94, base $13.39, bull $26.74, weighted 45/35/20. Street: Buy, $40.50 average (Compass Point $44, Cantor $40, Northland $40, A.G.P. $38) - and every one of those targets predates the release.
    - THE GROSS LINE: H1 gross profit $13.4M to $3.8M (-71.4%) while revenue doubled. June-quarter gross profit MINUS $2.11M against $7.04M a year earlier. Incremental gross margin on everything added year on year: -24.6% (revenue +$39.0M, cost of sales +$48.6M).
    - THE MIX: hardware $52.5M from $0 external (H1 2025's $22.9M was 100% eliminated on consolidation); services $25.9M from $39.3M, -34.2%. All hardware is booked at a point in time, all services over time.
    - THE FUNDING: $232M of 7.50% convertible notes in 63 days ($107M June, $125M July). Of the June $107M only $62.7M is debt - the other $44.3M is the conversion option. Filed effective interest rate 21.59%. Conversion at $25.4826 would add 9.10M shares to 27.24M, +33.4%.
    - THE RECEIVABLES: receivables plus contract assets $145.3M against $78.4M of half-year revenue (336 days), of which $104.8M is unbilled. 51.2% of invoiced receivables are past due; the credit-loss provision went $0.94M to $5.16M. Unfulfilled contracts -28.2% to $72.7M.
    What to watch: UP: a September quarter inside the guided $48-50M with gross margin back into double digits; cash actually collected against the $104.8M of unbilled contract assets. DOWN: another quarter of revenue growth on a negative gross margin; the credit-loss provision compounding past $5.2M; contract assets rising again at December.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    14 min
  • Materialise (MTLS): One Segment Earns 118% Of The Profit
    Materialise (MTLS) Q2 2026 — Q2 2026 (three months to 30 June, filed in EUR): revenue EUR70.1M, +8.1% YoY; adjusted EBIT EUR3.9M, +26.9%; net profit EUR3.3M, EUR0.06 per ordinary share and per ADS. But the REPORTED operating result was EUR2.8M against EUR2.7M - essentially unchanged. Full-year adjusted EBIT guidance RAISED to EUR12-14M; revenue guidance reaffirmed at EUR273-283M. The 6-K landed pre-market on 27 Aug: +11.24% on 8.2x median volume, then 53% handed back the next session to close at $7.02.
    One of Materialise's three businesses earned more money last half than the entire company did. Materialise Medical produced EUR20.8M of segment adjusted EBITDA in the six months to 30 June; the whole company kept EUR17.6M - 118%, on 51% of group revenue. It is not a quarter: the same ratio was 133% across 2025 and 113% across 2024. Software, the highest-quality revenue in the group, is the only segment shrinking. Manufacturing is a third of revenue and lost EUR6.2M at the segment operating line.
    THE CALL: HOLD (3/5, ONE SEGMENT IS THE COMPANY, AND NOTHING FORCES ANYONE TO SEPARATE IT) — base-case value ~$7.21 vs ~$7.02 today.
    KEY METRICS:
    - CALL: HOLD 3/5, fair value $7.21 vs the $7.02 close of 28 August (+2.7%). Bear $6.01 (discounted cash flow), base $7.40 (group at 8.5x guided adjusted EBITDA), bull $8.44 (sum of the parts), weighted 40/25/35. One dated Street target: Cantor Fitzgerald, Overweight, $10.00, 20 February 2026, set with the ADS at $5.48.
    - THE SPINE - segment adjusted EBIT, June half: Medical +EUR17.4M, Software +EUR0.8M, Manufacturing -EUR6.2M, unallocated corporate -EUR5.6M. Those four sum to the EUR6.4M of consolidated adjusted EBIT Materialise reported.
    - THREE YEARS, NOT ONE QUARTER: Medical was 133% of group adjusted EBITDA across 2025 and 113% across 2024. Two-year segment revenue: Medical EUR116.4M to EUR134.2M, Manufacturing EUR106.5M to EUR92.5M, Software EUR43.9M to EUR40.9M. Group revenue barely moved.
