Track market-moving stories before they get noisy

Mastercard (MA +4.16%) grew value-added services revenue 19% in the third quarter, well ahead of the 11% gain in its core payment network. Shares rose about 4% in midday trading. Services are growing faster than the network, and with costs rising slower than revenue, the company widened its margin even as it paid banks more to win their business.

Key NumbersNet revenue: about $9.8 billion, up 14% from a year agoValue-added services and solutions net revenue: up 19% from a year agoCross-border volume: up 11% excluding currency swingsDiluted earnings per share (EPS) under generally accepted accounting principles (GAAP): $5.28, up from $4.34$635.70+$25.39 (+4.16%)

NYSE · As of 4:00 PM ET 10/29/26

What It MeansThe network still grows faster than spending. Gross dollar volume, the total value of purchases and cash withdrawals on Mastercard cards, rose 7%, but network revenue grew faster on more transactions, pricing, and cross-border activity. Cross-border payments carry much higher fees than domestic ones, so cross-border growth lifts revenue more than volume alone would.

The catch is what Mastercard pays to keep that volume. Rebates and incentives, payments to banks and other customers that come out of net revenue, rose 18%, outpacing network revenue. Those deals win and renew card portfolios, but they mean each new dollar of network revenue costs more to book.

Services is the counterweight. Fraud prevention, authentication, and data tools are sold to banks already on the network, which makes them a natural cross-sell. Total operating expenses rose 11%, slower than revenue, and that gap is what widened the margin.

What to Watch NextTrack whether rebates and incentives continue to grow faster than payment network revenue. If they do, services will need to keep outgrowing the network for margins to keep rising.

Sharice Wells has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Mastercard. The Motley Fool has a disclosure policy.

Target (TGT +1.92%) and Walmart (WMT +2.09%) are two of the biggest retailers in the country.

As the only national, brick-and-mortar, multi-category chains where anyone can shop, the two are also close competitors, even if they have both carved out different brand identities. Over the last few years, Walmart has won that competition hands down, as the chart below shows.

TGT data by YCharts

As you can see from the chart above, Target and Walmart have gone in diametrically opposite directions, though the trend started to reverse earlier this year as Target showed some signs of life, and Walmart's comparable sales growth slowed.

While Walmart was trouncing Target, its earnings multiple got significantly higher, and at the same time, Target's fell. Foolish investors know that past performance isn't a guarantee of future returns. So is it time for a changing of the guard in big-box retail? Let's take a closer look.

Image source: Target.

It's understandable that Target would catch the eye of value investors at a price-to-earnings ratio of 15 and a dividend yield of 3.1%.

Additionally, under the guidance of new CEO Michael Fiddelke, the company seems to be emerging from a series of problems that challenged the retailer for years, including theft, getting dragged into culture war issues, and weak spending on discretionary items, and a slowdown coming out of a strong performance after the pandemic.

Walmart, on the other hand, now trades at a P/E ratio of 43, which reflects a consistent record of growth with comparable sales of 2% or better for every quarter for the last six years. Its investment in a network of grocery pickup stations has paid off, and it's built up its e-commerce business to a point where it's a real challenger to Amazon. That includes a Prime-like membership program, Walmart+, and it's growing its digital advertising business fast.

TGT Target$151.82+$2.86 (+1.92%)

NYSE · As of 4:00 PM ET 10/29/26

Which is the better buy? Walmart deserves to have a higher earnings multiple than Target because the two are different kinds of stocks.

Walmart is one of the top, defensive, recession-proof stocks on the market, as it earns more than half of its revenue from groceries, a category people need regardless of the state of the economy.

Target, on the other hand, gets most of its revenue from discretionary goods, making it more sensitive to economic factors like inflation, which explains in part why the stock has struggled.

Still, I think the gap in valuation is too steep, especially as Target's comparable sales growth is accelerating while Walmart's is fading.

Target is the better buy of the two, though if Walmart's valuation slipped closer to the market average, it would be an attractive buy as well.

Starbucks on Thursday reported mixed quarterly results as its international cafes underperformed expectations.

However, its U.S. turnaround continues to take hold, as its home market topped expectations during the coffee giant's final quarter of fiscal 2026.

"We enter fiscal 2027 with momentum, a clear set of priorities and higher ambitions for what Starbucks can become," CEO Brian Niccol said in a video shared on the company's website.

For fiscal 2027, Starbucks is projecting adjusted earnings per share in a range of $3.15 to $3.25, above Wall Street's expectations of earnings per share of $3.14. However, its anticipated revenue decline of 1% is weaker than expected; analysts were forecasting net sales growth of 1.4%. The outlook includes an additional week and the effects of the shift in its China business to a joint venture business model.

Shares of Starbucks fell about 2% in extended trading.

Here's what the company reported for the quarter ended Sept. 27 compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

Earnings per share: 80 cents adjusted vs. 72 cents expectedRevenue: $9.14 billion vs. $9.23 billion expectedStarbucks reported fiscal fourth-quarter net income attributable to the company of $677.2 million, or 59 cents per share, up from $133.1 million, or 12 cents per share, a year earlier.

Excluding restructuring and impairment costs and other items, the company reported earnings per share of 80 cents.

Net revenue fell 4% to $9.14 billion, reflecting the joint venture deal in China.

The company's global same-store sales increased 7.2%, fueled by growth in average ticket, and beating Wall Street estimates of 6%, according to StreetAccount. Transactions grew 1.8% in the quarter.

Starbucks' U.S. cafes reported same-store sales growth of 7.7%, topping StreetAccount estimates of a 6.5% increase.

Outside of North America, the company's international comparable sales ticked up 0.9%, as traffic declines offset an increase to average ticket. That growth fell short of analyst estimates of a 3.2% increase, according to StreetAccount.

Starbucks opened 303 net new cafes during the quarter. In September, the company announced it would close about 1% of its North American footprint, or about 250 locations, as part of its turnaround.

NEW YORK--(BUSINESS WIRE)--Why: Rosen Law Firm, a global investor rights law firm, announces an investigation of potential securities claims on behalf of shareholders of Xerox Holdings Corporation (NASDAQ: XRX) resulting from allegations that Xerox may have issued materially misleading business information to the investing public. So What: If you purchased Xerox securities you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangemen.

Norwegian Cruise Line Holdings (NCLH +13.45%)topped its own third-quarter targets and raised its full-year adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) outlook to about $2.55 billion. Shares jumped more than 10% in Thursday's regular session. But those targets already called for a sharp drop in yields. Ticket revenue fell as capacity grew, and adjusted profit trailed last year's level, so the turnaround rests on 2027 pricing, while first-half bookings still lag.

NCLH Norwegian Cruise Line$18.22+$2.16 (+13.45%)

NYSE · As of 4:00 PM ET 10/29/26

Key NumbersMetricsQ3 2026Q3 2025% ChangeNet Yield (in constant currency)6.7%8.9%(2.2) percentage pointsPassenger Ticket Revenue$1.95 billion$2.05 billion(5.1%)GAAP Net Income$491 million$419 million17.2%Adjusted EBITDA$937 million$1.02 billion(8.1%)Chart by Author. Source: Company filings. Net Yield is net revenue per available berth-day. GAAP stands for generally accepted accounting principles.

What It MeansNorwegian filled its added capacity with cheaper, shorter sailings. Passengers carried jumped 22%, far faster than cruise days. More guests lifted onboard revenue enough to offset the ticket decline. But cruise lines earn their returns on sailings booked months ahead, and Norwegian's first-half 2027 bookings still trail last year, even at higher prices.

The company's GAAP profit rose, but it wasn't driven by operations. Operating income fell about 17% as costs climbed against flat revenue. Net income rose because interest expense nearly halved, almost entirely because last year's quarter carried a large charge for paying off and modifying debt.

Debt raises the stakes. Net leverage, net debt divided by trailing Adjusted EBITDA, is 5.5 times. Management expects 2027 yield growth to accelerate in the second half, when bookings match last year. A back-loaded recovery leaves little cushion if demand softens.

What to Watch NextTrack how much of 2027 is already sold, the booked position, which still lags in the first half. If it hasn't caught up by next quarter, the 1% to 2% yield target depends even more on the second half.

Sharice Wells has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Live 7 updates · Last at 4:06pm ET Updates appear automatically.

By Thomas Richmond · Updated Oct 29, 4:06pm ET · Published Oct 29, 3:10pm ET

Live UpdatesNewest first

Intel just reported Q3 earnings, and shares initially plummeted 20% after the report. Here are the key numbers:

Revenue: $16.5B, up 21% year over year Adjusted EPS: $0.52 vs. $0.3953 expected GAAP EPS: $0.60 Adjusted Gross Margin: 44.1% Q4 Guidance:

Revenue: $15.0B–$16.0B Adjusted EPS: $0.25 Adjusted Gross Margin: 38.0% Quick Read:

Strong Quarter, Weak Outlook: Intel beat its revenue guidance and topped EPS expectations, but its Q4 outlook calls for a sharp sequential decline in profitability, with adjusted EPS falling to $0.25. Data Center Demand Explodes: Intel’s data center revenue surged 78% to $7.3 billion, its fastest growth in 15 years. However, management warned that supply constraints remain a major bottleneck, while the PC slowdown could continue through the first half of 2027. Despite impressive AI-driven data center demand, investors appear concerned about Intel’s weaker near-term outlook, sending shares plunging 20% after hours.

$0.42vs $0.22 est +93.1%

$16.13Bvs $14.45B est +11.6%

Earnings-day move -7.9%Since report -8.9%

Intel's July quarter showed the foundry-era cost cuts and stronger-than-expected demand flowing straight to the bottom line, yet the stock declined after the report and stayed there. For tonight, server CPU supply constraints and any read on 2026 PC demand are the key variables.

Price since the report

Reported Thu, Jul 23 · next print Thu, Oct 29

Put/call 0.79Balanced

CallsPuts

154.7%

Fri, Oct 30chain as of Wed, Oct 28

Friday expiry options are priced for chaos, with at-the-money implied volatility at 154.7% on the $96 strike. A 0.79 put/call ratio says traders are leaning call-heavy into the earnings report, and call open interest at $95 and $96 dwarfs the puts there, though crowded one-sided positioning has just as often marked the point where the opposite move begins.

Open interest near the money · puts / calls $933k / 4.2k$941.7k / 3.3k$955.7k / 11.5k$961.1k / 9.1k$97719 / 4.1k$98999 / 3.4k

Thu, Oct 29After close

$0.40

$16.47B

Intel's last four reports moved the stock 17% to 24% in one direction or the other, so tonight's numbers land on a $482.4 billion company. Foundry progress and the server CPU supply crunch are what decide whether the year-to-date gain holds.

What to watch

Whether server CPU supply constraints eased or capped data center revenueFoundry operating losses and any update on external customer commitmentsGross margin trajectory as 18A wafers rampCapex plans and the pace of CHIPS-related funding milestones EPS surprise vs consensus Beat 5 of last 6 Q1 2025+2788.9%Q2 2025-1175.3%Q3 2025+3050.7%Q4 2025+80.7%Q1 2026+2183.5%Q2 2026+93.1% Earnings-day stock move · last 4 reports Q3 2025+0.3%Q4 2025-17.0%Q1 2026+23.6%Q2 2026-7.9%

$91.30

-4.43% open $95.53

A 4.43% drop to $91.30 takes roughly $21 billion off Intel's $481.9 billion market cap in a single session. Keep an eye on whether the $91 handle holds into the close.

Thu, Oct 29 Earnings call · after close

Six topics have come up on every one of Intel's last four calls, and the one that decides tonight's reaction is capacity: analysts have pressed on supply constraints and capacity expansion in each quarter, and the server CPU shortage flagged earlier this afternoon is where management's answer lands first. Foundry node progress and the capex needed to fund it run a close second, since both feed the gross margin drop-through question that keeps resurfacing.

Analyst hot topics · last 4 calls Q3 25Q4 25Q1 26Q2 26

Supply constraints & capacity expansionFoundry momentum & node progressServer competition & TAM growthCapEx strategy & foundry investmentClient demand & PC inventoryGross margin & incremental drop-through

Intel heads into Q3 earnings tonight under pressure, with shares down 20.55% over the past month despite an extraordinary 149.84% year-to-date rally.

Wall Street expects $0.3953 in adjusted EPS, slightly above management’s $0.38 guidance, following 30 upward analyst revisions.

The biggest question is whether Intel can overcome its server CPU supply constraints. Management has been shifting wafer production toward data center chips, but tight Intel 3 capacity continues to limit output.

Meanwhile, Intel plans to spend more than $20 billion on capital expenditures in 2026, with spending expected to climb significantly in 2027.

Analysts have an average price target of $117.71, compared with the stock’s recent $92.19 price. Stronger supply improvements could reignite Intel’s rally, while another disappointing quarter could extend its recent selloff.

This article is updated throughout the trading day. Check back for more.

Full CoverageThe story so far

Intel (NASDAQ:INTC | INTC Price Prediction) is expected to report third-quarter results at 4:00 PM ET today. The company has beaten its own targets for seven consecutive quarters, yet the stock has seen a sharp pullback over the past month.

Fastest Growth in Fifteen Years Meets a Skeptical Market Intel’s second-quarter revenue rose 25.4% to $16.13 billion, and non-GAAP EPS of $0.42 beat the $0.22 estimate. Data Center and AI revenue jumped 59%, while operating cash flow reached $7.01 billion. CEO Lip-Bu Tan called it “our strongest revenue growth in more than fifteen years.”

Shares still fell 7.89% on earnings day. CFO David Zinsner flagged lasting shortages: “We will not fully catch up. We will still be behind in the fourth quarter.”

Analysts Sit Above Intel’s Own Guide Metric Q3 2026 Estimate Company Guidance FY 2026 Estimate FY 2027 Estimate Revenue $16.47B $15.8B to $16.8B $63.17B $73.06B EPS (Normalized) $0.3953 $0.38 $1.5297 $2.1446 The EPS consensus implies about 72% growth from the $0.23 earned a year ago. Revenue estimates clear the $16.3 billion guidance midpoint. The 2027 EPS view climbed from $1.9914 to $2.1446 over 90 days, so analysts are already pricing in capacity relief.

What to Watch Tonight: Server Supply, 18A Yields and ASIC Scale On server supply, management planned to shift as much production as possible to data center CPUs and said bottlenecks could begin to ease near the end of the quarter. Market expectations put a 78.5% chance on Data Center and AI revenue topping $6.5 billion.

Foundry’s operating loss narrowed by $348 million to $2.1 billion, and 18A output ran approximately 25% above target. Key items to track include the October Intel 14A PDK 0.9 milestone and any listed external customers.

Margins remain the swing factor. Panther Lake and Granite Rapids still sit below the corporate average, and the stated goal is gross margin “comfortably into the 40s in every quarter.”

Investors should also track the ASIC business, which runs near $2 billion annually, with a $4 billion target. On the PC side, management saw 2026 consumption falling into the low double digits on memory costs.

Intel’s Post-Earnings Track Record Quarter EPS Surprise Day-Of Move 1-Day Move 7-Day Move Q2 2026 +93.10% -7.89% -0.7% -2.3% Q1 2026 +2183.46% +23.6% +2.97% +20.69% Q4 2025 +56.58% -17.03% -5.72% +3.11% Q3 2025 +3050.68% +0.31% +3.29% +4.47% On average, shares swung 6.49% seven days after earnings over the past year.

Contact [email protected] for any questions or corrections.

Thomas Richmond

Thomas Richmond is a financial writer and content strategist with 5+ years of experience covering stocks and financial markets. He has published over 500 articles focused on individual stock analysis, helping investors better understand business fundamentals, stock valuations, and long-term opportunities.

Thomas previously served as a Content Lead at TIKR, a stock research platform, where he helped scale the company’s blog to hundreds of articles per month and contributed to a weekly newsletter reaching more than 100,000 investors.

Outside of work, Thomas enjoys weight lifting and soccer.

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Intel shares plummeted in extended trading on Thursday after the chipmaker issued a weak fourth-quarter forecast, citing continued softness in the global PC market.

Here's how the company did in the third quarter, compared with estimates from analysts polled by LSEG:

Earnings per share: 52 cents adjusted vs. 40 cents expectedRevenue: $16.51 billion vs. $16.5 billion expectedRevenue climbed 21% from $13.7 billion a year earlier, the company said in a press release.

However, revenue in Intel's client computing and physical AI group fell 5% from the same quarter a year ago to $8.1 billion, missing estimates, even as data center and AI revenue jumped 78% to $7.3 billion.

Global PC shipments declined 4% in the second quarter from a year earlier due to soaring costs for memory and other components, according to Counterpoint Research.

For the current quarter, Intel said it expects adjusted earnings per share of 25 cents on revenue between $15 billion and $16 billion. Analysts were expecting revenue of $17.1 billion and EPS of 43 cents, according to LSEG.

"We see the PC slowdown continuing at least through the first half of next year, but we remain optimistic about the opportunities across our broader portfolio," said Intel finance chief David Zinsner, in the release. "We will continue making disciplined investments in capacity and working capital to increase supply and support future growth."

Intel's stock has been on an upward tear, up about 150% so far this year, although it's down roughly 23% in October as concerns have emerged about the size of the artificial intelligence buildout.

Known best for its industry leading central processing units, or CPUs, Intel has been a beneficiary of the rise in agentic AI. While chatbots and large models rely heavily on graphics processors from Nvidia and Advanced Micro Devices, agentic applications such as Meta's Muse and OpenAI's Dots lean on CPUs to help orchestrate tasks and data from a computer operating in the cloud.

"Despite near term headwinds affecting the broader PC industry, we continue to see robust demand for CPUs and more broadly, for all our computing platforms in the long term," CEO Lip-Bu Tan said in the press release.

Nvidia, which has become the world's most valuable company thanks to its dominance in GPUs, is scheduled to report results on mid-November. AMD reports next week.

watch now

Intel's foundry business, meanwhile, has struggled to find its footing.

Intel is the only U.S.-based manufacturer of advanced logic chips, and is now in high-volume production of its most advanced 18A chip out of its new fab in Arizona, providing an alternative to Taiwan Semiconductor Manufacturing Co. 

While Intel remains the only major customer of the chip, analysts say a major fabless chip customer could choose Intel with its next chip, 14A.

"People want a second source to be able to twist TSMC's arm and keep them honest on pricing," said TechInsights analyst Dan Hutcheson. "All the big ones have been testing there."

The Trump administration took a 10% stake in the Intel last year after the company had fallen behind on its 7- and 10-nanometer technologies. Nvidia and Softbank also invested billions in Intel last year. 

Tan has taken a more cautious approach to foundry spending than his predecessor, Pat Gelsinger, who launched an ambitious revival of the company's foundry business. 

Last week, Intel said crews have installed the first structural truss at its huge Ohio chip fab that was originally expected to deliver chips in 2025. Its next fab in Arizona is expected to begin operations by the end of 2028.

