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Good morning investors!

During the ever important earnings season, we publish our “Earnings Recap” — an in-depth summary of the earnings reports for stocks that we cover on a regular basis.

It was a quieter week on the earnings front, but we did get huge earnings from Nvidia, as well as some important clarity on the consumer and tariff effects from some major retailers.

Here’s a look at the 5 names we are covering in this report:

• Monday 6/2: --

• Tuesday 6/3: CrowdStrike and Dollar General

• Wednesday 6/4: Dollar Tree

• Thursday 6/5: Broadcom and Lululemon

• Friday 6/6: --

Broadcom (AVGO)

Broadcom $AVGO ( ▲ 2.01% ) delivered a strong Q2 FY25, with AI-fueled semiconductor demand and VMware-led software growth pushing revenue, earnings, and cash flow to new highs. Revenue hit $15.0B, topping estimates and rising 20% YoY, while adjusted EPS came in at $1.58, up 44% and slightly above expectations. Operating income nearly doubled as margins expanded, and AI revenue surged 46% to $4.4B.

🔑 Key Points

• AI Momentum: AI revenue jumped 46% YoY to $4.4B, led by strong networking demand from hyperscalers.

• Software Strength: VMware drove a 25% YoY increase in infrastructure software revenue to $6.6B.

• Massive Cash Generation: Free cash flow reached $6.4B (+44% YoY), with $7.0B returned to shareholders.

• Margin Gains: Adjusted EBITDA hit $10.0B (67% margin), and operating margin expanded to 38.8%.

• Upbeat Outlook: Q3 revenue is guided to $15.8B (+21% YoY) with continued AI tailwinds.

👀 What You Need to Know

Broadcom continues to ride AI infrastructure demand and VMware synergy to record results, with strong capital returns and expanding margins reinforcing investor confidence. Q3 guidance points to further acceleration and this remains a high-quality compounder in the AI hardware and enterprise software stack.

AVGO shares are +3.8% so far this week.

CrowdStrike (CRWD)

CrowdStrike $CRWD ( ▼ 0.13% ) reported a strong Q1 FY26, beating EPS expectations and delivering robust ARR growth with 97% gross retention. Subscription revenue rose 21% YoY, and demand for Falcon Flex continues to scale rapidly. Despite the top-line strength, operating margins compressed, and the company reported a GAAP net loss as cost pressures linger. A new $1B share buyback program underscores management’s confidence.

🔑 Key Points

• EPS Beat: EPS came in at $0.73 vs. $0.66 expected (+11% surprise), though still down 22% YoY due to higher operating costs.

  ARR Growth: Annual recurring revenue rose 22% YoY to $4.44B, with $194M in net new ARR in Q1—driven by strong Falcon module adoption.

  Resilient Retention: Customer gross retention held steady at 97%, showing ongoing trust in the platform despite last year's outage.

  Cash Flow Strength: Operating cash flow hit a record $384M; free cash flow declined 13% YoY to $279M due to increased capex and investments.

  Expense Pressure: Operating expenses surged 36% YoY to $939M, tied to increased R&D, AI development, and post-incident remediation.

👀 What You Need to Know

CrowdStrike continues to fire on key metrics—strong net new ARR, resilient retention, and growing Falcon module adoption all support the long-term growth story. However, cost inflation and margin compression remain a near-term overhang. Investors should watch for stabilization in profitability as the company leans into AI, next-gen SIEM, and expanded service offerings in the back half of FY26.

CRWD shares are +0.8% so far this week.

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Lululemon (LULU)

Lululemon $LULU ( ▲ 3.18% ) delivered a solid top-line beat for Q1 FY25, with revenue up 7% YoY to $2.37B and EPS of $2.60 coming in ahead of estimates. However, operating cash flow turned sharply negative, inventories swelled by 23%, and operating margin slipped, signaling execution risks ahead despite continued international strength and brand momentum. Most notably, the company lowered its full-year EPS forecast, a cautious signal amid soft U.S. comps and mounting cost pressures.

🔑 Key Points

• Revenue Beat: Q1 revenue of $2.37B (+7% YoY) beat the $2.36B estimate, driven by +19% international growth. U.S. revenue rose just 2%.

• Modest EPS Beat: Adjusted EPS came in at $2.60 (vs. $2.58 est), but net income declined -2% to $315M, reflecting margin compression.

• Margins Under Pressure: Gross margin rose to 58.3% (+60bps YoY), but operating margin dropped to 18.5% (-110bps) as SG&A surged 12%.

