EARNINGS PANEL: ORCL, ADBE

0:00Welcome back to Market on Clothes. I'm Marley Kaden. Let's check in on where we ended the day. We've got red across the board for all of our major indices. The S&P 500 is down close to 6 tenths of a percent at 7590179. On the NASDAQ for 29103051 that's down more than 1 percent. The Dow ended 6 tenths down 52,06446 shed more than 300 points today and the Russell 2K ended the day down more than a percent as well 289095. As we look across our sector performance on the session today technology considerably lower 1.4 percent communication services was higher though and the overall cost of the day was higher than the expected cost of the day. The Dow was considered discretionary down while staples did manage to close out the day in the green as well. That's probably going to be the last of the green that we see on the screen here though utilities down a percent real estate down close to a percent here. We saw home sales fall despite the supply levels hitting a record. Industrials are lower on the session. Materials down a percent and a quarter as well on the session.

1:03Moving to our last slab here financials lower a third of a percent energy down despite our oil prices now sitting at 10275 for WTI and healthcare down a half a percent. As we look across mega tech we're going to have a mixed picture apple having a nice reaction to its foldable phone release AI updates and a slew of other products from its surprise and shine event. Ending the day up 3.5 percent higher. Amazon though fractionally lower on the session alphabet higher by 6.10 of a percent Microsoft up meta down giving up some of those gains we saw yesterday after announcing its muse AI agent and Nvidia closing the session to and a third percent lower joining me now to break down the today's action Kevin Green our senior markets chorus fondant Kevin what do you have your eye on during the session today. We continue to see weakness given the geopolitical risk out there as well as what's happening in the bond market we continue to have yields moving higher and. The technical standpoint is really kind of looked very similar to what we saw yesterday we talked about this 15 minute chart and the fact that we saw this you'll fade from this key moving average is volume weighted average price as a area of resistance for the market overnight you're looking at the futures you did see it leverage as a area support and then as we kind of gotten closer to the equity open today that's when we started seeing a little bit of failure news headlines hitting the tape as well I think until you can actually actually see this technical trend.

2:30You still have to be a little bit cautious within this market it's still an area where we are having this consolidation and we're not able to really resolve it at the moment and you're seeing a lot of selling activity under the surface especially when you're looking at some of these other defensive sectors as well as maybe some of these under love sectors so this morning we saw around 95% of the volume on the e-mini sp 500 was actually on down tanks and that really did not improve that much throughout the remainder of the day here so Marley the trends kind of. So we're going to the down side here with the s and p 500 probably looks the best out of all three of the major indexes that we follow on a day by day basis. I was talking to Tony Zhang earlier today on trading 360 and he said as far as the s and p is concerned he's keeping his eye on 7100 to the downside when you're looking at the chart what levels are standing out to you. I would say 7500 is the first key area that's going to be kind of your negative gamma exposure area at least for the next couple of weeks as we get through the September options expiration which will be something that does move markets obviously that's going to be accordingly and we see a readjustment going into the December.

3:37Contracts for a lot of the institutional traders out there today we were able to hold a key area of support here but once again a lot of selling pressure taking place at some key areas of resistance when you're looking at that that Valuated average price 7100 but that would be a considerable pullback and actually you can kind of align that with. that with maybe some of the trends that we are seeing. That shows the tenure tre and this kind of complements kind of talking about this seeing under the surface. breakdown when it comes to the dollar and the ten year the dollar and the ten year with each other. We are see for the dollars moving lower higher and something that for too long usually we'll about a month and a half almost two months now. Marley, so this is also kind of suggesting that we have maybe some other items really digest within this market or maybe a little bit more of a pullback before we can try to move higher. So with that divergence that you just highlighted KG

4:38I mean I'm just looking at the ten year right now and we're almost at 496 where at levels we haven't seen since 2023. You said that we're digesting obviously we have the Fed meeting next week, which is going to be one of the things that perhaps breaks that division. But what is it going to be taking? I think you're going to either going to need to have the Fed come out and be unfortunately maybe signify signal that they are willing to raise rates or even take other QT type of action rates is not the only thing that the Fed can control or you have the Treasury kind of back off and maybe some of the rhetoric that we've heard when it comes to these buyback programs but the dollar moving lower and yield moving higher that actually makes it a little bit more expensive not only the consumer when we spend money but also for us to finance our debt and equity is moving lower as well. Those three going in the same direction basically as far as weakness, something that you don't really want to see for too long. All right, we've got a doby's earnings coming across right now. So let's flip to those KG.

