What stands out

Reported profit and cash generation are moving at different speeds. Net income fell 16.6% over the year, while free cash flow rose 33.3%. This divergence highlights a distinct separation between accounting earnings and actual cash accumulation.

Growth and profit

Revenue growth is decelerating slightly. The trailing twelve-month revenue reached $1.09 billion, a 20.0% increase from the prior year. This growth rate is down 0.7 percentage points compared to the rate recorded a quarter earlier.

Operating profitability is improving despite the drop in net income. The trailing operating margin stands at 18.8%, which is up 4.2 percentage points from a year earlier. The trailing net margin is 15.6%.

Net income over the twelve months was $169.9 million. This figure represents a 16.6% decline on the year before.

Cash flow

Cash generation is accelerating. Operating cash flow over the twelve months was $283.7 million, up 32.7% on the year before. Capital spending remained minimal at $1.6 million, or 0.1% of revenue.

Free cash flow, defined as operating cash flow less capital spending, was $282.1 million. This represents a 33.3% increase on the year before. The free-cash-flow margin is 25.9% of revenue, up 2.6 percentage points from a year earlier.

The share count is shrinking. The average diluted share count fell 2.1% over the year. This reduction in shares outstanding amplifies the per-share impact of the rising cash flow.

In context

Today’s free-cash-flow margin of 25.9% is higher than 100% of the company’s own past quarterly readings. Historical readings have ranged from −14.1% to 25.9%.

Today’s operating margin of 18.8% is higher than 100% of the company’s own past quarterly readings. These historical figures have ranged from −23.0% to 18.5%.

Today’s twelve-month revenue growth rate of 20.0% is higher than 17% of the company’s own past quarterly readings. Past growth rates have ranged from 10.2% to 53.4%.

Guidance

The company raised its fiscal year 2026 guidance for full-year revenue to $1.12 billion to $1.13 billion. It provided fiscal year 2026 guidance for full-year non-GAAP operating margin (adjusted) of 26.5% to 27.5%.

What it means for value

Our model shows high sensitivity to growth assumptions. If growth is 5 percentage points lower, the value lowers by 23.3%. If growth is 5 percentage points higher, the value rises by 29.8%.

The model is also sensitive to margin changes. A free-cash-flow margin 1 percentage point lower would lower the value by 3.8%.

What to watch

The next filing will show whether the divergence between net income and free cash flow persists. It will reveal if the operating margin continues to expand or stabilizes. Investors should look for any changes in the share count trend.