3 things I learned from the market today – Wednesday, 21 May

The "things I learned from the market today" is a daily series sharing insights from my coverage of the Live Blog.

Soft earnings vs. takeover speculation

Webjet Group (ASX: WJL) reported a slightly disappointing full-year result, missing FactSet consensus across key metrics, yet its stock closed flat at 87 cents. Key figures include:

• Total transaction volume down 6% to $1.5bn vs. $1.53bn ests (1.9% miss)

• Revenue down 3% to $139.76m vs. $143.5m ests (2.6% miss)

• Underlying net profit after tax up 18% to $20.9m vs. $21.3m ests (1.8% miss)

The company described early FY26 trading as "soft" and reiterated that FY26 EBITDA is expected to align with FY25, assuming no further deterioration in market conditions. This cautious outlook reflects macroeconomic challenges and US-specific headwinds.

However, the soft result may be overshadowed by recent developments. Helloworld recently increased its stake in Webjet to approximately 10%, while BGH Capital is pursuing a controlling interest at 80 cents per share. With a potential takeover looming, weaker earnings could depress the share price, making Webjet a more attractive target for suitors.

Watch the second day

Technology One (ASX: TNE) shares surged 11.3% on Tuesday after the company reported a better-than-expected 1H25 result. The key numbers (vs. Goldman Sachs estimates) include:

• Total annual recurring revenue up 21% to $511.1m vs. $504m ests (1.4% beat)

• Revenue up 19% to $291.3m vs. $278m ests (4.8% beat)

• Profit before tax up 33% to $81.9m vs. $76m ests (7.8% beat)

• Profit after tax up 31% to $63m vs. $59m ests (6.8% beat)

• Interim dividend up 30% to 6.6 cents per share vs. 8 cents ests (17.5% miss)

Just when you thought the stock couldn't go any more vertical, it gained another 5.9%, driven by several analyst upgrades, including:

• Macquarie raises target to $34.40 from $31.00, maintained Neutral rating, citing strong pipeline validation but limited valuation upside

• Jefferies raises target to $44.00 from $35.00, maintained Buy, driven by FY25 guidance uplift and UK momentum

• E&P upgraded to Positive from Neutral, raises target to $45.00 from $31.52, highlighting UK contract wins and competitive edge

• JPMorgan raises target to $33.50 from $27.00, Maintained Neutral, noting UK traction and conservative profit guidance

Despite the positive sentiment, analysts remain cautious due to the stock’s high valuation multiple and the need for sustained positive catalysts to justify further gains.

Margins are key

Sports tech company Catapult (ASX: CAT) saw its shares surge 13.7% to all-time highs after its FY25 results exceeded market expectations, with narrower losses and improved margins (all figures in USD):

• Revenue up 16.5% to $116.5m vs. $116.8m ests (0.2% miss)

• Gross margin down 10 bps to 81% vs. 79.7% ests (13 bp beat)

• Management EBITDA of $14.8m vs. $13.3m ests (11.2% beat)

• Management EBITDA margin almost tripled to 12.7% (FY24: 4.2%) vs. 11.5% ests (12 bp beat)

• ACV up 18% to $101.2m vs. $103.1m ests (1.8% miss)

CEO Will Lopes commented, “As we enter FY26, we expect strong ACV growth, low churn, continued margin improvement toward our targets, and higher free cash flow—clear signs our operating model is scaling with discipline and aligned to the Rule of 40.” Despite minor revenue and ACV shortfalls due to foreign exchange movements and the company’s exit from Russia, the strong margin expansion and free cash flow underscore Catapult’s operating leverage and scalability.

Whether it’s gross margins for retailers or net interest margins for banks, margin performance remains a key metric to watch.