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Wednesday May 22, 2024

Finances

Finances
 

Oracle Posts Earnings

Oracle Corporation (ORCL) released its second quarter earnings report on Monday, December 11. The multinational computer technology company's stock fell more than 9% after the release of the report.

The company posted net revenue of $12.94 billion for the quarter. This was up 5% from $12.28 billion reported in the same quarter last year and below analysts' expectations of $13.05 billion.

"Demand for our Cloud Infrastructure and Generative AI services is increasing at an astronomical rate," said Oracle CEO, Safra Catz. "As a measure of that demand, Oracle's total Remaining Performance Obligations (RPO) climbed to over $65 billion – exceeding annual revenue. Our cloud businesses are now at nearly a $20 billion-dollar annual revenue run rate, and cloud services demand continues to grow at unprecedented levels. Business is good and getting better."

Oracle reported fiscal second quarter net income of $2.50 billion or $0.89 per adjusted share. Last year at this time, the company reported net income of $1.74 billion or $0.63 per adjusted share.

Oracle's cloud applications provided strong growth. The company's cloud services and license support segment revenue was up 12% to $9.64 billion in the quarter. The cloud-license and on-premise license segment revenue was down 18% to $1.18 billion. Oracle's cloud infrastructure climbed 52% to $1.6 billion. Oracle's board of directors declared a quarterly cash dividend of $0.40 per common share payable on January 25, 2024, to shareholders of record on January 11, 2024.

Oracle Corporation (ORCL) shares closed at $103.32, down 9% for the week.

Adobe Announces Earnings Results


Adobe Inc. (ADBE) released its fourth quarter and full-year earnings report on Wednesday, December 13. The San Jose, California-based digital media and creative software company's stock fell more than 6% after release of the report.

The company posted quarterly net revenue of $5.05 billion. This was up 12% from reported revenue of $4.53 billion during the same quarter last year and ahead of analysts' expectations of $5.03 billion. For the full year, the company's revenue was up 10% to $19.41 billion.

"Our strong performance reflects the mission-critical role our products play in a digital-first world, incredible product innovation and exceptional execution," said Adobe CEO, Shantanu Narayen. "Adobe's mission of changing the world through personalized digital experiences and our delivery of foundational technology platforms set us up for the next decade of growth. We take pride in being one of the most inventive, diversified and profitable software companies in the world."

For the quarter, Adobe reported net income of $1.48 billion or $3.23 per adjusted share. This is up from $1.18 billion or $2.53 per adjusted share reported at the same time last year. For the full year, Adobe reported net income of $5.43 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 13% to $3.72 billion for the quarter. The company's fourth quarter creative segment revenue grew 12% to $3.00 billion. Adobe's document cloud segment revenue was $721 million, a 16% increase year-over-year for the fourth quarter. The company's digital experience segment revenue increased 10% to $1.27 billion and digital experience subscription revenue grew 12% to $1.12 billion in the quarter, respectively. For the first quarter of fiscal 2024, Adobe expects revenue between $5.10 billion to $5.15 billion and earnings per share between $3.35 to $3.40.

Adobe Inc. (ADBE) shares closed at $584.68, down 5% for the week.

REV Group Drives Up Earnings


REV Group, Inc. (REVG) released its fourth quarter and full-year earnings report on Wednesday, December 13. The specialty vehicle company reported better-than-expected revenue, causing its stock to rise almost 10% following the release of the report.

REV Group reported revenue of $693.3 million for the quarter, up from the $623.6 million reported during the same quarter last year. Quarterly revenue exceeded analysts' expectations of $655 million. Full-year sales returned at $2.64 billion, a 13% increase from $2.33 billion in fiscal 2022.

"We are pleased to deliver strong fourth quarter and full year results which are a testament to the progress of the operational initiatives we have put in place over the past few quarters, and the hard work of our dedicated employees," said REV Group CEO, Mark Skonieczny. "We exited our 2023 fiscal year with a strong balance sheet, solid municipal end markets, and a record Fire and Emergency backlog which we believe positions us well for fiscal 2024."

The company posted net income of $29.7 million or $0.50 per diluted share for the quarter. This was an improvement compared to net income of $8.7 million or $0.15 per diluted share during the same quarter last year. For the full year, the company reported net income of $45.3 million or $0.77 per diluted share. This was up from $15.2 million or $0.25 per adjusted share in fiscal 2022.

The Wisconsin-based company manufactures public service, commercial and recreational vehicles. REV Group's fire and emergency segment reported sales of $339.1 million, an increase from $253.0 million in the same quarter in 2022. The company's commercial segment sales increased 26% to $139.7 million while recreation segment sales decreased 17% to $215.2 million for the quarter. The company's board of directors declared a quarterly cash dividend of $0.05 per common share payable on January 12, 2024, to shareholders of record on December 26, 2023.

REV Group, Inc. (REVG) shares ended the week at $18.55, up 13% for the week.

The Dow started the week of 12/11 at 36,254 and closed at 37,305 on 12/15. The S&P 500 started the week at 4,593 and closed at 4,719. The NASDAQ started the week at 14,340 and closed at 14,814.
 

Treasury Yields Move Lower

U.S. Treasury yields dropped mid-week as investors reacted to reports that the Federal Reserve will begin cutting interest rates in 2024. Yields remained low at the end of the week as analysts viewed the unemployment numbers as sign of a resilient economy.

On Wednesday, the Federal Reserve released its post-meeting statement maintaining the federal funds target range at current levels and indicating at least three rates cuts in 2024. Federal Reserve officials held the key federal funds rate between 5.25% and 5.5% but projected rates would move to 4.6% in 2024 due, in part, to improved inflation projections.

"Inflation has eased from its highs, and this has come without a significant increase in unemployment," said Federal Reserve Chairman, Jerome Powell. "Recent indicators suggest that growth in economic activity has slowed substantially from the outsized pace seen in the third quarter. Even so, GDP is on track to expand around 2.5% for the year as a whole."

The benchmark 10-year Treasury note yield opened the week of December 11 at 4.23% and traded as low as 3.89% on Thursday. The 30-year Treasury bond opened the week at 4.31% and traded as low as 4.02% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased by 19,000 to 202,000 for the week ending December 9. This was below economists' estimates of 220,000. Continuing claims increased by 20,000 to 1.88 million.

"The stable trend in initial claims is a more accurate reflection of current labor market conditions than the inflated increases in the continuing claims series since the summer," said chief economist at Wrightson ICAP, Lou Crandall.

The 10-year Treasury note yield finished the week of 12/11 at 3.91%, while the 30-year Treasury note yield finished the week at 4.01%.
 

Mortgage Rates Continue Downward

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, December 14. The survey showed mortgage rates dipping below 7% for the first time in several months.

This week, the 30-year fixed rate mortgage averaged 6.95%, down from last week's average of 7.03%. Last year at this time, the 30-year fixed rate mortgage averaged 6.31%.

The 15-year fixed rate mortgage averaged 6.38% this week, up from last week's 6.29%. During the same week last year, the 15-year fixed rate mortgage averaged 5.54%.

"Potential homebuyers received welcome news this week as mortgage rates dropped below 7% for the first time since August," said Freddie Mac's Chief Economist, Sam Khater. "Given inflation continues to decelerate and the Federal Reserve Board's current expectations that they will lower the federal funds target rate next year, we likely will see a gradual thawing of the housing market in the new year."

Based on published national averages, the savings rate was 0.46% as of 11/20. The one-year CD averaged 1.85%.

Editor's Note: The publicly available financial information is offered as a helpful and informative service to our friends. This article is not an endorsement of any company, product or service.

Published December 15, 2023

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