Apple, Amazon, Facebook, Google and Microsoft’s earnings: what stands out

America’s five tech giants reported last week. Here’s a look at some of the corporate earnings reports disclosures and calls that stood out to me.

1. The reopening is more of a tailwind for Apple than a headwind

IPhone revenue grew 50% annually to $ 39.6 billion, beating the consensus by more than $ 5 billion. In addition, Services revenue increased 33% to $ 17.5 billion and exceeded consensus by over $ 1 billion, and Wearables, Home and Accessories segment revenue increased. rose 36% to $ 8.8 billion, beating the consensus by nearly $ 1 billion.

As CFO Luca Maestri noted on Apple’s call, iPhone and Apple Watch sales have benefited (amid vaccine rollouts and the easing of pandemic restrictions) from consumers who go out of their homes more, including to Apple Stores. And in the services segment, AppleCare purchases were boosted by the increase in foot traffic to the Apple Store, while the increase in online ad spend boosted Google’s ad revenue (and with it, the share Apple’s advertising revenue from Google search involving the Safari browser).

Also: While sales growth for iPads and Macs has slowed compared to recent quarters – not surprisingly, given that sales of laptops and tablets have benefited from a higher great distance working and learning activity – they have each grown at a double-digit annual rate, and have grown faster if not for supply constraints.

2. AWS arguably had its best quarter in quite some time

Although Amazon.com (AMZN) missed its second quarter sales estimates, AWS deserves no blame for it. The public cloud giant saw its revenue increase 37% per year (its highest growth rate in two years) to $ 14.81 billion, beating the consensus by more than $ 500 million.

Additionally, AWS’s backlog grew 15% sequentially and 48% annually to $ 60.7 billion, with the weighted average length of its long-term contracts increasing to 3.6 years from previous years. 3.3 years of the first trimester. On Amazon’s call, CFO Brian Olsavsky said AWS has seen a resumption in cloud migrations, as companies reconsidered during the pandemic whether they wanted to run their own data centers.

The consensus for AWS revenue in 2022 is $ 76.1 billion, and that figure may prove conservative given recent growth in AWS’s order book. If AWS were to generate, say, $ 80 billion in revenue next year and AWS received a sales multiple of 10 times that number (less than what many high-growth cloud names are currently receiving), l The company is said to be worth $ 800 billion, or nearly 45% of Amazon’s current market capitalization. Food for thought.

3. Facebook believes Instagram reels can become a high-end growth engine

During the Facebook (FB) call, Mark Zuckerberg revealed that Instagram Reels / rival TikTok’s shorthand video service is now the biggest contributor to Instagram’s engagement growth. Later, COO Sheryl Sandberg added that Reels, which only launched in August 2020 and only introduced ads in mid-June, now runs ads in nearly every market in which the service has been launched.

Sandberg also suggested that over time, the Reels ads should prove to be as popular as Instagram’s now very successful Stories ads.

“It’s a format quite similar to stories [ads]”, she said.” It’s full screen and between the Reels videos [of] up to 30 seconds. We think that’s a pretty natural fit in Reels. It is a very nice surface for discovery. And we’re seeing parallel commitment and effectiveness with some of our other products … It’s still early days, but we think it has a lot of potential. “

4. YouTube advertising activity kicks in on all cylinders

After growing 49% per year in the first quarter to $ 6 billion, Alphabet’s (GOOGL) YouTube ad sales grew 84% per year in the second quarter to $ 7 billion, beating the consensus over $ 600 million. An easier annual comparison has contributed to this acceleration in growth, but also soaring demand from advertisers.

Much like AWS, YouTube is benefiting from the way businesses have rethought the way of doing things in recent months, as brand advertisers choose to direct their video ad spend more to online services compared to traditional TV. . Additionally, YouTube now sees greater profit from its multi-year efforts to flesh out its direct response advertising business.

“Nielsen found that US advertisers who only shifted 20% of their TV spend to YouTube generated a 25% increase in total campaign reach among their target audience while reducing their cost per reach point of almost 20%, “said Philipp Schindler, commercial director. to Alphabet’s call. The strength of the video ads YouTube is seeing could bode well for the leading numbers that will be shared by Roku (ROKU) and The Trade Desk (TTD), which report on August 4 and 9, respectively.

5. Microsoft’s Dynamics App Business has reached an inflection point

With 49% annual sales growth for its Dynamics 365 cloud applications, Microsoft’s Dynamics business application franchise (MSFT) achieved 33% annual sales growth in the June quarter. This is up from 26%, 21%, 19% and 13% respectively over the previous four quarters.

And it looks like the good times will continue: On Microsoft’s call, CFO Amy Hood guided Dynamics’ revenue growth for the September quarter, and Microsoft has a habit of leading conservatively.

Strong momentum in Microsoft’s Power Apps development tools and Power Automate workflow automation tools (these are accounted for in Dynamics 365 revenue) contributed to the growth. CEO Satya Nadella revealed that the number of organizations using Power Apps has more than doubled each year.

Nadella also argued that Microsoft’s efforts to tightly integrate Dynamics 365 applications dealing with business functions such as sales, marketing, customer service and supply chain management are paying off. And he added that integrating Dynamics with Teams and Microsoft’s business process automation tools (such as Power Automate) is increasingly a selling point.

“[You] I don’t want to have a recording system for anything, be it a client, a part or a forecast, that you don’t want to collaborate on, that you don’t want to communicate on, ”he said. said. think that tracking what’s going on with Power Platform, Dynamics, and Teams … and its intersection with even some of our data layers in Azure, is perhaps already the best indication of some of our competitive differentiations at large scale.”

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