Meta's Zuckerberg Not Liable In Lawsuits Over Social Media Harm To Children

Block SQ reported third-quarter 2024 adjusted earnings of 88 cents per share, in line with the Zacks Consensus Estimate. The figure surged 76% year over year.

Apart from being in line in the third quarter of 2024, SQ’s earnings beat the Zacks Consensus Estimate in a couple of quarters in the trailing four quarters and missed once, with the earnings surprise being 9.27%, on average.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Net revenues of $5.98 billion missed the consensus mark by 3.9%. The top line, however, increased 6.4% year over year.

SQ shares have declined 10.2%, underperforming the Zacks Technology Services industry’s return of 48.3% and the Zacks Business Services sector’s appreciation of 24%.

Block, Inc. Price, Consensus and EPS Surprise

Block, Inc. price-consensus-eps-surprise-chart | Block, Inc. Quote

However, the company offered solid guidance for fourth-quarter 2024 and increased 2024 guidance for adjusted EBITDA and operating income, which is expected to help the SQ shares recover. Block expects to achieve Rule of 40 in 2026.

SQ’s Top-Line Details

Transaction (28.7% of net revenues) revenues were $1.71 billion, up 3.2% year over year.

Strong Square ecosystem accounted for $1.61 billion in transaction revenues, up 7% year over year. Cash App contributed $99 million to transaction revenues, down 26% year over year.

In the reported quarter, Cash App Card actives grew 11% year over year to 24 million actives.

SQ’s Cash App and Lyft LYFT inked a partnership to bring a customer-friendly new payment method to the latter’s customers.

Cash App’s partnership with Alphabet’s GOOGL Google Play offers a preferred alternative payment option when checking out their Android smartphones or tablets.

Square’s partnership with T-Mobile TMUS is expected to expand its footprint among millions of small businesses.

Subscription and Services (30.1% of net revenues) revenues were $1.8 billion, up 20.4% year over year.

Hardware (0.6% of net revenues) revenues fell 14.1% year over year to $36.4 million.

Bitcoin (40.6% of net revenues) revenues inched up 0.2% year over year to $2.43 billion.

Gross Payment Volume (GPV) was $62.49 billion compared with $60.08 billion. Square’s GPV was $59.87 billion, and Cash App’s GPV was $2.619 billion.

SQ’s Operating Details

Gross profit grew 19% year over year to $2.25 billion. Square generated a gross profit of $932 million, up 16% year over year, and Cash App generated a gross profit of $1.31 billion, up 21% year over year.

Adjusted EBITDA was $807 million, up 69% year over year.

Operating expenses were $1.46 billion, up 1% year over year.

Product development expenses were $442 million, up 3% year over year. General and administrative expenses were $338 million, down 11% year over year. Sales and marketing costs were $476 million, up 8% year over year.

The adjusted operating income was $444 million in the reported quarter, with an operating margin of 20%. SQ reported an adjusted operating income of $90 million in the year-ago quarter.

Block’s Balance Sheet Details

As of Sept. 30, 2024, the cash and cash equivalent balance was $9.9 billion, up from $7.8 billion as of June 30, 2024.

The long-term debt was $5.1 billion as of Sept. 30, 2024, unchanged sequentially.

In the third quarter of 2024, SQ repurchased 5.3 million shares of its Class A common stock for an aggregate amount of $346 million. As of Sept. 30, 2024, $2.86 billion remained available under the current authorization.

SQ Offers Positive Guidance

For the fourth quarter of 2024, Block expects gross profit of $2.31 billion, suggesting year-over-year growth of 14%.

Adjusted EBITDA for the fourth quarter is anticipated to be $725 million.

Adjusted operating income is expected to be $355 million.

For 2024, SQ reiterated its guidance for gross profit at $8.89 billion, indicating growth of 18% from the 2023 reported figure.

The guidance for 2024 adjusted EBITDA has been increased from $2.90 billion to $3 billion. Adjusted EBITDA margin for 2024 is now expected to be 34% better than previous guidance of 33%.

