German medical-tech firm Siemens Healthineers expects the impact from tariffs to roughly double to €400 million in fiscal 2026 https://t.co/tKkDTiZfVN ...

Core Insights - The company's revenue growth from its diagnostics business transformation program was negatively impacted by U.S. tariffs [1] Group 1 - The transformation program of the diagnostics business led to higher comparable revenue [1] - U.S. tariffs had a detrimental effect on the overall financial performance [1]

Siemens Healthineers on Wednesday reported fourth-quarter revenue slightly below analysts' consensus as higher U.S. import tariffs weigh. ...

Financial Data and Key Metrics Changes - Q3 subscription revenue grew 19% to $286.3 million, with Confluent Cloud revenue increasing 24% to $161 million, representing 56% of subscription revenue compared to 54% in the previous year [20][21] - Non-GAAP operating margin expanded 3 percentage points to approximately 10%, with subscription gross margin at 81.8% [4][21] - Adjusted free cash flow margin increased 450 basis points to 8.2%, and net income per share was $0.13 [21][22] Business Line Data and Key Metrics Changes - Confluent Platform revenue grew 14% to $125.4 million, driven by strong demand in financial services [20] - Flink ARR for Confluent Cloud grew more than 70% sequentially, with over 1,000 customers using Flink [7][26] - The $100K+ ARR customer count increased to 1,487, marking the largest sequential increase in two years [22] Market Data and Key Metrics Changes - Revenue from the U.S. grew 13% to $172.1 million, while revenue from outside the U.S. grew 29% to $126.4 million [21] - The company reported a net retention rate (NRR) of 114% and a gross retention rate (GRR) close to 90% [22] Company Strategy and Development Direction - The company is focusing on tightening field alignment to drive more use cases into production and expanding its Data Streaming Platform (DSP) specialist team for multi-product selling [5][7] - Confluent aims to position its Data Streaming Platform as the context layer for enterprise AI, facilitating real-time data processing and decision-making [17][19] - The company is also enhancing its partner ecosystem, with partners sourcing over 25% of new business in the last 12 months [9][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong consumption growth and the traction of the Data Streaming Platform, particularly with Flink [18][29] - The outlook for Q4 2025 includes expected subscription revenue in the range of $295.5 to $296.5 million, representing growth of approximately 18% [23] - For fiscal year 2025, subscription revenue is expected to be in the range of $1.1135 to $1.1145 billion, representing growth of approximately 21% [24] Other Important Information - The company highlighted the successful integration and growth of WarpStream, which has seen 8x growth in consumption since its acquisition [12][29] - Confluent was named a MongoDB Partner of the Year and served as an AWS Launch Partner for the new AI Agents and Tools category [10] Q&A Session Summary Question: What are the learnings from the go-to-market changes and conversion trends? - Management noted high confidence in the late-stage pipeline, emphasizing that these are customer workloads reaching production, which will drive future consumption [32] Question: Why should RPO be considered a reliable leading indicator? - RPO is viewed as a key leading indicator for Confluent Platform, while for Confluent Cloud, the focus is on the momentum of new use cases moving into production [34][36] Question: When can growth be expected to bottom? - Management expressed optimism about the cloud business's strength and noted stability in overall growth rates, despite some customer-specific impacts [40] Question: Is there a cannibalization effect from new offerings? - Management indicated that new offerings have proven to be a substantial tailwind, leading to larger deal sizes and increased customer engagement [42] Question: What is the early response to the launch of streaming agents on Confluent Cloud? - Management believes streaming agents can become a significant part of the mix, facilitating real-time data access for AI applications [50][52] Question: How significant is the cloud service provider replacement opportunity? - Management highlighted that the total cost of ownership (TCO) improvements and enhanced Data Streaming Platform capabilities are driving customer interest in migrating from existing solutions [78] Question: How are optimization levels impacting guidance? - Management described current optimization levels as healthy and normalized compared to historical trends, indicating a balanced approach to managing customer growth [84]

