🖲️ Big Tech Earnings Recap

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Happy Friday!

This was one of the busiest earnings week to date, with 19% of the S&P 500 reporting earnings.

In today’s issue, I’ll be featuring 4 infographics instead of the usual 3 to try to cover as many of the big names as possible!

As always, please share any feedback/comments/suggestions in the poll at the end. I read each and every response!

Some key data bites from this week that you should know: 

• The Fed will keep rates steady at the current 5.25% to 5.5% and hinted that March may be too early for a rate cut.

• Walmart $WMT announced a 3-for-1 stock split to make the stock price more accessible to employees.

• A Delaware Judge voided Elon Musk’s $55B pay package after a Tesla $TSLA shareholder sued the company.

• UPS $UPS is planning to cut 12,000 jobs and require employees to work from the office 5 days a week.

• PayPal $PYPL is also trimming its workforce by by 2,500 jobs, or 9% of its workforce.

In today’s newsletter:

• ☁️ Microsoft’s Azure Growth Continues

• 🔎 Google Misses On Ad Revenue

• 💸 Meta To Start Paying Dividends

• 🍎 Apple Gives A Bleak Outlook

Let’s dive right in!

☁️ Microsoft’s Azure Growth Continues

On Tuesday evening, Microsoft released its fiscal 2024 second-quarter results outpacing analysts' expectations on both revenue and profits.

The Numbers:

• Earnings: 🟢 $2.93 Beats $2.78 Est.

• Revenue: 🟢 $62.02B Beats $61.12B Est.

Analyst estimates from LSEG.

The Quarter:

Microsoft saw strong growth across all segments, with an 18% increase in overall revenue and a 33% surge in both operating and net income.

Notably, Azure and cloud services, a key focus area within the Intelligent Cloud segment, outperformed expectations by growing 30%.

This surpassed the forecasted 27%.

CEO Satya Nadella emphasized the strategic role of AI in enhancing Microsoft's offerings and attracting new customers.

The company saw a notable increase to 53,000 Azure AI customers, a third of whom were acquired in the last year.

Despite these strong results, CFO Amy Hood's revenue projection for the next quarter was slightly conservative at $60B to $61B, marginally below analyst predictions of $60.93B.

🔎 Google Misses On Ad Revenue

Along with Microsoft, Alphabet also reported earnings on Tuesday evening, topping analyst estimates on the top and bottom line.

The Numbers:

• Earnings: 🟢 $1.64 Beats $1.59 Est.

• Revenue: 🟢 $86.31B Beats $85.33B Est.

Analyst estimates from LSEG.

The Quarter:

Despite surpassing overall revenue and net profit forecasts, Alphabet's shares fell nearly 7% due to its $65.5B ad revenue falling slightly short of expectations.

This was mainly from a dip in Search and Network ad revenues.

However, the company maintained a steady performance, with a 13% year-over-year revenue increase and a slight operating margin boost to 27%.

CEO Sundar Pichai highlighted the “Gemini era,” emphasizing AI's role in Alphabet's future strategy and investments.

The earnings call also celebrated subscriptions, which includes YouTube Premium and Google One, reaching $15B annually.

This represents a 5x increase since 2019.

Looking ahead, Alphabet is set to ramp up its AI and technical infrastructure investments, projecting a significant CapEx increase in 2024 as a result.

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💸 Meta To Start Paying Dividends

While Google dropped due to slightly weaker than expected ad revenue, Meta saw the complete opposite with its fourth quarter earnings results.

The Numbers:

• Earnings: 🟢 $5.33 Beats $4.96 Est.

• Revenue: 🟢 $40.1B Beats $39.18B Est.

Analyst estimates from FactSet.

The Quarter:

Meta's shares soared 15% after-hours following an excellent quarter, with revenue up 25% year-over-year and operating margins doubling to 41% from 20% in 2022.

The company's efficient cost-cutting measures led to an 8% drop in expenses and a 22% reduction in headcount, bolstering the company’s profits.

To the surprise of many, Meta announced its first-ever quarterly dividend of $0.50 per share in addition to a large $50B share buyback program.

Advertising revenue hit a record $38.7B and the Average Revenue Per User climbed to an all-time high of $13.12 for the quarter.

Daily Active Users also exceeded expectations, reaching 2.11B.

To put icing on the cake, Meta's Q1 2024 sales forecast beat estimates, as the company is projecting $34.5B to $37B in sales.

🍎 Apple Gives A Bleak Outlook

Apple saw a similar fate as Google, with shares dropping close to 3% following the release of their first quarter fiscal 2024 earnings.

The Numbers:

• Earnings: 🟢 $2.18 Beats $2.10 Est.

• Revenue: 🟢 $119.58B Beats $117.91B Est.

Analyst estimates from FactSet.

The Quarter:

Apple's revenue rose by 2% with earnings increasing 16% year-over-year, fueled by robust iPhone sales and record-breaking Services growth.

CEO Tim Cook highlighted over 2.2B active Apple devices globally, demonstrating the brand’s vast reach.

Clouding these results though was a notable 13% sales dip in Greater China.

As you may recall, I previously visualized China’s revenue contribution to Apple in a previous newsletter, indicating its significant 19% contribution to Apple's overall revenue.

Despite this, Cook noted that, adjusting for constant currency, the decline was more moderate, in the mid-single digits.

Importantly, he also emphasized that Apple continues to dominate urban China's smartphone market, claiming four of the top six selling spots.

Notable Companies Reporting Earnings Next Week:

• Monday (2/5):

  • McDonald’s $MCD, Caterpillar $CAT, Simon Property Group $SPG, Palantir $PLTR

• Tuesday (2/6):

  • Eli Lilly $LLY, Chipotle $CMG, Ford $F, Spotify $SPOT, Snap $SNAP

• Wednesday (2/7):

  • Alibaba $BABA, Walt Disney $DIS, Uber $UBER, CVS $CVS, PayPal $PYPL

• Thursday (2/8):

  • S&P Global $SPGI, Philip Morris $PM, Cloudflare $NET

• Friday (2/9):

  • Pepsico $PEP

All of the companies that are reporting earnings next week can be viewed here.

Buys

• Vera Therapeutics ($VERA)

  • Insider: Maha Katabi (Director)

    • # of Shares Purchased: 161,290

    • $ Amount: $4,999,990

    • SEC Forms: [1]

• Intel ($INTC)

  • Insider: Pat Gelsinger (CEO)

    • # of Shares Purchased: 3,000

    • $ Amount: $130,083

    • SEC Forms: [1]

Sells

• DraftKings ($DKNG)

  • Insider: Paul Liberman (Director)

    • # of Shares Sold: 510,000

    • $ Amount: $20,400,000

    • SEC Forms: [1]

• Meta ($META)

  • Insider: Mark Zuckerberg (COB and CEO)

    • # of Shares Sold: 170,562

    • $ Amount: $15,520,593

    • SEC Forms: [1], [2], [3], [4]

• Palo Alto Networks ($PANW)

  • Insider: Lee Klarich (EVP, Chief Product Officer)

    • # of Shares Sold: 18,000

    • $ Amount: $14,328,661

    • SEC Forms: [1]

• Coinbase ($COIN)

  • Insider: Ernest Ehrsam (Director)

    • # of Shares Sold: 81,530

    • $ Amount: $9,889,013

    • SEC Forms: [1]

🤝 Review of the Week