• Cash Flow Weakness: Operating cash flow flipped to -$119M (from +$128M), while FCF fell 13% to -$226M.

• Inventory Ballooned: Inventory rose 23% YoY to $1.7B — well ahead of sales growth, raising markdown risk.

👀 What You Need to Know

While Q1 results slightly beat estimates and international strength remains a tailwind, Lululemon cut its full-year EPS outlook and reported worsening operating cash flow and rising inventory levels. These developments point to execution risk and margin pressure, even as management maintains its full-year revenue forecast and continues aggressive buybacks.

LULU shares are -16.6% so far this week.

Dollar General (DG)

Dollar General $DG ( ▼ 2.97% ) kicked off fiscal 2025 with a solid earnings beat and raised its full-year guidance despite ongoing macro uncertainty. Revenue grew 5.3% YoY to $10.44B, topping estimates by 1.46%, while EPS of $1.78 crushed expectations by over 20%. Strength came from increased basket sizes, margin expansion, and efficiency gains in inventory management. Although store count declined due to elevated closures, free cash flow surged and management reaffirmed confidence in its turnaround.

🔑 Key Points

• Revenue Beat: Total sales rose 5.3% YoY to $10.44B, topping expectations by $150M, led by strength in consumables and seasonal goods.

• Margin Expansion: Gross margin improved 78 bps to 31.0% as shrink declined and inventory markups helped offset higher markdowns and labor costs.

• Cash Flow Strength: Operating cash flow climbed 28% YoY to $847M, and free cash flow rose 73% to $557M despite elevated capex.

• Same-Store Sales: Comps rose 2.4% YoY, driven by a +2.7% increase in average transaction size, though traffic dipped slightly (-0.3%).

• Guidance Raised: FY25 outlook was raised across the board with EPS now guided to $5.20–$5.80 (vs. $5.10–$5.80 prior) and comp sales expected to grow 1.5–2.5%.

👀 What You Need to Know

Dollar General is showing early signs of an operational rebound, with improved merchandising execution and better margin discipline. Inventory per store fell 7% YoY, and management flagged market share gains across both consumables and discretionary categories. While store growth turned slightly negative this quarter (net -12 stores), the company remains on track for nearly 5,000 remodels and new stores this year. Tariff risks loom later in 2025, but for now, execution is improving and investors are taking notice.

DG shares are +15.7% so far this week.

Dollar Tree (DLTR)

Dollar Tree $DLTR ( ▲ 1.44% ) beat Q1 expectations on both revenue and earnings, with comps rising +5.4% and revenue jumping +11% YoY to $4.64B. But despite the strong top-line, cost inflation and strategic investments weighed on margins and cash flow. EPS of $1.26 beat by 4%, but management warned that Q2 EPS could drop as much as 50% YoY before rebounding in the second half.

🔑 Key Points

• Comps Accelerate: Same-store sales rose +5.4%, driven by a +2.5% increase in traffic and a +2.8% jump in average ticket size — the best quarterly comp since early 2022.

• Revenue Beats: Revenue hit $4.64B vs. $4.54B est. (+2.2% beat), marking an 11% YoY increase as multi-price format conversions and store openings boosted topline.

• Margins Compress: Operating income rose just 1% YoY to $384.1M, while SG&A jumped 16% due to wage pressure, utilities, and depreciation. Operating margin fell 90bps to 8.3%.

• FCF Slump: Free cash flow dropped -31% YoY to $129.7M, as capex and inventory investments outweighed inflows. Operating cash flow was also down -25% YoY.

• Capital Moves: Dollar Tree repurchased $504.3M in stock YTD and redeemed $1B in senior notes post-quarter. The Family Dollar divestiture is on track to close in Q2, expected to deliver $800M in proceeds and $350M in tax benefits.

👀 What You Need to Know

Dollar Tree is delivering on its store-level strategy as comps, traffic, and ticket all improved meaningfully, but the real debate now shifts to margins. Higher payroll, tariffs, and transitional costs from the Family Dollar separation will pressure Q2 results, with EPS guided down -45% to -50% YoY. But the company reaffirmed full-year revenue and raised EPS guidance to $5.15–$5.65, suggesting a stronger H2. Investors will be watching closely to see if FCF stabilizes and margins rebound once the Family Dollar deal closes and TSA costs roll off.

DLTR shares are +4.1% so far this week.

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The Investor’s Edge

Disclosure

This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.