Financial Data and Key Metrics Changes - Q3 subscription revenue grew 19% to $286.3 million, with Confluent Cloud revenue increasing 24% to $161 million, representing 56% of subscription revenue compared to 54% in the previous year [21][24] - Non-GAAP operating margin expanded 3 percentage points to approximately 10%, with subscription gross margin at 81.8% [4][22] - Adjusted free cash flow margin increased 450 basis points to 8.2%, and net income per share was $0.13 [22] Business Line Data and Key Metrics Changes - Confluent Platform revenue grew 14% to $125.4 million, driven by demand in financial services [21] - Flink ARR for Confluent Cloud grew more than 70% sequentially, with over 1,000 customers using Flink [27][28] - The count of $100K+ ARR customers increased to 1,487, marking the largest sequential increase in two years [23] Market Data and Key Metrics Changes - Revenue from the U.S. grew 13% to $172.1 million, while revenue from outside the U.S. grew 29% to $126.4 million [22] - The net retention rate stabilized at 114%, with gross retention rate remaining close to 90% [23] Company Strategy and Development Direction - The company is focused on tightening field alignment to drive more use cases into production and expanding its Data Streaming Platform (DSP) specialist team for multi-product selling [5][6] - The partner ecosystem sourced over 25% of new business in the last 12 months, indicating strong growth potential [9][29] - The company aims to position its Data Streaming Platform as the context layer for enterprise AI, enhancing real-time data capabilities [19][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong cloud consumption growth and the traction of the Data Streaming Platform, particularly with Flink [19][30] - The outlook for Q4 2025 includes expected subscription revenue in the range of $295.5 million to $296.5 million, representing growth of approximately 18% [24] - For fiscal year 2025, subscription revenue is expected to be in the range of $1.1135 billion to $1.1145 billion, representing growth of approximately 21% [25] Other Important Information - The company reported a record operating margin of 9.7%, exceeding guidance by 270 basis points [22] - The WarpStream acquisition has seen 8x growth in consumption over the past year, indicating successful integration and market demand [12][30] Q&A Session Summary Question: Insights on go-to-market changes and pipeline conversion trends - Management highlighted the successful implementation of a specialization model for DSP and the importance of field execution in driving consumption pipeline [33] Question: RPO as a leading indicator for growth - RPO is considered a key leading indicator for Confluent Platform, while for Confluent Cloud, the focus is on the momentum of new use cases moving into production [37] Question: Growth stabilization and cannibalization effects - Management noted that new offerings have proven to be a substantial tailwind, leading to larger deal sizes and increased customer engagement [43] Question: Flink's growth and future potential - The company expressed excitement about Flink's growth trajectory and its potential to capture a significant market opportunity in real-time data processing [57] Question: Impact of U.S. Federal shutdown on guidance - Management indicated that the federal performance in Q3 was in line with expectations, and the impact of the shutdown is accounted for in Q4 guidance [80]

Financial Data and Key Metrics Changes - Q3 subscription revenue grew 19% to $286 million, representing 96% of total revenue [24][4] - Confluent Cloud revenue increased 24% to $161 million, accounting for 56% of subscription revenue compared to 54% in the previous year [24][4] - Non-GAAP operating margin expanded three percentage points to approximately 10% [4] - Subscription gross margin was 81.8%, above the long-term target of 80% [26] - Operating margin increased 340 basis points to a record 9.7%, exceeding guidance by 270 basis points [26] - Adjusted free cash flow margin increased 450 basis points to 8.2% [26] Business Line Data and Key Metrics Changes - Confluent Platform revenue grew 14% to $125.4 million, driven by demand in financial services [24] - Flink ARR for Confluent Cloud grew more than 70% sequentially, with over 1,000 customers using Flink [31][7] - The number of customers with $100k+ ARR increased to 2,533, up 36 sequentially [27] - The number of customers with $1 million+ ARR increased to 234, representing a growth acceleration of 27% [27] Market Data and Key Metrics Changes - Revenue from the U.S. grew 13% to $172.1 million, while revenue from outside the U.S. grew 29% to $126.4 million [24] - Net retention rate stabilized at 114%, with gross retention rate close to 90% [27] Company Strategy and Development Direction - The company is focused on tightening field alignment to drive more use cases into production and expanding its DSP specialist team for multiproduct selling [6][7] - The partner ecosystem sourced over 25% of new business in the last twelve months, indicating strong growth potential [10][11] - The company aims to position itself as a leader in providing real-time data context for AI applications, emphasizing the importance of data streaming in AI deployment [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong cloud consumption growth and the overall performance of the data streaming platform [22][36] - The company expects subscription revenue for 2025 to be in the range of $295.5 million to $296.5 million, representing approximately 18% growth [29] - For fiscal year 2025, subscription revenue is expected to be between $1.1135 billion and $1.1145 billion, indicating approximately 21% growth [29] Other Important Information - The company highlighted the successful integration and growth of WarpStream, which has seen eightfold growth in consumption since its acquisition [14][35] - The company has maintained a win rate above 90% in replacing CSP streaming offerings, with average deal sizes more than doubling over the past two quarters [11][12] Q&A Session Summary Question: Insights on go-to-market changes and pipeline conversion trends - Management noted that the specialization model for DSP and field execution improvements have driven strong pipeline progression, with high confidence in the late-stage pipeline [40][41] Question: RPO and CRPO as leading indicators - Management confirmed that RPO is a key leading indicator for the Confluent platform, while for Confluent Cloud, the focus is on new use cases moving into production [45][46] Question: Growth outlook and cannibalization effects - Management indicated that new offerings have proven to be a substantial tailwind, leading to larger deal sizes and increased customer engagement [54] Question: Flink adoption and future business impact - Management expressed excitement about Flink's growth and its potential to drive significant business opportunities in the future [76][78] Question: AI use cases and customer readiness - Management highlighted various AI use cases across industries, emphasizing the importance of data flow and quality in achieving successful AI deployments [86][87]