    - BALANCE SHEET AND CAPEX: EUR74.2M of NET CASH, a fifth of the $407.1M market value. But depreciation was EUR11.3M in the half against EUR3.4M of capital spending - 0.31x.
    - VENDOR ERRORS NAMED ON-SLIDE: FMP's FY2025 revenue is 3.9% BELOW the filed figure; its earnings feed carries a PHANTOM 23 July 2026 print; its market cap is 1.0% high. ONE ADS IS ONE ORDINARY SHARE, proved from note 6.2.
    What to watch: UP: the medical share of group adjusted EBITDA falling below 100%; two consecutive periods of software revenue GROWTH; any announced separation or disposal of a segment. DOWN: capital spending staying below depreciation; manufacturing losses widening again; the full-year revenue guide being cut in November.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    14 min
  • JinkoSolar (JKS): The $212M Operating Loss That Was Reported As $103M
    JinkoSolar (JKS) Q2 2026 — Q2 2026 (three months to 30 June): revenue RMB12.36BN / $1,821.2M, -31.3% YoY on module shipments of 15,961MW, -34.4%; gross margin 4.2% from 8.3% in Q1; operating expenses $287.3M against $75.6M of gross profit, so a $211.7M loss from operations. Net loss attributable to ordinary shareholders $102.8M, or $1.94 per ADS - but the company's own ADJUSTED loss is $134.2M, 31% BIGGER. Full-year shipment guidance cut from 75-85GW to 60-70GW. The 6-K landed pre-market on 26 Aug: the ADSs closed -11.87% and made a fresh 12-month closing low the next session.
    Making and selling solar modules lost JinkoSolar $211.7M in the June quarter. The loss reported to the owners of the ADSs was $102.8M - less than half of it. Both figures are correct and both are printed on the same filed statement of operations. The $108.9M in between is five non-operating items: government grants of $29.7M, the gain on selling 75.1% of the US business ($34.9M), a fair-value mark on a portfolio of private investments ($54.6M), an income tax benefit ($24.1M), and $84.0M of the group loss carried by the MINORITY holders of the majority-owned operating subsidiary. Not one of them is a solar module, and on the same morning the company cut its full-year shipment guidance by 15GW and made its head of strategic investment the chief executive.
    THE CALL: SELL (3/5, A LEVERED CYCLICAL WHOSE REPORTED LOSS IS HALF THE OPERATING ONE) — base-case value ~$9.90 vs ~$13.54 today.
    KEY METRICS:
    - CALL: SELL 3/5, fair value $9.90 vs the $13.54 close of 28 August (-26.9%). Bear $4.94, base $8.89, bull $20.86, weighted 35/45/20. Below both live Street targets: Goldman Sachs cut to $11.00 and Roth Capital to $16.00, both on 27 August. Their average of $13.50 is 4 cents UNDER the last close.
    - THE BRIDGE: loss from operations $211.7M; net loss attributable to ordinary shareholders $102.8M; ratio 2.06x, against 1.27x in the March quarter. The five items in between total $227.3M of help against $118.4M of drags - net interest $40.3M, an exchange loss on foreign-currency debt of $48.0M, and smaller items.
    - THE UNIT ECONOMICS: 0.47 cents of gross profit per watt shipped against 1.80 cents of operating cost per watt - 3.8x. A quarter earlier the gross line was 1.10 cents. Gross margin must reach ~15.8% to cover the overhead; it is 4.2%, an 11.6-point gap that WIDENED from 7.7 points a year ago.
    - THE BALANCE SHEET: $6,617M of total interest-bearing debt less $2,497M of cash = $4,121M of net debt, 5.8x the $716M market value. Cash fell $865M in the quarter (from $3,362M at 31 March) while a $1.50/ADS dividend (~$79M) was declared. Equity attributable to JinkoSolar is $2,152M - 12.3% of $17.5BN of assets. Book value $40.72 an ADS; the tape pays 0.33x book.
