> ## Documentation Index > Fetch the complete documentation index at: https://valuation-101.com/docs/llms.txt > Use this file to discover all available pages before exploring further. # Earnings Guidance > Extract forward-looking management guidance from the most recent earnings call transcript to override LTM-derived defaults. ## What it does Fetches and parses the most recent earnings call transcript to extract management's forward-looking guidance on revenue and operating margins. When guidance is available, it provides a better starting point for DCF assumptions than extrapolating historical trends. This skill runs as **Phase 5.5** — after cost of capital and before growth & profitability. It is optional: if no transcript is found or no usable guidance is extracted, the pipeline proceeds with LTM-derived defaults. ## Why earnings guidance matters Historical financials tell you where a company has been. Earnings guidance tells you where management expects it to go. For companies undergoing rapid change — high-growth tech, turnarounds, recent IPOs — the gap between past performance and forward expectations can be enormous. When management provides explicit guidance, the plugin uses the **conservative end of any range** as the default starting point, which the user can then adjust. ## What it extracts The skill looks for guidance on four forecast variables: | Variable | Example guidance | How it's used | | ---------------------------- | ------------------------------------------- | --------------------------------------------------- | | Revenue — Year 1 | "We expect FY2026 revenue of `$`12–13B" | Overrides the Year 1 revenue growth rate in the DCF | | Revenue — Long-term | "Exit run-rate of `$`17–19B" | Informs year 10 revenue growth target | | Operating margin — Year 1 | "Adjusted operating income of `$`900M–1.1B" | Overrides Year 1 margin assumption | | Operating margin — Long-term | "25–30% long-term margin target" | Overrides the Year 10 target margin | Two additional variables are stored for reference but not currently used in the pipeline: * **Sales-to-capital** — CapEx guidance, useful for cross-checking reinvestment assumptions * **Cost of capital** — refinancing commentary, interest rate improvements ## How it works From `statements_required`, identify the most recent filing by fiscal period end and map it to the corresponding earnings call quarter (e.g., 10-K with FY end 12/31/2025 → Q4-2025). Look for an existing `guidance-Q{N}-{YYYY}.json` in the ticker cache. If found, load and return it — no fetch needed. Search for the transcript using a priority cascade: company IR website, Motley Fool, Investing.com, SEC 8-K exhibit. Fetches and filters the transcript to the most relevant 5,000–8,000 tokens (prepared remarks + forward-looking Q\&A). An LLM prompt extracts guidance for each variable, including raw quotes, inferred numerical values, inference method, and confidence rating. Two files are saved: a `.json` file (consumed by the pipeline) and a `.md` file (human-readable with raw quotes and reasoning). ## Inference methods Management rarely says "our revenue will be exactly X." The skill handles several patterns of guidance: | Pattern | Example | Method | | ------------------------ | ------------------------------------------------------- | ------------------------------ | | Direct annual guidance | "Revenue of `$`12–13B for FY2026" | `direct_guidance` | | Growth rate applied | "Approximately 140% growth" | `growth_rate_applied` | | Exit run-rate | "Exit run-rate of `$`17–19B" + Q1 guidance | `exit_run_rate_interpolation` | | Quarterly sum | Per-quarter guidance that sums to annual | `quarterly_sum` | | Derived from adjusted OI | "Adj. operating income `$`900M–1.1B" ÷ revenue guidance | `derived_from_adj_oi_guidance` | | Direct margin percentage | "25–30% long-term margin target" | `direct_guidance` | Each extraction includes a confidence rating (high, medium, or low) so downstream skills can weight it appropriately. ## Mode behavior | Mode | Behavior | | ----------------- | --------------------------------------------------------------------------------------------------------- | | **Expert** | Presents extracted guidance alongside industry benchmarks. User can accept, modify, or reject each value. | | **Novice** | Presents guidance with explanations of what it means and how it was derived. | | **Feeling Lucky** | Runs silently — applies guidance automatically with no user interaction. | ## Output Two files are saved per extraction to the ticker cache: * `guidance-Q{N}-{YYYY}.json` — structured data consumed by [growth-and-profitability](/docs/skills/growth-and-profitability) and the [lucky pipeline](/docs/lib/overview) * `guidance-Q{N}-{YYYY}.md` — annotated markdown with raw management quotes, inference reasoning, and confidence ratings ## Edge cases | Scenario | Behavior | | ---------------------------------------- | ---------------------------------------------------------------------------------------------------------------- | | No transcript found | Logs a warning and returns `None`. Pipeline proceeds with LTM-only defaults. | | Transcript found but no revenue guidance | Saves JSON with null revenue values. LTM default is used. | | Guidance is adjusted (excludes SBC) | Flags the adjustment type. User can decide whether to use GAAP or adjusted figures. | | Low confidence extraction | Flagged in output. In Expert mode, user is asked to confirm. In Lucky mode, used but caveated in the transcript. |