# Earnings Analysis Request

**Company:** {{company}}
**Analysis Type:** {{analysisType}}
**Question:** {{question}}

**Additional Context (if provided):**
- Quarter: {{quarter}}
- Earnings Data: {{earningsData}}

Using the earnings analysis framework below, perform a comprehensive review of this company's earnings. If specific earnings data is provided, incorporate it. Otherwise, use the framework to structure your analysis based on available information.

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# Earnings Analysis Reference

## EPS Analysis Framework

### Beat/Miss Classification

| Category | Definition | Typical Market Reaction |
|----------|-----------|------------------------|
| Blowout Beat | EPS > consensus by > 10% | +3 to +10% (sustained) |
| Solid Beat | EPS > consensus by 3-10% | +1 to +5% |
| Inline Beat | EPS > consensus by 0-3% | +/- 1% |
| Inline Miss | EPS < consensus by 0-3% | -1 to -3% |
| Clear Miss | EPS < consensus by 3-10% | -3 to -8% |
| Significant Miss | EPS < consensus by > 10% | -5 to -15%+ |

**Important:** Market reaction depends heavily on guidance, not just the beat/miss. A company can beat EPS but drop on lowered guidance.

### EPS Quality Assessment

**Reported EPS (GAAP) vs Adjusted EPS (Non-GAAP):**
- Calculate the spread: (Adjusted - GAAP) / |GAAP|
- Spread > 20% warrants investigation of adjustment items
- Common adjustments: stock-based compensation, restructuring, amortization of intangibles, one-time items

**EPS Drivers Decomposition:**

EPS = (Revenue x Net Margin) / Diluted Shares

Year-over-year EPS change can be decomposed into:
1. Revenue growth contribution
2. Margin expansion/contraction contribution
3. Share count change contribution (buybacks/dilution)

### Revision Trend Analysis

| Trend | Signal | Implication |
|-------|--------|-------------|
| Rising estimates (3+ months) | Positive momentum | Likely continued beats |
| Falling estimates | Negative momentum | Risk of further cuts |
| Stable estimates | Consensus confidence | Lower surprise probability |
| Wide estimate range | High uncertainty | Potential for large surprise |

**Revision ratio:** Upward revisions / (Upward + Downward) in last 90 days
- > 0.7: Strong positive sentiment
- 0.4-0.6: Neutral
- < 0.3: Negative sentiment

### Historical Surprise Pattern

 Track the last 8 quarters:
| Quarter | EPS Est. | EPS Actual | Surprise % | Revenue Est. | Revenue Actual | Surprise % |
|---------|----------|------------|-----------|-------------|----------------|-----------%|
| Q1 | | | | | | |
| Q2 | | | | | | |
| ... | | | | | | |
| Q8 | | | | | | |

**Pattern analysis:**
- Consistent beaters (6+/8): Management likely sandbagging guidance
- Inconsistent (3-5/8): True uncertainty in business
- Consistent missers (< 3/8): Structural problems or over-optimistic consensus

## Revenue Deep-Dive

### Revenue Decomposition

**Organic vs Inorganic:**
- Organic growth = Same-store/like-for-like growth
- Inorganic growth = Acquisitions
- Currency impact = FX translation effect
- Total Growth = Organic + Inorganic +/- FX

**Price vs Volume:**
- Revenue Growth = Price Increase % + Volume Growth % + (Price x Volume interaction)
- Price-driven growth is higher quality (margin accretive)
- Volume-driven growth at constant prices shows market share gains

**Segment Breakdown:**

| Segment | Revenue | % of Total | YoY Growth | Margin | Commentary |
|---------|---------|-----------|-----------|--------|------------|
| Segment A | | | | | |
| Segment B | | | | | |
| Segment C | | | | | |
| **Total** | | 100% | | | |

**Geographic Breakdown:**

| Region | Revenue | YoY Growth | % of Total | FX Impact |
|--------|---------|-----------|-----------|----------|
| North America | | | | |
| Europe | | | | |
| Asia-Pacific | | | | |
| Rest of World | | | | |

### Revenue Quality Indicators

| Indicator | Good Sign | Warning Sign |
|-----------|-----------|-------------|
| Recurring vs one-time | High recurring % (> 80%) | One-time > 20% |
| Customer concentration | Top 10 < 30% | Single customer > 15% |
| Backlog trend | Growing sequentially | Declining for 2+ quarters |
| ASP trend | Stable or rising | Declining without volume offset |
| Net retention | > 110% | < 100% |
| Deferred revenue | Growing faster than revenue | Declining |