    - TWO VENDOR ERRORS NAMED ON-SLIDE: (1) FMP's epsActual of -2.53 is the company's ADJUSTED loss per ADS, not the filed GAAP -1.94. (2) FMP's market cap of $177.3M is 75% TOO LOW - it carries 13.09M shares where the release prints 211,435,343 weighted ordinary shares, and ONE ADS REPRESENTS FOUR ORDINARY SHARES. The correction makes the stock DEARER, not cheaper.
    What to watch: DOWN (our case): gross profit per watt staying under 1.80 cents; a second cut to the 60-70GW guide in November; net debt holding above $4BN against a sub-$1BN equity. UP (what would change our mind): two consecutive quarters of gross profit per watt above 1.80 cents; the January 2027 efficiency standard lifting realised prices on 40GW of TOPCon 3.0 capacity; net debt falling toward the equity value.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    14 min
  • Gaotu Techedu (GOTU): More Cash Than Market Cap - And Two Thirds Of It Is Prepaid Tuition
    Gaotu Techedu (GOTU) Q2 2026 — Q2 2026 (three months to 30 June): net revenues RMB1,670.1M / $246.1M, +20.2% YoY, accelerating from +13.2% in Q1; gross margin 66.5%; operating expenses $185.8M against $163.7M of gross profit, so a $22.1M operating loss, narrowed from $35.6M. Net loss $20.0M, RMB0.57 (-$0.09) per ADS. Operating cash inflow $126.9M, +46.3% - but the six-month figure is $4.8M, -70.6%. The 6-K landed pre-market on 27 Aug: the ADSs gapped +6.9%, faded to $1.74, closed +5.20%, and added +3.30% the next session.
    Gaotu holds $588.5M of cash, restricted cash and investments against a market value of $441.9M. On a screen that is a negative enterprise value. But $384.9M of that cash is deferred revenue - tuition already collected for lessons that have not been taught - and the filed shareholders' equity of $154.2M has already netted it off for you. Fund the cost of teaching every lesson already sold, at the filed 33.5% cost ratio, and $380.7M survives: $1.62 an ADS, 86% of the share price. That leaves the market paying about $61.2M for a business turning over $1.06BN at a 66.5% gross margin, still growing 20%.
    THE CALL: SPEC BUY (3/5, A CASH FLOOR UNDER A BUSINESS THAT STILL LOSES MONEY) — base-case value ~$2.35 vs ~$1.88 today.
    KEY METRICS:
    - CALL: SPEC BUY 3/5, fair value $2.35 vs the $1.88 close of 28 August (+25.1%). Bear $0.96, base $2.34, bull $4.04, weighted 30/45/25. Street: 10 ratings, consensus Hold, and NO live target - the newest dated note from a named firm is Citigroup's $5.81 of 5 August 2024, 754 days stale.
    - THE FLOOR: net cash $509.6M ($588.5M less $78.9M of borrowings) against a $441.9M market value. Deducting the whole $384.9M deferred revenue balance leaves $124.7M ($0.53 an ADS); deducting only the 33.5% cost of delivering it leaves $380.7M ($1.62 an ADS, 86% of the price). Filed shareholders' equity is $154.2M.
    - THE SPINE: operating cash inflow was $126.9M (+46.3%) while deferred revenue rose $120.6M over the same three months - 95% of it. The March quarter was a $122.1M OUTFLOW while deferred revenue fell $114.0M - 93% of it. Both quarters together: $4.8M against $16.4M, -70.6%. Six months of it moved the cash pile $3.0M.
    - THE ADS RATIO: three ADSs represent two ordinary shares. 156,703,879 ordinary shares outstanding is 235.1M ADSs, so the market value is $441.9M - not the $682.0M published, which uses 362.7M ADSs and is 54% too high. Corroborated independently by the FY2025 20-F depositary disclosure.
    - THE QUARTER: revenue $246.1M (+20.2%), gross margin 66.5%, operating loss $22.1M vs $35.6M. Operating costs fell to 75.5% of revenue from 83.4% - a 7.9 point move that halved the gap to operating break-even, from 17.4 points to 9.0. Selling costs alone were $134.6M, 82.2% of gross profit.