5:38I'll get you the numbers here. Third quarter EPS coming in at $6.13. As to what was looking for 608. We've got to beat their on EPS revenue for their third quarter. $6.76 billion. The estimate was for 6.7. So a slight beat there as well. As we're looking at some of their guidance here. I want to walk through their guidance. They're raising their fiscal year-adjusted EPS guidance to $24.45 to $24.50 from a previous range of $24.35 to $24.45. So a five-cent increase but an increase nonetheless. Revenue they're raising to $26.58 to $26.63 billion. That's also a very small adjustment but still an adjustment. First quarter EPS they're expecting to see between $6.30 and $6.35. That's right in line with the 6.30 estimate that's at the low end of that range. The remaining performance obligations. 22.16 billion dollars. That missed the estimate. And that is likely why we're seeing this move to the downside

6:38where 1 and a third percent lower right now. Their AI first AR grew more than 150 percent. Year over year. Monthly active users here. We're looking at 1 billion across creativity and productivity solutions here. And of course they have their new CEO coming on December first. They announced that last week did not get a great response. The street was looking for someone that was coming from the outside perhaps. But not a huge move to the downside for a doby a small move that remaining performance obligation missed. Pretty much the same. But the last few months we have been able to move that remaining performance obligation missed. Pretty significant here. KG. I would agree. But this is a very low bar for this company. If you look at the last couple of earnings announcements actually probably last two years or so they have been able to kind of miss either on the top line or bottom line or providing weaker guidance. I think this is a little bit more of a mixed report. You have a small revision to the upside for some of the forward guidance. You did have the miss when it came to the remaining performance obligations. But they do highlight the fact that they're trying to re-

7:38energize their premium strategy here. I think on the conference call. The market's going to really want to hear how they are going to really try to monetize that outside of subscriptions. Are they able to kind of place ads in? Maybe have a little bit more about that diversified type of model when it comes to their products. Because right now there's a lot of AI products out there that are free that can do exactly or even better what eight doby actually has to offer. So very low bar going into this report. I don't think it's really shocking that we're seeing a kind of a lot of current price levels. Yeah, and the ARR was a key metric here. The CEO giving some commentary here. They're growing, you know, exceeding 650 million. They're growing more than 150% year over year. How important is that to the narrative for Adobe? I mean, as you mentioned, the bar was very low. Arguably one of the most caught up in the SaaS occurer SaaS apocalypse narratives was Adobe. I think that's a very important thing. The bar was very low. Arguably one of the most caught up in the SaaS occurer SaaS apocalypse narratives was Adobe. I mean, I would agree if you're kind of looking at it. But unfortunately, when you're looking at the ARR, if you're

8:38looking at it from a nominal standpoint, it's not really it's not. It's not a really big mover right now on the overall revenue front. So it's something that's a little bit more of icing on the cake right now. Now if they talk about really trying to expand that particular metric with a particular strategy, the net could actually help them out. But I think that there's a lot that's already been baked into the cake. So I think that's a little bit more of an icing on the cake right now. Now if they talk about really trying to expand that particular metric with a particular strategy, the net could be able to make a little bit more of a little bit more of the cake in the cake. When it comes to Adobe and technically speaking, if it's able to hold these levels, I think that's actually a win for shareholders because it has been able to bounce off of the lows and make higher lows. So technically speaking, it's trying to regroup itself. Hopefully the conference call is going to give it enough to really try to break it out. If you don't see a substantial breakdown in price, and I mean, you know, 5% to even 7% or more to the downside of the cake. So I think that's a good question for you as far as the reaction for this name after earnings. And KG on that call, what does management need to say? What does the tone need to be