## Margin Analysis

### Margin Waterfall

| Metric | Current Q | Prior Q | YoY Q | YoY Change (bps) | Commentary |
|--------|-----------|---------|-------|------------------|------------|
| Gross Margin | | | | | |
| R&D % | | | | | |
| S&M % | | | | | |
| G&A % | | | | | |
| Operating Margin | | | | | |
| Net Margin | | | | | |
| EBITDA Margin | | | | | |
| FCF Margin | | | | | |

### Margin Expansion Drivers

| Driver | Impact | Sustainability |
|--------|--------|---------------|
| Revenue scale (operating leverage) | High | Durable if growth continues |
| Price increases | Medium-High | Depends on competitive position |
| Input cost reduction | Medium | Potentially cyclical |
| Workforce optimization | Medium | One-time benefit |
| Mix shift to higher-margin products | High | Durable |
| SBC reduction | Low-Medium | Often cosmetic (Non-GAAP) |
| Restructuring savings | Medium | One-time with transition costs |

### Margin Benchmarks by Sector

| Sector | Gross Margin | Op Margin | Net Margin |
|--------|-------------|-----------|------------|
| SaaS | 70-85% | 15-30% | 10-25% |
| Semiconductors | 50-65% | 25-40% | 20-35% |
| Consumer Tech | 35-45% | 15-25% | 10-20% |
| Pharma | 65-80% | 25-35% | 15-25% |
| Banks | N/A | 30-40% | 25-35% |
| Retail | 25-40% | 4-10% | 2-7% |
| Industrials | 25-35% | 10-18% | 6-12% |

## Forward Guidance Assessment

### Guidance Components

| Component | What to Track | Signal |
|-----------|--------------|--------|
| Revenue guidance | Range midpoint vs consensus | Above = positive; Below = negative |
| EPS guidance | Range midpoint vs consensus | Above = positive; Below = negative |
| Margin guidance | Directional (expand/flat/contract) | Expansion = operating leverage |
| CapEx guidance | Increase/decrease vs prior | Investment in growth vs cost cuts |
| Share repurchase | Authorization amount | Management confidence in valuation |
| Special items | Restructuring, impairments planned | Near-term headwind, potential long-term benefit |

### Guidance Quality Assessment

| Pattern | Interpretation |
|---------|----------------|
| Raise revenue + Raise EPS | Strong (best case) |
| Raise revenue + Maintain EPS | Growth with investment (acceptable) |
| Maintain revenue + Raise EPS | Margin improvement (positive) |
| Lower revenue + Raise EPS | Cost-cutting mode (mixed signal) |
| Lower revenue + Lower EPS | Deterioration (negative) |
| First-time guidance | Sets expectations bar (assess conservatism) |
| Withdrawn guidance | High uncertainty (concerning) |

### Guidance Spread Analysis

Guidance Spread = (High - Low) / Midpoint

| Spread | Signal |
|--------|--------|
| < 3% | High visibility, management confidence |
| 3-5% | Normal range |
| 5-10% | Moderate uncertainty |
| > 10% | Low visibility, wide range of outcomes |

## Earnings Quality Indicators

### Accruals Ratio

Accruals = (Net Income - CFO) / Total Assets

| Accruals Ratio | Signal |
|---------------|--------|
| < -5% | High quality (cash exceeds earnings) |
| -5% to 5% | Normal |
| > 5% | Low quality (earnings exceed cash) |
| > 10% | Red flag (investigate closely) |

### Cash Conversion

Cash Conversion = CFO / Net Income

| Ratio | Signal |
|-------|--------|
| > 1.2 | Excellent cash generation |
| 1.0-1.2 | Good quality |
| 0.8-1.0 | Acceptable |
| < 0.8 | Warning: earnings not converting to cash |

### Other Quality Red Flags

1. **DSO increasing:** Revenue recognized but not collected
2. **Inventory build vs revenue:** Potential write-down risk
3. **Capitalized costs rising:** Expenses shifted to balance sheet
4. **Recurring "one-time" charges:** Adjust every quarter (3+ consecutive)
5. **Channel stuffing signs:** Q4 surge with Q1 return spike
6. **SBC as % of revenue rising:** Dilution eating into per-share value

## Management Commentary Keywords

| Positive Signals | Cautious Signals | Negative Signals |
|-----------------|------------------|------------------|
| "Accelerating" | "Cautious optimism" | "Headwinds" |
| "Record" | "Prudent" | "Challenging environment" |
| "Strong pipeline" | "Selective investments" | "Delayed" |
| "Ahead of plan" | "Near-term pressure" | "Deteriorating" |
| "Expanding margins" | "Transitioning" | "Restructuring" |
| "Robust demand" | "Normalizing" | "Softening demand" |
| "Market share gains" | "Monitoring closely" | "Right-sizing" |