Oracle disclosed an expanded deal with Intel this week, announcing at its annual AI conference that it would deploy the chipmaker's next-generation Xeon server processors, as well as the latest rack-scale systems from Nvidia and AMD, as it continues to add data center capacity.

Intel completed a $23 billion equity offering in August. Tech giants have spent trillions of dollars in recent years to meet insatiable demand for AI and the infrastructure needed to support it.

watch now

Mastercard's fraud-prevention and data services are growing nearly twice as fast as its core payment network, and that gap is reshaping how investors value the card giants. Here is what the Q3 numbers reveal about where the real growth engine…

Faster growth in fraud-prevention, data and marketing services pushed Mastercard (NYSE:MA | MA Price Prediction) past Wall Street’s revenue and profit targets for Q3 2026. Mastercard stock is at $636.23, up 4% in afternoon trading. Financials are stronger, with the Financial Select Sector SPDR Fund (NYSEARCA:XLF) at $56.88, up 1%. Across the broader market, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is at $768.15, down 0.5%.

All four big payment names are running ahead of both funds. Year to date (YTD), Mastercard stock is up 12%. The results capped a strong quarter for the card giants as consumer spending held up.

Value-Added Services Lead Mastercard’s Q3 Beat
Before the opening bell on October 29, Mastercard reported quarterly results that cleared expectations on both lines. Net revenue at Mastercard reached $9.81 billion, ahead of StockStory’s $9.67 billion consensus estimate. Mastercard’s adjusted earnings per share (EPS) of $5.31 also beat StockStory’s $5.17 consensus estimate.

The company’s adjusted figure leaves out $74 million in pre-tax litigation charges tied to U.S. merchant opt-out settlements, plus a $5 million net loss on equity investments. Including those items, Mastercard disclosed diluted EPS of $5.28.

Leading the way, Mastercard’s value-added services and solutions revenue grew 19%, outpacing the 11% increase in its payment network revenue. Management singled out security solutions, consumer engagement, digital authentication and business insights as the standouts.

Spending trends backed the network side as well, with Mastercard’s cross-border volume, a gauge of international spending and travel, up 11% in local currency. Across the Mastercard network, gross dollar volume rose 7% in local currency to $3 trillion. Customers had issued 3.8 billion Mastercard and Maestro-branded cards by the end of September.

Miebach Puts Agentic Commerce and BVNK in Focus
Chief executive Michael Miebach summed up the quarter simply: “Another strong quarter for Mastercard, delivering net revenue growth of 14%. More Mastercard credentials in more hands give us a powerful foundation, backed by our global reach and innovation.” Miebach also highlighted agentic commerce, where artificial intelligence (AI) agents help initiate purchases, along with Mastercard’s new Global Money Platform through BVNK, which lets customers hold, convert and send fiat currencies and stablecoins.

Shareholder returns stayed generous, too. Mastercard returned $3.8 billion in Q3, split between $3 billion in buybacks and $763 million in dividends.

Visa, American Express and PayPal Climb Alongside Mastercard
Visa (NYSE:V) stock is at $409.61, up 2%. Having reported fiscal Q4 2026 results after the close on October 27, Visa is posting a smaller gain than Mastercard. In that quarter, Visa’s own value-added services revenue grew 31% in constant dollars, a sign that services strength extends beyond Mastercard.

American Express (NYSE:AXP) stock is at $323.74, up 2%. The move trails Mastercard’s but beats the XLF ETF’s advance.

PayPal Holdings (NASDAQ:PYPL) stock is at $57.33, up 1%. Among the four payment names, PayPal is posting the smallest gain, though it’s still slightly ahead of the XLF financials fund.

How Mastercard’s Network Model Differs From Its Rivals
Mastercard and Visa run open-loop networks, where banks issue the cards and carry the credit risk while the networks collect fees on the volume and transactions crossing their rails. That structure keeps Mastercard out of consumer lending and ties its growth to spending activity and the services it sells on top of the network.

American Express runs a closed loop, serving as network, card issuer and lender at once, so its results lean on a premium cardholder base, card fees and credit quality. PayPal sits in a different space, with a digital wallet, the Venmo peer-to-peer app and Braintree merchant processing that compete for online checkout and money movement.

What Comes Next for Mastercard’s Services Engine
The next test for Mastercard is whether its services growth can keep outpacing rising customer incentives. Management guided for Q4 2026 net revenue growth at the high end of low double digits on a currency-neutral basis and expects rebates and incentives as a share of gross assessments to rise from Q3 levels.

On the bullish side, Mastercard has services momentum, a broad strategic partnership with OpenAI and Agent Pay tools built for agentic payments. Bearish signals include payment network rebates and incentives that rose 18%, U.S. debit growth of 1% and slower intra-Europe cross-border e-commerce.

One figure to watch for is Mastercard’s Q4 incentive spending against the company’s guidance. A conservative approach could make sense while the path of Mastercard’s rebate costs remains unresolved.

Contact [email protected] for any questions or corrections.

Key Takeaways Cisco's AI infrastructure orders hit $9.3B in fiscal 2026, with revenues projected to be $7.5B in 2027. CSCO's networking revenues surged 28% in fiscal Q4 2026, fueled by strong AI infrastructure demand. Cisco faces competition as Arista targets $3.6B in AI revenues and HPE expands its networking business. Cisco Systems (CSCO - Free Report) is benefiting from accelerating investments in artificial intelligence (AI) infrastructure, hyperscaler demand and enterprise network modernization. The growing adoption of agentic AI is driving demand for high-bandwidth, low-latency networking solutions, strengthening Cisco’s competitive position against Hewlett Packard (HPE - Free Report) and Arista Networks (ANET - Free Report) .

Cisco’s AI infrastructure orders from hyperscalers reached $9.3 billion in fiscal 2026, approximately 4.5 times the fiscal 2025 level. The company expects AI infrastructure revenues from hyperscalers to reach $7.5 billion in fiscal 2027. Its Silicon One architecture, Acacia optical technologies and next-generation switching platforms are helping capture opportunities across scale-out and scale-across AI networking deployments.

In the fourth quarter of fiscal 2026, networking revenues increased 28% year over year, supported by triple-digit AI infrastructure growth. Networking orders surged 40%, while data-center networking orders increased more than 35%. Strong campus networking demand, Wi-Fi 7 adoption and enterprise infrastructure refreshes further strengthen its prospects.

 The company’s expanding portfolio has been noteworthy. CSCO recently expanded its Cisco 360 Partner Program with new incentives, Ecosystem Deal Registration and AI-powered tools to strengthen partner profitability and customer engagement. The company announced the general availability of Cisco IQ for Partners, enabling resellers and managed service providers to leverage real-time intelligence, automate operations and identify modernization opportunities. Cisco also enhanced its Cloud Control platform with AgenticOps capabilities, including Model Foundry, ThousandEyes integration and Model Context Protocol servers. The company also introduced quantum-resilient Wi-Fi 7 access points and expanded Live Protect capabilities to strengthen enterprise security and support AI-ready infrastructure.

Cisco’s expanding AI networking portfolio, strong hyperscaler traction and partner ecosystem position it favorably to capitalize on emerging opportunities and compete effectively with Hewlett Packard and Arista Networks. For the first quarter of fiscal 2027, Cisco expects revenues between $18 billion and $18.2 billion.

How Competitors Fare Against CSCOCisco is facing stiff competition from Arista Networks and Hewlett Packard in the AI networking domain.

Arista strengthens its position in AI networking as enterprises and hyperscale customers expand Ethernet-based AI infrastructure. During the second quarter of 2026, the company exceeded 100 cumulative AI fabric customers using Etherlink switches compared with only a handful of early adopters in 2024. Management also expects AI revenues to reach at least $3.6 billion in 2026, supported by scale-up, scale-out and scale-across deployments.

Hewlett Packard is benefiting from a broader shift toward AI infrastructure, networking modernization and hybrid cloud, with Juniper expanding its addressable market and integration synergies supporting earnings growth. The Juniper acquisition is broadening HPE’s reach across campus and branch, data center switching, routing and security, while integration remains ahead of schedule.

In the third quarter of fiscal 2026, Networking revenues were $2.9 billion, up 10% on a normalized basis, and operating margin was 22%. Networks for AI orders reached $700 million in the quarter and $2.2 billion cumulatively, prompting HPE to raise its fiscal 2026 year-end target to $2.5 billion-$3.0 billion. HPE now expects fiscal 2026 Networking revenue growth of 73% to 74%.

CSCO’s Share Price Performance, Valuation & EstimatesCisco shares have gained 43.2% year to date, outperforming the broader Zacks Computer and Technology sector’s 16.5% increase.

CSCO Stock’s Price Performance
Image Source: Zacks Investment Research

CSCO stock is trading at a premium, with a forward 12-month price/sales of 5.94X compared with the Zacks Computer and Technology sector’s 5.57X. Cisco has a Value Score of F.

CSCO Stock Is Overvalued
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for fiscal 2027 earnings is currently pegged at $5.11 per share, which has been unchanged over the past 30 days. This suggests 18.01% growth from the year-ago quarter.

Cisco currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Merck & Co., Inc. (MRK) Q3 2026 Earnings Call October 29, 2026 9:00 AM EDT

Company Participants

Peter Dannenbaum - Vice President of Investor Relations
Robert Davis - Chairman, President & CEO
Caroline Litchfield - Executive VP & CFO
Dean Li - Executive VP & President of Merck Research Laboratories
Jannie Oosthuizen - Executive VP and President of Oncology & MSD International
Brian Foard - Executive VP and President of Specialty, Pharma & Infectious Diseases

Conference Call Participants

Christopher Schott - JPMorgan Chase & Co, Research Division
Vamil Divan - Guggenheim Securities, LLC, Research Division
Michael Yee - UBS Investment Bank, Research Division
Courtney Breen - Bernstein Institutional Services LLC, Research Division
Akash Tewari - Jefferies LLC, Research Division
Daina Graybosch - Leerink Partners LLC, Research Division
Mohit Bansal - Wells Fargo Securities, LLC, Research Division
Steve Scala - TD Cowen, Research Division
Umer Raffat - Evercore ISI Institutional Equities, Research Division
Asad Haider - Goldman Sachs Group, Inc., Research Division
Terence Flynn - Morgan Stanley, Research Division

Presentation

Operator

Welcome to the Merck & Co., Inc., Rahway, N.J., USA Third Quarter Sales and Earnings Conference Call. [Operator Instructions] This call is being recorded. If you have any objections, you may disconnect at this time.

I would now like to turn the call over to Mr. Peter Dannenbaum, Senior Vice President, Investor Relations. Sir, you may begin.

Peter Dannenbaum
Vice President of Investor Relations

Thank you, Julie, and good morning, everyone. Welcome to the Third Quarter 2026 Conference Call for Merck & Co., Inc., Rahway, N.J., USA. Speaking on today's call will be Rob Davis, Chairman and Chief Executive Officer; Caroline Litchfield, Chief Financial Officer; and Dr. Dean Li, President of Research Labs.

Before we get started, I'd like to point out that we have items in our GAAP results such as acquisition-related charges, restructuring costs and certain other items that we have excluded from

Two income funds, one blended yield, and a fixed monthly target: the math works on paper, but the risks hiding inside this two-fund setup could quietly widen the gap when markets turn calm or payouts shift.

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A 67-year-old couple sits down with their statements and asks one question: can this money pay us $10,500 a month without running dry? That’s $126,000 a year. If they split the money evenly between two income funds, they’d need about $2.02 million. That figure assumes a blended yield of roughly 6.2%, based on prices and payouts pulled in late October 2026.

Most couples this age also collect Social Security. It usually covers part of their monthly spending, so many only need a portfolio to fill the gap. In this example, the portfolio must cover the full $10,500 on its own.

Neither fund guarantees its payout, and the income can rise or fall from year to year. Here, “for life” means a portfolio built to keep paying from its distributions, so the couple doesn’t have to sell shares to cover their bills.

First Trust Morningstar Dividend Leaders Index Fund
First Trust Morningstar Dividend Leaders Index Fund (NYSEARCA:FDL) is an index fund of U.S. companies picked for a record of dividends they look able to keep paying. It weights companies by the dollars they pay in dividends, so the biggest payers get the biggest weight. The fund has about $7.3 billion in net assets.

It gets half the portfolio, or about $1.01 million. The share price is near $52, and the fund paid $1.94 per share over the last 12 months. That’s a trailing yield of about 3.7%. If you annualize the latest quarterly payment instead, you get about 3.9%. Using the trailing figure, FDL adds roughly $37,400 a year.

Concentration is the thing to know about this fund. Its two biggest holdings, Chevron (NYSE:CVX | CVX Price Prediction) and Verizon Communications (NYSE:VZ), made up 7.4% and 7.2% of the fund in its June holdings report. After those two, it leans on utilities, tobacco, packaged food, drug makers, and banks.

The quarterly checks also bounce around. The latest one was $0.51 per share, while the March payment was $0.40. First Trust posts the expense ratio and the 30-day SEC yield on its fact sheet, and the SEC yield is a standard measure of the last month’s income after fees.

Eaton Vance Enhanced Equity Income Fund II
Eaton Vance Enhanced Equity Income Fund II (NYSE:EOS) is a closed-end fund. It has a fixed number of shares and trades on the exchange like a stock. Investors buy and sell those shares among themselves, so the price can drift above the value of what the fund owns (a premium) or below it (a discount). That underlying value is called net asset value, or NAV.

The fund owns large-cap growth stocks and sells call options on them. A call option gives someone else the right to buy a stock at a set price. The fund gets paid up front for selling that right. That adds to its income, but it gives up some of the gain when stocks jump.

EOS gets the other half, about $1.01 million. It pays $0.1523 per share every month, or $1.83 a year. At a price near $21, that’s a distribution rate of about 8.8% on the market price. At this size, EOS brings in roughly $88,600 a year.

This payout has changed before, and that’s the one thing to know about EOS. It was $0.1373 a month in 2021 and 2022, then dropped to $0.1152 from 2023 into early 2024. The share price is down about 5% over the past year.

Eaton Vance issues distribution notices that estimate how much of each payout is a return of capital, meaning part of the payout is simply invested principal being returned. Those notices, along with the fund’s NAV and its premium or discount, show whether the payout is being earned or partly paid out of principal.

Risks Inside a Two-Fund Income Plan
Two funds make a concentrated portfolio. EOS supplies most of the income, and option income moves with market volatility. Calm markets usually mean smaller option payments. A closed-end fund bought at a premium can also lose value if that premium shrinks, even when its holdings stay the same.

The plan takes about $2.02 million. The FDL half pays the steadier income because it comes straight from company dividends, and its share price is up about 26% over the past year. The EOS half pays the bigger check, but that check can change more.

The one number to track each year is EOS’s annual distribution per share, now $1.83. If it gets cut, the gap toward $10,500 a month widens quickly. Our free Paycheck Portfolio Method guide covers the mix, timing, and withdrawal order for building a payout calendar from regular savings.

Contact [email protected] for any questions or corrections.

MarketBeat Week in Review – 10/05 - 10/09Linde NASDAQ: LIN reported record third-quarter sales, operating profit and earnings per share, while outlining restructuring actions and pricing initiatives intended to address underperformance in its home-care business and rising inflationary costs.

Chief Executive Officer Sanjiv Lamba said the company recorded a $425 million restructuring charge during the quarter to better align its cost base and portfolio with market conditions. About half of the charge related to severance, particularly in lower-growth regions, while the remainder was largely tied to portfolio and asset actions in Linde’s U.S. home-care business, Lincare.

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AI Chip Demand Gives Linde a New Growth CatalystLamba said Lincare will now report directly to Chief Financial Officer Matt White and will move into the company’s Global Other segment. The reporting change is intended to provide greater visibility into the regional gases businesses as Linde restructures Lincare and evaluates strategic alternatives for the operation.

Record results, but margin pressure remains
Third-quarter sales rose 9% from the prior year to a record $9.4 billion. Operating profit increased 8% to $2.8 billion, while diluted earnings per share climbed 9% to $4.59, or 8% excluding currency effects.

Buy, Hold, or Wait: 3 Small-Cap Stocks Telling Different StoriesWhite said underlying sales increased 5% after adjusting for currency, cost pass-through, acquisitions and engineering sales. Volume growth was 2%, split roughly between contributions from projects in the backlog and organic growth, while pricing increased 3%.

Operating margin was 29.4%, down 30 basis points from the previous year. Excluding cost pass-through, however, margin was essentially flat. Margin expansion in the combined gas segments was offset by declines in engineering and Global Other, according to White.

“The core gas business is healthy, but there are clear opportunities to improve,” White said, citing pricing and productivity actions amid higher inflation. He said Lincare has reduced year-to-date EPS growth by roughly 1.5% to 2%.

Linde generated $3.2 billion of operating cash flow in the quarter, up 8% year over year. The company said it deployed more than $9 billion of capital year to date, with roughly half invested in the business and the remainder returned to shareholders.

Demand varied across end markets and regions
Lamba said sales conditions remained uneven by geography and end market. Electronics was the strongest consumer-related category, with sales growth of 15%, supported by organic growth in Asia-Pacific and the U.S. Linde also has approximately $2 billion of electronics projects under construction in the U.S., South Korea and China, which Lamba said supports continued double-digit growth.

Food and beverage sales increased 3%, led by the Americas and EMEA, while healthcare sales increased 2%. Excluding Lincare, healthcare growth was in the mid-single digits, according to Lamba.

Chemicals and energy: Sales rose 12%, reflecting stronger volumes in the U.S. and China as well as pricing actions, especially in the Americas.
Metals and mining: Sales increased 3%, driven primarily by North American construction and industrial activity, partly offset by declines in EMEA and APAC.
Manufacturing: Sales rose 7%, supported by price increases and higher volumes in the U.S., China and India, including continued aerospace demand.

Lamba said U.S. packaged-gas growth remained in the low teens, supported by construction and data-center activity. Merchant and onsite volumes were strongest in the U.S., including activity along the Gulf Coast in energy and chemicals, metals production and space-propellant demand.

In Europe, Lamba described the underlying market as flat after excluding equipment sales. He said improved comparisons have provided some stability, but that he sees no catalyst for a near-term recovery in European industrial activity.

In China, Lamba said steel production declined 2.5% amid government curtailment orders, while chemicals activity was flat. Electronics industrial production grew about 17% during the quarter, supporting Linde’s growth in the country. He added that export demand remained strong, but domestic consumption had not improved materially.

Backlog and project updates
Linde’s sale-of-gas project backlog stood near $8 billion at quarter-end. Lamba said the company expects to start projects representing about $1 billion during the remainder of the quarter and remains confident it can finish the year near the $8 billion backlog level, subject to customer timing.

The sale-of-plant backlog was just under $3 billion and is expected to grow during the next year, he said. Linde said it will provide more detailed outlook commentary for 2027 in February.

