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Friday August 19, 2022



Zoom Reports Earnings

Zoom Video Communications, Inc. (ZM) released its third quarter earnings on Monday, November 22. Despite exceeding expectations for the quarter, the company's stock fell over 17% following the report's release.

The videoconferencing technology company reported revenue of $1.1 billion for the quarter. This was an increase of 35% year over year and up from $777.2 million reported at this time last year.

"In Q3, we held our premier user event, Zoomtopia, on our Zoom Events service," said Zoom founder and CEO, Eric S. Yuan. "During this immersive, multi-track conference, we showcased how Zoom is placing people at the center of our communications platform, connecting their disparate work streams into our technology, moving beyond enterprises' ability to collaborate internally, and empowering them to communicate face-to-face with their customers through Zoom Events and our upcoming Video Engagement Center." "Through innovation and dedication, we will continue to deliver happiness to our customers."

Zoom posted net income of $340.4 million for the quarter or $1.11 per adjusted share. This was up from $198.4 million or $0.66 per adjusted share at this time last year.

Zoom continues to be a popular communication tool used by many businesses and households during the pandemic. By the end of the third quarter, its business customers with 10 or more employees reached 512,100, an increase of 18% year-over-year. However, Zoom expects a slowdown in revenue in the fourth quarter as workers return to the office. Zoom's guidance anticipates closing the year between $4.079 to $4.081 billion in total revenue.

Zoom Video Communications, Inc. (ZM) shares ended on Wednesday, 11/24 at $208.30, down 16.4% for the week.

Jack in the Box Provides Quarterly Earnings

Jack in the Box Inc. (JACK) reported its fourth quarter and full-year earnings on Tuesday, November 23. Due to the results falling short of analyst's expectations, the fast-food company's shares were down 7.1% following the release of the report.

The fast-food chain brought in revenue of $278.5 million for the quarter, missing analysts' expected revenue of $289.1 million. This was up from $255.4 million in revenue reported at the same time last year. Revenue for the full year reached $1.1 billion.

"I am very proud of the execution and determination shown by our outstanding franchisees and corporate team members, continuing to deliver for our guests during a challenging operating environment," said Jack in the Box CEO Darin Harris. "We continue to focus heavily on making significant progress on our strategic pillars, growth objectives, and unlocking substantial value for JACK shareholders."

The company reported net earnings of $38.9 million for the quarter or $1.81 per share. This is up from $37.8 million or $1.65 per share during the same quarter last year.

Jack in the Box reported company owned same-store sales decreased 4.4% in the quarter. The company reported that the decline in restaurant traffic was offset by increases in average check. Franchise owned same-store sales increased 0.6%. System owned same-store sales led the quarter with an 8.6% increase. Traffic continues to be affected in certain markets due to temporary shutdowns and reduced hours of operation because of the continued COVID-19 pandemic.

Jack in the Box Inc. (JACK) shares ended on Wednesday, 11/24 at $89.47, down 8.9% for the week.

Urban Outfitters Posts Record Earnings

Urban Outfitters, Inc. (URBN) released third quarter earnings on Monday, November 22. The lifestyle product and service company reported record sales and earnings in the quarter.

The company reported record quarterly net sales of $1.13 billion. This was up 14.6% from $969.6 million in net sales in the same quarter last year.

"I'm pleased to announce our teams produced record Q3 sales and earnings," said Urban Outfitters CEO, Richard A. Hayne. "We are excited that November 'comp' sales to date for all brands have accelerated from their Q3 rate."

Urban Outfitters reported record net income of $88.9 million for the quarter or $0.90 per share. This was up from $76.7 million or $0.78 per share reported in the same quarter last year.

Urban Outfitters' portfolio of brands includes Anthropologie, Free People, Nuuly and others. The company's total net sales were heavily supported by the Anthropologie and Urban Outfitters brands. Anthropologie accounted for $431.4 million in net sales, while Urban Outfitters brought in $415.9 million in net sales. Free People brought in the third highest sales at $265.0 million. During the first three quarters of the year, the company opened 46 new retail locations and two franchisee-owned store openings. During the same period, the company shuttered nine stores permanently.

Urban Outfitters, Inc. (URBN) shares ended on Wednesday, 11/24 at $33.04, down 10.4% for the week.

The Dow started the week at 35,631 and closed at 35,804 on 11/24. The S&P 500 started the week at 4,712 and closed at 4,701 on 11/24. The NASDAQ started the week at 16,121 and closed at 15,845 on 11/24.

Treasury Yields Rise as Markets Reflect Powell Renomination

U.S. Treasury yields rose on Tuesday following President Biden's announcement of his pick for Federal Reserve Chair and Vice Chair nominees. Yields held steady on Wednesday as jobless levels continue to decline.

On Tuesday, the President nominated Jerome Powell for Federal Reserve Chair and Lael Brainard as Vice Chair. Powell currently holds the position as Chair, while Brainard currently serves as a Federal Reserve Governor.

"This is remarkably consistent with expectations and, if anything, adds to the curve flattening pressure," said BMO's head of U.S. rates, Ian Lyngen. "There was a great deal of focus on the nomination, which implies the passing of the event risk might see some follow-through price action."

The benchmark 10-year Treasury note yield opened the week of 11/22 at 1.549%, hit a high of 1.682% on Tuesday and was trading as high as 1.697% on Wednesday. The 30-year Treasury bond yield opened the week at 1.915%, hit a high of 2.044% on Tuesday and was trading as high as 2.038% on Wednesday.

On Wednesday, the U.S. Department of Labor reported that Americans filing for unemployment benefits fell to 199,000, marking the lowest initial jobless claims level in more than 52 years. The report was overwhelmingly more positive than economists' forecast of 260,000.

"It is fair to say we didn't see that coming," said senior economic analyst at Bankrate, Mark Hamrick. "Getting new claims below the 200,000 level for the first time since the pandemic began is truly significant, portraying further improvement."

The 10-year Treasury note yield closed at 1.65% on 11/24, while the 30-year Treasury bond yield was 1.97%.

Mortgage Rates Relatively Stable

Freddie Mac released its latest Primary Mortgage Market Survey on Wednesday, November 24. The report noted the 15-year fixed rate mortgage average increased ahead of the Thanksgiving holiday.

This week, the 30-year fixed rate mortgage averaged 3.10%, unchanged from last week's average. Last year at this time, the 30-year fixed rate mortgage averaged 2.72%.

The 15-year fixed rate mortgage averaged 2.42% this week, up from 2.39% last week. At this time last year, the 15-year fixed rate mortgage averaged 2.28%.

"Despite the noise around the economy, inflation, and monetary policy, mortgage rate volatility has been low," said Freddie Mac's Chief Economist, Sam Khater. "For most of 2021, mortgage rates have stayed within half a percentage point, which is a smaller range than in past years."

Based on published national averages, the savings rate was 0.06% as of 11/15. The one-year CD finished at 0.14%.

Published November 26, 2021
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