CrowdStrike, Target, Costco, and More Set the Market Tone

Earnings Report Preview:

This week’s earnings reports provide key insights into cybersecurity, retail, footwear, and consumer trends as we continue into 2025. With macroeconomic pressures, evolving spending habits, and digital transformation shaping markets, these results could help to set expectations for the remainder of the year.

Here’s what to watch:

? Cybersecurity & AI Adoption – Can CrowdStrike ($CRWD) maintain its strong ARR growth and expand its AI-driven security offerings in a competitive market?

? Retail & Consumer Spending Trends – With the holiday season approaching, Target ($TGT), Abercrombie & Fitch ($ANF), and Costco ($COST) will provide insight into discretionary spending, e-commerce momentum, and inventory management.

? Footwear & Brand Expansion – On Holding ($ONON) continues its rapid growth in performance footwear and direct-to-consumer sales—can it sustain momentum heading into 2025?

As companies navigate shifting consumer behavior, cost pressures, and AI-driven innovation, these earnings will offer a critical preview of market trends heading into the new year. Let’s dive into what to watch from this week’s key reports.

CrowdStrike ($CRWD)

Q3 FY2025 Recap:

CrowdStrike reported strong Q3 FY2025 earnings, surpassing key financial and operational milestones. The company’s Annual Recurring Revenue (ARR) exceeded $4 billion, with net new ARR reaching $153 million. Total revenue for the quarter came in at $1.01 billion, reflecting 29% year-over-year growth. The company’s subscription revenue, its core business, grew 31% YoY to $963 million, continuing its strong expansion trend.

CrowdStrike’s free cash flow for the quarter totaled $231 million, maintaining a strong Rule of 51, underscoring its efficiency in generating cash while scaling operations. Gross retention rates remained above 97%, highlighting the company’s strong customer loyalty. Operating income also saw an uptick, with non-GAAP diluted earnings per share (EPS) reaching $0.93, compared to $0.82 in the prior-year quarter.

Key highlights included:

? Growing cybersecurity demand: Increasing adoption of its Falcon security platform, particularly in Extended Detection and Response (XDR) and identity protection.

? Partner-driven sales: Nearly 70% of new subscription business was sourced through channel partnerships.

? Enterprise adoption: Over 260 $1 million+ transactions were recorded in the quarter, reflecting strong enterprise demand.

What to Watch For in Q4 FY2025:

1. Continued ARR Growth: Investors will closely monitor whether CrowdStrike maintains its strong ARR momentum, particularly in a competitive cybersecurity landscape.

2. Next-Gen SIEM Performance: The company’s Next-Gen Security Information and Event Management (SIEM) solution saw over 150% YoY growth in net new ARR. Analysts will track whether this trend sustains into Q4.

3. Customer Expansion & Retention: With over 66% of customers adopting at least five Falcon modules, further cross-selling opportunities will be a key factor in ARR expansion.

4. AI & Automation Integration: CrowdStrike continues to emphasize AI-driven security enhancements. The market will be looking for additional developments in its AI-native Falcon platform.

5. Cybersecurity Market Trends: Broader macroeconomic conditions and the evolving cybersecurity threat landscape will play a role in shaping demand for CrowdStrike’s services.

With strong execution and continued innovation, CrowdStrike remains a dominant player in the cybersecurity sector heading into Q4 FY2025.

Target Corporation ($TGT)

Q3 2024 Recap:

Target reported total revenue of $25.7 billion, reflecting a 1.1% year-over-year increase. Comparable sales were up 0.3%, driven by a 2.4% increase in transaction volume, though the average transaction amount declined 2.0%. Digitally originated sales increased by 10.8%, showing strong e-commerce performance, while in-store comparable sales declined 1.9%.

Operating income came in at $1.2 billion, down 11.2% YoY, impacted by higher SG&A expenses and a lower gross margin rate of 27.2%, a slight decline from 27.4% in the prior year. Target’s GAAP and adjusted EPS were $1.85, down 11.9% YoY.

What to Watch for in Q4 2024:

1. Holiday Season Outlook: With five fewer shopping days between Thanksgiving and Christmas compared to last year, Target expects a calendar-related sales headwind of nearly 1 percentage point. Investors will be watching how the company navigates this challenge while sustaining customer demand.

2. Inventory and Margin Management: While discretionary categories remain pressured, Target's ability to optimize inventory levels and avoid heavy markdowns will be critical for margin stabilization.

3. E-Commerce and Same-Day Fulfillment Growth: Digital sales and fulfillment services like Drive Up and Shipt have been key drivers. Continued growth in these segments could provide a positive tailwind for Q4.

4. Consumer Spending Behavior: With ongoing inflation and economic uncertainty, the mix of discretionary vs. essential spending will be crucial in determining overall sales momentum.

5. Capital Allocation and Share Repurchases: Target repurchased $354 million worth of shares in Q3 and plans to continue buybacks in Q4, signaling confidence in its long-term strategy.

With a cautious consumer environment and compressed holiday shopping window, Q4 will test Target’s ability to drive sales while maintaining operational efficiency.

ON Holding AG ($ONON)

Overview: ON Holding AG, a premium sportswear brand, continues to build on its strong momentum with record-breaking revenue and profitability in Q3 2024. The company, which operates in the high-performance running and lifestyle footwear segment, has been expanding its direct-to-consumer (DTC) presence while maintaining growth in wholesale partnerships.

