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Wednesday June 29, 2022



Oracle Reports Earnings

Oracle Corporation (ORCL) released its quarterly and full-year earnings report on Tuesday, June 15. The multinational computer technology company reported increased net revenue and income.

The company posted net revenue of $11.23 billion for the quarter, up 8% from $10.44 billion reported in the same quarter last year. For the full year, revenue was up 5% to $40.48 billion.

"Our Q4 performance was absolutely outstanding with total revenue beating guidance by nearly $200 million, and non-GAAP earnings per share beating guidance by $0.24," said Oracle CEO Safra Catz. "The accelerating growth rates of both our applications and infrastructure cloud businesses this year drove earnings per share growth up to 21% in FY21. That is the fourth consecutive year of double-digit earnings per share growth at Oracle Corporation."

The company reported net income of $4.03 billion or $1.37 per share, up from $3.12 billion or $0.99 per share in the same quarter last year. For the full year, net income was reported at $13.75 billion.

Oracle's cloud applications provided strong growth. Cloud services and license support segment revenue was up 8% to $7.4 billion in the quarter, and grew 5% to $28.7 billion for the full year. Cloud services and on-premises license segment revenues was up 9% to $2.1 billion for the quarter, and increased 5% to $5.4 billion for the full year. 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 July 15, 2021, with an anticipated payment date of July 29, 2021.

Oracle Corporation (ORCL) shares closed at $76.23, down 8.2% for the week.

H&R Block Reports Earnings

H&R Block, Inc. (HRB) announced quarterly and full-year earnings on Tuesday, June 15. The tax-preparation company reported increased net revenue and income.

For the quarter, the company reported net revenue of $2.3 billion, up from $1.8 billion in the same quarter last year. For the full year, net revenue was $3.4 billion compared to $2.6 billion reported last year.

"I am proud of the outstanding growth across our business," said H&R Block CEO Jeff Jones. "Our team provided help and inspired financial confidence for millions of consumers and small business owners this year. We made tremendous progress in our first year of Block Horizons, blending technology and digital tools with human expertise in tax, improving our offerings in small business, driving significant growth in Wave, and making progress on our new mobile banking platform."

H&R Block reported $949.3 million or $5.13 per share of net income for the quarter, this is up from $460.4 million in the same quarter last year. For the full year, net income reached $583.8 million or $3.08 per share.

During the quarter, the company repurchased 2.1 million shares bringing the fiscal year total to 11.6 million shares valued at $188 million, or $16.29 per share. H&R Block also announced a 4% increase in its quarterly dividend to $0.27 per share. Net income and revenue improved largely because the 2020 tax filing deadline extension increased the volume of tax returns processed during the company's fourth quarter.

H&R Block, Inc. (HRB) shares closed at $23.56, down 9.9% for the week.

Adobe Reports Earnings

Adobe Inc. (ADBE) released its second quarter earnings report on Thursday, June 17. The San Jose, California-based digital media and marketing software maker reported increased revenue and income.

The company posted quarterly net revenue of $3.84 billion, up 23% year-over-year. At the same time last quarter, Adobe reported revenue at $3.13 billion.

"Adobe had an outstanding second quarter as Creative Cloud, Document Cloud and Experience Cloud continue to transform work, learn and play in a digital-first world," said Adobe CEO Shantanu Narayen. "Our innovative product roadmap and unparalleled leadership in creativity, digital documents and customer experience management position us for continued success in 2021 and beyond."

For the quarter, Adobe reported net income of $1.12 billion or $2.32 per share. This is up from $1.10 billion or $2.27 per share reported at the same time last year.

Adobe reported increased year-over-year growth in net revenue in many segments of the company. The company's digital media segment revenue increased 25% to $2.79 billion. The company's creative segment revenue grew 24% to $2.32 billion. Adobe's document cloud segment revenue was $469 million, a 30% increase year-over-year. The company's digital experience segment revenue increased 21% to $938 million and digital experience subscription revenue grew to 25% to $817 million. The company updated its third quarter revenue target to $3.88 billion.

Adobe Inc. (ADBE) shares closed at $565.59, up 3.8% for the week.

The Dow started the week at 34,473 and closed at 33,290 on 6/18. The S&P 500 started the week at 4,248 and closed at 4,166. The NASDAQ started the week at 14,083 and closed at 14,030.

Treasury Yields Remain Flat

Yields on U.S. Treasurys remained flat as investors processed the newest policy changes from the Federal Reserve. Meanwhile, jobless claims unexpectedly increased this week after weeks of decreasing.

On Thursday, the Labor Department reported weekly jobless claims were the highest in a month. The report showed first-time unemployment filings totaled 412,000 for the week of June 12. This is up from the previous week's total of 375,000 and exceeded analysts' expectations of 360,000 new claims. Continuing claims for unemployment insurance for the week were at 3.52 million relatively unchanged from the previous report and significantly lower than the 18 million reported at this same time last year.

"Factors related to the pandemic, such as caregiving needs, ongoing fears of the virus, and unemployment insurance payments appear to be weighing on employment growth," said Federal Reserve Chairman Jerome Powell. "These factors should wane in coming months against a backdrop of rising vaccinations leading to more rapid gains in employment."

The 10-year Treasury note opened the week at 1.453% and reached a high of 1.595% on Thursday. The 30-year Treasury bond opened the week at 2.141% and reached a high of 2.219% on Thursday.

U.S. Treasury yields remained flat on Friday following turbulence caused by the Federal Reserve's faster-than-expected shift in its monetary policy. The Federal Reserve indicated that interest rates may be raised sooner than anticipated and inflation rates may rise higher than expected. Benchmark interest rates are expected to be raised to 0.6% by the end of 2023 and the forecasted inflation rates were increased to 3.4%, up from March's forecast of 2.4%.

"We're expecting a good year, a good reopening," said James Bullard, President of the St. Louis Federal Reserve. "But this is a bigger year than we were expecting, more inflation than we were expecting. I think it's natural that we've tilted a little bit more hawkish here to contain inflationary pressures."

The 10-year Treasury note yield closed at 1.438% on 6/18, while the 30-year Treasury bond yield was 2.015%.

Mortgage Rates Continue Decline

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, June 17. The report showed a continued decrease in the 30-year fixed rate mortgage.

The 30-year fixed rate mortgage averaged 2.93%, down from 2.96% last week. At this time last year, the 30-year fixed rate mortgage averaged 3.13%.

This week, the 15-year fixed rate mortgage averaged 2.24%, up from 2.23% last week. Last year at this time, the 15-year fixed rate mortgage averaged 2.58%.

"Mortgage rates continue to drift down as markets concur with the view that inflation increases are temporary," said Sam Khater, Freddie Mac's Chief Economist. "While mortgage rates are low, purchase demand has weakened over the last couple of months, primarily due to affordability constraints stemming from high home prices. With inventory tight, the slowdown in demand has yet to impact prices, meaning the summer will likely remain a strong seller's market."

Based on published national averages, the national average savings rate was 0.06% as of 5/17. The one-year CD averaged 0.14%.

Published June 18, 2021
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