🗞 Top 5 Earnings Reports From Q2

Happy Sunday!

Here’s what’s on the docket for this week’s newsletter:

• 📊 Top 5 Earnings Reports from Q2

• 🔐 CrowdStrike is the Real AI Powerhouse in Cybersecurity

Let’s dive in!

Featured Story

Top 5 Earnings Reports from Q2

Q2 earnings season is coming to a close. As we look back at the thousands of companies that reported earnings over the last two months, there are a few in particular that stand out above the rest.

Here are 5 of the best reports we saw in Q2:

1. Reddit Inc.

Since coming public in 2024, the “community of communities” is quickly emerging as an impressive digital platform.

Reddit reached 416 million weekly active users this quarter, up 22% YoY. And those users are attracting more and more advertisers as Reddit saw an 84% jump in its advertising revenue this quarter.

3-Month Total Return: +111%

2. SoFi Technologies

SoFi, the burgeoning online-only bank, is attracting customers at a record pace.

As of this quarter, the company now has 11.7 million total members and has added a record number of new members in three consecutive quarters.

This member growth is also helping attract new deposits for SoFi bank as well. Consumer deposits have grown more than 10-fold over the last 3 years.

3-Month Total Return: +82%

3. Medpace Holdings

Medpace is a contract research organization (CRO) in the biotech space. In other words, they help pharmaceutical companies develop drugs by managing their trials.

For those who don’t keep up with the industry, pharmaceutical spending has been in a cyclical downturn since 2023, which has impacted pretty much all companies in the biotech space.

However, despite the industry-wide headwinds, Medpace delivered a positive surprise for investors this quarter. After four quarters in a row of declines in their Net New Business Awards (aka Backlog), Medpace grew the figure by $121 million, up 24% compared to a quarter ago.

3-Month Total Return: +66%

4. Ubiquiti Inc.

Ubiquiti sells unified networking systems to enterprises and SMBs.

The integrated hardware & software provider goes about its business quietly. They provide minimal disclosures, have no conference calls, and don’t offer any investor presentations. Yet they continue to produce stellar results.

Ubiquiti’s “Enterprise Revenue” grew by 58% this quarter, which is the company’s fastest growth rate in more than 5 years.

3-Month Total Return: +42%

5. Microsoft

Expectations for the tech giant were already extremely high coming into this quarter, yet still, they found a way to surprise investors.

Microsoft Azure saw a major acceleration in revenue growth this quarter and grew faster than both Google Cloud and Amazon Web Services. This helped the company report its largest ever jump in cloud revenue in a single quarter. In fact, the dollar growth in cloud revenue was more than double any other quarter in the company’s history.

3-Month Total Return: +6%

Partner Spotlight: Potential Multibaggers

CrowdStrike is the Real AI Powerhouse in Cybersecurity

The company reported the result on Wednesday, August 27, and the stock was down around 6% after the release. The next day, the stock was up around 5%.

The Numbers

CrowdStrike's management team informed us about the reacceleration in the last quarter, and the numbers for this quarter confirmed the reacceleration.

CEO George Kurtz:

“I'm proud of CrowdStrike's ability to deliver reacceleration, our return to year-over-year net new ARR growth a quarter early.”

Revenue for Q2 came in at $1.17 billion, up 21% year-over-year, slightly ahead of expectations. More importantly, Annual Recurring Revenue or ARR grew 20% to $4.66 billion, with $221.1 million in net new ARR added during the quarter.

To put that in perspective, CrowdStrike's ARR has skyrocketed from $791 million to $4.66 billion in just four years, representing a 42.53% compound annual growth rate. That level of sustained growth at scale is truly remarkable.

In Q1, CrowdStrike customers who adopted 6 or more modules grew to 48% from 45% a year ago, 7 or more modules grew to 33% from 29% a year ago, and 8 or more modules grew to 23%. Notably, among customers with over $100,000 in ending ARR, 60% have adopted eight or more modules, highlighting the effectiveness of the CrowdStrike platform consolidation strategy.

The total GAAP gross margin was 77%, and the non-GAAP subscription gross margin remained at 80% of revenue.

On a non-GAAP basis, CrowdStrike reported net income of $237.4 million, compared to $221.6 million a year ago. Non-GAAP EPS came in at $0.93, compared to $0.88 in Q2 last year. Both figures came in ahead of internal estimates for the quarter.

GAAP results, however, were more heavily impacted by the compensations from the outage last year. The company reported a GAAP net loss of $77.2 million, which included $35.7 million in expenses for outage and related matters and $38.4 million in strategic plan-related charges, compared to a net income of $47 million in the same quarter last year. GAAP net loss per share was $0.31, versus a profit of $0.19 per share in Q2 last year.

Free cash flow was $283.6 million or 24% of revenue, compared to $272.2 million. Expenses for outage-related and strategic plan costs impacted Q2 free cash flow by approximately $29 million. Free cash flow began to tick up as the outage-related expenses started to fade away slowly. The Free cash flow margin was 25.9, and the management team guided to exit the year with 27% of free cash flow margin.

CEO George Kurtz on the call:

“Quarters like this one highlight our momentum and progress on the path to $10 billion in ending ARR, setting new records, achieving net new ARR reacceleration sooner than anticipated, and rising competitive win rates highlight CrowdStrike leading the way in cybersecurity.”