Baron Global Advantage Fund: Latest Insights and Commentary

The Review and Outlook for period ending June 30, 2025, is not yet available.

CONTRIBUTORS

• Cloudflare, Inc. is a leading cloud software infrastructure vendor. Shares contributed to performance after the company reported solid quarterly results, with revenue rising 27% year over year and slightly exceeding expectations. Results were boosted by a $135 million deal—the largest in the company’s history—driven by demand for its Workers platform, which allows developers to build and deploy applications at the edge for faster performance. The deal represented a competitive win, with the customer choosing Cloudflare over a major hyperscaler due to faster development time and better total cost of ownership. Cloudflare also continued to improve its go-to-market execution, including stronger sales productivity, improved pipeline attainment, and solid customer growth. Management noted record additions of customers spending over $1 million and $5 million annually, while churn remained stable and dollar-based net retention held steady at 111%. We continue to have high conviction in Cloudflare, given its differentiated platform, capable management team, and significant long-term growth opportunity.
• MercadoLibre, Inc., the leading e-commerce marketplace across Latin America, contributed to performance during the quarter. The company reported better-than-expected quarterly results across gross merchandise value (GMV), total payment volume, revenue, and EBIT margin. Margin outperformance was driven largely by Argentina, where revenue grew to 34% of the total in the first quarter (up from 14% a year ago) and profitability remains structurally higher. Management cited strong business momentum in the country, supported by a more favorable macroeconomic backdrop—including falling interest rates that are boosting credit demand, lowering funding costs, and driving higher consumption. The number of items sold in Argentina also rose 50% year over year. These gains helped offset expected pressure from continued investments in new distribution centers and the expansion of MercadoLibre’s credit card portfolio. More broadly, the company continued to gain GMV share across Latin America. We remain optimistic about MercadoLibre’s long-term potential given the still-low penetration of e-commerce and financial services in the region, and the company’s category leadership in both.
• NVIDIA Corporation is a fabless semiconductor company specializing in compute and networking platforms for accelerated computing. The company's dominant position in AI infrastructure—with a comprehensive portfolio spanning GPUs, systems, software, and high-performance networking solutions—continues to drive strong performance. Shares rose during the quarter as signs emerged that the AI cluster buildout is likely to extend into 2026, with NVIDIA maintaining its leadership. The company also removed all AI-related revenue contributions from China, effectively de-risking that part of the business. We maintain a long-term constructive view, as leading AI labs show growing confidence in their ability to achieve human-level intelligence and deploy AI products in enterprise settings. Many top labs are significantly expanding their compute budgets, particularly to advance reinforcement learning for AI agents operating in real-world environments. We believe these labs will begin capturing meaningful value as large-scale use cases are identified and monetized. This, in turn, should further support investment in AI infrastructure as confidence in long-term returns grows.

 

DETRACTORS

• Shares of IT services provider Endava plc detracted from performance due to continued soft demand trends. The company also reported a modest decline in organic revenue, driven by a slowdown in new projects, and lowered its revenue outlook to reflect slower pipeline conversion and incremental currency headwinds. We remain investors. We expect these near-term pressures to ease over time, leading to improved growth as clients increasingly prioritize digital transformation.
• Argenx SE is a biotechnology company best known for developing Vyvgart, the leading FcRn inhibitor for the treatment of autoimmune conditions. Shares declined after Q1 Vyvgart sales came in below elevated investor expectations due to a combination of seasonal factors (such as insurance reverification) and higher Medicare Part D utilization and associated discounts. Our conversations with management and neurologists continue to reinforce Vyvgart’s value as an important treatment option with strong long-term growth potential. The drug continues to launch well in both generalized myasthenia gravis and chronic inflammatory demyelinating polyneuropathy. Over time, we expect Vyvgart to demonstrate efficacy across an expanding range of autoantibody-driven autoimmune conditions, supported by encouraging Phase 2 myositis data recently presented by argenx at a major medical conference.
• Shares of IT services provider Globant S.A. fell after the company reported weaker-than-expected financial results and lowered its guidance for the year. While revenue grew 7% in the first quarter, full-year revenue growth is projected to decelerate sharply to just 2%. Management attributed the softer outlook to macroeconomic uncertainty, tariffs, and weakness in certain geographies. Globant had previously demonstrated resilience despite broader softness in IT services spending, making this slowdown particularly disappointing. We continue to own the stock, as we believe Globant has a long runway for growth in the large and expanding global IT services market.