Regarding the Woodside project, Lamba said Linde began supplying nitrogen from its air separation unit in the third quarter and is temporarily supplying hydrogen through its existing pipeline network. The project’s two hydrogen trains are expected to start in a staggered fashion, with startup completion anticipated in the first half of next year. The carbon capture and sequestration component is being developed by ExxonMobil.

Lamba said the project’s financial contribution would begin in the second half of next year, with capacity utilization expected to ramp gradually and potentially reach full levels in 2028.

Outlook
For the fourth quarter, Linde forecast EPS of $4.40 to $4.50, representing growth of 5% to 7%. The company expects a 1% sequential foreign-exchange headwind and is not assuming an improvement in economic conditions or a meaningful near-term improvement in Lincare profitability.

The company’s full-year EPS outlook is $17.82 to $17.92. White said the guidance incorporates a foreign-exchange benefit of about 2% for the full year, compared with the company’s prior expectation of roughly 1%.

Linde expects the severance-related restructuring actions to begin contributing in the fourth quarter, with full run-rate benefits expected in the second half of next year. White said the severance portion of the restructuring program has an estimated undiscounted cash payback period closer to two years.

About Linde (NASDAQ:LIN)Linde plc NASDAQ: LIN is a global industrial gases and engineering company. It produces and distributes atmospheric gases such as oxygen, nitrogen and argon, as well as hydrogen, helium, carbon dioxide and specialty gases. The company serves customers through packaged gases, bulk deliveries, on-site production and pipeline systems.

Linde's products and services support a broad range of industries, including healthcare, food and beverage, manufacturing, chemicals, energy, refining, electronics and metals.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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T-Mobile (TMUS -0.53%) grew third-quarter net income 27% to about $3.5 billion. Shares rose about 2% in pre-market trading Thursday but were about flat at midday. The catch is that T-Mobile is growing profit by earning more from each account while adding fewer accounts and losing more of them.

Key NumbersPostpaid ARPA (average monthly revenue per account): $155.73, up 4% year over yearPostpaid net account additions: 274,000, down from 396,000 a year agoPostpaid account churn (monthly): 1.09%, up from 0.97% a year agoDiluted EPS: $3.22, up 34% year over yearTMUS T-Mobile US$147.29-$0.79 (-0.53%)

NASDAQ · As of 4:00 PM ET 10/29/26

What It MeansThe profit jump is mostly operating leverage. A wireless network costs about the same to run whether an account pays a few dollars more or less, so extra revenue per account drops straight to profit. The year-ago quarter also carried a $278 million impairment charge, which flatters the comparison, and buybacks largely explain why earnings per share (EPS) grew faster than net income.

The weak spot is retention. Churn rising alongside ARPA is a warning sign in wireless, because it often means higher bills are pushing some customers out. Full-year guidance for net account additions implies roughly 230,000 in the fourth quarter, below the third quarter's pace. The release also gives no postpaid phone figures, the industry's standard yardstick.

Cash isn't keeping up with earnings. Operating cash flow slipped even as net income climbed, and adjusted free cash flow grew only because capital spending fell 14%. The guidance "raise" mostly narrows ranges; the top of the outlook for Core Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came down.

What to Watch NextWatch account churn: if it stays above 1% while ARPA keeps climbing, higher prices may be costing T-Mobile customers. Also watch whether free cash flow keeps growing, since full-year guidance implies capital spending rebounds to about $2.4 billion in the fourth quarter.

Sharice Wells has no position in any of the stocks mentioned. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.

Alphabet shares fell nearly 10% after its Q3 earnings, even as Google Cloud reported 103% revenue growth. Microsoft and Oracle also reported strong AI related growth, but their stocks moved in the opposite direction, gaining around 4% and 11%. With AI spending climbing across the industry, the contrasting market reactions raise a question: How much growth is enough to justify the cost?

Oracle stock ORCL fell 4% on Thursday as a broader sell-off in large-cap technology shares weighed on the company, despite analysts responding positively to its latest artificial intelligence infrastructure plans and long-term financial targets. The Nasdaq Composite declined 1.57%, while the S&P 500 fell 0.54%.

AUSTIN, Texas, Oct. 29, 2026 (GLOBE NEWSWIRE) -- Digital Realty (NYSE: DLR), the world’s largest cloud- and carrier-neutral data center platform, announced today its financial results for the third quarter of 2026. All per share results are presented on a fully diluted basis.

Highlights

Reported net income available to common stockholders of $0.48 per share in 3Q26, compared to $0.15 in 3Q25Reported FFO per share of $1.97 in 3Q26, compared to $1.65 in 3Q25Reported Core FFO per share of $2.10 in 3Q26, compared to $1.89 in 3Q25Signed record total bookings during 3Q26 that are expected to generate $855 million of annualized GAAP base rent at 100% share; at Digital Realty’s share, bookings were a record $627 million, including a record $152 million within the 0-1 megawatt plus interconnection categoryReported rental rate increases on renewal leases of 11.8% on a cash basis in 3Q26Reported a record total backlog of $2.5 billion of annualized GAAP base rent at 100% share at the end of 3Q26; at Digital Realty’s share, the backlog was a record $1.8 billionRaised 2026 Core FFO per share (excluding net promote) outlook to $8.30 - $8.35 and 2026 Constant-Currency Core FFO per share (excluding net promote) outlook to $8.25 - $8.30
Financial Results

Digital Realty reported total revenues of $1.9 billion in the third quarter of 2026, 10% higher than the previous quarter when excluding $201 million of promote income in the second quarter and 21% above the same quarter last year.

The company delivered net income of $194 million in the third quarter of 2026, as well as net income available to common stockholders of $185 million and $0.48 per share, compared to $1.21 per share in the previous quarter and $0.15 per share in the same quarter last year.

Digital Realty generated Adjusted EBITDA of $978 million in the third quarter of 2026, which was in line with the previous quarter and a 13% increase over the same quarter last year.

The company reported Funds From Operations (FFO) of $742 million in the third quarter of 2026, or $1.97 per share, compared to $2.73 per share in the previous quarter and $1.65 per share in the same quarter last year.

Digital Realty delivered Core FFO per share (excluding net promote) of $2.10 in the third quarter of 2026, compared to $2.13 per share in the previous quarter and $1.89 per share in the same quarter last year. Digital Realty delivered Core FFO per share (excluding net promote) of $6.27 for the nine-month period ended September 30, 2026. Digital Realty delivered Constant-Currency Core FFO per share (excluding net promote) of $2.10 in the third quarter of 2026 and $6.18 per share for the nine-month period ended September 30, 2026.

“Digital Realty extended its track record of execution in the third quarter with record leasing, an expanding backlog, and another quarter of double-digit earnings growth,” said Digital Realty President and Chief Executive Officer Andy Power. “These results underscore the global strength of customer demand for connectivity-rich environments, trusted execution, and a well-capitalized partner with the reach and capabilities to support their evolving requirements across the digital infrastructure landscape.”

Leasing Activity

In the third quarter, Digital Realty signed total bookings that are expected to generate $855 million of annualized GAAP rental revenue, at 100% share; at Digital Realty’s share, total bookings were $627 million, including a $130 million contribution from the 0-1 MW category and a $22 million contribution from interconnection.

The weighted-average lag between new leases signed during the third quarter of 2026 and the contractual commencement date was 17 months. The backlog of signed-but-not-commenced leases at quarter-end was $2.5 billion of annualized GAAP base rent at 100% share, and $1.8 billion at Digital Realty’s share. In addition, Digital Realty also signed renewal leases representing $261 million of annualized cash rental revenue during the quarter. Rental rates on renewal leases signed during the third quarter of 2026 increased 11.8% on a cash basis and 17.0% on a GAAP basis.

New leases signed during the third quarter of 2026, at Digital Realty’s share, are summarized by region and product as follows:

           Annualized GAAP       Base Rent   GAAP Base RentAmericas (in thousands) Megawatts per Kilowatt0-1 MW  $39,587 11.6  $284> 1 MW   203,002 64.0   264Other(1)   357 —   —Total  $242,947 75.6  $267         EMEA(2)        0-1 MW  $68,062 23.1  $245> 1 MW   9,906 6.4   129Other(1)   94 —   —Total  $78,062 29.5  $220         Asia Pacific(2)        0-1 MW  $21,979 6.5  $282> 1 MW   261,271 73.2   297Other(1)   136 —   —Total  $283,386 79.7  $296         All Regions(2)        0-1 MW  $129,628 41.2  $262> 1 MW   474,180 143.6   275Other(1)   587 —   —Total  $604,395 184.8  $272         Interconnection  $22,209 N/A  N/A         Grand Total at DLR Share  $626,604 184.8  $272         Grand Total at 100% Share  $855,275 267.2  $259 Note: Totals may not foot due to rounding differences.
(1) Other includes Powered Base Building® shell capacity as well as storage and office space within fully improved data center facilities.
(2) Based on quarterly average exchange rates during the three months ended September 30, 2026.

Investment Activity

During the third quarter of 2026, Digital Realty acquired $742 million of land:

Near the Indianapolis metro area, to support over one gigawatt of IT capacity.Adjacent to Digital Realty’s Fort Gillem campus in Atlanta to support hyperscale and enterprise colocation IT capacity.Two parcels in the Chicago metro area to support hyperscale and enterprise colocation for an aggregate of 360 megawatts of IT capacity.In the Charlotte metro area to support development of up to 600 megawatts of IT capacity.Near Digital Realty’s Ostend campus in Frankfurt, Germany to support up to 14 megawatts of IT capacity.Near Crete, Greece to support up to 5 megawatts of IT capacity. As previously disclosed, during the quarter, Digital Realty entered into a new joint venture with Rönesans Infrastructure to develop data centers across Türkiye for $33 million. The joint venture's first investment will be a data center in Ankara, expected to support more than 22 megawatts of IT capacity.

  Subsequent to quarter end, Digital Realty also closed on the following acquisitions:

Land near Brussels, Belgium for approximately €15 million or $17 million.The freehold interest in the land underlying our campus in Dugny, France for approximately €80 million or $90 million.An additional 16% stake in Teraco for approximately $688 million from certain minority shareholders, principally through the issuance of 3.4 million shares of common stock, increasing Digital Realty’s ownership from 61% to approximately 77%.
Subsequent to quarter end, we closed $1.4 billion of initial cornerstone equity commitments to our new perpetual capital strategy focused on stabilized hyperscale data centers in North America.

Balance Sheet

Digital Realty had approximately $19.5 billion of total debt outstanding as of September 30, 2026, comprised of $17.9 billion of unsecured debt and approximately $1.6 billion of secured debt and other debt. At the end of the third quarter of 2026, net debt-to-Adjusted EBITDA was 5.2x, debt-plus-preferred-to-total enterprise value was 23.2% and fixed charge coverage was 4.8x. 

During the quarter, the company sold approximately 2.4 million shares of common stock under its At-The-Market (ATM) equity issuance program at a weighted average price of $191.84 per share, for net proceeds of approximately $450 million. Year-to-date, the company has sold approximately 15.9 million shares under its ATM equity issuance program at a weighted average price of $185.98 per share, for net proceeds of approximately $2.9 billion.

In October, the company issued:

€1 billion of 5.125% euro notes due 2036, for net proceeds of approximately €1 billion ($1.1 billion); and CHF225 million of 1.6803% Swiss bonds due 2029, CHF185 million of 2.0600% due 2032 and CHF100 million of 2.4150% due 2036, for aggregate net proceeds of approximately CHF508 million ($611 million).  2026 Outlook

Digital Realty raised its 2026 Core FFO per share (excluding net promote) outlook to $8.30 - $8.35 and its 2026 Constant-Currency Core FFO per share (excluding net promote) outlook to $8.25 - $8.30. The assumptions underlying the outlook are summarized in the following table.

           As of As of As of As ofTop-Line and Cost Structure February 5, 2026 April 23, 2026 July 23, 2026 October 29, 2026Total revenue (excluding promote income) $6.600 - $6.700 billion $6.650 - $6.750 billion $6.850 - $6.950 billion $7.050 - $7.125 billionNet non-cash rent adjustments(1) ($90 - $95 million) ($90 - $95 million) ($145 - $150 million) ($145 - $150 million)Adjusted EBITDA $3.600 - $3.700 billion $3.650 - $3.750 billion $3.750 - $3.850 billion $3.800 - $3.850 billionG&A $610 - $620 million $615 - $625 million $620 - $630 million $640 - $650 million         Internal Growth        Rental rates on renewal leases        Cash basis 6.0% - 8.0% 6.5% - 8.5% 9.0% - 11.0% 10.0% - 12.0%GAAP basis 8.5% - 10.5% 9.5% - 11.5% 12.0% - 14.0% 13.0% - 15.0%Year-end portfolio occupancy(2) +50 - 100 bps +50 - 100 bps +75 - 125 bps +75 - 125 bps"Same-Capital" cash NOI growth(3) 4.0% - 5.0% 4.0% - 5.0% 4.25% - 5.25% 5.25% - 5.75%         Foreign Exchange Rates        U.S. Dollar / Pound Sterling $1.30 - $1.35 $1.32 - $1.37 $1.32 - $1.37 $1.32 - $1.37U.S. Dollar / Euro $1.13 - $1.18 $1.15 - $1.20 $1.13 - $1.18 $1.13 - $1.18         External Growth        Dispositions / Asset Contributions        Dollar volume $500 - $1,000 million $500 - $1,000 million $1,000 - $1,500 million $1,500 - $2,000 millionCap rate 0.0% - 10.0% 0.0% - 10.0% 0.0% - 10.0% 0.0% - 10.0%Development        CapEx (Net of Partner Contributions)(4) $3,250 - $3,750 million $3,500 - $4,000 million $4,250 - $4,750 million $4,250 - $4,750 millionAverage stabilized yields 10.0%+ 10.0%+ 10.0%+ 10.0%+Enhancements and other non-recurring CapEx(5) $30 - $35 million $30 - $35 million $30 - $35 million $30 - $35 millionRecurring CapEx + capitalized leasing costs(6) $400 - $425 million $400 - $425 million $400 - $425 million $400 - $425 million         Balance Sheet        Long-term debt issuance        Dollar amount $1,000 - $1,500 million $1,500 - $2,000 million $1,500 - $2,000 million ~$1,750 millionPricing 4.0% - 4.5% 4.0% - 4.5% 4.5% - 5.5% ~4.0%Timing Mid-Year Mid-Year 2H-2026 October         Net income per diluted share $2.55 - $2.65 $2.65 - $2.75 $3.10 - $3.15 $2.90 - $2.95Real estate depreciation and (gain) / loss on sale $4.90 - $4.90 $4.95 - $4.95 $5.30 - $5.30 $5.65 - $5.65Funds From Operations / share (NAREIT-Defined) $7.45 - $7.55 $7.60 - $7.70 $8.40 - $8.45 $8.55 - $8.60Non-core expenses and revenue streams $0.45 - $0.45 $0.40 - $0.40 $0.25 - $0.25 $0.25 - $0.25Net Promote $0.00 - $0.00 $0.00 - $0.00 ($0.50) - ($0.50) ($0.50) - ($0.50)Core Funds From Operations / share (excluding net promote) $7.90 - $8.00 $8.00 - $8.10 $8.15 - $8.20 $8.30 - $8.35Foreign currency translation adjustments $0.00 - $0.00 ($0.05) - ($0.05) ($0.05) - ($0.05) ($0.05) - ($0.05)Constant-Currency Core FFO / share (excluding net promote) $7.90 - $8.00 $7.95 - $8.05 $8.10 - $8.15 $8.25 - $8.30 (1) Net non-cash rent adjustments represent the sum of straight-line rental revenue and straight-line rental expense, as well as the amortization of above- and below-market leases (i.e., ASC 805 adjustments). 
(2) Year-end portfolio occupancy guidance based on IT load (kW).
(3) The “Same-Capital” pool includes properties owned as of December 31, 2024 with less than 5% of total rentable square feet under development. It excludes properties that were undergoing, or were expected to undergo, development activities in 2025-2026, properties classified as held for sale and contribution, and properties sold or contributed to joint ventures for all periods presented. The 2026 “Same-Capital” cash NOI growth outlook is presented on a constant currency basis.
(4) Excludes land acquisitions and includes Digital Realty’s share of joint venture and fund contributions. Figure is net of joint venture and fund partners’ share of contributions.
(5) Other non-recurring CapEx represents costs incurred to enhance the capacity or marketability of operating properties, such as network fiber initiatives and software development costs. 
(6) Recurring CapEx represents non-incremental improvements required to maintain current revenues, including second-generation tenant improvements and leasing commissions.

Note: The company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis, where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items, and the information is not available without unreasonable effort. Please see Non-GAAP Financial Measures in this document for further discussion.

Non-GAAP Financial Measures

This document contains non-GAAP financial measures, including FFO, Core FFO, Core FFO (excluding net promote), Constant Currency Core FFO (excluding net promote), Adjusted FFO, Net Operating Income (NOI), “Same-Capital” Cash NOI and Adjusted EBITDA. A reconciliation from U.S. GAAP net income available to common stockholders to FFO, a reconciliation from FFO to Core FFO, a reconciliation from Core FFO (excluding net promote) to Constant Currency Core FFO (excluding net promote), a reconciliation from Core FFO to Adjusted FFO, a reconciliation from NOI to Cash NOI, and definitions of FFO, Core FFO, Constant Currency Core FFO, Core FFO (excluding net promote), Adjusted FFO, NOI and “Same-Capital” Cash NOI are included as an attachment to this document. A reconciliation from U.S. GAAP net income available to common stockholders to Adjusted EBITDA, a definition of Adjusted EBITDA and definitions of net debt-to-Adjusted EBITDA, debt-plus-preferred-to-total enterprise value, cash NOI, and fixed charge coverage ratio are included as an attachment to this document.

The company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis, where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and/or amount of various items that would impact net income attributable to common stockholders per diluted share, which is the most directly comparable forward-looking GAAP financial measure. This includes, for example, external growth factors, such as dispositions, and balance sheet items such as debt issuances, that have not yet occurred, are out of the company's control and/or cannot be reasonably predicted. For the same reasons, the company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.

Investor Conference Call

Prior to Digital Realty’s investor conference call at 5:00 p.m. ET / 4:00 p.m. CT on October 29, 2026, a presentation will be posted to the Investors section of the company’s website at https://investor.digitalrealty.com. The presentation is designed to accompany the discussion of the company’s third quarter 2026 financial results and operating performance. The conference call will feature President & Chief Executive Officer Andy Power and Chief Financial Officer Matt Mercier.

A live webcast of the call will be available on the Investors section of Digital Realty’s website at https://investor.digitalrealty.com. The webcast will be archived for one year and the replay will be available shortly after the conclusion of the live event.