Financial Data and Key Metrics Changes - Q3 subscription revenue grew 19% to $286.3 million, representing 96% of total revenue [19][20] - Confluent Cloud revenue increased 24% to $161 million, accounting for 56% of subscription revenue compared to 54% in the previous year [19][20] - Non-GAAP operating margin expanded 3 percentage points to approximately 10% [3] - Subscription gross margin was 81.8%, exceeding the long-term target of 80% [20] - Operating margin increased 340 basis points to a record of 9.7% [20] - Adjusted free cash flow margin rose 450 basis points to 8.2% [20] Business Line Data and Key Metrics Changes - Confluent Platform revenue grew 14% to $125.4 million, driven by demand in financial services [19] - Flink ARR for Confluent Cloud grew more than 70% sequentially, with over 1,000 customers using Flink [25][26] - The number of $100K+ ARR customers increased to 1,487, marking the largest sequential increase in two years [21] - The $1 million+ ARR customer count rose to 234, representing a 27% growth acceleration [21] Market Data and Key Metrics Changes - Revenue from the U.S. grew 13% to $172.1 million, while revenue from outside the U.S. grew 29% to $126.4 million [20] - RPO (Remaining Performance Obligations) grew 43%, indicating strong future revenue visibility [24] Company Strategy and Development Direction - The company is focusing on tightening field alignment to drive more use cases into production, with over 40% sequential growth in late-stage pipeline [4][24] - There is a strong emphasis on expanding the Data Streaming Platform (DSP) and multi-product selling, particularly with Flink [5][26] - The partner ecosystem is contributing significantly, with over 25% of new business sourced from partners [8][26] - The company aims to position its Data Streaming Platform as the context layer for enterprise AI, facilitating the transition from AI experimentation to production [16][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong cloud consumption growth and the traction of the Data Streaming Platform, particularly with Flink [17][27] - The outlook for Q4 2025 includes expected subscription revenue in the range of $295.5 to $296.5 million, representing approximately 18% growth [22] - For fiscal year 2025, subscription revenue is expected to be between $1.1135 to $1.1145 billion, indicating approximately 21% growth [23] Other Important Information - The company ended Q3 with $1.99 billion in cash, cash equivalents, and marketable securities, reflecting a strong balance sheet [20] - The WarpStream acquisition has seen 8x growth in consumption since its acquisition [11][26] Q&A Session Summary Question: Insights on go-to-market changes and pipeline conversion trends - Management highlighted the effectiveness of the specialization model for DSP and the high confidence in the late-stage pipeline, which is expected to drive future consumption [29][30] Question: RPO and CRPO as leading indicators - RPO is considered a key leading indicator for Confluent Platform, while for Confluent Cloud, the focus is on the momentum of new use cases moving into production [31][32] Question: Growth stabilization and cloud business outlook - Management noted that the cloud business has shown stability, with positive trends in new use cases and product adoption [34] Question: Impact of new offerings on core streaming business - New offerings have proven to be a substantial tailwind, leading to larger deal sizes and increased customer engagement [37] Question: Flink's growth and future potential - Flink has seen significant adoption, with over 1,000 paying customers, and management is optimistic about its future growth potential [56] Question: AI use cases and customer readiness - Management indicated that AI use cases are broad, with many enterprises actively pursuing projects across various sectors [61]

