Monday December 4, 2023
Salesforce Posts Quarterly Earnings
The company reported revenue of $7.41 billion, up 24% from $5.96 billion in revenue at this time last year. This exceeded analysts' expected revenue of $7.38 billion for the quarter.
"There is no greater measure of our resilience and the momentum in our business than the $42 billion we have in remaining performance obligation, representing all future revenue under contract," said Salesforce CEO, Marc Benioff. "While delivering incredible growth at scale, we're committed to consistent margin expansion and cash flow growth as part of our long-term plan to drive both top and bottom line performance."
Salesforce posted net income for the quarter of $28 million or $0.03 per adjusted share. During the same quarter last year, the company reported net income of $469 million or $0.50 per adjusted share.
Salesforce's subscription and support revenue grew 24% in the quarter, to $6.86 billion. The company's professional services and other revenues reached $56 million, growth of 30% in the quarter. Salesforce projects second quarter revenue between $7.69 and $7.70 billion. For fiscal year 2023, Salesforce expects revenue between $31.7 and $31.8 billion.
Salesforce.com, Inc. (CRM) shares ended the week at $184.91, up 10.8% for the week.
Chewy Bounces Back with First Quarter Earnings
Chewy, Inc. (CHWY) released its first quarter earnings report on Wednesday, June 1. The online pet-related products company reported increased net sales for the quarter. The company stock rose almost 20% in after-hours trading, following the release of the report.
The company reported net sales of $2.43 billion for the quarter. This was up 13.7% from $2.14 billion in the same quarter the previous year and exceeded analysts' estimates of $2.42 billion.
"Our first quarter results are a testament to the resiliency of the pet category and clearly demonstrate our ability to execute against our strategic priorities," said Chewy CEO, Sumit Singh. "Moving forward, Chewy's value proposition is as compelling as ever and we continue to innovate robustly, attract customers with high lifetime values, drive engagement, and capture greater share of wallet."
The company reported net income of $18.5 million in the quarter. This was down from net income of $38.7 million during the same time last year.
The company reported that it had added 4.2 million new users during the first quarter, bringing the company's total active users to 20.6 million. Chewy reported a record in Net Sales Per Active Customer of $446 in the quarter, up almost 15%. The company expects sales to be in the range of $10.2 to $10.4 billion for this fiscal year. However, the company noted that inflationary pressures and supply-chain issues are expected to cause more of Chewy's items to be out of stock.
Chewy, Inc. (CHWY) shares ended the week at $28.80, up 3.7% for the week.
GameStop Releases Earnings
GameStop Corp. (GME) announced its first quarter earnings on Wednesday, June 1. The video game, consumer electronics and gaming merchandise retailer's shares dropped almost 3% following the report's release.
GameStop reported quarterly revenue of $1.38 billion. This was up from $1.28 billion reported at this time last year.
"During Q1, we specifically focused on two main areas: continuing to rebuild and strengthen our commerce business after years of underinvestment and pursuing growth opportunities in the cryptocurrency, NFT, and Web 3 gaming verticals, all of which we expect to be increasingly relevant for gamers of the future," said GameStop CEO, Matt Furlong in the company's earnings call. "With respect to our commerce business, we kept working to pragmatically expand product selection, improve delivery speeds, and strengthen the in-store and online shopping experience. We also made additional investments in our assortment, infrastructure, technology, and talent."
GameStop reported a net loss of $157.9 million or $2.08 per adjusted share. This is greater than a net loss of $66.8 million or $1.01 per adjusted share the previous year.
For the first quarter, the company's collectibles sales accounted for $220.9 million. On May 23, GameStop announced a digital wallet to allow gamers to store, send, receive and use cryptocurrency and non-fungible tokens (NFTs) across decentralized apps. The GameStop Wallet will be downloadable as a web browser extension and will enable transactions on its NFT marketplace. The GameStop Wallet is expected to launch during the second quarter.
GameStop Corp. (GME) shares ended the week at $133.70, down 2.6% for the week.
The Dow started the week at 33,161 and closed at 32,900 on 6/3. The S&P 500 started the week at 4,151 and closed at 4,109. The NASDAQ started the week at 12,138 and closed at 12,013.
Treasury Yields Rise
On Tuesday, Europe's statistics office released key inflation data, while investors continue to be informed by global inflation data. Inflation reached 8.1% in May for the euro zone, exceeding economists' expectations of 7.8%.
"The inflation problem in the euro area is getting worse," said economist at Commerzbank, Christoph Weil. "Today's price data once again increase the pressure on the ECB to end its ultra-loose monetary policy."
On Friday, the U.S. Department of Labor job report indicated the economy added 390,000 jobs in May. This was higher than analysts' estimate of 328,000. Unemployment held steady at 3.6%, just missing economists' expectations of 3.5%.
"Despite the slight cooldown, the tight labor market is clearly sticking around and is shrugging off fears of a downturn," said senior economist at Glassdoor, Daniel Zhao. "We continue to see signs of a healthy and competitive job market, with no signs of stepping on the brakes yet."
The 10-year Treasury note yield closed at 2.96% on 6/3, while the 30-year Treasury bond yield was 3.11%.
Mixed Results for Mortgage Rates
This week, the 30-year fixed rate mortgage averaged 5.09%, down from last week's average of 5.10%. Last year at this time, the 30-year fixed rate mortgage averaged 2.99%.
The 15-year fixed rate mortgage averaged 4.32% this week, up from 4.31% last week. During the same week last year, the 15-year fixed rate mortgage averaged 2.27%.
"Mortgage rates continued to inch downward this week but are still significantly higher than last year, affecting affordability and purchase demand," said Freddie Mac's Chief Economist, Sam Khater. "Heading into the summer, the potential homebuyer pool has shrunk, supply is on the rise and the housing market is normalizing. This is welcome news following unprecedented market tightness over the last couple years."
Based on published national averages, the savings rate cap was 0.07% as of 5/16. The one-year CD averaged 0.21%.