About Digital Realty

Digital Realty brings companies and data together by delivering the full spectrum of data center, colocation and interconnection solutions. PlatformDIGITAL®, the company’s global data center platform, provides customers with a secure data meeting place and a proven Pervasive Datacenter Architecture (PDx®) solution methodology for powering innovation, from cloud and digital transformation to emerging technologies like artificial intelligence (AI), and efficiently managing Data Gravity challenges. Digital Realty gives its customers access to the connected data communities that matter to them with a global data center footprint of 300+ facilities in 55+ metros across 30+ countries on six continents. To learn more about Digital Realty, please visit digitalrealty.com or follow us on LinkedIn and X.

Contact Information

Matt Mercier
Chief Financial Officer
Digital Realty

Jordan Sadler / Jim Huseby
Investor Relations
Digital Realty
[email protected]

Consolidated Quarterly Statements of Operations
Third Quarter 2026Unaudited and in Thousands, Except Per Share Data
          Three Months Ended Nine Months Ended 30-Sep-2630-Jun-2631-Mar-2631-Dec-2530-Sep-25 30-Sep-2630-Sep-25Rental revenues$1,224,802 $1,145,936 $1,103,946 $1,074,703 $1,045,708  $3,474,684 $3,009,784 Tenant reimbursements - Utilities 423,919  352,897  333,909  356,084  332,681   1,110,726  898,373 Tenant reimbursements - Other 47,032  45,391  38,093  34,406  37,302   130,516  116,834 Interconnection and other 131,356  130,409  124,278  123,414  120,399   386,043  355,320 Fee income 75,298  248,927  34,899  45,692  36,398   359,124  91,468 Other 11  480  47  372  4,746   538  6,242 Total Operating Revenues$1,902,418 $1,924,040 $1,635,173 $1,634,671 $1,577,234  $5,461,631 $4,478,021          Utilities$477,537 $396,454 $372,385 $398,185 $375,627  $1,246,376 $1,028,301 Rental property operating 304,193  291,408  266,115  295,948  278,292   861,716  784,615 Property taxes 60,408  55,160  54,964  50,791  51,823   170,532  150,249 Insurance 4,654  4,744  4,799  4,711  4,508   14,197  13,937 Depreciation and amortization 539,471  507,106  499,511  493,458  497,002   1,546,088  1,401,178 General and administration 170,644  153,316  151,923  159,283  139,911   475,883  394,778 Severance, equity acceleration and legal expenses 2,643  4,384  2,835  4,937  1,794   9,862  6,484 Transaction and integration expenses 48,961  38,703  15,685  36,083  86,559   103,349  149,007 Provision for impairment —  —  —  78,553  —   —  — Other expenses 179  13,508  23  98  3,297   13,710  3,604 Total Operating Expenses$1,608,690 $1,464,783 $1,368,240 $1,522,047 $1,438,813  $4,441,713 $3,932,153          Operating income before gain (loss) on disposition of properties, net$293,728 $459,257 $266,933 $112,624 $138,420  $1,019,918 $545,868 Gain (loss) on disposition of properties, net 8,403  7,988  873  42,865  19,780   17,264  952,721 Operating Income$302,131 $467,245 $267,806 $155,489 $158,200  $1,037,182 $1,498,589          Equity in earnings (loss) of unconsolidated entities (18,433) 36  (1,833) 4,659  (16,944)  (20,230) (36,646)Interest and other income (expense), net 11,937  137,944  45,342  42,797  47,735   195,223  118,255 Interest (expense) (93,273) (113,943) (116,384) (116,516) (113,584)  (323,600) (321,431)Income tax benefit (expense) (8,751) (33,675) (16,008) 9,673  (11,695)  (58,434) (41,713)Gain (loss) on debt extinguishment and modifications —  —  (4,119) 9  —   (4,119) — Net Income$193,611 $457,607 $174,804 $96,111 $63,713  $826,022 $1,217,054          Net income (loss) attributable to noncontrolling interests 1,735  (4,318) 4,470  2,536  4,099   1,887  (7,112)Net Income Attributable to Digital Realty Trust, Inc.$195,346 $453,289 $179,274 $98,647 $67,812  $827,909 $1,209,942          Preferred stock dividends (10,181) (10,181) (10,181) (10,181) (10,181)  (30,543) (30,543)Net Income (Loss) Available to Common Stockholders$185,165 $443,108 $169,093 $88,466 $57,631  $797,366 $1,179,399          Weighted-average shares outstanding - basic 372,193  354,118  345,013  343,493  341,370   357,208  338,565 Weighted-average shares outstanding - diluted 379,799  361,542  353,255  351,570  349,234   364,903  346,631 Weighted-average fully diluted shares and units 385,937  367,605  359,300  357,430  355,165   370,963  352,571          Net income / (loss) per share - basic$0.50 $1.25 $0.49 $0.26 $0.17  $2.23 $3.48 Net income / (loss) per share - diluted$0.48 $1.21 $0.46 $0.24 $0.15  $2.14 $3.35  Funds From Operations and Core Funds From Operations
Third Quarter 2026Unaudited and in Thousands, Except Per Share Data
           Three Months Ended Nine Months EndedReconciliation of Net Income to Funds From Operations (FFO)30-Sep-2630-Jun-2631-Mar-2631-Dec-2530-Sep-25  30-Sep-2630-Sep-25          Net Income (Loss) Available to Common Stockholders$185,165 $443,108 $169,093 $88,466 $57,631   $797,366 $1,179,399 Adjustments:         Noncontrolling interest in operating partnership 4,000  9,000  4,000  2,000  2,000    17,000  26,000 Real estate related depreciation and amortization(1) 527,646  499,106  490,965  484,260  487,182    1,517,717  1,370,884 Reconciling items related to noncontrolling interests (23,943) (24,292) (23,726) (22,753) (22,888)   (71,961) (63,406)Unconsolidated entities real estate related depreciation and amortization 57,047  62,972  60,291  70,260  65,922    180,310  180,955 (Gain) loss on real estate transactions (8,403) (7,988) (226) (42,865) (19,780)   (16,617) (952,721)Provision for impairment —  —  —  78,553  —    —  — Funds From Operations$741,512 $981,906 $700,398 $657,921 $570,067   $2,423,815 $1,741,111           Weighted-average shares and units outstanding - basic 378,331  360,181  351,059  349,354  347,301    363,268  344,504 Weighted-average shares and units outstanding - diluted(2) (3) 385,937  367,605  359,300  357,430  355,165    370,963  352,571           Funds From Operations per share - basic$1.96 $2.73 $2.00 $1.88 $1.64   $6.67 $5.05           Funds From Operations per share - diluted(2) (3)$1.97 $2.73 $1.99 $1.89 $1.65   $6.68 $5.07           Reconciliation of FFO to Core FFO30-Sep-2630-Jun-2631-Mar-2631-Dec-2530-Sep-25  30-Sep-2630-Sep-25          Funds From Operations$741,512 $981,906 $700,398 $657,921 $570,067   $2,423,815 $1,741,111 Other non-core revenue adjustments(4) (3,219) (80,837) (29) (10,633) (4,746)   (84,085) (2,443)Transaction and integration expenses 48,961  38,703  15,685  36,083  86,559    103,349  149,007 Gain (loss) on debt extinguishment and modifications —  —  4,119  (9) —    4,119  — Severance, equity acceleration and legal expenses(5) 2,643  4,384  2,835  4,937  1,794    9,862  6,484 (Gain) loss on FX and derivatives revaluation 7,515  (1,608) (4,398) (16,295) 252    1,509  7,015 Other non-core expense adjustments(6) (2,149) 13,208  (2,538) (21,794) 2,075    8,521  6,465 Core Funds From Operations$795,263 $955,756 $716,071 $650,210 $656,001   $2,467,090 $1,907,639           Net promote —  (187,871) —  —  —    (187,871) —           Core Funds From Operations (excluding net promote)$795,263 $767,885 $716,071 $650,210 $656,001   $2,279,219 $1,907,639           Weighted-average shares and units outstanding - diluted(2) (3) 378,770  360,648  351,293  349,740  347,700    363,687  344,873           Core Funds From Operations per share - diluted(2)$2.10 $2.65 $2.04 $1.86 $1.89   $6.78 $5.53           Core FFO per share (excluding net promote) - diluted(2)$2.10 $2.13 $2.04 $1.86 $1.89   $6.27 $5.53           (1) Real Estate Related Depreciation & Amortization30-Sep-2630-Jun-2631-Mar-2631-Dec-2530-Sep-25  30-Sep-2630-Sep-25          Depreciation and amortization per income statement$539,471 $507,106 $499,511 $493,458 $497,002   $1,546,088 $1,401,178 Non-real estate depreciation  & amortization (11,825) (8,000) (8,546) (9,198) (9,820)   (28,371) (30,294)Real Estate Related Depreciation & Amortization$527,646 $499,106 $490,965 $484,259 $487,182   $1,517,717 $1,370,884  (2) Certain of Teraco's minority indirect shareholders have the right to put their shares in an upstream parent company of Teraco to Digital Realty in exchange for cash or the equivalent value of shares of Digital Realty common stock, or a combination thereof. U.S. GAAP requires Digital Realty to assume the put right is settled in shares for purposes of calculating diluted EPS. This same approach was utilized to calculate FFO/share. The potential future dilutive impact associated with this put right will be excluded from Core FFO and AFFO until settlement occurs – causing diluted share count to be higher for FFO than for Core FFO and AFFO. When calculating diluted FFO, Teraco related noncontrolling interest is added back to the FFO numerator as the denominator assumes all shares have been put back to Digital Realty.

                         Three Months Ended   Nine Months Ended   30-Sep-26  30-Jun-26  31-Mar-26  31-Dec-25  30-Sep-25   30-Sep-26  30-Sep-25Teraco noncontrolling share of FFO  $19,190  $19,979  $15,410  $18,240  $17,018   $54,579  $46,154Teraco related minority interest  $19,190   $19,979   $15,410   $18,240   $17,018    $54,579   $46,154 (3) For all periods presented, we have excluded the effect of dilutive series J, series K and series L preferred stock, as applicable, that may be converted into common stock upon the occurrence of specified change in control transactions as described in the articles supplementary governing the series J, series K and series L preferred stock, as applicable, which we consider highly improbable. See above for calculations of FFO and the share count detail section that follows the reconciliation of Core FFO to AFFO for calculations of weighted average common stock and units outstanding. For definitions and discussion of FFO, Core FFO and Core FFO (excluding net promote), see the Definitions section.
(4) Includes development fees included in gains, lease termination fees, gain on sale of equity investment included in other income, insurance proceeds related to property damage and unconsolidated entities non-core adjustments within equity in earnings.
(5) Relates to severance and other charges related to the departure of company executives and integration-related severance.
(6) Includes non-real estate amortization expense, write-offs associated with non-recurring legal and insurance expenses, impact of foreign tax rate changes, non-core adjustments attributable to noncontrolling interests, impact on tax expense due to insurance proceeds related to property damage and adjustments to reflect our proportionate share of transaction costs associated with noncontrolling interests.

Adjusted Funds From Operations (AFFO)
            Third Quarter 2026
Unaudited and in Thousands, Except Per Share Data
 Three Months Ended Nine Months Ended
Reconciliation of Core FFO to AFFO 30-Sep-26 30-Jun-2631-Mar-26 31-Dec-25 30-Sep-25 30-Sep-26 30-Sep-25                  Core Funds From Operations  $795,263  $955,756 $716,071  $650,210  $656,001  $2,467,090  $1,907,639   Adjustments:               Non-real estate depreciation  7,422  8,000 8,546  9,198  9,820  23,968  30,293  Amortization of deferred financing costs  6,368  6,343 6,443  6,781  6,565  19,154  19,564  Amortization of debt discount/premium  1,612  1,595 1,581  1,341  1,293  4,788  3,669  Non-cash stock-based compensation expense  22,789  21,379 20,908  17,327  18,174  65,076  52,900  Straight-line rental revenue  (44,053)  (26,955) (21,741)  (34,351)  (33,351)  (92,749)  (66,741)  Straight-line rental expense  1,714  (602) (1,410)  (97)  (271)  (298)  (906)  Above- and below-market rent amortization  (2,142)  (962) (1,007)  (972)  (864)  (4,111)  (2,322)  Deferred tax (benefit) / expense  (13,146)  (12,681) (10,919)  (26,184)  18,187  (36,746)  (13,044)  Leasing compensation and internal lease commissions  15,987  13,857 15,476  14,644  15,013  45,320  43,139  Recurring capital expenditures (1)  (105,789)  (76,674) (59,665)  (168,539)  (77,998)  (242,128)  (175,386)                  Adjusted Funds From Operations (2)  $686,025  $889,056 $674,283  $469,358  $612,569  $2,249,364  $1,798,805                  Weighted-average shares and units outstanding - basic  378,331  360,181 351,059  349,354  347,301  363,268  344,504  Weighted-average shares and units outstanding - diluted (3)  378,770  360,648 351,293  349,740  347,700  363,687  344,873                  AFFO per share - diluted (3) $1.81  $2.47 $1.92  $1.34  $1.76  $6.18  $5.22                    Dividends per share and common unit $1.22 $1.22$1.22 $1.22 $1.22 $3.66 $3.66                  Diluted AFFO Payout Ratio 67.4% 49.5%63.6% 90.9% 69.2% 59.2% 70.2%                     Three Months Ended  Nine Months Ended
 Share Count Detail 30-Sep-26 30-Jun-2631-Mar-26  31-Dec-25  30-Sep-25 30-Sep-26 30-Sep-25                    Weighted Average Common Stock and Units Outstanding  378,331   360,181 351,059   349,354   347,301   363,268   344,504  Add: Effect of dilutive securities  439 467 234   386   399   419   369  Weighted Avg. Common Stock and Units Outstanding - diluted  378,770   360,648 351,293   349,740   347,700   363,687   344,873   (1) Recurring capital expenditures represent non-incremental building improvements required to maintain current revenues, including second-generation tenant improvements and external leasing commissions. Recurring capital expenditures do not include acquisition costs contemplated when underwriting the purchase of a building, costs which are incurred to bring a building up to Digital Realty’s operating standards, or internal leasing commissions.
(2) For a definition and discussion of AFFO, see the Definitions section. For a reconciliation of net income (loss) available to common stockholders to FFO and Core FFO, see above.
(3) For all periods presented, we have excluded the effect of dilutive series J, series K and series L preferred stock, as applicable, that may be converted into common stock upon the occurrence of specified change in control transactions as described in the articles supplementary governing the series J, series K and series L preferred stock, as applicable, which we consider highly improbable. See above for calculations of FFO and for calculations of weighted average common stock and units outstanding.  

Consolidated Balance Sheets   Third Quarter 2026
Unaudited and in Thousands, Except Per Share Data
             30-Sep-26 30-Jun-26 31-Mar-26 31-Dec-2530-Sep-25Assets          Investments in real estate:          Real estate $34,399,727  $ 33,700,303  $ 31,633,899  $ 31,359,298  $ 30,194,891 Construction in progress  10,634,707   9,770,384   5,381,071   4,976,785   5,422,338 Land held for future development  769,433   122,841   199,681   91,130   66,668 Investments in Real Estate $45,803,867  $43,593,528  $37,214,651  $36,427,213  $35,683,897 Accumulated depreciation and amortization  (11,150,810)  (10,736,127)  (10,355,181)  (9,993,596)  (9,665,380)Net Investments in Properties $34,653,057  $32,857,401  $26,859,470  $26,433,617  $26,018,517 Investment in unconsolidated entities  3,805,462   3,548,297   3,536,757   3,427,903   3,690,749 Net Investments in Real Estate $38,458,519  $36,405,698  $30,396,227  $29,861,520  $29,709,266            Operating lease right-of-use assets, net $ 1,071,340  $ 1,093,015  $ 1,105,080  $ 1,135,645  $ 1,167,398 Cash and cash equivalents  802,903   1,864,796   2,426,631   3,451,647   3,299,703 Accounts and other receivables, net(1)  1,809,964   1,564,955   1,430,242   1,358,895   1,496,105 Deferred rent, net  832,808   792,045   765,198   750,907   710,624 Goodwill  10,050,563   9,592,127   9,591,250   9,711,953   9,647,754 Customer relationship value, deferred leasing costs and other intangibles, net  2,714,699   2,595,046   2,053,368   2,134,698   2,080,898 Assets held for sale and contribution  —   —   441,064   349,826   116,624 Other assets  783,719   610,232   650,913   655,377   500,262 Total Assets $56,524,515  $54,517,914  $48,859,973  $49,410,468  $48,728,634            Liabilities and Equity          Global unsecured revolving credit facilities, net $ 1,640,466  $ 709,756  $ 707,961  $ 899,090  $ 1,152,042 Unsecured term loans, net  424,364   427,681   432,450   439,536   438,933 Unsecured senior notes, net of discount  15,809,482   15,906,794   16,013,977   16,194,441   15,808,565 Secured and other debt, net of discount  1,620,303   1,591,118   842,245   869,068   825,894 Operating lease liabilities  1,192,434   1,209,459   1,218,509   1,253,217   1,285,067 Accounts payable and other accrued liabilities  3,609,832   3,241,792   2,419,888   2,600,979   2,377,726 Deferred tax liabilities  1,100,877   1,124,899   1,093,955   1,124,724   1,151,374 Accrued dividends and distributions  —   —   —   428,337   — Security deposits and prepaid rents  886,252   759,979   733,974   754,920   699,528 Obligations associated with assets held for sale and contribution  —   —   —   182   283 Total Liabilities $26,284,010  $24,971,478  $23,462,959  $24,564,494  $23,739,412            Redeemable noncontrolling interests  1,596,431   1,567,282   1,594,718   1,498,975   1,535,972            Equity          Preferred Stock:  $0.01 par value per share, 110,000 shares authorized:          Series J Cumulative Redeemable Preferred Stock(2) $ 193,540  $ 193,540  $ 193,540  $ 193,540  $ 193,540 Series K Cumulative Redeemable Preferred Stock(3)  203,264   203,264   203,264   203,264   203,264 Series L Cumulative Redeemable Preferred Stock(4)  334,886   334,886   334,886   334,886   334,886 Common Stock: $0.01 par value per share, 502,000 shares authorized(5)  3,716   3,669   3,459   3,406   3,400 Additional paid-in capital  35,077,627   34,160,611   30,093,165   29,350,487   29,182,332 Dividends in excess of earnings  (7,212,298)  (6,939,476)  (6,946,676)  (6,690,722)  (6,358,501)Accumulated other comprehensive loss, net  (488,408)  (522,024)  (512,885)  (469,198)  (533,891)Total Stockholders' Equity $28,112,327  $27,434,470  $23,368,753  $22,925,663  $23,025,030            Noncontrolling Interests          Noncontrolling interest in operating partnership $ 521,934  $ 533,622  $ 426,853  $ 415,456  $ 420,280 Noncontrolling interest in consolidated entities  9,813   11,062   6,690   5,880   7,940            Total Noncontrolling Interests $531,747  $544,684  $433,543  $421,336  $428,220            Total Equity $28,644,074  $27,979,154  $23,802,296  $23,346,999  $23,453,250            Total Liabilities and Equity $56,524,515  $54,517,914  $48,859,973  $49,410,468  $48,728,634  (1) Net of allowance for doubtful accounts of $78,043 and $85,274 as of September 30, 2026 and September 30, 2025, respectively.
(2) Series J Cumulative Redeemable Preferred Stock, 5.250%, $200,000 liquidation preference ($25.00 per share), 8,000 shares issued and outstanding as of September 30, 2026 and September 30, 2025.
(3) Series K Cumulative Redeemable Preferred Stock, 5.850%, $210,000 liquidation preference ($25.00 per share), 8,400 shares issued and outstanding as of September 30, 2026 and September 30, 2025.
(4) Series L Cumulative Redeemable Preferred Stock, 5.200%, $345,000 liquidation preference ($25.00 per share), 13,800 shares issued and outstanding as of September 30, 2026 and September 30, 2025.
(5) Common Stock: 374,888 and 343,041 shares issued and outstanding as of September 30, 2026 and September 30, 2025, respectively.

