What factors drove GCT's EPS surprises in 2024?

GigaCloud Technology Inc. (GCT) experienced a negative EPS surprise in the fourth quarter of 2024, with the EPS falling by -0.07 compared to the expected value. This marks a shift from the company's strong performance in the previous quarter, where it reported an EPS of $0.98, surpassing estimates. The key factors influencing GCT's fluctuating EPS in 2024 include: |code|Ticker|Name|Date|EPS Surprise|Diluted EPS|market_code| |---|---|---|---|---|---|---| |GCT|GCT.O|GigaCloud Technology|2024 Q1|0.33|0.66|185| |GCT|GCT.O|GigaCloud Technology|2024 Q2|0.3|0.65|185| |GCT|GCT.O|GigaCloud Technology|2024 Q3|0.41|0.98|185| |GCT|GCT.O|GigaCloud Technology|2024 Q4|-0.07||185| 1. **Revenue Growth**: GCT's revenue has been on an upward trajectory, with significant increases in both quarterly and yearly comparisons. For instance, the company reported a 103.1% year-over-year revenue surge in Q2 2024, reaching $310.9 million, surpassing estimates. Similarly, in Q3 2024, revenue jumped by 70.2% to $303.3 million, exceeding analyst estimates. This robust revenue growth indicates a strong business performance, which typically supports higher EPS figures. However, the fourth quarter's revenue was slightly below expectations, potentially impacting EPS. 2. **Net Income and Profit Margin**: GCT has demonstrated strong net income growth, with a 46.7% increase in Q2 2024 and a 68.2% rise in Q3 2024 compared to the previous year. The company's gross margin has also been impressive, with a 24.6% margin in Q2 2024 and a 25.5% margin in Q3 2024. These factors generally contribute to higher EPS, as net income and gross margin are key components of EPS calculation. 3. **Market Expansion and Strategic Initiatives**: GCT's expansion into new markets and product categories, such as the introduction of the Brand-as-a-Service (BaaS) program, has boosted seller competitiveness and user engagement, driving record revenues. The company's successful global fulfillment infrastructure expansion and the acquisition of Noble House have also been instrumental in boosting its market share and revenue potential. These strategic moves likely supported EPS growth in the first three quarters of the year. 4. **Cost Factors**: While GCT has seen significant increases in gross profit and net income, the company has also faced challenges such as higher delivery costs and warehouse optimization efforts, which have slightly impacted gross margin. These cost factors, although positive in the context of revenue growth, can strain profitability and potentially lead to lower EPS in certain quarters. In summary, GCT's EPS in 2024 was driven by strong revenue growth, particularly in the first three quarters, and strategic initiatives that boosted market share and profitability. However, the fourth quarter's slightly lower-than-expected revenue and cost factors, such as higher delivery costs, contributed to the negative EPS surprise.