Wednesday November 29, 2023
Oracle Reports Earnings
The company posted net revenue of $12.28 billion for the quarter. This was up 18% from $10.36 billion reported in the same quarter last year and exceeded analysts' expectations of $12.05 billion.
"In Q2, Oracle's total revenue grew 25% in constant currency?exceeding the high end of our guidance by more than $200 million," said Oracle CEO, Safra Catz. "That strong overall revenue growth was powered by our infrastructure and applications cloud businesses that grew 59% and 45% respectively, in constant currency. Fusion Cloud ERP grew 28% in constant currency, NetSuite Cloud ERP grew 29% in constant currency?each and every one of our strategic businesses delivered solid revenue growth in the quarter."
Oracle reported fiscal second quarter net income of $1.74 billion or $0.63 per adjusted share. Last year at this time, the company reported net income loss of $1.25 billion or $0.46 per adjusted share.
Oracle's cloud applications provided strong growth. The company's cloud services and license support segment revenue was up 14% to $8.60 billion in the quarter. Cloud services and on-premises license segment revenues was up 16% to $1.44 billion and cloud infrastructure climbed 53% to $1.0 billion. Oracle's board of directors declared a quarterly cash dividend of $0.32 per share of common stock. The cash dividend will be due to the stockholder of record on January 10, 2023, with an anticipated payment date of January 24, 2023.
Oracle Corporation (ORCL) shares closed at $79.58, relatively unchanged for the week.
JOANN Releases Earnings Report
JOANN, Inc. (JOANN) released its third quarter earnings report on Monday, December 12. The American retailer in crafts and fabrics delivered a miss on earnings and its stock fell more than 10% following the report's release.
The company reported net sales of $562.8 million. This was down 8% from net sales of $611.0 million in the same quarter last year and missed consensus estimates by nearly 2%.
"Although we had a very good sell through during Halloween and are encouraged by our recent momentum during Black Friday and Cyber Monday, it's clear that consumers are increasingly pressured by inflation and are being more selective with their purchases in the current holiday season, prioritizing household essentials over many discretionary activities," said JOANN CEO, Wade Miquelon. "As an organization, we are taking very meaningful and pro-active steps to optimize our cost structure while continuing to drive multiple growth strategies. As a result, we expect to emerge from the current economic environment in a much stronger operating position."
The company reported a net loss of $17.5 million for the quarter or $0.43 per adjusted share. This is down from net income of $22.8 million or $0.53 per adjusted share in the same quarter last year.
JOANN's omni-channel sales were down 4.4% during the quarter and accounted for 11% of the company's revenue. The company's Halloween seasonal business grew 8% during the third quarter, however the current inflationary environment has led to annual cost increases that has affected the company's cash flow and operating earnings. The company's comparable sales decreased 8% in the quarter. The company announced it will pause its quarterly dividends momentarily in order to increase liquidity and overall financial flexibility.
JOANN Inc. (JOANN) shares ended the week at $3.34, down 3% for the week.
Adobe Quarterly Earnings
Adobe Inc. (ADBE) released its fourth quarter and full-year earnings report on Thursday, December 15. The San Jose, California-based digital media and marketing software maker reported record revenue and income.
The company posted quarterly net revenue of $4.53 billion, up 10% from reported revenue of $4.11 billion during the same quarter last year. For the full year, the company's revenue was up 12% to $17.61 billion.
"Adobe drove record revenue and operating income in fiscal 2022," said Adobe CEO, Shantanu Narayen. "Our market opportunity, unparalleled innovation, operational rigor and exceptional talent position us well to drive our next decade of growth."
For the quarter, Adobe reported net income of $1.18 billion or $2.53 per adjusted share. This is down from $1.23 billion or $2.57 per adjusted share reported at the same time last year. For the full year, Adobe reported net income of $4.76 billion.
Adobe's fourth quarter net revenues increased year-over-year in many segments of the company. The company's digital media segment revenue increased 10% to $3.30 billion, for the quarter. The company's fourth quarter creative segment revenue grew 8% to $2.68 billion. Adobe's document cloud segment revenue was $619 million, a 16% increase year-over-year for the fourth quarter. The company's digital experience segment revenue increased 14% to $1.15 billion and digital experience subscription revenue grew 14% to $1.01 billion in the quarter, respectively. The company updated its first quarter revenue target for 2023 to $4.64 billion.
Adobe Inc. (ADBE) shares closed at $338.54, relatively unchanged for the week.
The Dow started the week at 33,520 and closed at 32,920 on 12/16. The S&P 500 started the week at 3,939 and closed at 3,852. The NASDAQ started the week at 11,015 and closed at 10,705.
Treasury Yields Fall
On Wednesday, the Federal Reserve approved a 0.50% increase in short-term interest rates bringing the Fed funds rate to a range of 4.25% to 4.5%. While it is a deceleration from recent rate hikes, this increase brought the Fed benchmark interest rate to the highest level since 2007.
"Over the course of the year, we have taken forceful actions to tighten the stance of monetary policy," said Federal Reserve chair, Jerome Powell. "We have covered a lot of ground, and the full effects of our rapid tightening so far are yet to be felt. Even so, we have more work to do."
The benchmark 10-year Treasury note yield opened the week of December 12 at 3.58% and traded as low as 3.43% on Thursday. The 30-year Treasury bond opened the week at 3.56% and traded as low as 3.46% on Thursday.
On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased 20,000 to 211,000 for the week ending December 10, falling below analysts expected 230,000. Continuing unemployment claims were up 1,000, to 1.67 million. Retail sales fell 0.6% in November, surpassing economists' estimates of a 0.3% decline.
"Initial claims data can be noisy around the holidays, but the low level of initial claims is a reminder that employers are reluctant to let go of workers they've struggled to find," said Lead U.S. Economist at Oxford Economics, Nancy Vanden Houten. "On balance, though, the claims data paint a picture of a labor market that is still too tight for the Fed and will leave the Fed on track to continue to raise rates further in 2023 after yesterday's 50 [basis points] rate hike."
The 10-year Treasury note yield finished the week of 12/16 at 3.50%, while the 30-year Treasury note yield finished the week at 3.55%.
Mortgage Rates Continue Downward Trend
This week, the 30-year fixed rate mortgage averaged 6.31%, down from last week's average of 6.33%. Last year at this time, the 30-year fixed rate mortgage averaged 3.12%.
The 15-year fixed rate mortgage averaged 5.54% this week, down from 5.67% last week. During the same week last year, the 15-year fixed rate mortgage averaged 2.34%.
"Mortgage rates continued their downward trajectory this week, as softer inflation data and a modest shift in the Federal Reserve's monetary policy reverberated through the economy," said Freddie Mac's Chief Economist, Sam Khater. "The good news for the housing market is that recent declines in rates have led to a stabilization in purchase demand. The bad news is that demand remains very weak in the face of affordability hurdles that are still quite high."
Based on published national averages, the savings rate was 0.24% as of 11/21. The one-year CD averaged 0.91%.