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🖲️ Big Tech Earnings Recap
1) Microsoft’s Azure Growth Continues 2) Google Misses On Ad Revenue, 3) Meta To Start Paying Dividends, 4) Apple Gives A Bleak Outlook and more!
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!
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☁️ 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.
✂️ Valuation Cut. Reddit is being advised to lower its target IPO valuation to $5B - BB
💸 Mega Donation. Netflix $NFLX Co-Founder Reed Hastings donated $1.1B worth of stock to a California charity - WSJ
🎙️ Griffin Talk. Billionaire Ken Griffin said the economy “looks pretty damn good right now” - CNBC
🏎️ First Place. Ferrari $RACE saw sales rise 11% and delivered 3,245 vehicles in Q4 - B
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 $PEP
All of the companies that are reporting earnings next week can be viewed here.
Major Trades Published 01/26 - 02/01
Buys
Sells
DraftKings ($DKNG)
Insider: Paul Liberman (Director)
# of Shares Sold: 510,000
$ Amount: $20,400,000
SEC Forms: [1]
Meta ($META)
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]
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