Reconciliation of Earnings Before Interest, Taxes, Depreciation & Amortization and Financial Ratios
Third Quarter 2026Unaudited and Dollars in Thousands          Three Months EndedReconciliation of Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA)(1)30-Sep-2630-Jun-2631-Mar-2631-Dec-2530-Sep-25      Net Income (Loss) Available to Common Stockholders$185,165 $443,108 $169,093 $88,466 $57,631 Interest expense 93,273  113,943  116,384  116,516  113,584 (Gain) loss on debt extinguishment and modifications —  —  4,119  (9) — Income tax expense (benefit) 8,751  33,675  16,008  (9,673) 11,695 Depreciation and amortization 539,471  507,106  499,511  493,458  497,002 EBITDA$826,660 $1,097,832 $805,115 $688,758 $679,912 Unconsolidated JV real estate related depreciation and amortization 57,047  62,972  60,291  70,260  65,922 Unconsolidated JV interest expense and tax expense 37,874  37,142  35,814  38,498  44,795 Severance, equity acceleration and legal expenses 2,643  4,384  2,835  4,937  1,794 Transaction and integration expenses 48,961  38,703  15,685  36,083  86,559 (Gain) loss on disposition of properties, net (8,403) (7,988) (873) (42,865) (19,780)Provision for impairment —  —  —  78,553  — Other non-core adjustments, net(2) 4,474  (82,084) (4,270) (25,033) 2,523 Net promote —  (187,871) —  —  — Noncontrolling interests (1,735) 4,318  (4,470) (2,536) (4,099)Preferred stock dividends 10,181  10,181  10,181  10,181  10,181 Adjusted EBITDA$977,702 $977,589 $920,307 $856,836 $867,807  (1) For definitions and discussion of EBITDA and Adjusted EBITDA, see the Definitions section.
(2) Includes foreign exchange remeasurement (gain) loss, net, impact of foreign tax rate changes, non-recurring legal and insurance expenses, lease termination fees, insurance proceeds related to property damage and similar adjustments on unconsolidated entities.

        Three Months EndedFinancial Ratios30-Sep-26 30-Jun-2631-Mar-2631-Dec-2530-Sep-25       Total GAAP interest expense$93,273 $113,943 $116,384$116,516 $113,584Capitalized interest expense 70,964 37,102 35,63734,783 32,923Change in accrued interest and other non-cash amounts 61,617 (104,924)30,268(52,014)41,265Cash Interest Expense(3)$225,854 $46,121 $182,289$99,285 $187,772       Preferred stock dividends 10,181 10,181 10,18110,181 10,181Total Fixed Charges(4)$174,418 $161,226 $162,202$161,479 $156,687              Coverage      Interest coverage ratio(5)5.1x 5.5x5.2x4.8x4.9xCash interest coverage ratio(6)3.8x 13.2x4.4x6.8x3.9xFixed charge coverage ratio(7)4.8x 5.2x4.9x4.5x4.6xCash fixed charge coverage ratio(8)3.7x 11.6x4.2x6.3x3.8x       Leverage      Debt to total enterprise value(9)(10) 22.4% 21.4% 21.7%25.1% 23.0%Debt-plus-preferred-stock-to-total-enterprise-value(10)(11) 23.2% 22.3% 22.7%26.1% 23.9%Pre-tax income to interest expense(12)3.1x 5.0x 2.5x1.8x1.6xNet Debt-to-Adjusted EBITDA(13)5.2x 4.7x 4.7x4.9x4.9x (3) Cash interest expense is interest expense less amortization of debt discount and deferred financing fees and includes interest that we capitalized. We consider cash interest expense to be a useful measure of interest as it excludes non-cash-based interest expense.
(4) Fixed charges consist of GAAP interest expense, capitalized interest, scheduled debt principal payments and preferred stock dividends.
(5) Adjusted EBITDA (including our pro rata share of unconsolidated entities EBITDA), divided by GAAP interest expense plus capitalized interest (including our pro rata share of unconsolidated entities interest expense).
(6) Adjusted EBITDA (including our pro rata share of unconsolidated entities EBITDA), divided by cash interest expense (including our pro rata share of unconsolidated entities interest expense).
(7) Adjusted EBITDA (including our pro rata share of unconsolidated entities EBITDA), divided by fixed charges (including our pro rata share of unconsolidated entities fixed charges).
(8) Adjusted EBITDA (including our pro rata share of unconsolidated entities EBITDA), divided by the sum of cash interest expense and preferred stock dividends (including our pro rata share of unconsolidated entities cash fixed charges).
(9) Total debt divided by market value of common equity plus debt plus preferred stock.
(10) Total enterprise value defined as market value of common equity plus debt plus preferred stock.
(11) Same as (9), except numerator includes preferred stock.
(12) Calculated as net income plus interest expense divided by GAAP interest expense.
(13) Calculated as total debt at balance sheet carrying value, plus finance lease obligations, plus Digital Realty’s pro rata share of unconsolidated entities debt, less cash and cash equivalents (including Digital Realty’s pro rata share of unconsolidated entities cash) divided by the product of Adjusted EBITDA (including Digital Realty’s pro rata share of unconsolidated entities EBITDA), multiplied by four.

Definitions

Funds From Operations (FFO):
We calculate funds from operations, or FFO, in accordance with the standards established by the National Association of Real Estate Investment Trusts (Nareit) in the Nareit Funds From Operations White Paper - 2018 Restatement. FFO is a non-GAAP financial measure and represents net income (loss) available to common stockholders (computed in accordance with GAAP), excluding gain (loss) from the disposition of real estate assets, provision for impairment, real estate related depreciation and amortization (excluding amortization of deferred financing costs), our share of unconsolidated JV real estate related depreciation & amortization, net income attributable to noncontrolling interests in operating partnership and reconciling items related to noncontrolling interests. Management uses FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization and gains and losses from property dispositions and after adjustments for unconsolidated partnerships and joint ventures, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our data centers that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our data centers, all of which have real economic effect and could materially impact our financial condition and results from operations, the utility of FFO as a measure of our performance is limited. Other REITs may not calculate FFO in accordance with the Nareit definition and, accordingly, our FFO may not be comparable to other REITs’ FFO. FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.

Core Funds from Operations (Core FFO) and Core FFO (excluding net promote):
We present core funds from operations, or Core FFO, and Core FFO (excluding net promote) as supplemental operating measures because, in excluding certain items that do not reflect core revenue or expense streams, they provide a performance measure that, when compared year over year, capture trends in our core business operating performance. We calculate Core FFO by adding to or subtracting from FFO (i) other non-core revenue adjustments, (ii) transaction and integration expenses, (iii) gain (loss) on debt extinguishment and modifications, (iv) gain on / issuance costs associated with redeemed preferred stock, (v) severance, equity acceleration and legal expenses, (vi) gain/loss on FX and derivatives revaluation, and (vii) other non-core expense adjustments. We calculate Core FFO (excluding net promote) by adding to Core FFO the net impact of (i) promote income and (ii) promote expense (collectively “net promote”). Because certain of these adjustments have a real economic impact on our financial condition and results from operations, the utility of Core FFO and Core FFO (excluding net promote) as a measure of our performance is limited. Other REITs may calculate Core FFO and Core FFO (excluding net promote) differently than we do and accordingly, our Core FFO and Core FFO (excluding net promote) may not be comparable to other REITs’ Core FFO and Core FFO (excluding net promote). Core FFO and Core FFO (excluding net promote) should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.

Adjusted Funds from Operations (AFFO):
We present adjusted funds from operations, or AFFO, as a supplemental operating measure because, when compared year over year, it assesses our ability to fund dividend and distribution requirements from our operating activities. We also believe that, as a widely recognized measure of the operations of REITs, AFFO will be used by investors as a basis to assess our ability to fund dividend payments in comparison to other REITs, including on a per share and unit basis. We calculate AFFO by adding to or subtracting from Core FFO (i) non-real estate depreciation, (ii) amortization of deferred financing costs, (iii) amortization of debt discount/premium, (iv) non-cash stock-based compensation expense, (v) straight-line rental revenue, (vi) straight-line rental expense, (vii) above- and below-market rent amortization, (viii) deferred tax expense / (benefit), (ix) leasing compensation and internal lease commissions, and (x) recurring capital expenditures. Other REITs may calculate AFFO differently than we do and, accordingly, our AFFO may not be comparable to other REITs’ AFFO. AFFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.

EBITDA and Adjusted EBITDA:
We believe that earnings before interest expense, gain (loss) on debt extinguishment and modifications, income tax expense (benefit), and depreciation and amortization, or EBITDA, and Adjusted EBITDA (as defined below), are useful supplemental performance measures because they allow investors to view our performance without the impact of non-cash depreciation and amortization or the cost of debt and, with respect to Adjusted EBITDA, (i) unconsolidated entities real estate related depreciation & amortization, (ii) unconsolidated entities interest expense and tax expense, (iii) severance, equity acceleration and legal expenses, (iv) transaction and integration expenses, (v) gain (loss) on sale / deconsolidation, (vi) provision for impairment, (vii) other non-core adjustments, net, (viii) noncontrolling interests, (ix) preferred stock dividends, (x) gain on / issuance costs associated with redeemed preferred stock and (xi) net promote. In addition, we believe EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors, and other interested parties in the evaluation of REITs. Because EBITDA and Adjusted EBITDA are calculated before recurring cash charges including interest expense and income taxes, exclude capitalized costs, such as leasing commissions, and are not adjusted for capital expenditures or other recurring cash requirements of our business, their utility as a measure of our performance is limited. Other REITs may calculate EBITDA and Adjusted EBITDA differently than we do and, accordingly, our EBITDA and Adjusted EBITDA may not be comparable to other REITs’ EBITDA and Adjusted EBITDA. Accordingly, EBITDA and Adjusted EBITDA should be considered only as supplements to net income computed in accordance with GAAP as a measure of our financial performance.

Net Operating Income (NOI) and Cash NOI:
Net operating income, or NOI, represents rental revenue, tenant reimbursement revenue and interconnection revenue less utilities expense, rental property operating expenses, property taxes and insurance expenses (as reflected in the statement of operations). NOI is commonly used by stockholders, company management and industry analysts as a measurement of operating performance of the company’s rental portfolio. Cash NOI is NOI less straight-line rents and above- and below-market rent amortization. Cash NOI is commonly used by stockholders, company management and industry analysts as a measure of property operating performance on a cash basis. Same-Capital Cash NOI represents data centers owned as of December 31, 2024 with less than 5% of total rentable square feet under development and excludes data centers that were undergoing, or were expected to undergo, development activities in 2025-2026, data centers classified as held for sale and contribution, and data centers sold or contributed to joint ventures for all periods presented (prior period numbers adjusted to reflect current same-capital pool). However, because NOI and cash NOI exclude depreciation and amortization and capture neither the changes in the value of our data centers that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our data centers, all of which have real economic effect and could materially impact our results from operations, the utility of NOI and cash NOI as measures of our performance is limited. Other REITs may calculate NOI and cash NOI differently than we do and, accordingly, our NOI and cash NOI may not be comparable to other REITs’ NOI and cash NOI. NOI and cash NOI should be considered only as supplements to net income computed in accordance with GAAP as measures of our performance.

Additional Definitions

GAAP refers to United States generally accepted accounting principles.

Net debt-to-Adjusted EBITDA ratio is calculated as total debt at balance sheet carrying value, plus finance lease obligations, plus Digital Realty’s pro rata share of unconsolidated entities debt, less cash and cash equivalents (including Digital Realty’s pro rata share of unconsolidated entities cash) divided by the product of Adjusted EBITDA (including Digital Realty’s pro rata share of unconsolidated entities EBITDA), multiplied by four.

Debt-plus-preferred-to-total enterprise value is total debt plus preferred stock divided by total debt plus the liquidation value of preferred stock and the market value of outstanding Digital Realty Trust, Inc. common stock and Digital Realty Trust, L.P. units, assuming the redemption of Digital Realty Trust, L.P. units for shares of Digital Realty Trust, Inc. common stock.

Fixed charge coverage ratio is Adjusted EBITDA divided by the sum of GAAP interest expense, capitalized interest and preferred stock dividends. For the quarter ended September 30, 2026, GAAP interest expense was $93 million, capitalized interest was $71 million and preferred stock dividends were $10 million.

        Reconciliation of Net Operating Income (NOI) Three Months Ended Nine Months Ended(in thousands) 30-Sep-2630-Jun-2630-Sep-25 30-Sep-2630-Sep-25        Operating income before gain (loss) on disposition of properties, net $293,728 $459,257 $138,420  $1,019,918 $545,868         Fee income (75,298) (248,927) (36,398) (359,124)(91,468)Other income (11) (480) (4,746) (538)(6,242)Depreciation and amortization 539,471  507,106  497,002  1,546,088 1,401,178 General and administrative 170,644  153,316  139,911  475,883 394,778 Severance, equity acceleration and legal expenses 2,643  4,384  1,794  9,862 6,484 Transaction and integration expenses 48,961  38,703  86,559  103,349 149,007 Provision for impairment —  —  —  — — Other expenses 179  13,508  3,297  13,710 3,604         Net Operating Income $980,317 $926,868 $825,839  $2,809,148 $2,403,209                 Cash Net Operating Income (Cash NOI)               Net Operating Income $980,317 $926,868 $825,839  $2,809,148 $2,403,209         Straight-line rental revenue (43,501) (26,955) (33,196) (92,268)(66,904)Straight-line rental expense (710) (617) (297) (2,751)(742)Above- and below-market rent amortization (2,142) (962) (864) (4,111)(2,322)        Cash Net Operating Income $933,964 $898,334 $791,482  $2,710,018 $2,333,240                         Constant Currency Core FFO (Excluding Net Promote) Reconciliation Three Months Ended Nine Months Ended(in thousands, except per share data) 30-Sep-26 30-Sep-25 30-Sep-2630-Sep-25        Core FFO (Excluding Net Promote)(1) $795,263  $656,001  $2,279,219 $1,907,639 Core FFO impact of holding '25 Exchange Rates Constant(2) 1,693   —  (32,442)—         Constant Currency Core FFO (Excluding Net Promote) $796,956  $656,001  $2,246,777 $1,907,639 Weighted-average shares and units outstanding - diluted 378,770   347,700  363,687 344,873 Constant Currency Core FFO Per Share (Excluding Net Promote) $2.10  $1.89  $6.18 $5.53  (1) As reconciled to net income above.
(2) Adjustment calculated by holding currency translation rates for 2026 constant with average currency translation rates that were applicable to the same periods in 2025.     

This document contains forward-looking statements within the meaning of the federal securities laws, which are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Such forward-looking statements include statements relating to: our economic outlook, our expected investment and expansion activity, anticipated continued demand for our products and service, our liquidity, our joint ventures, supply and demand for data center and colocation capacity, our acquisition and disposition activity, pricing and net effective leasing economics, market dynamics and data center fundamentals, our strategic priorities, our product offerings, available inventory, rent from leases that have been signed but have not yet commenced and other contracted rent to be received in future periods, rental rates on future leases, lag between signing and commencement, cap rates and yields, investment activity, the company’s FFO, Core FFO, constant currency Core FFO, Core FFO (excluding net promote), Constant Currency Core FFO (excluding net promote), adjusted FFO, adjusted EBITDA, net income,  2026 outlook and underlying assumptions, information related to trends, our strategy and plans, leasing expectations, weighted average lease terms, the exercise of lease extensions, lease expirations, debt maturities, annualized rent at expiration of leases, the effect new leases and increases in rental rates will have on our rental revenue, our credit ratings, construction and development activity and plans, projected construction costs, estimated yields on investment, expected occupancy, expected square footage and IT load capacity upon completion of development projects, backlog NOI, NAV components, and other forward-looking financial data. Such statements are based on management’s beliefs and assumptions made based on information currently available to management. Such statements are subject to risks, uncertainties and assumptions and are not guarantees of future performance and may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. Some of the risks and uncertainties that may cause our actual results, performance, or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:

reduced demand for data centers or decreases in information technology spending;decreased rental rates, increased operating costs or increased vacancy rates;increased competition or available supply of data center capacity;the suitability of our data centers and data center infrastructure, delays or disruptions in connectivity or availability of power, or failures or breaches of our physical and information security infrastructure or services;breaches of our obligations or restrictions under our contracts with our customers;our inability to successfully develop and lease new properties and development capacity, and delays or unexpected costs in development of properties;the impact of current global and local economic, credit and market conditions;increased tariffs, global supply chain or procurement disruptions, or increased supply chain costs;the impact from periods of heightened inflation on our costs, such as operating and general and administrative expenses, interest expense and real estate acquisition and construction costs;the impact on our customers’ and our suppliers’ operations during an epidemic, pandemic, or other global events;our dependence upon significant customers, bankruptcy or insolvency of a major customer or a significant number of smaller customers, or defaults on or non-renewal of leases by customers;changes in political conditions, geopolitical turmoil, political instability, civil disturbances, restrictive governmental actions or nationalization in the countries in which we operate;our inability to retain data center capacity that we lease or sublease from third parties;information security, cyberattacks, security breaches and data privacy breaches;difficulties managing an international business and acquiring or operating properties in foreign jurisdictions and unfamiliar metropolitan areas;our failure to realize the intended benefits from, or disruptions to our plans and operations or unknown or contingent liabilities related to, our recent and future acquisitions;our failure to successfully integrate and operate acquired or developed properties or businesses;difficulties in identifying properties to acquire and completing acquisitions;risks related to joint venture investments, including as a result of our lack of control of such investments;risks associated with using debt to fund our business activities, including re-financing and interest rate risks, our failure to repay debt when due, adverse changes in our credit ratings or our breach of covenants or other terms contained in our loan facilities and agreements;our failure to obtain necessary debt and equity financing, and our dependence on external sources of capital;financial market fluctuations and changes in foreign currency exchange rates;adverse economic or real estate developments in our industry or the industry sectors that we sell to, including risks relating to decreasing real estate valuations and impairment charges and goodwill and other intangible asset impairment charges;our inability to manage our growth effectively;losses in excess of our insurance coverage;our inability to attract and retain talent;environmental liabilities, risks related to natural disasters and our inability to achieve our sustainability goals;the expected operating performance of anticipated near-term acquisitions and descriptions relating to these expectations;our inability to comply with rules and regulations applicable to our company;Digital Realty Trust, Inc.’s failure to maintain its status as a REIT for U.S. federal income tax purposes;Digital Realty Trust, L.P.’s failure to qualify as a partnership for U.S. federal income tax purposes;restrictions on our ability to engage in certain business activities;changes in local, state, federal and international laws and regulations, including related to taxation, real estate and zoning laws, and increases in real property tax rates; andthe impact of any financial, accounting, legal or regulatory issues or litigation that may affect us. The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance. Several additional material risks are discussed in our annual report on Form 10‑K for the year ended December 31, 2025, and other filings with the U.S. Securities and Exchange Commission. Those risks continue to be relevant to our performance and financial condition. Moreover, we operate in a competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise. Digital Realty, Digital Realty Trust, the Digital Realty logo, Interxion, Turn-Key Flex, Powered Base Building, ServiceFabric, AnyScale Colo, Pervasive Data Center Architecture, PlatformDIGITAL, PDx, Data Gravity Index and Data Gravity Index DGx are registered trademarks and service marks of Digital Realty Trust, Inc. in the United States and/or other countries. All other names, trademarks and service marks are the property of their respective owners.