Block revised the guidance for operating income from $1.44 billion to $1.56 billion. Operating margin for 2024 is now expected to be 18% better than the previous guidance of 16%.

Zacks Rank

Currently, Block has a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research

Dropbox DBX reported third-quarter 2024 non-GAAP earnings of 60 cents per share, which beat the Zacks Consensus Estimate by 15.38% and increased 7.1% year over year.

DBX’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the earnings surprise being 13.65%, on average.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Revenues of $638.8 million inched up 0.9% year over year and beat the consensus mark by 0.29%. Total annual recurring revenues came in at $2.579 billion, up 2.1% year over year.

Dropbox, Inc. Price, Consensus and EPS Surprise

Dropbox, Inc. price-consensus-eps-surprise-chart | Dropbox, Inc. Quote

What Can You Expect from DBX Shares Post Q3 Results?

Dropbox shares were slightly down following the third-quarter 2024 results. Year to date, DBX shares have declined 5.4%, underperforming the Zacks Computer & Technology sector’s return of 28.4%.

It has also underperformed the Zacks Internet Services industry and peers, including Alphabet GOOGL. While Alphabet returned 29.6%, the industry appreciated 24.3% over the same timeframe.

DBX offered positive guidance for 2024, expecting both gross and operating margins to rise on a narrower revenue base. It is suffering from stiff competition in the File Sync and Share (FSS) business amid a challenging macroeconomic environment.

The launch of the AI-powered universal search product, Dropbox Dash, for business users in October is a noteworthy development. This is expected to boost clientele.

DBX’s Paid User Base Rises in Q3

Dropbox exited the third quarter of 2024 with 18.24 million paying users, marking sequential growth of nearly 19,000. The average revenue per paying user was $139.05 compared with $138.71 in the year-ago quarter.

DBX is a leader in the content sharing and collaboration applications category that is currently worth $12 billion, per IDC estimates. DBX currently supports more than 700 million registered users through its FSS plans and has better market share than Apple AAPL and Box BOX.

Per IDC’s May 2024 report, Dropbox enjoys a market share of 20.9%, followed by Alphabet’s Google with a 16.4% share, and Box’s 8.8%, while Apple has an 8.6% market share. Microsoft, with a 29.4% market share, was placed at #1 by IDC.

DBX’s Margins Expand in Q3

In the third quarter, Dropbox reported a non-GAAP gross margin of 84%, expanding 140 basis points (bps) year over year.

In the reported quarter, research and development expenses were $155.4 million, up 1.8% year over year. Sales & marketing expenses increased 3.7% year over year to $101 million. General & administrative expenses rose 7.3% year over year to $48.8 million.

Dropbox reported a non-GAAP operating margin of 36.2%, up 30 bps year over year.

Balance Sheet & Cash Flow

As of Sept. 30, 2024, Dropbox had cash, cash equivalents and short-term investments of $890.8 million compared with $1.06 billion as of June 30, 2024. Available liquidity was $1.36 billion as of Sept. 30.

In the third quarter, the company reported a free cash flow of $270.1 million compared with $224.7 million reported in the previous quarter.

In second-quarter 2024, more than 11 million shares were repurchased, totaling $260 million. As of the end of the second quarter, approximately $868 million remained under the current repurchase authorization.

Dropbox Raises 2024 Margin Guidance

For the third quarter of 2024, Dropbox expects revenues between $635 million and $638 million. The company expects a forex tailwind of less than $0.5 million.

Non-GAAP operating margin is expected to be around 32%.

For 2024, it expects revenues between $2.542 billion and $2.545 billion (compared with previous guidance of $2.540-$2.550 billion). At constant currency, revenues are expected between $2.538 billion and $2.541 billion (compared with previous guidance of $2.537-$2.547 billion).

The company expects gross margin to be 84% (up from the previous guidance range of 83-83.5%) for the full year. Non-GAAP operating margin is expected to be roughly 36% (up from the previous guidance range of 33.5-34%).

Dropbox expects free cash flow between $860 million and $875 million (down from previous guidance between $910 million and $950 million).

