AI poses new moral questions. Pope Leo says the Catholic Church has answers.
But Pope Leo XIV, the newly elected pontiff, has established AI as an early focus of his papacy, raising the topic repeatedly in public remarks, including those explaining why he took the name Leo. He has signaled that the church is poised to mount a spiritual response to the challenges posed by AI for human justice and dignity.
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Yahoo
28 minutes ago
- Yahoo
How to play software stocks in a shaky macro climate
Sales cycles are starting to stretch as trade pressure adds uncertainty and companies weigh their next artificial intelligence (AI) moves. Steve Koenig, Macquarie head of US technology research, joins Market Domination to explain why he favors Autodesk (ADSK), HubSpot (HUBS), and Atlassian (TEAM) heading into earnings. To watch more expert insights and analysis on the latest market action, check out more Market Domination. Software stocks in focus as IT budgets shrink and a flurry of trade deals up end the macroeconomic landscape, we're navigating how to play the software sector with the Yahoo Finance playbook and joining us now is Steve Koenig, Head of US Technology Research at Macquarie. Steve, great to see you as always. Um, you know, that August 1st trade deadline, it is here, Steve, and you know, you think trade and tariffs and the uncertainty that has created. Have you seen any sort of downstream effects of that in the software sector, Steve, in terms of, um, you know, size of deals or length of time to get deals done? Hi Josh, yeah, great. Thanks for having me on the program. Uh, you know, we do think that there's more uncertainty that enterprise and SMB customers are facing and in some cases it's resulting in longer sales cycles. That's that's happening. Um, but that is accompanied by a a real, um, push by companies to figure out what they need to do with AI, you know, and and whether whether that's using the LLM internally, developing their own retrieval augmented generation use cases, or using the agenti AI functionality being pushed on them by the SAS vendors. And so there are areas of investment that are happening and there's some urgency, uh, on the part of companies to figure out what they're going to do here. So, you know, there there's both headwinds and tailwinds in the current environment. I think in Q1 we we had continued good momentum, kind of a carry over from Q4. I think this quarter, this calendar Q2, the June and July quarters, we're likely to see more separation among companies with the companies that are better positioned as priority investments, uh, doing doing better and then companies that are maybe more legacy or or aren't, uh, whose products are not as much of a priority, not getting as much attention from an investment point of view. Steve, you know, the AI trading trend looks intact here, just based on the earnings reports have been coming in. I'm curious, you know, in your coverage universe, you look at those software names, are there certain names, Steve, that you would say, um, more leveraged to that trend than others? Yeah. Well, we like, uh, three names in particular, especially coming up into these June, July quarter prints. All out perform rated, Autodesk, HubSpot, and Atlassian. Um, and all of those companies have some very interesting AI opportunities. I would say HubSpot and Atlassian, the ticker there is TEAM TEAM. They're both furthest along and applying agenti AI to a variety of use cases. In HubSpot's case, it has a lot to do with marketing content creation and customer services use cases in the customer relationship management space. And for Atlassian, their agenti AI strategy has a lot to do with accelerating the software development life cycle and enhancing collaboration across business teams and across the entire company departments, including CRM and HR. So Autodesk, HubSpot, Atlassian, all buys. If I were to push you, Steve, and say, you know, which is your favorite child? Would you say you have a a strong buy on one of them? You know, we we like all three of these and, um, you know, we we would, you know, we always we always like to, um, especially going into the prints, have several picks that we think, you know, some some are probably going to do well. If we can hit two out of three, we're pretty happy. So so we would advocate, um, you know, going for all of these companies and accumulating now and averaging in. I think Autodesk is very especially interesting because the AI opportunity they have, it's still formative and it's and it's probably underappreciated by investors what they're going to be able to do. Uh, they what they do and product wise, they facilitate essential design work across architecture, engineering, construction, manufacturing, media and entertainment, and their design tools are are the standard basically in all of those industries. Uh, they have an opportunity to apply generative AI to enable product designers and architects and engineers to use text prompts, uh, and to start with an idea for what they want to build or the product they want to create and and then use generative AI to actually create the design. And Autodesk is still, uh, working to make this happening, putting the infrastructure in place. They haven't talked a lot about it, uh, on the outside, but I think over the coming quarters we're going to be hearing a lot more about their AI strategy. All right, so we got your buys. Let's talk about names you're not as excited about. Salesforce, Steve, you're neutral. You're on the sidelines. Why why the lack of excitement there for for Marc Benioff's company? Yeah. Well, I mean, you know, they they deserve a lot of respect, you know, 20 plus years having pioneered the SAS space and, you know, creating the SAS based CRM market, if you will. Um, the last several years though, they've been under a lot of pressure ever since the, um, kind of the the pandemic era spending started to, you know, that that burst of spending started to wind down. They've had headwinds, uh, when it comes to customers that are renewing and customers wanting to spend a lot more money on Salesforce. And you've