PHOENIX--(BUSINESS WIRE)--First Solar, Inc. (Nasdaq: FSLR) (the “Company”), America's leading PV solar technology and manufacturing company, today announced financial results for the third quarter ended September 30, 2026 and updated its 2026 guidance. Net sales were $1.23 billion for the third quarter of 2026, a 23% decrease compared to the third quarter of 2025, driven primarily by a decrease in the volume of modules sold to third parties. The Company reported third quarter net income of $571.

Gilead Sciences posts higher-than-expected sales as blockbuster HIV drug Biktarvy continues to drive its top line.

KHC expects to post weaker Q3 sales and earnings amid soft volumes, cautious consumer spending and rising costs, while strategic investments may offer support.

, /PRNewswire/ -- DaVita Inc. (NYSE: DVA) announced financial and operating results for the quarter ended September 30, 2026.

Financial and operating highlights for the quarter ended September 30, 2026:

Consolidated revenues were $3.578 billion.Operating income was $499 million and adjusted operating income was $561 million.Diluted earnings per share was $3.40 and adjusted diluted earnings per share was $3.82.Operating cash flow was $519 million and free cash flow was $276 million.Repurchased 0.6 million shares of the Company's common stock at an average price paid of $186.21 per share.
Three months ended

Nine months ended September 30,

September 30, 2026

June 30, 2026

2026

2025

Net income attributable to DaVita Inc.:

(dollars in millions, except per share data)

Net income

$             223

$             265

$              686

$             513

Diluted per share

$            3.40

$            4.02

$           10.27

$            6.62

Adjusted net income(1)

$             250

$             265

$              713

$             576

Adjusted diluted per share(1)

$            3.82

$            4.02

$           10.67

$            7.44

 _______________________

(1)

For definitions of non-GAAP financial measures, see the note titled "Note on Non-GAAP Financial Measures" and related reconciliations beginning on page 14.

Three months ended

Nine months ended September 30,

September 30, 2026

June 30, 2026

2026

2025

Amount

Margin

Amount

Margin

Amount

Margin

Amount

Margin

Operating income

(dollars in millions)

Operating income

$   499

14.0 %

$   579

16.3 %

$ 1,560

14.8 %

$ 1,483

14.8 %

Adjusted operating income(1)

$   561

15.7 %

$   579

16.3 %

$ 1,622

15.4 %

$ 1,508

15.0 %

 _______________________

(1)

For definitions of non-GAAP financial measures, see the note titled "Note on Non-GAAP Financial Measures" and related reconciliations beginning on page 14.

U.S. dialysis metrics:

Volume: Total U.S. dialysis treatments for the third quarter of 2026 were 7,329,644, or an average of 92,780 treatments per day, representing a per day increase of 0.1% compared to the second quarter of 2026. Normalized non-acquired treatment growth in the third quarter of 2026 compared to the third quarter of 2025 was 0.4%.

Three months ended

Quarter

change

Nine months ended

Year to date
change

September 30,
2026

June 30,
2026

September 30,
2026

September 30,
2025

(dollars in millions, except per treatment data)

Revenue per treatment

$    415.25

$      415.87

$      (0.62)

$     416.22

$    405.15

$        11.07

Patient care costs per treatment

$    280.22

$      277.40

$       2.82

$     279.24

$    271.23

$          8.01

General and administrative

$         316

$           331

$         (15)

$          967

$         917

$             50

Primary drivers of the changes in the table above were as follows:

Revenue: The quarter change was primarily driven by normal fluctuations, partially offset by an increase in average reimbursement rates and improvements in payor mix. The year to date change was driven by typical annual rate increases and other normal fluctuations, partially offset by unfavorable changes in payor mix.

Patient care costs: The quarter change was primarily due to increased medical supplies expenses. The year to date change was primarily driven by increased compensation expenses, medical supplies expense, insurance costs and health benefits expenses.

General and administrative: The quarter change was primarily due to decreased professional fees. The year to date change was primarily driven by increases in IT-related costs and compensation expenses, partially offset by costs related to the cybersecurity incident experienced by the Company in 2025.

Certain items impacting the quarter:

Goodwill and other asset impairment charges. During the quarter ended September 30, 2026, we recognized non-cash goodwill and other asset impairment charges related to our business in China. The effect was a $62 million impairment charge within operating income, offset by a $1 million tax benefit and $34 million noncontrolling interest credit, resulting in a $27 million net income impact attributable to DaVita Inc.

Share repurchases. During the three months ended September 30, 2026, we repurchased 0.6 million shares for $111 million, at an average price paid of $186.21 per share.

Subsequent to September 30, 2026 through October 27, 2026, the Company has repurchased 0.5 million shares of our common stock for $87 million at an average price paid of $180.57 per share.

Financial and operating metrics:

Three months ended

September 30,

Twelve months ended

September 30,

2026

2025

2026

2025

Cash flow:

(dollars in millions)

Operating cash flow

$         519

$         842

$       1,870

$       1,893

Free cash flow(1)

$         276

$         604

$          980

$          996

 _______________________

(1)

For definitions of non-GAAP financial measures, see the note titled "Note on Non-GAAP Financial Measures" and related reconciliations beginning on page 14.

Three months ended
September 30, 2026

Nine months ended
September 30, 2026

Effective income tax rate on:

Income

24.9 %

21.8 %

Income attributable to DaVita Inc.(1)

28.7 %

26.5 %

Adjusted income attributable to DaVita Inc.(1)

26.6 %

25.8 %

 _______________________

(1)

For definitions of non-GAAP financial measures, see the note titled "Note on Non-GAAP Financial Measures" and related reconciliations beginning on page 14.

Center activity: As of September 30, 2026, we provided dialysis services to a total of approximately 298,100 patients at 3,269 outpatient dialysis centers, of which 2,671 centers were located in the United States and 598 centers were located in 14 countries outside of the United States.

Integrated kidney care (IKC): As of September 30, 2026, we had approximately 80,800 patients in risk-based integrated care arrangements representing approximately $6.4 billion in annualized medical spend. We also had an additional 3,100 patients in other integrated care arrangements; we do not include the medical spend for these patients in this annualized medical spend estimate. For an additional description of these metrics, see footnote 5 in the "Supplemental Financial Data" table below.

Outlook:

The following forward-looking measures and the underlying assumptions involve significant known and unknown risks and uncertainties, including those described below, and actual results may vary materially from these forward-looking measures. We do not provide guidance for operating income or diluted net income per share attributable to DaVita Inc. or operating cash flow on a basis consistent with United States generally accepted accounting principles (GAAP) nor a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures on a forward-looking basis because we are unable to predict certain items contained in the GAAP measures without unreasonable efforts. These current non-GAAP financial measures do not include certain items, including goodwill impairment charges and foreign currency fluctuations, which may be significant. The guidance for our effective income tax rate on adjusted income attributable to DaVita Inc. also excludes the amount of third-party owners' income and related taxes attributable to non-tax paying entities.

Current 2026 guidance

Prior 2026 guidance

Low

High

Low

High

(dollars in millions, except per share data)

Adjusted operating income

$2,175

$2,250

$2,150

$2,250

Adjusted diluted net income per share attributable to DaVita Inc.

$14.30

$15.20

$14.10

$15.20

Free cash flow

$1,000

$1,250

$1,000

$1,250

The following table outlines normalized treatment days by quarter for 2025 and 2026. Normalized treatment days are adjusted for the mix of days of the week for each quarter and serve as a means to more readily compare calendar effects on each quarter's treatment volume.

Normalized Treatment Days

2026

2025

Q1

76.5

76.9

Q2

78.0

78.0

Q3

79.2

78.8

Q4

78.8

79.5

Total

312.4

313.2

               Certain columns, rows or percentages may not sum or recalculate due to the presentation of rounded numbers.

We will be holding a conference call to discuss our results for the third quarter ended September 30, 2026, on October 29, 2026, at 5:00 p.m. Eastern Time. To join the conference call, please dial (877) 918-6630 from the U.S. or (517) 308-9042 from outside the U.S., and provide the operator the password "Earnings." This call is being webcast and can be accessed at the DaVita Investor Relations website investors.davita.com. A replay of the conference call will also be available at investors.davita.com.

Forward looking statements

DaVita Inc. and its representatives may from time to time make written and oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA), including statements in this release, filings with the Securities and Exchange Commission (SEC), reports to stockholders and in meetings with investors and analysts. All statements in this release, during the related presentation or other meetings, other than statements of historical fact, are forward-looking statements and as such are intended to be covered by the safe harbor for "forward-looking statements" provided by the PSLRA. These forward-looking statements could include, among other things, statements about our balance sheet and liquidity, our expenses, revenues, billings and collections, patient census, the impact of the cybersecurity incident experienced by the Company in 2025 (cyber incident), the impact of federal government policy changes or shutdowns on our business, including with respect to federal funding and reimbursement rates of Medicare, Medicare Advantage (MA), Medicaid and other government programs, availability or cost of supplies, including without limitation the impact of evolving trade policies and tariffs and any reduction in clinical and other supplies due to any disruptions experienced by third party vendors, including with respect to our ability to provide home dialysis services, treatment volumes, mix expectation, such as the percentage or number of patients under commercial insurance, including potential impacts to such mix as a result of U.S. administration policies, current macroeconomic, marketplace and labor market conditions, and overall impact on our patients and teammates, as well as other statements regarding our outlook, future operations, financial condition and prospects, capital allocation plans, expenses, cost saving initiatives, other strategic initiatives, use of contract labor, government and commercial payment rates, expectations related to value-based care (VBC), integrated kidney care (IKC), MA plan enrollment and our international operations, expectations regarding increased competition and marketplace changes, including those related to new or potential entrants in the dialysis and pre-dialysis marketplace and the potential impact of innovative technologies, drugs, or other treatments on the dialysis industry, and expectations regarding our share repurchase program. All statements in this release, other than statements of historical fact, are forward-looking statements. Without limiting the foregoing, statements including the words "expect," "intend," "will," "could," "plan," "anticipate," "believe," "forecast," "guidance," "outlook," "goals," and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on DaVita's current expectations and are based solely on information available as of the date of this release. DaVita undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of changed circumstances, new information, future events or otherwise, except as may be required by law. Actual future events and results could differ materially from any forward-looking statements due to numerous factors that involve substantial known and unknown risks and uncertainties. These risks and uncertainties include, among other things:

external conditions, including those related to general economic, political and global health conditions, including without limitation, the impact of global events and political or governmental volatility, including in the Middle East and Ukraine; the impact of the domestic political environment and related developments on the current healthcare marketplace, our patients and on our business; the impact of infectious diseases or other adverse conditions on our financial condition, the chronic kidney disease population and our patient population; supply chain challenges and disruptions, including without limitation, with respect to certain key services, critical clinical supplies and equipment we obtain from third parties, and including any impacts on our supply chain and cost of supplies as a result of global events, natural disasters or evolving trade policies, including tariffs; the impact on our patients and industry of continued increased competition from dialysis providers and others, including new or potential entrants in the dialysis and pre-dialysis marketplace; the impact of new or innovative technologies, drugs, or other treatments, including our ability to successfully implement new technologies, treatments or therapies in our business such as those related to middle molecule toxin clearance; elevated teammate turnover or labor costs; and our ability to respond to challenging U.S. and global economic and marketplace conditions, including, among other things, our ability to successfully identify cost saving opportunities and execute on related strategic initiatives;the concentration of profits generated by higher-paying commercial payor plans for which there is continued downward pressure on average realized payment rates; our ability to negotiate and maintain contracts with these payors on competitive terms or at all; a reduction in the number or percentage of our patients under commercial plans, including, without limitation, as a result of healthcare, immigration or other policies implemented by the U.S. administration, continuing legislative, regulatory or other efforts to restrict or prohibit the use and/or availability of charitable premium assistance, or as a result of payors implementing restrictive plan designs or resulting from negotiations with large commercial payors that we have in the past, and currently are, conducting on a concurrent basis; risks arising from laws, regulations or requirements applicable to us or changes thereto, including, without limitation, the One Big Beautiful Bill Act and those related to trade policy, healthcare, charitable premium assistance, privacy, antitrust matters, and acquisition, merger, joint venture or similar transactions and/or labor matters, and potential impacts of changes in interpretation or enforcement thereof or related litigation impacting, among other things, coverage or reimbursement rates for our services or the number of patients enrolled in or that select higher-paying commercial plans, and the risk that we make incorrect assumptions about how our patients will respond to any such developments; our ability to successfully implement our strategies with respect to IKC and VBC initiatives that may be impacted by, among other things, changes to the Comprehensive Kidney Care Contracting model and home based dialysis in the desired time frame and in a complex, dynamic and highly regulated environment; a reduction in government payment rates under the Medicare End Stage Renal Disease program, state Medicaid or other government-based programs and the impact of the MA benchmark structure and adjustment methodologies;our reliance on significant suppliers, service providers and other third party vendors to provide key support to our business operations and enable our provision of services to patients, including, among others, suppliers of certain pharmaceuticals, administrative or other services or critical clinical products; and risks resulting from a closure, reduction, disruption or transition in the services or products provided to us by such suppliers, service providers and third party vendors, which may, among other things, increase our costs or expenses;our ability to successfully and cost-effectively maintain, operate or upgrade our information systems or those of third-party service providers upon which we rely and our ability to successfully and cost-effectively adopt or adapt to new technologies, treatments or therapies, including technologies that utilize artificial intelligence; legal and compliance risks, such as compliance with complex, and at times, evolving government regulations and requirements, and with additional laws that may apply to our operations as we expand geographically or enter into new lines of business;noncompliance by us or our business associates with any privacy or security laws or any security breach by us or a third party, such as the cyber incident, including, among other things, any such non-compliance or breach involving the misappropriation, loss or other unauthorized use or disclosure of confidential information;our ability to attract, retain and motivate teammates, including key leadership personnel, our ability to manage potential disruptions to our business and operations, including potential work stoppages, and our ability to manage operating cost increases or productivity decreases that may be related to political unrest, legislative or other changes, union organizing activities, or volatility and uncertainty in the current challenging and highly competitive labor market that has experienced an ongoing nationwide shortage of skilled clinical personnel, among other things;changes in practice patterns, pricing, or reimbursement and payment policies or processes related to pharmaceuticals, medical equipment or supplies, including with respect to oral phosphate binders, among other things; our ability to develop and maintain relationships with physicians and hospitals, changing affiliation models for physicians, and the emergence of new models of care or other initiatives that, among other things, may erode our patient base and impact reimbursement rates;our ability to complete and successfully integrate and operate acquisitions, mergers, dispositions, joint ventures or other strategic transactions on terms favorable to us or at all; and our ability to continue to successfully expand our operations and services in markets outside the United States, or to businesses or products outside of dialysis services;the variability of our cash flows, including, without limitation, any extended billing or collections cycles that may be due to, among other things, defects or operational issues in our billing systems such as those experienced during the cyber incident, or defects or operational issues in the billing systems or services of third parties on which we rely; the risk that we may not be able to generate or access sufficient cash in the future to service our indebtedness or to fund our other liquidity needs;the effects on us or others of natural or other disasters, public health crises or severe adverse weather events such as hurricanes, earthquakes, fires or flooding;factors that may impact our ability to repurchase stock under our share repurchase program and the timing of any such stock repurchases, as well as any use by us of a considerable amount of available funds to repurchase stock; our goals and disclosures related to sustainability matters, including, among other things, evolving regulatory requirements affecting environmental, social and governance standards, measurements and reporting requirements; andthe other risk factors, trends and uncertainties set forth in our Annual Report on Form 10-K for the year ended December 31, 2025 and Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 2026, and the risks and uncertainties discussed in any subsequent reports that we file or furnish with the SEC from time to time.The financial information presented in this release is unaudited and is subject to change as a result of subsequent events or adjustments, if any, arising prior to the filing of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2026.

DAVITA INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(dollars and shares in thousands, except per share data)

Three months ended September 30,

Nine months ended September 30,

2026

2025

2026

2025

Dialysis patient service revenues

$  3,408,266

$  3,298,090

$ 10,047,440

$  9,607,954

Other revenues

169,860

122,137

500,318

415,328

Total revenues

3,578,126

3,420,227

10,547,758

10,023,282

Operating expenses:

Patient care costs

2,451,047

2,332,759

7,185,305

6,833,959

General and administrative

408,697

414,373

1,254,069

1,201,268

Depreciation and amortization

165,188

177,490

510,825

528,645

Equity investment income, net

(8,237)

(10,162)

(24,765)

(23,135)

Goodwill and other asset impairment charges

62,176

—

62,176

—

Total operating expenses

3,078,871

2,914,460

8,987,610

8,540,737

Operating income

499,255

505,767

1,560,148

1,482,545

Debt expense

(150,016)

(150,557)

(445,403)

(431,674)

Debt extinguishment and modification costs

—

(5,150)

(2,035)

(5,150)

Other income (loss), net

9,468

(41,257)

22,241

(81,657)

Income before income taxes

358,707

308,803

1,134,951

964,064

Income tax expense

89,318

68,554

247,304

216,379

Net income

269,389

240,249

887,647

747,685

Less: Net income attributable to noncontrolling interests

(46,458)

(89,917)

(201,789)

(235,099)

Net income attributable to DaVita Inc.