Zacks Rank

Currently, Dropbox carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research

Rigetti Computing RGTI is set to report third-quarter 2024 results on Nov. 12.

The Zacks Consensus Estimate for third-quarter revenues is currently pegged at $33.33 million, indicating growth of 7.07% year over year.

The consensus mark for earnings is currently pegged at a loss of 8 cents per share, unchanged over the past 30 days. The figure indicates a 38.46% increase from the year-ago quarter’s reported figure.

Rigetti Computing, Inc. Price and EPS Surprise

Rigetti Computing, Inc. price-eps-surprise | Rigetti Computing, Inc. Quote

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Let’s see how things have shaped up prior to this announcement.

Key Factors to Consider for RGTI Q3 Earnings

RGTI’s focus on developing high-fidelity Quantum Processor Units (QPUs) and expanding its market presence through partnerships and new customer acquisitions, particularly in government and international markets, is expected to have driven growth in the to-be-reported quarter.

Rigetti achieved a 99.3% median 2-qubit gate fidelity on its 9-qubit Ankaa class quantum system in second-quarter 2024. This improvement in quantum processor performance is expected to be a significant step toward deploying the 84-qubit Ankaa 3 system by the end of the year. This advancement is expected to have enhanced Rigetti’s reputation and capabilities in the quantum computing industry.

The strong performance of Rigetti’s 24-qubit system, with a 99% fidelity rate and rapid gate speeds of 60-80 nanoseconds, is expected to have been a tailwind in the to-be-reported quarter. This system’s superior capability is likely to attract more partners and customers, further enhancing Rigetti’s market presence and revenue growth.

The sale of its Novera QPU to Horizon Quantum Computing in the second quarter of 2024 shows Rigetti’s capability to generate revenues through product sales. More sales, alongside potential new contracts from government and commercial clients, are expected to have aided Rigetti’s revenues in the third quarter.

RGTI Shares Underperform Sector, Industry

Rigetti shares have underperformed the Zacks Computer & Technology sector and its peers Salesforce CRM, International Business Machines IBM and Alphabet GOOGL in the year-to-date period.

While RGTI has returned 14.8%, Salesforce, IBM and Alphabet have gained 48%, 30.7% and 29.4%, respectively, in the year-to-date period. The broader sector appreciated 25.5% over the same timeframe.

RGTI has also underperformed the Zacks Computer - Software industry, which has returned 24.9% year to date.

YTD Performance

RGTI stock is not so cheap, as suggested by the Value Score of C.

In terms of the forward 12-month Price/Sales ratio, RGTI is trading at 11.93X, higher than the sector’s 7.95X.

Price/Sales Ratio (F12M)

RGTI’s Long-term Prospects Are Bright

RGTI benefits from the growth opportunities in the quantum computing market, which, per a Grand View Research report, is expected to witness a CAGR of 20.1% from 2024 to 2030.

RGTI’s expanding clientele further underscores its growing influence in the quantum computing space.

In October, Rigetti, in collaboration with Riverlane, successfully demonstrated real-time, low-latency quantum error correction on its 84-qubit Ankaa-2 system. This marks a significant step toward achieving fault-tolerant quantum computing, with long-term plans to integrate large-scale error correction on future systems.

Rigetti’s portfolio strength is a major growth driver for its success. In August, Rigetti announced the publication of a paper on its novel chip fabrication process, Alternating-Bias Assisted Annealing, which enhances qubit frequency targeting and improves quantum computing performance.

Rigetti’s modular chip architecture, which allows for efficient scaling by linking multiple identical chips, could provide a scalable pathway to higher-qubit quantum processors. This is expected to support future product expansions, positioning Rigetti to meet increasing market demand for scalable quantum systems.

RGTI Shares – Buy, Sell or Hold?

Rigetti’s advancements in quantum processors and modular chip architecture will benefit the company.

However, challenging macroeconomic uncertainties and intense competition in the rapidly evolving and highly competitive quantum computing market make it a risky bet.