seen that in terms of their, uh, subscription revenue that the sequential additions to that sequential revenue have been actually falling year on year for the last 10 quarters or so. We think they are coming up probably to an inflection in that as we lap some of these comparisons from the, uh, you know, kind of the post pandemic, uh, you know, spending slowdown. Um, so I think they can start to do better from a revenue production perspective. But I do think, um, there's still some over optimism about their AI strategy, which is a solid strategy, but it's going to take time, especially for the bigger customers to get their data in order and for Salesforce to get its revenue model, uh, associated with its AI products and also its its sales commission model, a lot of operational things to take care of. Lastly, I don't think it was a real positive sign that they have, uh, basically cut off third party, uh, gen AI tools, large language models from accessing slack data, even when customers that are using their slack product want to access that data for for the use in in training or fine tuning models or creating new use cases. And I think that's that looks to us very much like a defensive move by the company. And you know, maybe it's a smart thing in the short term to keep companies like OpenAI and glean out of out of the customer data that they host for their customers. But long term, I think it it it signals sort of a balkanization, you know, kind of a a siloed approach to to making SAS work and that's not what SAS has been about for many, many years. So I don't know if that strategy is really going to work out, uh, long term that well for them. Related Videos Smooth Sailing for Norwegian Cruise We Set Ourselves Up to Thrive in Stable Rate Environment: Sanborn Starbucks CEO Brian Niccol talks Q3 earnings, turnaround strategy Komatsu CFO on US Tariff Impact Sign in to access your portfolio
Yahoo
38 minutes ago
- Yahoo
Grid Dynamics's (NASDAQ:GDYN) Q2: Beats On Revenue, Full-Year Outlook Exceeds Expectations
Digital transformation consultancy Grid Dynamics (NASDAQ:GDYN) reported Q2 CY2025 results beating Wall Street's revenue expectations , with sales up 21.7% year on year to $101.1 million. Revenue guidance for the full year exceeded analysts' estimates, but next quarter's guidance of $104 million was less impressive, coming in 1.2% below expectations. Its non-GAAP profit of $0.10 per share was in line with analysts' consensus estimates. Is now the time to buy Grid Dynamics? Find out in our full research report. Grid Dynamics (GDYN) Q2 CY2025 Highlights: Revenue: $101.1 million vs analyst estimates of $100.6 million (21.7% year-on-year growth, 0.5% beat) Adjusted EPS: $0.10 vs analyst estimates of $0.10 (in line) Adjusted EBITDA: $12.75 million vs analyst estimates of $13.2 million (12.6% margin, 3.5% miss) The company reconfirmed its revenue guidance for the full year of $425 million at the midpoint EBITDA guidance for Q3 CY2025 is $12.5 million at the midpoint, below analyst estimates of $16.02 million Operating Margin: -0.1%, in line with the same quarter last year Market Capitalization: $820.1 million Company Overview With engineering centers across the Americas, Europe, and India serving Fortune 1000 companies, Grid Dynamics (NASDAQ:GDYN) provides technology consulting, engineering, and analytics services to help large enterprises modernize their technology systems and business processes. Revenue Growth A company's long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. With $389.2 million in revenue over the past 12 months, Grid Dynamics is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels. On the bright side, it can grow faster because it has more room to expand. As you can see below, Grid Dynamics grew its sales at an incredible 26.9% compounded annual growth rate over the last five years. This shows it had high demand, a useful starting point for our analysis. We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Grid Dynamics's annualized revenue growth of 10.4% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. This quarter, Grid Dynamics reported robust year-on-year revenue growth of 21.7%, and its $101.1 million of revenue topped Wall Street estimates by 0.5%. Company management is currently guiding for a 18.9% year-on-year increase in sales next quarter. Looking further ahead, sell-side analysts expect revenue to grow 13% over the next 12 months, an improvement versus the last two years. This projection is admirable and suggests its newer products and services will catalyze better top-line performance. Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend. Operating Margin Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D. Although Grid Dynamics broke even this quarter from an operational perspective, it's generally struggled over a longer time period. Its expensive cost structure has contributed to an average operating margin of negative 2.5% over the last five years. Unprofitable business services companies require extra attention because they could get caught swimming naked when the tide goes out. It's hard to trust that the business can endure a full cycle. On the plus side, Grid Dynamics's operating margin rose by 4.2 percentage points over the last five years, as its sales growth gave it operating leverage. Still, it will take much more for the company to reach long-term profitability. This quarter, Grid Dynamics generated a negative 0.1% operating margin. Earnings Per Share Revenue trends explain a company's historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions. Grid Dynamics's astounding 28.5% annual EPS growth over the last five years aligns with its revenue performance. This tells us its incremental sales were profitable. Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business. Grid Dynamics's two-year annual EPS declines of 3.3% were bad and lower than its 10.4% two-year revenue growth. Diving into the nuances of Grid Dynamics's earnings can give us a better understanding of its performance. We mentioned earlier that Grid Dynamics's operating margin was flat this quarter, but a two-year view shows its margin has declined by 1.8 percentage pointswhile its share count has grown 12.5%. This means the company not only became less efficient with its operating expenses but also diluted its shareholders. In Q2, Grid Dynamics reported adjusted EPS at $0.10, up from $0.08 in the same quarter last year. This print beat analysts' estimates by 2.1%. Over the next 12 months, Wall Street expects Grid Dynamics to perform poorly. Analysts forecast its full-year EPS of $0.43 will hit $0.45. Key Takeaways from Grid Dynamics's Q2 Results It was encouraging to see Grid Dynamics's full-year revenue guidance beat analysts' expectations. We were also happy its EPS outperformed Wall Street's estimates. On the other hand, its revenue guidance for next quarter slightly missed. Zooming out, we think this was a mixed quarter. Investors were likely hoping for more, and shares traded down 2.5% to $9.25 immediately after reporting. Big picture, is Grid Dynamics a buy here and now? We think that the latest quarter is just one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Forbes
41 minutes ago
- Forbes
Matching Occupational Exoskeletons With The Right Work Task
Regardless of whether one thinks of industrial exoskeletons as personal protective equipment (PPE), an engineering solution, or something in between, these wearable devices are still an ergonomic solution that needs to be applied to the correct problem. In the decade that this technology has started to see an ever-growing adoption at work sites, the responsibility of matching the exoskeleton with a job task continues to fall on the end user or buyer. This is a persistent hurdle towards mass adoption, with several solutions on the horizon. How it started: Like any new technology, exoskeleton startups had no choice but to sell their products directly. This meant that if a company wanted to select and compare devices, it had to discover each one and establish unique communication channels. This process can be slow and laborious, and the lessons learned by one buyer are often not shared with others. One exception that exists in the public domain is 'The implementation of cobotics and exoskeletal devices for the Australia red meat processing industry,' a 91-page report published by AMPC comparing 19 industrial exoskeletons. Ten years later, the landscape has gone through some dramatic changes. Multiple standards bodies have looked into classifying and evaluating occupational exoskeletons. Fraunhofer IPA, a leading German research institute, has created a series of parcours to evaluate occupational exoskeletons as product families grouping results by task. Another change is the emergence of distributors, which could either be dedicated to one supplier or carry multiple products from different developers. As a quick note, choosing the correct exoskeleton solution (or deciding if a wearable is even the correct solution) for a repetitive work task is just one piece of the puzzle for a successful implementation. Still, it is often the first step in the process, and an error there will cascade down through pilots and long-term adoption efforts (and will most certainly negatively impact any return business). Even with all these changes, the majority of occupational exoskeletons are still sold directly by their producers, with some alternative acquisition and comparison pathways emerging: First, several dedicated consulting companies have sprouted in North America and Europe, which can provide support in choosing the right exoskeleton system for a fee. Second, some distributors carry devices from multiple developers, and their sales team is becoming more experienced with the strengths of each one. Third, some companies go beyond the role of a distributor and have become closer to an integrator that goes on a journey with the end user and buyers, helping them through the entire process of selection, comparison, and setting up a pilot. Last but not least, in the age of AI and digital tools, there have been multiple systems proposed that can collect data from repetitive work tasks, and some are designed specifically for wearables. The challenge with this digital solution is data collection, which can range from cell phone videos to motion tracking or even full EMG studies, but that is not all, because in addition to data collection, data interpretation with these systems is not trivial and requires effort before it can be condensed and summarized into a digestible report. How could things shape up in the future? There are a few likely scenarios on how the complexity of selecting an occupational exoskeleton could be reduced while creating a more positive and streamlined experience for decision makers and buyers. The car dealership route - developers of occupational exoskeletons could continue to consolidate so that each one has a full portfolio. This would be similar to shopping for a car, where car company A would offer sedans through trucks and everything in between, and the dealership next to it would offer the same range of vehicle classes from a different maker. An alternative to that would be an increase in multi-vendor distributors that already carry competing brands. Some examples of this happening right now would be Stanley Handling and FoxInnovation in Europe, The Exoskeleton Store and ExxoVantage in the Americas and Oceania. With this model, buyers have to visit fewer places and can also leverage the experience of the multi-vendor distributors to assist with selection. The final version could be an investment and improvement in digital tools. This could include online comparison tools, such as those found on car or camera equipment websites, or something more custom that can collect and interpret data from job sites and compare it against the known capabilities of different types and brands of industrial exoskeletons. All this work will lead to the formation of a marketplace, allowing buyers and end users to compare and evaluate industrial wearable solutions against data or prior knowledge. This would simplify the buying process considerably and lower the entry barrier for professionals and companies interested in becoming early adopters of wearable devices that provide direct physical support for their jobs.