$    222,931

$    150,332

$    685,858

$    512,586

Earnings per share attributable to DaVita Inc.:

Basic net income

$          3.49

$          2.09

$        10.50

$          6.77

Diluted net income

$          3.40

$          2.04

$        10.27

$          6.62

Weighted average shares for earnings per share:

Basic shares

63,835

72,075

65,322

75,768

Diluted shares

65,504

73,769

66,811

77,442

DAVITA INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

 (dollars in thousands)

Three months ended September 30,

Nine months ended September 30,

2026

2025

2026

2025

Net income

$    269,389

$    240,249

$    887,647

$    747,685

Other comprehensive income (loss), net of tax:

Unrealized gains (losses) on interest rate cap agreements:

Unrealized gains (losses)

26,777

(4,418)

34,729

(19,358)

Reclassifications of net realized losses into net income

2,877

1,427

8,632

4,468

Unrealized (losses) gains on foreign currency translation

(564)

24,669

49,961

209,526

Other comprehensive income

29,090

21,678

93,322

194,636

Total comprehensive income

298,479

261,927

980,969

942,321

Less: Comprehensive income attributable to noncontrolling interests

(46,458)

(89,917)

(201,789)

(235,099)

Comprehensive income attributable to DaVita Inc.

$    252,021

$    172,010

$    779,180

$    707,222

DAVITA INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

(dollars and shares in thousands, except per share data)

September 30, 2026

December 31, 2025

ASSETS

Cash and cash equivalents

$        495,629

$        676,438

Restricted cash and equivalents

83,631

81,309

Short-term investments

70,673

24,303

Accounts receivable

2,509,014

2,414,690

Inventories

161,464

160,627

Contract assets and other receivables

565,459

494,414

Prepaid and other current assets

141,147

156,285

Income tax receivable

47,807

49,937

Total current assets

4,074,824

4,058,003

Property and equipment, net of accumulated depreciation of $6,985,414 and $6,602,134, respectively

2,731,171

2,812,966

Operating lease right-of-use assets

2,434,212

2,397,179

Intangible assets, net of accumulated amortization of $39,378 and $37,751, respectively

221,070

222,125

Equity method and other investments

404,305

157,249

Long-term investments

38,382

40,966

Other long-term assets

364,506

246,520

Goodwill

7,548,042

7,545,095

$     17,816,512

$     17,480,103

LIABILITIES AND EQUITY

Accounts payable

$          662,199

$          696,148

Other liabilities

848,178

893,024

Accrued compensation and benefits

747,911

793,478

Current portion of operating lease liabilities

438,132

425,484

Current portion of long-term debt

112,491

109,201

Income tax payable

23,143

24,359

Due to related party

54,714

199,940

Total current liabilities

2,886,768

3,141,634

Long-term operating lease liabilities

2,185,179

2,175,658

Long-term debt

10,656,624

10,163,988

Other long-term liabilities

100,431

83,516

Deferred income taxes

861,693

756,869

Total liabilities

16,690,695

16,321,665

Commitments and contingencies

Noncontrolling interests subject to put provisions

1,484,283

1,532,166

Equity:

Preferred stock ($0.001 par value, 5,000 shares authorized; none issued)

—

—

Common stock ($0.001 par value, 450,000 shares authorized; 69,237 shares issued

 and 63,400 shares outstanding at September 30, 2026, and 68,549 shares issued and

 outstanding at December 31, 2025)

69

69

Additional paid-in capital

53,979

—

Accumulated earnings (deficit)

301,565

(328,428)

Treasury stock (5,837 and zero shares, respectively)

(917,239)

(199,940)

Accumulated other comprehensive loss

(29,461)

(122,783)

Total DaVita Inc. shareholders' equity deficit

(591,087)

(651,082)

Noncontrolling interests not subject to put provisions

232,621

277,354

Total equity deficit

(358,466)

(373,728)

$     17,816,512

$     17,480,103

DAVITA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(dollars in thousands)

Nine months ended September 30,

2026

2025

Cash flows from operating activities:

Net income

$       887,647

$       747,685

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

510,825

528,645

Goodwill and other asset impairment charges

62,176

—

Loss on extinguishment of debt

—

4,253

Stock-based compensation expense

83,378

101,559

Deferred income taxes

91,207

68,989

Equity investment loss, net

887

91,532

Other non-cash losses, net

14,668

11,522

Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:

Accounts receivable

(67,585)

(144,688)

Inventories

1,103

913

Other current assets

(50,210)

(153,428)

Other long-term assets

(47,733)

(21)

Accounts payable

(47,803)

97,879

Accrued compensation and benefits

(64,671)

19,279

Other current liabilities

(50,713)

16,462

Income taxes

453

(30,635)

Other long-term liabilities

6,101

(14,172)

Net cash provided by operating activities

1,329,730

1,345,774

Cash flows from investing activities:

Additions of property and equipment

(431,323)

(430,434)

Acquisitions

(41,693)

(118,337)

Proceeds from asset and business sales

16,297

32,337

Purchase of debt investments held-to-maturity

(66,788)

(15,842)

Purchase of other debt and equity investments

(29,832)

(3,352)

Proceeds from debt investments held-to-maturity

17,020

38,051

Proceeds from sale of other debt and equity investments

4,382

6,706

Purchase of equity method investments

(221,839)

(2,466)

Distributions from equity method investments

329

1,514

Net cash used in investing activities

(753,447)

(491,823)

Cash flows from financing activities:

Borrowings

3,511,331

4,672,170

Payments on long-term debt

(3,021,008)

(3,880,721)

Deferred and debt related financing costs

(10,602)

(26,416)

Purchase of treasury stock from related party

(419,318)

(430,286)

Other purchases of treasury stock

(450,862)

(1,033,887)

Distributions to noncontrolling interests

(243,786)

(232,721)

Net proceeds from issuance of common stock under employee stock plans

14,509

17,583

Payment of tax withholdings on net share settlements of equity awards

(68,968)

(33,764)

Contributions from noncontrolling interests

4,636

3,999

Proceeds from sales of additional noncontrolling interests

—

169

Purchases of noncontrolling interests

(70,593)

(16,385)

Net cash used in financing activities

(754,661)

(960,259)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(109)

21,897

Net decrease in cash, cash equivalents and restricted cash

(178,487)

(84,411)

Cash, cash equivalents and restricted cash at beginning of the year

757,747

879,825

Cash, cash equivalents and restricted cash at end of the period

$       579,260

$       795,414

DAVITA INC.

SUPPLEMENTAL FINANCIAL DATA

(unaudited)
(dollars in millions and shares in thousands, except per treatment and patient data)

Three months ended

Nine months ended
September 30, 2026

September 30,
2026

June 30,
2026

1. Consolidated business metrics:

Operating margin

14.0 %

16.3 %

14.8 %

Adjusted operating margin excluding certain items(1)

15.7 %

16.3 %

15.4 %

General and administrative expenses as a percent of

 consolidated revenues(2)

11.4 %

11.9 %

11.9 %

Effective income tax rate on income

24.9 %

21.1 %

21.8 %

Effective income tax rate on income attributable to DaVita Inc.(1)

28.7 %

25.6 %

26.5 %

Effective income tax rate on adjusted income attributable to DaVita Inc.(1)

26.6 %

25.6 %

25.8 %

2. Summary of financial results:

Revenues:

U.S. dialysis patient services and other

$   3,050

$   3,012

$      9,004

Other—Ancillary services

Integrated kidney care

144

162

422

Other U.S. ancillary

10

9

29

International dialysis patient service and other

398

386

1,156

552

557

1,606

Eliminations

(24)

(14)

(62)

Total consolidated revenues

$   3,578

$   3,554

$    10,548

Operating income (loss):

U.S. dialysis

$      544

$      538

$      1,588

Other—Ancillary services

Integrated kidney care

4

40

24

Other U.S. ancillary

(6)

(8)

(20)

International

(16)

25

40

(19)

57

44

Corporate administrative support expenses

(26)

(16)

(72)

Total consolidated operating income

$      499

$      579

$      1,560

DAVITA INC.

SUPPLEMENTAL FINANCIAL DATA - continued

(unaudited)

(dollars in millions and shares in thousands, except per treatment and patient data)

Three months ended

Nine months ended
September 30, 2026

September 30,
2026

June 30,
2026

3. Summary of reportable segment financial results and metrics:

U.S. dialysis

Financial results

Revenue:

Dialysis patient service revenues

$   3,044

$   3,005

$      8,984

Other revenues

7

7

20

Total operating revenues

3,050

3,012

9,004

Operating expenses:

Patient care costs

2,054

2,005

6,028

General and administrative

316

331

967

Depreciation and amortization

144

146

446

Equity investment income

(8)

(8)

(25)

Total operating expenses

2,506

2,474

7,416

Segment operating income

$     544

$     538

$      1,588

Metrics

Volume:

Treatments

7,329,644

7,226,600

21,585,769

Number of treatment days

79.0

78.0

233.7

Average treatments per day

92,780

92,649

92,365

Per day year-over-year change

1.2 %

0.6 %

0.5 %

Number of normalized treatment days(3)

79.2

78.0

233.7

Average treatments per normalized day

92,546

92,649

92,365

Per normalized day year-over-year change

0.7 %

0.6 %

0.5 %

Normalized year-over-year non-acquired treatment growth(4)

0.4 %

0.3 %

Operating net revenues:

Average patient service revenue per treatment

$  415.25

$  415.87

$    416.22

Expenses:

Patient care costs per treatment

$  280.22

$  277.40

$    279.24

General and administrative expenses per treatment

$    43.14

$    45.79

$      44.79

Depreciation and amortization expense per treatment

$    19.70

$    20.26

$      20.66

Accounts receivable:

Receivables

$    1,684

$    1,719

DSO

51

52

4. IKC metrics:

Patients per integrated care arrangement type:

Risk-based(5)

80,800

64,900

Other(5)

3,100

5,700

Annualized aggregate risk based spend(5)

$   6,400

$   5,800

DAVITA INC.

SUPPLEMENTAL FINANCIAL DATA - continued

(unaudited)

(dollars in millions and shares in thousands, except per treatment and patient data)

Three months ended

Nine months ended
September 30, 2026

September 30,
2026

June 30,
2026

5. Cash flow:

Operating cash flow

$      519

$       490

$        1,330

Operating cash flow, last twelve months

$   1,870

$    2,193

Free cash flow(1)

$      276

$       256

$           672

Free cash flow, last twelve months(1)

$      980

$    1,308

Capital expenditures:

Maintenance

$      112

$       123

$           309

Development

$        47

$         47

$           122

Acquisition expenditures

$          3

$           5

$             42

Proceeds from sale of self-developed properties

$        10

$         —

$             13

6. Debt and capital structure:

Total debt(6)

$  10,832

$  10,848

Net debt, net of cash and cash equivalents(6)

$  10,337

$  10,179

Leverage ratio(7)

3.38x

3.37x

Weighted average effective interest rate:

At end of the quarter

5.54 %

5.43 %

On the senior secured credit facilities at end of the quarter

6.02 %

5.76 %

Amount spent on share repurchases

$        111

$       348

$           863

Number of shares repurchased

594

2,238

5,837

Certain columns, rows or percentages may not sum or recalculate due to the presentation of rounded numbers.

_______________________

(1)

These are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to their most comparable measure calculated and presented in accordance with GAAP, and for a definition of adjusted amounts, see attached reconciliation schedules. Adjusted operating income margin is adjusted operating income divided by consolidated revenues.

(2)

General and administrative expenses include certain corporate support, long-term incentive compensation and advocacy costs.

(3)

Normalized treatment days reflect treatment days adjusted to normalize for the mix of days of the week in a given quarter.

(4)

Normalized non-acquired treatment growth reflects year-over-year growth in treatment volume, adjusted to exclude acquisitions and other similar transactions, and further adjusted to normalize for the number and mix of treatment days in a given quarter versus the prior year quarter.

(5)

Integrated care metrics: The aggregate amount of medical spend associated with risk-based integrated care arrangements that we disclose includes both medical costs included in our reported expenses for certain risk-based arrangements (such as our SNPs), as well as the aggregate estimated benchmark amount above or below which we will incur profit or loss from value-based care (VBC) arrangements under which third-party medical costs are not included in our reported results. A number of our VBC contracts are subject to complex or novel patient attribution mechanics and benchmark adjustments, some of which are based on information not reported to us until periods after we report our quarterly results. As a result, our estimates of our patients under, and the dollar amount of, our value-based contracts remain subject to estimation uncertainty.

(6)

The debt amounts presented as of September 30, 2026 and June 30, 2026 exclude approximately $63.1 and $66.5, respectively, of debt discount, premium and other deferred financing costs related to our senior secured credit facilities and senior notes in effect or outstanding at that time.

(7)

This is a non-GAAP measure. See "Calculation of Leverage Ratio" in non-GAAP reconciliations.

DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES
(unaudited)
(dollars in millions)

Calculation of the Leverage Ratio

Under our amended senior secured credit facilities (the Amended Credit Agreement) dated June 8, 2026, the leverage ratio is defined as (a) all funded debt, minus unrestricted cash and cash equivalents (including short-term investments) divided by (b) "Consolidated EBITDA." The leverage ratio determines the interest rate margin payable by the Company for its Term Loan A-2 and revolving line of credit under the Amended Credit Agreement by establishing the margin over the base interest rate (SOFR plus credit spread adjustment) that is applicable. The calculation below is based on the last 12 months of "Consolidated EBITDA" and "Consolidated net debt" at the end of each reported period, each as defined in the credit agreement that was in effect at the end of each such period (the Applicable Credit Agreement). The calculation of "Consolidated EBITDA" below sets forth, among other things, certain pro forma adjustments described in the Applicable Credit Agreement, including, pro forma adjustments for acquisitions or divestitures that occurred during the period and certain projected net cost savings, expense reductions and cost synergies. These pro forma adjustments are determined according to specified criteria set forth in the Applicable Credit Agreement, and as a result, the total adjustments calculated may not be comparable to the Company's estimates for other purposes, including as operating performance measures. The Company's management believes the presentation of "Consolidated EBITDA" is useful to investors to enhance their understanding of the Company's leverage ratio under the Applicable Credit Agreement and should not be evaluated for any other purpose. The leverage ratio calculated by the Company is a non-GAAP measure and should not be considered a substitute for the ratio of total debt to operating income, determined in accordance with GAAP. The Company's calculation of its leverage ratio might not be calculated in the same manner as, and thus might not be comparable to, similarly titled measures of other companies.

Twelve months ended

September 30,
2026

June 30,
2026

Net income from continuing operations attributable to DaVita Inc.

$          895

$          822

Income taxes

324

303

Interest expense

543

540

Depreciation and amortization

698

710

Impairment charges

62

—

Net income attributable to noncontrolling interests

299

342

Stock-settled stock-based compensation

117

127

Debt extinguishment and modification costs

11

16

Expected cost savings and expense reductions

10

7

Other

84

149

Consolidated EBITDA

$        3,042

$        3,018

September 30,
2026

June 30,
2026

Total debt, excluding debt discount and other deferred financing costs(1)

$      10,832

$      10,848

Less: Cash and cash equivalents including short-term investments(2)

(563)

(685)

Consolidated net debt

$      10,269

$      10,162

Last twelve months Consolidated EBITDA

$        3,042

$        3,018

Leverage ratio

3.38x

3.37x

Maximum leverage ratio permitted under the Credit Agreement

5.00x

5.00x

Certain columns or rows may not sum or recalculate due to the presentation of rounded numbers.

______________________

(1)

The debt amounts presented as of September 30, 2026 and June 30, 2026 exclude approximately $63.1 and $66.5, respectively, of debt discount, premium and other deferred financing costs related to our senior secured credit facilities and senior notes in effect or outstanding at that time.

(2)

This excludes amounts not readily convertible to cash related to the Company's non-qualified deferred compensation plans for all periods presented.

DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES
(unaudited)

Note on Non-GAAP Financial Measures

As used in this press release, the term "adjusted" refers to non-GAAP measures as follows, each as reconciled to its most comparable GAAP measure as presented in the non-GAAP reconciliations in the notes to this press release: (i) for income and expense measures, the term "adjusted" refers to operating performance measures that exclude certain items such as, but not limited to, cybersecurity costs, impairment charges, gains or losses on ownership changes, restructuring charges, accruals for legal matters, and debt extinguishment and modification costs; and (ii) the term "effective income tax rate on adjusted income attributable to DaVita Inc." represents the Company's effective tax rate excluding applicable non-GAAP items and the tax associated with them as well as noncontrolling owners' income, which primarily relates to non-tax paying entities.

These non-GAAP or "adjusted" measures are presented because management believes these measures are useful adjuncts to GAAP results. However, these non-GAAP measures should not be considered alternatives to the corresponding measures determined under GAAP. 

Specifically, management uses adjusted operating income, adjusted net income attributable to DaVita Inc. and adjusted diluted net income per share attributable to DaVita Inc. to compare and evaluate our performance period over period and relative to competitors, to analyze the underlying trends in our business, to establish operational budgets and forecasts and for incentive compensation purposes. We believe these non-GAAP measures also are useful to investors and analysts in evaluating our performance over time and relative to competitors, as well as in analyzing the underlying trends in our business. Furthermore, we believe these presentations enhance a user's understanding of our normal consolidated results by excluding certain items which we do not believe are indicative of our ordinary results of operations. As a result, adjusting for these amounts allows for comparison to our normalized prior period results.

The effective income tax rate on adjusted income attributable to DaVita Inc. excludes noncontrolling owners' income and certain non-deductible and other charges which we do not believe are indicative of our ordinary results. Accordingly, we believe these adjusted effective income tax rates are useful to management, investors and analysts in evaluating our performance and establishing expectations for income taxes incurred on our ordinary results attributable to DaVita Inc.

Finally, free cash flow represents net cash provided by operating activities less distributions to noncontrolling interests, development capital expenditures, and maintenance capital expenditures; plus contributions from noncontrolling interests and proceeds from the sale of self-developed properties. Management uses this measure to assess our ability to fund acquisitions and meet our debt service obligations and we believe this measure is equally useful to investors and analysts as an adjunct to cash flows from operating activities and other measures under GAAP.

It is important to bear in mind that these non-GAAP "adjusted" measures are not measures of financial performance or liquidity under GAAP and should not be considered in isolation from, nor as substitutes for, their most comparable GAAP measures.

The following tables provide reconciliations of the non-GAAP financial measures presented in this press release to their most comparable GAAP measures.

DAVITA INC.