Currently, Rigetti carries a Zacks Rank #3 (Hold), which implies that investors should wait for a better entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research

Valued at a market cap of $41.4 billion, Snowflake is a cloud-based data warehousing company that provides enterprises with a platform for data processing, analytics, and storage. Its robust architecture provides Snowflake with a competitive moat, as it can easily separate compute and storage functions, enabling clients to scale their data requirements effectively while optimizing costs.

The Snowflake Data Marketplace allows users to access live datasets from their accounts. It has successfully leveraged cloud technology to eliminate data silos and simplify the data management process. Companies across sectors such as finance, healthcare, communications, and retail use Snowflake’s portfolio of offerings.

Snowflake’s diversified product offerings allowed the company to grow sales from $265 million in fiscal 2020 (ended in January) to $3.20 billion in the last 12 months. Despite its strong top-line growth, SNOW stock is down about 70% from all-time highs, underperforming the broader markets significantly since its initial public offering (IPO) five years back. Let’s see if Snowflake can surprise Wall Street to the upside with its upcoming earnings release and stage a recovery in the final stretch of 2024.

Artificial intelligence (AI) is rapidly transforming industries across the globe. As AI capabilities evolve and improve, tech companies can create more value while expanding into new markets.

Several companies stand to benefit significantly from the advancement of AI. While top tech giants like Nvidia , Microsoft , and AMD are obvious choices, there are a few emerging tech companies that might also profit extensively in the long run from their AI investments.

#1. CrowdStrike Holdings

CrowdStrike Holdings has emerged as a market leader in the rapidly growing cybersecurity market. Unlike traditional cybersecurity companies, CrowdStrike's cloud-native platform, the Falcon Platform, uses AI, machine learning (ML), and data analytics to detect and mitigate threats in real-time.

Valued at $78.4 billion by market cap, shares of the cybersecurity company have rallied 29.6% year-to-date, compared to the S&P 500 Index's gain of 25.2%.

Total revenue for the second quarter of fiscal 2025 increased 32% year on year to $963.9 million. The company's subscription model led to annual recurring revenue (ARR) growth of 32%. Adjusted earnings soared 40.5% to $1.04 per share.

Analysts predict earnings growth of 17.7% in fiscal 2025 and 18.2% in fiscal 2026. CRWD is trading at 74 times forward earnings. For the time being, the company's rapid revenue and earnings growth warrants a higher valuation. The company's collaboration with tech titans such as Nvidia, Tata Consultancy Services, Amazon , and others will help strengthen the Falcon platform's market position.

Furthermore, the global cybersecurity market is expected to reach $298.5 billion by 2028, growing at a CAGR of 9.4%. CrowdStrike, with its advanced AI-driven technology and strong market position, is poised to capitalize on this growth.

Wall Street analysts are bullish on CRWD stock, with an overall “strong buy” rating. Among the 43 analysts in coverage, 34 have rated it as a “strong buy,” three as a “moderate buy,” and seven maintain a “hold” rating. The stock is trading close to its average 12-month price target of $325.54, while the Street-high price estimate of $424, suggests more than 28% expected upside from current levels.

#2. Palantir Technologies

Palantir Technologies is a significant player in the software and data analytics markets. Its data analytics platforms, namely Gotham and Foundry, serve both government and commercial clients.

Valued at $124.3 billion by market cap, shares of this software firm have surged an eye-catching 234.9% YTD, crushing the broader market's gain, with recent upside driven by strong Q3 results.

In Q3 of 2024, revenue increased 30% from the previous year to $726 million, while adjusted EPS increased 43% to $0.10.

Palantir's government business remains its core, but the company has made a significant push into the commercial sector. Growth of 54% in U.S. commercial revenue and 40% growth in U.S. government revenue drove this performance. Strong adoption of its Artificial Intelligence Platform (AIP) enabled the company to secure 104 contracts in Q3 alone.

Looking ahead, Palantir's commercial expansion may allow it to reach new clients and industries, increasing its revenue base and decreasing its reliance on government spending.