What to Watch for in Q4 2024:

1. Sustained Growth in DTC Sales: On’s strategy emphasizes direct engagement with customers. Watch for further expansion in online and retail store footprints.

2. Brand Momentum: The company has seen surging brand awareness due to high-profile marketing campaigns and product launches. Q4 performance will indicate whether this trend continues.

3. Margin Sustainability: On’s improved gross margin is a key highlight. Investors will look for updates on pricing strategy and supply chain efficiencies.

4. Guidance & 2025 Outlook: Management has raised its full-year net sales growth outlook to at least 32%. Any further guidance on Q4 trends and 2025 expectations will be closely watched.

5. Impact of Macroeconomic Conditions: Given global economic uncertainties and forex fluctuations, ON Holding’s ability to navigate these challenges will be critical.

Bottom Line: ON Holding AG continues to capitalize on brand momentum, strategic retail expansion, and innovation in performance sportswear. With strong sales growth and increasing profitability, the upcoming earnings release will provide further insight into how well the company can sustain its trajectory into 2025.

Abercrombie & Fitch ($ANF)

Q3 2024 Recap:

Abercrombie & Fitch delivered another strong quarter, reporting record Q3 net sales of $1.2 billion, a 14% year-over-year increase. Comparable sales grew 16%, driven by double-digit gains across both its Abercrombie and Hollister brands. The company saw broad-based regional growth, with Americas sales up 14%, EMEA up 15%, and APAC surging 32%.

Operating income increased 30% YoY to $179 million, with operating margin expanding 170 basis points to 14.8%. The company’s gross profit rate improved to 65.1%, reflecting strong pricing discipline and reduced supply chain costs. Net income rose to $133.9 million, or $2.50 per diluted share, up from $1.83 per share in the prior year.

Key financial highlights included:

? Abercrombie brand growth of 15% and Hollister brand growth of 14%.

? Direct-to-consumer sales expansion, continuing to outpace wholesale growth.

? $100 million in share repurchases during Q3, totaling $130 million YTD.

What to Watch for in Q4 2024:

1. Holiday Sales Momentum: With strong back-to-school and fall season performance, expectations for holiday sales will be critical.

2. Inventory and Margin Management: Inventory levels increased 16% YoY, but management remains confident in controlling markdowns.

3. E-commerce & Omnichannel Growth: The company continues investing in digital innovation, enhancing the online shopping experience and omnichannel capabilities.

4. Consumer Demand Across Segments: While Abercrombie has been the main growth driver, investors will look for signs of a continued recovery in Hollister’s performance.

5. Full-Year Guidance: Management raised its full-year net sales growth outlook to 14%-15%, with an operating margin target of ~15%. Any further revisions could impact investor sentiment.

With momentum building across all regions and brands, Abercrombie & Fitch is well-positioned heading into the holiday shopping season.

Costco ($COST)

Q1 FY2025 Recap:

Costco posted strong first-quarter earnings, reporting net sales of $61.0 billion, a 7.5% year-over-year increase. Comparable sales, excluding fuel and FX impacts, grew 7.1%, with U.S. comparable sales rising 5.2%, Canada increasing 5.8%, and other international markets up 4.7%.

Key financial highlights:

? E-commerce comparable sales surged 13.0%, benefiting from site traffic growth of 16% and increased average order values.

? Membership income rose 7.8%, with paid memberships reaching 77.4 million and a global renewal rate of 90.4%.

? Net income increased 13.2% YoY to $1.80 billion, driven by improved operating efficiency and sales growth.

? Diluted EPS came in at $4.04, a 12.8% YoY increase.

What to Watch for in Q2 FY2025:

1. Holiday Season Performance – With a strong value proposition, Costco’s ability to capture holiday shopping demand will be crucial.

2. E-commerce and Digital Sales Growth – The company continues expanding its digital footprint, with Costco Logistics deliveries up 13%. Investors will look for sustained momentum.

3. Warehouse Expansion & Store Openings – Costco added six new locations in Q1 and plans 20 more by year-end. Updates on international expansion efforts will be key.

4. Membership Growth & Pricing Strategy – Costco’s recurring revenue model remains a major strength. Any updates on potential membership fee increases could impact investor sentiment.

5. Margins & Consumer Spending Trends – Given economic uncertainties, how Costco balances pricing, promotional activity, and gross margins will be closely monitored.

Costco’s ability to leverage its strong membership model, digital expansion, and competitive pricing strategy will determine its Q2 FY2025 performance.

Conclusion

As we analyze this week’s earnings reports, key themes emerge across cybersecurity, retail, footwear, and consumer spending that will shape market expectations continuing into 2025.

? Cybersecurity & AI Growth – CrowdStrike ($CRWD) continues to expand its AI-driven security platform, and its ability to maintain ARR momentum will be a key indicator of enterprise IT spending.

? Retail & Holiday Demand – Target ($TGT), Abercrombie & Fitch ($ANF), and Costco ($COST) will provide critical insights into consumer spending behavior, inventory strategies, and e-commerce trends.

? Brand Expansion & DTC Strength – On Holding ($ONON) has shown impressive growth in the footwear sector, but the focus now shifts to sustaining direct-to-consumer momentum and global expansion.

As we head into the next quarter, margin management, consumer resilience, and AI-driven innovation will remain top areas of focus.

Stay tuned for next week’s edition as we continue tracking the companies shaping the future of their industries.

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