Core Insights - The Fund underperformed the MSCI World ex USA Index for the quarter but has outperformed the benchmark since inception [5] - Consumer discretionary and materials sectors were the largest contributors to performance, while industrials and communication services were the largest detractors [5] - Geographically, the portfolio is heavily weighted towards Europe ex U.K. (68.4%), followed by the U.K. (11.5%) and Asia ex Japan (9.3%) [5] Performance Analysis - Kering was the top contributor during the quarter, driven by leadership changes and improving revenue trends [7] - CNH Industrial was the top detractor, facing weak results and soft demand, particularly in the U.S., but management expects a rebound in 2025 [8] Portfolio Activity - Six new positions were added to the Fund, while nine were exited during the quarter [9] - New purchases included Bunzl, which is expected to return to stable growth despite recent execution issues [10] - Dassault Systèmes, a leader in virtual twin technology, is viewed as a high-quality investment opportunity despite a nearly 40% decline in share price [11] Company Highlights - FEMSA, a diversified Latin American conglomerate, is well-positioned for growth through strategic divestments and share buybacks [12] - Hexagon has upgraded its management team and is expected to see improvements in return on capital employed and cash flow [13] - Siemens Healthineers is positioned for profitable growth in medical technology, with a favorable product cycle and turnaround in its diagnostics business [16] Investment Returns - The Fund's average annualized total returns show strong performance across various time frames, with the Institutional Class returning 26.51% year-to-date [18]

Group 1: Siemens Healthineers Stake - Siemens AG is exploring a separation of its approximately 71% stake in Siemens Healthineers, considering a direct distribution of shares to its shareholders instead of a traditional IPO or spinoff [1] - This approach is unusual in the German market, where large stakes are typically sold gradually or through secondary offerings [2] - The mechanics of the direct distribution under German corporate and tax law will be closely monitored if Siemens proceeds with this plan [2] Group 2: Canada Packers Spin-off - Maple Leaf Foods has completed the separation of its pork operations, resulting in Canada Packers Inc., effective October 1 [3] - This separation allows investors to value Canada Packers independently on public markets [3] - Maple Leaf retains a ~16% stake in Canada Packers and has signed an evergreen supply agreement, remaining an anchor customer [7] Group 3: Aptiv's Strategic Shift - Aptiv is reconsidering its plans to spin off its electrical distribution systems business and may instead pursue an outright sale of the unit [4] - A shift from a spinoff to a sale could provide immediate cash proceeds but may limit long-term upside for investors [5]

Market Overview - European markets closed higher, driven by optimism regarding potential interest rate cuts from the Federal Reserve and positive sentiment surrounding artificial intelligence, despite concerns over a U.S. government shutdown [1] - The pan-European Stoxx 600 index increased by 0.5%, with notable gains in the U.K.'s FTSE 100 (up 0.67%), France's CAC 40 (up 0.31%), and Switzerland's SMI (up 0.64%) [2] Sector Performance - Financial, mining, and energy sectors were among the prominent gainers in the European markets [1] - In the U.K., companies such as Bunzl (up 4.5%), Natwest Group, and others saw gains between 2% to 4%, while Coca-Cola Europacific Partners and others experienced losses of 1% to 2% [3] - German companies like Merck, Rheinmetall, and Siemens Healthineers reported sharp gains, while Siemens Energy and others faced losses [4] Economic Data - The HCOB Germany Composite PMI was revised lower to 52 in September, indicating strong growth in private sector activity compared to 50.5 in August [5] - Eurozone producer prices fell for the first time in nine months in August, with a yearly decline of 0.6%, reversing a previous increase [6][8] - France's industrial production unexpectedly declined by 0.7% in August, with manufacturing output shrinking by 1.6% [7] - The S&P Global UK Composite PMI fell to 50.1 in September, indicating stagnant private sector activity [9] - The S&P Global UK Services PMI decreased to 50.8 in September, marking the weakest pace of expansion since April [10]