Zoom Video Communications, Inc. (ZM) released its first quarter earnings report on Monday, May 20. Despite the company reporting stronger than expected earnings for the quarter, shares fell 2% following the release.

The videoconferencing technology company reported revenue of $1.14 billion for the quarter. This was up 3.2% from $1.11 billion during the same quarter last year and above analysts' expectations of $1.13 billion.

"In Q1, we continued to integrate AI across our platform including Zoom Contact Center and Zoom Workplace, our AI-powered collaboration platform that provides customers the ability to reimagine teamwork by streamlining communications, increasing employee engagement, and improving productivity within their organizations," said Zoom CEO, Eric S. Yuan. "These innovations combined with our execution and focused investment enabled us to outperform our guidance and drive operating cash flow growth of 40.6% and free cash flow growth of 43.6% year over year."

Zoom posted net income of $216.31 million for the quarter or $0.69 per adjusted share. This was an improvement from a net income of $15.44 million or $0.05 per adjusted share during the same quarter last year.

Zoom's Enterprise customers, those who subscribe directly through Zoom's sales team or partners, reached approximately 191,000 for the first quarter. The number of customers spending more than $100,000 increased to 3,883, an 8.5% increase compared to the same quarter last year. At the end of the first quarter, the percentage of total online Monthly Recurring Revenue (MRR) from Online customers with a continuous service term of at least 16 months stood at 73.8%, an increase of 180 basis points year-over-year. Zoom's forecast for fiscal year 2025 expects total revenue to be between $4.61 billion and $4.62 billion and diluted earnings per share to be between $4.99 and $5.02.

Zoom Video Communications, Inc. (ZM) shares ended the week at $63.01, down 2% for the week.

AutoZone Releases Earnings Report

AutoZone, Inc. (AZO) released its third quarter earnings report on Tuesday, May 21. The auto parts company's shares dipped about 4% following the release of the report.

The company reported net sales of $4.24 billion during the quarter, below analysts' expectations of $4.29 billion. This was up 3.5% from $4.09 billion in sales during the same quarter last year.

"I want to thank and congratulate all AutoZoners for their efforts in delivering solid results for our third fiscal quarter," said AutoZone CEO, Phil Daniele. "Our AutoZoners' ongoing commitment to providing customers with Trustworthy Advice and WOW! Customer Service allowed us to deliver stronger than planned bottom line results. As we continue to invest in our business, we remain committed to our disciplined approach of increasing operating earnings and cash flow, and delivering strong shareholder value."

AutoZone reported net income of $651.73 million for the quarter or $36.69 per adjusted share. This was up from $647.72 million or $34.12 per adjusted share in the same quarter last year.

The Memphis, Tennessee-based company saw no change in their domestic same store sales, and an 18.1% increase in international same store sales for the quarter. During the quarter, AutoZone opened 45 new stores, including 32 new stores in the U.S., 12 in Mexico and one in Brazil. At the end of the quarter, the company had a combined total of 7,236 stores globally. The company's inventory grew to $6.16 billion an increase of 7.9% compared to the year prior.

AutoZone, Inc. (AZO) shares ended the week at $2,792.90, down 4% for the week.

Target Reports First Quarter Results

Target Corporation (TGT) announced its first quarter earnings report on Wednesday, May 22. The company's earnings missed analysts' estimates causing shares to fall by over 7% following the report's release.

Target reported quarterly revenue of $24.53 billion. This was down 3.1% from revenue of $25.32 billion in the same quarter last year and above analysts' expectations of $24.52 billion.

"Our first quarter financial performance was in line with our expectations on both the top and bottom line,

tracking the trajectory we outlined for this year and setting up a return to growth in the second quarter," said Target CEO, Brian Cornell. "Our topline performance improved for the third consecutive quarter, with growth in our digital business led by strength in our same-day fulfillment services. Looking ahead, our team will deliver for our guests through lower prices, a seasonally relevant assortment, ease and convenience, as we keep investing in our strategy and efficiency initiatives to get back to growth and deliver on our longer-term financial goals."

The company reported a net income of $942 million or $2.03 per diluted share for the quarter. This was a slight decrease from net income of $950 million or $2.05 per diluted share in the same quarter last year.

Target's total comparable sales decreased 3.7% in the quarter. Digital comparable sales increased by 1.4%. Same-day services increased 9% in the quarter with the Drive-Up service leading the way with a 13% increase. Inventory for the quarter was 7% lower year-over-year despite Target seeing higher in-stock levels. For the full year, Target expects to earn between $8.60 to $9.60 per adjusted share in fiscal year 2024.

Target Corporation (TGT) shares ended the week at $145.23, down 9% for the week.

The Dow started the week of 5/20 at 39,990 and closed at 39,070 on 5/24. The S&P 500 started the week at 5,305 and closed at 5,305. The NASDAQ started the week at 16,702 and closed at 16,921.

U.S. Treasury yields rose midweek as investors reacted to the minutes from the Federal Reserve's latest meeting. Yields rose toward the end of the week following the latest data showing the labor market remains strong.

On Wednesday, the Federal Reserve released the minutes from its May meeting, in which the Federal Reserve unanimously held the key federal funds rate between 5.25% and 5.5%. The minutes indicated the intention to hold off on interest rate cuts until there are clearer signs of inflation cooling while various Federal Reserve officials also mentioned a willingness to tighten policy further if such action became appropriate.

"Participants observed that while inflation had eased over the past year, in recent months there had been a lack of further progress toward the Committee's 2% objective," noted the minutes. "The recent monthly data had showed significant increases in components of both goods and services price inflation."

The benchmark 10-year Treasury note yield opened the week of May 20 at 4.43% and traded as high as 4.50% on Thursday. The 30-year Treasury bond opened the week at 4.56% and traded as high as 4.60% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased by 8,000 to 215,000 for the week ended May 18. Continuing unemployment claims increased by 8,000 to reach 1.79 million.

"Claims settled down from the previous week, so the acceleration some had feared has not come to pass," said corporate economist at Navy Federal Credit Union, Robert Frick. "The labor market remains robust, and if claims are the canary in the coal mine for jobs, it has yet to develop a mild cough."

The 10-year Treasury note yield finished the week of 5/20 at 4.47%, while the 30-year Treasury note yield finished the week at 4.58%.

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, May 23. The survey showed mortgage rates fell for the third straight week.

This week, the 30-year fixed rate mortgage averaged 6.94%, down from last week's average of 7.02%. Last year at this time, the 30-year fixed rate mortgage averaged 6.57%.

The 15-year fixed rate mortgage averaged 6.24% this week, down from 6.28% last week. During the same week last year, the 15-year fixed rate mortgage averaged 5.97%.

"Spring homebuyers received an unexpected windfall this week, as mortgage rates fell below the 7% threshold for the first time in over a month," said Freddie Mac's Chief Economist, Sam Khater. "Although this week's data on previously owned home sales showed a decline, total inventory of both new and existing homes is up. Greater supply coupled with the recent downward trend in rates is an encouraging sign for the housing market."

Based on published national averages, the savings rate was 0.45% as of 05/20. The one-year CD averaged 1.80%.

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