    - WHERE WE DISAGREE: guided Q3 revenue, this quarter's gross margin and costs grown at the +8.8% they actually grew give a FY2026 operating LOSS of $46.7M. The vendor consensus has a $5.3M operating PROFIT, on four revenue analysts and one earnings analyst. We agree on revenue to within 0.6%. Our model crosses into profit in 2028.
    What to watch: UP: March-quarter gross billings above last March's $146.8M; the operating cost ratio falling below 66.5% of revenue; deferred revenue continuing to grow year on year. DOWN: two consecutive quarters of deferred revenue falling year on year; refunds rising inside gross billings; the cost ratio back above 83%.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    14 min
  • Lantronix (LTRX): The $12.6M Drone Line That Replaced An $11M Customer
    Lantronix (LTRX) Q4 FY2026 — Fiscal Q4 FY2026 (three months to 30 June): revenue $31.2M, +8.0% YoY and +3.2% QoQ; gross margin 43.7% from 40.0%; operating loss $0.4M from $3.1M. GAAP EPS -$0.01; non-GAAP EPS $0.04 against a $0.03 bar. FULL YEAR: revenue $120.9M, DOWN 1.6% on $122.9M.
    A brand new unmanned systems line billed $12.6M in fiscal 2026, from what the release calls a minimal contribution the year before. In the same twelve months one customer went from just over $11M of revenue to zero - a sentence that appears only in the 10-K, never in the press release. The two very nearly cancel, which is why group revenue reads -1.6%. Take the new line out and $108.3M against $122.9M is -11.9%.
    THE CALL: AVOID (3/5, A REAL REPAIR, PAID FOR BY THE OWNERS) — base-case value ~$4.52 vs ~$5.37 today.
    KEY METRICS:
    - CALL: AVOID 3/5, fair value $4.52 vs the $5.37 close of 28 August (-15.9%). Bear $3.57, base $5.32, bull $8.35, weighted 35/30/35. Street: 6 analysts, 6 Buys, no Hold or Sell; four targets average $10.00, +86% above the tape and +121% above us - and not one published since the print.
    - THE SUBSTITUTION: $12.6M of unmanned systems revenue arrived (press release, three times) and just over $11M of one customer left (10-K Item 7, once). Excluding the new line, fiscal 2026 was $108.3M vs $122.9M = -11.9%, against a reported -1.6%.
    - THE SAME CAUSE TWICE: the 10-K attributes the 171bp gross margin gain primarily to the absence of that customer's lower-margin revenue, not to operating improvement.
    - THE MIX: Embedded IoT +15.6% to $53.6M, IoT Systems -15.2% to $58.3M, Software & Services +15.5% to $9.0M. Regionally Americas +20.2% while EMEA -30.2% and APJ -31.3% - $16.2M of annual revenue left the rest of the world.
    - THE BALANCE SHEET WAS BOUGHT: cash $20.1M to $60.5M and debt $11.8M to zero, funded by $44.9M of net share issuance. Shares 39.10M to 46.59M, +19.2%. Strip the raise and cash FALLS $4.5M. About $17M of the ATM remains open.
    - IN FAIRNESS: free cash flow was a genuine $9.3M (7.7% of revenue) - though $6.3M of it is a share-based pay add-back. Core opex held flat. 30+ unmanned engagements from ~10, NDAA-compliant, partners include Swarmer, DoD Solution and AVT Australia (CACI).
    - GUIDANCE: Q1 FY2027 revenue $31-33M = +7.4% at the midpoint against the year-ago quarter, NOT double digit. The full-year double-digit promise then needs +10.8% from the three quarters after it, and unmanned to reach $20-27M against $12.6M.
    - CONSENSUS DEFECT: the vendor's fiscal-2027 average net income of $9.0M over an average EPS of $0.234 solves to 38.4M shares. The company filed 46.7M on its 10-K cover. That $9.0M over the real count is $0.19, not $0.23.
    What to watch: UP: the September-quarter unmanned number tracking to management's 15-20% of fiscal 2027 revenue (about $5M in Q1); IoT Systems and the international regions stabilising. DOWN: the remaining $17M at-the-market programme being drawn near this price; the memory cost inflation the 10-K flags eating the margin gain; another concentrated customer leaving.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    15 min

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