What are the gross and operating margin trends for the nine‑month period compared to the prior year, and are they improving or deteriorating?

Margin trends – what the numbers tell us

The nine‑month press release only disclosed top‑line revenue (up ≈ 18 % YoY to $59.3 MM) and did not break out cost of goods sold (COGS) or operating expenses, so the exact gross‑margin and operating‑margin percentages are not provided. Because the revenue surge came largely from higher license, maintenance, consulting and advertising fees—items that are typically higher‑margin than the “traditional” newspaper ad mix—we can infer that the cost base has not risen as fast as revenue. If COGS and SG&A have held roughly steady, the gross margin would have risen (gross profit growing faster than revenue) and the operating margin would be on an upward trajectory. Conversely, if the incremental revenue was offset by proportionate cost increases (e.g., higher staff, technology spend, or marketing outlays), the margins could be flat or even deteriorating.

Trading implication

Until the company’s SEC filing (Form 10‑Q) releases the detailed margin figures, the safest stance is “neutral‑to‑bullish” on DJCO. An improving margin narrative would support a long bias, especially if the operating margin expands beyond the prior‑year level—signalling better profitability and cash‑flow generation. If the upcoming filing reveals that margins are compressing (e.g., operating expenses outpacing revenue growth), the risk/reward balance tilts toward a short or at‑least a defensive position. In practice, traders should:

1. Watch for the 10‑Q (expected within the next 10‑12 days) to confirm gross and operating margin percentages.
   
2. Monitor EPS guidance and any commentary on cost‑control initiatives; an upward‑trend in margins often leads to a price‑up move on the next earnings‑related rally.
   
3. Set a tight stop around the current support level (≈ $1.20) if taking a long position now, and be ready to flip to a short if the margin data shows a deterioration.

In short, the available data points to a likely improving margin environment, but the definitive answer—and the trade direction—will hinge on the forthcoming detailed financials.