9:38here? Because this is one of those cases where tone may matter more. They've already given the guidance numbers, but like you said, if they can avoid that 7% move to the downside, which I think is almost exactly 7.1% is what the options traders are pricing in for the move in either direction. What does the narrative have to be to see us move to the upside for this name? I think they need to talk about the fact that they are not seeing a loss in subscriptions or seats, especially on the enterprise front. And in fact, they're actually seeing that reaccelerate. And that maybe some of the revenue they can make up some of that revenue in the future by having a little bit more pricing power. I think the big concern that you have is that if you do have an economic slowdown, you have other competition kind of hitting the space, you're going to have less seat usage. And that's once again going to have an impact on the top line kind of similar to what we saw for the new market. And that's what we're going to do. And that's what we're going to have to do. And that's what we saw for Microsoft about three to four quarters ago. That was the big fear everybody had, but obviously I have been able to over come that with new product offerings and kind of re-energizing their own portfolio, if you will.

10:38Adobe has to do the same thing. Well, an Oracle made us wait an extra five and a half minutes, but they've just sent their numbers across the wire. So let's dive in here. We've got revenue coming in at 19.35 billion. The estimate was looking for 19.13. So a clean beat there. Also a clean beat on EPS, $1.90 million. The estimate was looking for $1.75 billion. Their operating income for the first quarter, $8.15 billion. The expectation was for $7.81. Operating margins coming in better than expected at 42% cloud infrastructure revenue. That's at $7.39 billion. That's also better than expected. Their software support revenue at $4.9 billion. A beat there as well. Software licensing revenue $655 million. That's just a big difference in the market. And that's what we're going to do. The $7.95 billion. That's just slightly under the $718.8 million consensus that the street was looking for here. But we are up more than 9% right now. They're also looking across their second quarter,

11:38which will be their current quarter. EPS, they're projecting to be $1.85 to $1.93. We'll call that in line. The consensus was looking for about $1.90 here. $1.89. So they've got their outlook here for EPS in line with maybe perhaps a touch low at the midpoint there. But how are you looking at these numbers? I mean, the street is accepting them. There were a lot of always questions around Oracle with the CapEx and their debt and their free cash flow. But we are up 7 and 3.25% right now. Yeah, I think the big risk that you have for Oracle is the announcement of another shelf offering or trying to run the app. We're going to be able to bring or trying to raise more capital in order to spend more on CapEx. Hopefully they're done with that and they make that type of commentary on the conference call. The stock probably continue to run to the upside. In fact, the $200 call is pretty much across the curve. If you're looking at the next three months on the month, the options, expiration, they were

12:38gaining a lot of attention here today. So the conference call can take this over the top. Think a little bit of the weakness in the software side. We want to hear as to why that is actually occurring. It's actually, I believe, the second quarter that we've seen a little bit more of a weakness on the software front. But they talk about also deploying a significant amount of usage actually for Q1, they delivered 850 megawatts of additional data center capacity in Q1. Obviously we've heard a lot about these new products as far as the agentic AI and the personal agents, if you will, we've had meta-announced one, OpenAI announced one today as well. They have a agreement and a working relationship with OpenAI. They may be able to talk about that on the conference call that can also be a benefit for them. But you do not want to hear about any more capital raises for this name, at least for this quarter or even trying to pull back some of their expectations when it comes a cat-back spend in the future. I believe they actually provide an update on that cat-back's guidance on the conference call. I don't think we get it out on the report. That could also be a major over this name. Yeah, certainly coded. It is not in the report that I'm seeing, but they are up in their fiscal, their full data center.

13:38I believe they actually provide an update on that cat-back's guidance on the conference call. I don't think we get it out on the report. That could also be a major over this name. I believe they are up in their fiscal year. EPS and revenue estimates just slightly above the consensus, but a beat there as well. Holding on to five and a half percent gains for Oracle. Kevin really appreciate being with us to break down these earnings as they came across the wire. We are seeing Oracle up about 5% and Adobe is down about one and a quarter percent.