Analysts predict 52.8% earnings growth in 2024, followed by 22.1% in 2025. Palantir's stock is expensive, trading at 119 times forward 2025 earnings and 33 times forward sales. However, investors appear to believe in the company's long-term potential, which has driven its stock performance this year.

Overall, analysts are neutral about PLTR stock, rating it a “hold” due to its lofty valuation. With the YTD surge, PLTR stock has surpassed its average 12-month price target of $30.29, and closed Thursday just 2% away from its newly raised Street-high price target of $57.

#3. MongoDB

MongoDB is a leading provider of modern database solutions, best known for its open-source, document-driven database. MongoDB's flagship product is MongoDB Atlas, a fully managed cloud database service that allows businesses to deploy MongoDB on major cloud providers such as Amazon Web Services (AWS), Microsoft Azure, and Alphabet's Google Cloud. Other notable offerings include MongoDB Stitch, MongoDB Compass, and MongoDB Realm, among others.

Valued at $20.7 billion by market cap, shares of MongoDB have fallen 28% in 2024, lagging the overall market. However, this presents a buying opportunity, as Wall Street sees more upside in store.

In the second quarter of fiscal 2025, total revenue increased 13% to $478.1 million, led by a 13% increase in subscription revenue. Adjusted earnings per share were $0.70, down from $0.93 the previous year. Its flagship product, MongoDB Atlas, contributed 71% of total revenue, up 27% year on year.

The company ended the second quarter with $2.3 billion in cash, cash equivalents, short-term investments, and restricted cash.

At the midpoint, management expects fiscal 2025 revenue of $1.925 billion and adjusted EPS of $2.40, compared to $1.68 billion and $3.33 in fiscal 2024. Analysts predict that the company's revenue will rise by 14.6% and 17.6% over the next two fiscal years. In fiscal 2026, the company could report a $3.16 profit. MDB stock is trading at nine times forward sales, a discount from its five-year historical average of 20.8x.

Wall Street analysts are bullish on MDB, with an overall “strong buy” rating. Among the 31 analysts covering the stock, 22 have rated it as a “strong buy,” three as a “moderate buy,” five maintain a “hold” rating, and one suggests a “strong sell.” Its average 12-month price target of $337.85 implies an upside potential of 14.9%. Plus, the high price estimate of $440 suggests nearly 49.6% expected upside from current levels.

A team of Goldman analysts led by Ryan Hammond believes "platform" stocks like MongoDB and Snowflake will be the "primary beneficiaries of the next wave of generative AI investments."

#4. Snowflake

Snowflake offers a cloud-native data platform that allows businesses to seamlessly store, analyze, and share data across multiple clouds.

Valued at $40.7 billion by market cap, shares of Snowflake have fallen 37.9% this year, widely trailing the tech-led Nasdaq Composite’s ($NASX) gain of 28.4%.

Snowflake has shown strong customer confidence in its products, as evidenced by its net retention rate of 127% in the second quarter of fiscal 2025. Product revenue increased 30% year on year to $829.3 million. Snowflake's business model is based on usage-based billing, which means that revenue streams are relatively predictable. The remaining performance obligations, or RPO (contracted revenue to be realized in the future), increased by 48% to $5.2 billion in the second quarter.

The company has not yet achieved consistent profitability, and its Q2 net loss stood at $0.95 per share. Analysts predict that Snowflake's fiscal 2025 losses will be around $0.60, with profits of $0.92 by fiscal 2026. Revenue is expected to rise by 25.8% and 23.4% in fiscal years 2025 and 2026, respectively. SNOW, trading at nine times forward sales, is a reasonable AI stock to buy right now.

Overall, analysts are moderately bullish about SNOW stock. Among the 41 analysts in coverage, 24 have rated it as a “strong buy,” three as a “moderate buy,” 12 maintain a “hold” rating, and two suggest a “strong sell.” Its average 12-month price target of $170.25 implies an upside potential of 37.8%. Plus, the high price estimate of $220 suggests 78% expected upside from current levels.

On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.