RECONCILIATIONS FOR NON-GAAP MEASURES - continued

(unaudited)

(dollars in millions, except per share data)

Adjusted net income and adjusted diluted net income per share attributable to DaVita Inc.:

Three months ended

Nine months ended

September 30,
2026

June 30,
2026

September 30,
2026

September 30,
2025

Dollars

Per share

Dollars

Per share

Dollars

Per share

Dollars

Per share

Consolidated:

Net income attributable to DaVita Inc.

$  223

$  3.40

$  265

$  4.02

$  686

$ 10.27

$  513

$  6.62

Goodwill and other asset impairments(1)

62

0.95

—

—

62

0.93

—

—

Goodwill and other asset impairments attributable to noncontrolling interests(1)

(34)

(0.53)

—

—

(34)

(0.51)

—

—

Cybersecurity incident-related charges(2)

—

—

—

—

—

—

25

0.33

Other loss, net - Mozarc net loss(3)

—

—

—

—

—

—

26

0.33

Income tax impact related to prior legal matter(4)

—

—

—

—

—

—

19

0.24

Related income tax

(1)

(0.01)

—

—

(1)

(0.01)

(6)

(0.08)

Adjusted net income attributable to DaVita Inc.

$  250

$  3.82

$  265

$  4.02

$  713

$ 10.67

$  576

$  7.44

Certain columns, rows or percentages may not sum or recalculate due to the presentation of rounded numbers.

Adjusted operating income:

Three months ended September 30, 2026

U.S.

dialysis

Ancillary services

Corporate

administration

U.S. IKC

U.S. Other

International

Total

Consolidated

Operating income (loss)

$   544

$        4

$      (6)

$     (16)

$   (19)

$       (26)

$     499

Goodwill and other asset impairments(1)

—

—

—

62

62

—

62

Adjusted operating income (loss)

$   544

$        4

$      (6)

$      46

$     44

$       (26)

$     561

Certain columns, rows or percentages may not sum or recalculate due to the presentation of rounded numbers.

Nine months ended September 30, 2026

U.S.

dialysis

Ancillary services

Corporate

administration

U.S. IKC

U.S. Other

International

Total

Consolidated

Operating income (loss)

$ 1,588

$      24

$     (20)

$      40

$     44

$       (72)

$   1,560

Goodwill and other asset impairments(1)

—

—

—

62

62

—

62

Adjusted operating income (loss)

$ 1,588

$      24

$     (20)

$     102

$   106

$       (72)

$   1,622

Certain columns, rows or percentages may not sum or recalculate due to the presentation of rounded numbers.

Nine months ended September 30, 2025

U.S. dialysis

Ancillary services

Corporate
administration

Consolidated

U.S. IKC

U.S. Other

International

Total

Operating income (loss)

$ 1,529

$     (24)

$     (14)

$      93

$     55

$     (101)

$   1,483

Cybersecurity incident-related charges(2)

25

—

—

—

—

—

25

Adjusted operating income (loss)

$ 1,554

$     (24)

$     (14)

$      93

$     55

$     (101)

$   1,508

Certain columns or rows may not sum or recalculate due to the presentation of rounded numbers.

DAVITA INC.

RECONCILIATIONS FOR NON-GAAP MEASURES - continued

(unaudited)

(dollars in millions, except per share data)

Effective income tax rates:

Three months ended

Nine months ended

September 30, 2026

September 30,
2026

June 30,
2026

Effective income tax rates on income attributable to DaVita Inc.:

Income before income taxes

$    359

$  435

$   1,135

Noncontrolling owners' income primarily attributable to non-tax paying entities

(46)

(78)

(202)

Income before income taxes attributable to DaVita Inc.

$    313

$  357

$      933

Income tax expense

$      89

$    92

$      247

Income tax benefit (expense) attributable to noncontrolling interests

1

(1)

—

Income tax expense attributable to DaVita Inc.

$      90

$    91

$      247

Effective income tax rate on income attributable to DaVita Inc.

28.7 %

25.6 %

26.5 %

Effective income tax rate on adjusted income attributable to DaVita Inc.:

Income before income taxes

$    359

$  435

$   1,135

Goodwill and other asset impairments(1)

62

—

62

Noncontrolling owners' income primarily attributable to non-tax paying entities

(46)

(78)

(202)

Goodwill and other asset impairments attributable to noncontrolling interests(1)

(34)

—

(34)

Adjusted income before income taxes attributable to DaVita Inc.

$    341

$  357

$      961

Income tax expense

$      89

$    92

$      247

Income tax benefit (expense) related to:

Goodwill and other asset impairments

1

—

1

Noncontrolling interests

1

(1)

—

Income tax on adjusted income attributable to DaVita Inc.

$      90

$    91

$      248

Effective income tax rate on adjusted income attributable to DaVita Inc.

26.6 %

25.6 %

25.8 %

Certain columns, rows or percentages may not sum or recalculate due to the presentation of rounded numbers.

DAVITA INC.

RECONCILIATIONS FOR NON-GAAP MEASURES - continued

(unaudited)

(dollars in millions, except per share data)

Free cash flow:

Three months ended

Nine months ended

September 30, 2026

September 30,
2026

June 30,
2026

September 30,
2025

Net cash provided by operating activities

$       519

$       490

$       842

$       1,330

Adjustments to reconcile net cash provided by operating activities to

 free cash flow:

Distributions to noncontrolling interests

(94)

(64)

(82)

(244)

Contributions from noncontrolling interests

—

—

1

5

Maintenance capital expenditures(5)

(112)

(123)

(119)

(309)

Development capital expenditures(6)

(47)

(47)

(47)

(122)

Proceeds from sale of self-developed properties

10

—

8

13

Free cash flow

$       276

$       256

$       604

$         672

Certain columns or rows may not sum or recalculate due to the presentation of rounded numbers.

Twelve months ended

September 30,
2026

June 30,
2026

September 30,
2025

Net cash provided by operating activities

$     1,870

$     2,193

$     1,893

Adjustments to reconcile net cash provided by operating activities to free cash flow:

Distributions to noncontrolling interests

(335)

(323)

(341)

Contributions from noncontrolling interests

8

9

8

Maintenance capital expenditures(5)

(417)

(424)

(423)

Development capital expenditures(6)

(160)

(159)

(178)

Proceeds from sale of self-developed properties

14

12

36

Free cash flow

$       980

$     1,308

$       996

Certain columns or rows may not sum or recalculate due to the presentation of rounded numbers.

______________________

(1)

Represents non-cash goodwill and other asset impairment charges related to our business in China, of which a portion was allocated to noncontrolling interests. These charges are excluded from our non-GAAP metrics because they do not occur in or reflect the ordinary course of our ongoing business, are inherently unpredictable and are non-cash amounts, the exclusion of which facilitates comparison of historical, current and forecasted financial results.

(2)

Represents charges recognized to work to remediate a cybersecurity incident and restore systems following the occurrence of the incident in the second quarter of 2025. We have excluded these charges from our non-GAAP metrics as we do not believe they are indicative of our ordinary results of operations.

(3)

Represents non-cash impairment and restructuring charges included in other losses related to our equity investment in Mozarc Medical Holding LLC. This loss does not represent a normal and recurring cost of operating our business or generating returns from investments and may obscure analysis of underlying trends and financial performance.

(4)

Represents the write-down of a tax receivable related to a 2014 tax refund claim. The claim related to estimated tax expense associated with a legal matter previously presented as a non-GAAP adjustment. We have excluded this charge from our non-GAAP metrics because, among other things, we do not believe it is indicative of our ordinary results of operations because the charge is significant and may obscure analysis of underlying trends and financial performance of our current business.

(5)

Maintenance capital expenditures represent capital expenditures to maintain the productive capacity of the business and include those made for investments in information technology, dialysis center renovations, capital asset replacements, and any other capital expenditures that are not development or acquisition expenditures.

(6)

Development capital expenditures principally represent capital expenditures (other than acquisition expenditures) made to expand the productive capacity of the business and include those for new U.S. and international dialysis center developments, dialysis center expansions and relocations, and new or expanded contracted hospital operations.

Contact:
Investor Relations
DaVita Inc.
[email protected]

SOURCE DaVita

LBMA members back tokenised gold but seek legal certainty and safeguards

Bristol Myers Squibb's (BMY +0.90%) Growth Portfolio of newer drugs grew 12% to $7.7 billion in the third quarter, supplying nearly all of the company's 7% revenue gain. Shares were roughly flat in midday trading. Bristol now grows on its newer medicines. The drop in adjusted earnings reflects the cost of buying its next ones, not a weaker core business.

Key Numbers

Total revenue: $13.1 billion, up 7% from the prior-year quarterGrowth Portfolio revenue: $7.7 billion, up 12%Earnings per share: $1.05 GAAP and $1.35 adjusted, with adjusted down 17% from $1.632026 revenue guidance: raised to $49.75 billion to $50.25 billionWhat It Means

The Growth Portfolio added roughly $830 million in sales from a year ago, about as much as the whole company added. The release credits Opdivo Qvantig, Breyanzi and three other drugs, so growth doesn't hang on a single launch. That breadth is what a company replacing aging blockbusters needs.

The Legacy Portfolio rose 1%, but only because Eliquis outran generic erosion across the older drugs. Eliquis faces its own patent expiration later this decade, so that stability is temporary.

BMY Bristol Myers Squibb$61.12+$0.55 (+0.90%)

NYSE · As of 3:50 PM ET 10/29/26

The earnings decline is mostly deal accounting. Acquired IPRD charges are upfront payments for drug candidates licensed from other companies. Net of licensing income, they cost $0.58 a share. The release raises the sales outlook but only "updates" the adjusted EPS range, which now absorbs those charges. Bristol is spending today's earnings to refill its pipeline before Eliquis fades.

What to Watch Next

Track whether the Growth Portfolio holds double-digit growth as Eliquis gains slow. Also watch whether the licensed programs produce data that justifies their price.

David Kretzmann has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bristol Myers Squibb. The Motley Fool has a disclosure policy.

Do you want a permanent income stream from the stocks you own? It's easy to find stocks with high dividend yields. Unfortunately, most of them are mature, sometimes stagnant businesses with only enough growth to support slow, steady increases.

Why not dial up the difficulty to find a generous dividend that can still easily outpace inflation for years to come? Philip Morris International (PM +2.92%) yields 3.2% and has raised its dividend annually since it began trading in 2008.

Its most recent increase, a hefty 8.8% bump, is impressive and no fluke. Here's why investors can buy, hold, and look forward to increasingly generous dividends from this tobacco giant for the foreseeable future.

Image source: Getty Images.

The legacy business still shines At first glance, it's fair to wonder why one might invest in tobacco stocks. Smoking rates have been declining for decades in the United States. However, Philip Morris primarily operates outside the United States, selling Marlboro worldwide.

The smoking decline isn't as straightforward in international markets, where rapid population growth has helped buoy the number of smokers despite the actual smoking rate decreasing.

Whereas sister company Altria Group, which sells Marlboro in America, reported a 3.2% decrease in domestic cigarette volume in the third quarter of 2026, Philip Morris' volumes held flat. Pricing power enabled the company to boost its organic gross profit from combustibles by 7.4%. In other words, cigarettes remain a very viable business internationally.

The future is coming sooner rather than later That hasn't stopped Philip Morris from pushing to shift its business toward reduced-risk products, such as oral nicotine salt pouches, electronic vapes, and heat-not-burn tobacco devices.

The products have accounted for a whopping 42% of Philip Morris' net revenue through nine months of 2026. That puts Philip Morris squarely in the driver's seat in this industrywide race to a future beyond cigarettes.

With both major business segments thriving, Philip Morris has a strong growth outlook. Analysts see the company growing earnings by an average of nearly 9% annually over the next three to five years, and I wouldn't be shocked to see that pace sustained longer due to the immense pricing power nicotine creates.

$208.56+$5.92 (+2.92%)

NYSE · As of 3:54 PM ET 10/29/26

A 3.2% yield with tons of room to run The company's cash payout ratio is only about 67% at the moment, which serves as a useful financial buffer and provides management with some flexibility. Philip Morris has been investing heavily over the past several years, first acquiring Swedish Match and then expanding manufacturing capacity to grow its Zyn brand.

Regardless of those investments, free cash flow has trended upward over the past few years. It's a sign that the business is outgrowing its capital spending, a good sign for investors moving forward.

Not many stocks offer a 3.2% dividend yield and near-double-digit earnings growth. But Philip Morris does, and the dividend will likely continue to stack up for years to come. It could also provide some stellar total returns along the way.

On its third quarter of 2026 earnings call, held on Oct. 28, 2026, ServiceNow (NOW -26.77%) announced that it raised its full-year target for artificial intelligence (AI) annual contract value, which measures recurring annual subscription revenue from customer contracts, to over $1.7 billion. That increase reflects enterprise clients moving beyond software testing into full automated deployment. Three takeaways from management's call stand out for long-term investors.

1. Artificial Intelligence Target Expands to $1.7 BillionServiceNow raised its full-year artificial intelligence annual contract value target from $1.5 billion to over $1.7 billion. Customer adoption is accelerating as enterprise clients expand automated workflows beyond early testing.

As a reminder, we began the year with a $1 billion AI target by year-end. We raised that target to $1.5 billion at Financial Analyst Day in May. Today, we are raising that target again this time to $1.7 billion plus by year-end.
-- William McDermott, Chairman and Chief Executive Officer2. Deployment Teams Accelerate Enterprise Customer AdoptionManagement made a deliberate choice to include specialized deployment assistance with platform software for select large customer agreements. This investment temporarily shifts a fraction of revenue from subscriptions into professional services, but speeds up how fast clients implement software and consume automated tasks. Upon renewal of those contracts, the value of those services return to subscription sales.

To help our customers realize value even faster at scale, we've made the strategic decision to invest in their success by including delivery expertise with our platform solutions to accelerate AI deployments for select large deals.
-- Gina Mastantuono, President and Chief Financial Officer3. Large Deals Drive Broad Platform AdoptionEnterprise clients are buying broader product bundles rather than isolated software features. Deals involving multiple artificial intelligence products expanded rapidly, helping lift total contract commitments across major business functions.

In Q3, the number of AI deals over $1 million grew 4.5x year-over-year. We're also seeing customers embrace AI more broadly across their enterprises with deals spanning five or more AI products increasing over 8.5x year over year.
-- Gina Mastantuono, President and Chief Financial OfficerLooking AheadSoftware demand expands as enterprise clients shift from pilot testing into full production. ServiceNow leverages deep system integration to entrench its platform, while management monitors deployment speed and pricing discipline.

We see clear momentum in AI monetization driven by our organic innovation, our pricing, and our intelligent packaging.
-- William McDermott, Chairman and Chief Executive OfficerThe company continues expanding profit margins while funding software engineering and direct sales.

As you'll hear in the raised full year guidance, we're a company going from the rule of 56 to the rule of 57 on our way to the rule of 60. That, of course, is free cash flow plus revenue growth.
-- William McDermott, Chairman and Chief Executive OfficerThe Motley Fool has positions in and recommends ServiceNow. The Motley Fool has a disclosure policy.

In an environment where retail investing activity has fallen sharply, aerospace and defense contractor Lockheed Martin (LMT +2.17%) has seen its market value go up nearly 15% at one point since last Thursday's third-quarter results.

Against this backdrop, a double-digit rally following earnings may instinctively prompt investors to anticipate a pullback. However, over a three- to five-year horizon, it could mark the early stages of a longer rally for America's largest defense contractor by revenue.

The general anxiety levels seen today in the stock market and financial media may sound as though doomsday is approaching. In reality, however, the market is far more fractured than the prevailing sentiment suggests. Institutional investors are quietly rotating capital out of overvalued, highly vulnerable sectors and into companies that have greater structural immunity and long-term visibility.

Image source: The Motley Fool.

The most important number: $292 billionAt the core, Lockheed Martin is transitioning from a traditional defense contractor into a faster-moving, integrated defense technology and manufacturing firm. It is expanding production capacity ahead of customer requirements and using long-term contracts to support sustained growth.

Management announced a record-breaking backlog of $292 billion, with nearly a fifth of that amount going into producing missile interceptors under a multi-year contract. For context, over the previous four quarters, backlog has cumulatively grown by 63%, from just $179 billion.

Meanwhile, management has revised free cash flow expectations for 2026 from a midpoint of $6.65 billion at the beginning of this year to $7.9 billion in three quarters.

Why does this matter?Despite a solid outlook and a 15% gain since last week, Lockheed Martin shares have only returned 29% this year. While that may seem substantial in isolation, particularly given the S&P 500's 12% gain over the same period, it is difficult to argue that the stock has exhausted its upside potential.

For the third quarter, sales grew in all four segments, with Missiles and Fire Control (MFC) leading the way at 24% year-on-year growth. The segment was equally profitable. Despite accounting for less than 22% of total revenue, MFC contributed nearly 29% of total operating profit. Notably, the PAC-3 interceptor leads with a seven-year contract that's cumulatively worth $58.6 billion.

Beyond munitions production, the F-35 aircraft program continues to be a growth engine for the company, having secured a new multiyear contract in the aeronautics segment. On the earnings call, management specifically noted that the aircraft is singularly contributing to expanding profit margins for the company.

$643.45+$13.70 (+2.17%)

NYSE · As of 3:52 PM ET 10/29/26

A more efficient operating modelInstead of developing individual systems and platforms in isolation, management is outlining how existing and future systems can work together to deliver incremental gains.

Additionally, the company's 1LMX initiative, a model-based engineering and production system, uses digital technology to design, model, and test products before actually investing in physical hardware by using digital twins and digital threads. This creates far greater efficiency and reduces wasted or sunk costs.

Backlog alone may not guarantee profitsYet backlog isn't the same as profits. These multi-year contracts must still be executed. Moreover, as in any manufacturing business, expansion in actual production depends heavily on suppliers, labor availability, and manufacturing efficiency.

More importantly, investors must keep an eye ‌on margins. While the long-term economics look favorable, Lockheed's ability to consistently deliver top-grade returns depends on whether these contracts get the final go-ahead and whether these operational changes translate into actual free cash flow growth.

LMT PE Ratio data by YCharts.

Priced like a growth stockAt nearly 23 times trailing price-to-earnings (P/E) ratio, Lockheed Martin stock isn't exactly cheap. For context, Northrop Grumman (NOC +1.75%) stock trades at a more conservative 18 times trailing earnings. It's evident the market is already pricing in a lot of growth by pricing Lockheed higher. However, this doesn't necessarily mean the stock fully reflects its longer-term growth potential.

If you believe defense spending and missile production will remain elevated, and you're comfortable with government-contract and geopolitical risks, Lockheed Martin may be worth looking into.

The 24th consecutive annual dividend raise of $0.15, to $3.60, also makes the stock attractive to dividend investors.

Lockheed Martin has a compelling growth story after last week's third-quarter earnings release. Given today's geopolitical landscape, I'd put this stock on the buy list for long-term exposure to the defense sector. But more importantly, I'd watch for sustained sales growth driving higher profit margins.