Wednesday November 30, 2022
Zoom Posts Earnings
Zoom Video Communications, Inc. (ZM) released its third quarter earnings on Monday, November 21. Despite meeting revenue expectations for the quarter, the company's shares fell more than 7% following the release.
The videoconferencing technology company reported revenue of $1.10 billion for the quarter, up 5% from $1.05 billion during the same quarter last year. Revenue was slightly below analysts' expectations of $1.15 billion.
"At Zoomtopia, we announced a number of innovations including Zoom Mail and Zoom Calendar, along with new partnerships that are expected to power and enhance the modern work experience," said Zoom CEO, Eric S. Yuan. "Our customers are increasingly looking to Zoom to help them enable flexible work environments and empower authentic connections and collaboration. Proactively addressing these needs with Zoom's expanding platform continues to be our focus in this dynamic environment."
Zoom posted net income of $48.4 million for the quarter or $0.16 per adjusted share. This was down from $340.4 million or $1.11 per adjusted share during the same quarter last year.
Zoom's Enterprise customers, those who subscribe directly through Zoom's sales team or partners, now number approximately 209,300, an increase of 14% from 204,100 one year ago. The company also saw an increase to 3,286 of its customers spending more than $100,000 in revenue, a 31% increase compared to the same quarter last year. Zoom expects revenue to hold steady in the fourth quarter between $1.12 billion and $1.13 billion. Zoom's guidance anticipates closing the year between $4.079 to $4.081 billion in total revenue.
Zoom Video Communications, Inc. (ZM) shares closed on Wednesday, 11/23 at $76.14, down 6.2%.
Urban Outfitters Reports Record Revenue
Urban Outfitters, Inc. (URBN) released third quarter earnings on Monday, November 21. The company's shares increased more than 2% after the company reported record sales in the quarter.
The clothing and lifestyle retailer's revenue for the third quarter was $1.18 billion. This was up almost 4% from $1.13 billion in the same quarter last year and beat analysts' forecast of $1.16 billion.
"We are pleased to announce record Q3 sales fueled by strong 'comps' at Anthropologie and Free People brands," said Urban Outfitters CEO, Richard A. Hayne. "As we approach the all-important Black Friday/Cyber Monday weekend, we are encouraged by sales quarter-to-date."
Urban Outfitters reported net income of $37.2 million for the quarter or $0.40 per adjusted share. This was down from $88.9 million or $0.89 per adjusted share reported in the same quarter last year.
Urban Outfitters' portfolio of brands includes Anthropologie, Free People, Nuuly and others. Anthropologie sales increased 13% and accounted for $484.2 million in net sales, while Free People's net sales increased 8% over last year to bring in $280.7 million. Urban Outfitters stores, which cater to teenage customers, saw a 9% decline in sales and brought in $367.6 million in net sales. During the first three quarters of the year, the company opened 23 new retail locations and closed four stores.
Urban Outfitters, Inc. (URBN) shares ended on Wednesday, 11/23 at $27.68, up 7.7% for the week.
Best Buy Releases Earnings Report
Best Buy Co., Inc. (BBY) posted its third quarter earnings on Tuesday, November 22. The company's shares rose more than 12% following a less-than-expected decline in revenue.
The company's quarterly revenue came in at $10.59 billion, down 11% from $11.91 billion during the same quarter last year. This exceeded analysts' expected revenue of $10.31 billion.
"I am proud of our team's execution and their relentless focus on providing amazing service to our customers during what is clearly a challenging environment for our industry," said Best Buy CEO, Corie Barry. "Throughout the quarter, we were committed to balancing our near-term response to current conditions and managing well what is in our control, while also advancing our strategic initiatives and investing in areas important for our long-term growth."
For the quarter, Best Buy reported net earnings of $277 million or $1.22 per adjusted share. This was down from $499 million or $2.00 per share reported last year at this time.
The electronics retailer's sales fell year-over-year across domestic and international categories. In the Domestic revenue segment, comparable sales decreased 10.5% which led to a 10.8% decrease in revenue to $9.80 billion. International revenue fell 14.9% to $787 million stemming from a comparable sales decline of 9.3%. Best Buy announced it authorized payment of a regular quarterly cash dividend of $0.88 per common share payable on January 3, 2023 to shareholders of record on December 13, 2022. In addition, the company expects to resume share repurchases and will spend approximately $1 billion on share repurchases this year.
Best Buy Co., Inc. (BBY) shares ended on Wednesday, 11/23 at $82.39, up 15.3% for the week.
The Dow started the week at 33,760 and closed at 34,194 on 11/23. The S&P 500 started the week at 3,956.45 and closed at 4,027 on 11/23. The NASDAQ started the week at 11,091 and closed at 11,285 on 11/23.
Treasury Yields Drop Slightly
U.S. Treasure yields dropped slightly heading into the Thanksgiving holiday as investors watched for insights from Federal Reserve officials on the pace of further interest rate hikes. During the week, Fed officials signaled that interest rates will continue to rise but at a slower rate.
"We are going to have more work to do, because we need to see inflation really on a sustainable downward path back to 2%," said Cleveland Federal Reserve President, Loretta Mester. "We have had some good news on the inflation front, but we need to see more good news and sustained good news to make sure that we are returning to price stability as soon as we can."
The benchmark 10-year Treasury note yield opened the week of November 21 at 3.83% and traded as low as 3.70% on Wednesday. The 30-year Treasury bond opened the week at 3.93% and traded as low as 3.73% on Wednesday.
On Wednesday, the U.S. Department of Labor reported that initial claims for unemployment increased 17,000 to 240,000 for the week ending November 19. The increase in claims is the highest weekly total since August 13 and exceeded analysts' expectation of 225,000 new claims for the week. Continuing unemployment claims increased 48,000, reaching 1.55 million.
"I view the increase in layoffs from the prism of 'bad news is good news'," said chief U.S. economist for Moody's Analytics, Mark Zandi. "That is, layoffs are awful for those losing their jobs, but it does mean the job market is cooling off, which is critical to getting inflation back down and forestalling more aggressive interest rates hikes by the Federal Reserve."
The 10-year Treasury note yield ended on Wednesday 11/23 at 3.71%, while the 30-year Treasury note yield closed on Wednesday at 3.74%.
Mortgage Rates Edge Lower
Freddie Mac released its latest Primary Mortgage Market Survey on Wednesday, November 23. The report showed interest rates moving slightly lower but still remaining at record highs.
This week, the 30-year fixed rate mortgage averaged 6.58%, down from last week's average of 6.61%. Last year at this time, the 30-year fixed rate mortgage averaged 3.10%.
The 15-year fixed rate mortgage averaged 5.90% this week, down from 5.98% last week. At this time last year, the 15-year fixed rate mortgage averaged 2.42%.
"Mortgage rates continued to tick down heading into the Thanksgiving holiday," said Freddie Mac's Chief Economist, Sam Khater. "In recent weeks, rates have hit above 7% only to drop by almost half a percentage point. This volatility is making it difficult for potential homebuyers to know when to get into the market, and that is reflected in the latest data which shows existing home sales slowing across all price points."
Based on published national averages, the savings rate was 0.24% as of 11/21. The one-year CD averaged 0.90%.
Published November 25, 2022
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