Deciphering Big Tech Giants’ Quarterly Results: Here’s What They Say!
The Big Techs recently disclosed their fourth-quarter results. For those who are interested in the industry, these are a few key findings and insights from the quarterly reports.
Alphabet Inc., the parent company of Google, exceeded Wall Street forecasts with its fourth-quarterly earnings report. Ad sales, however, failed to expand quickly enough to keep up with experts’ predictions. YouTube, which has been contributing to increased growth, came up barely short of projections. With over 2 billion monthly users and an average of 70 billion views per day, YouTube Shorts continues to be a top priority for Google.
The cloud division, which was losing money for years while it attempted to compete with Microsoft Azure and Amazon Web Services, is where the company makes its money. Google Cloud continued to be a growth engine in the fourth quarter, expanding by 26%. The primary driver of revenue growth continues to be search. While brand and direct response advertising drove YouTube advertising, growth in retail was the main driver of Google Search and other forms of advertising revenue.
By the numbers
- Revenue reported was $86.31 billion, up 13.5%.
- Google Search and other advertising revenues rose to $48 billion, up 13% Yo-Y.
- Google cloud computing revenue was $9.19 billion up 26% Yo-Y.
- Advertising revenues reported were $65.52.
- YouTube advertising reported $9.2 billion, up 16% Yo-Y.
- Network advertising revenue was $8.3 billion, down 2%.
- Traffic acquisition costs were $13.9 billion.
Google is beginning to provide generative AI to an increasing number of companies to assist them in creating more effective campaigns and advertisements. Google unveiled Gemini, a large language model that it claims to be its most powerful AI model, in December. The business intends to license Gemini to users via Google Cloud so they can utilize it in their apps. Additionally, Google plans to test the usage of Gemini in Search, where it will speed up consumers’ Search Generative Experience (SGE).
Sundar Pichai, CEO, said in the conference call,
We are pleased with the ongoing strength in Search and the growing contribution from YouTube and Cloud. Each of these is already benefiting from our AI investments and innovation. As we enter the Gemini era, the best is yet to come.
Ruth Porat, President and Chief Investment Officer, CFO said,
We ended 2023 with very strong fourth quarter financial results, with Q4 consolidated revenues of $86 billion, up 13% year over year. We remain committed to our work to durably re-engineer our cost base as we invest to support our growth opportunities.
Meta exceeded Wall Street expectations and had a positive fourth quarter. The positive outcomes show that digital advertising has recovered well from its 2022 decline. It was a significant year for both the business and the community. According to Meta’s estimation, over 3.1 billion individuals use at least one of the Meta applications daily. The already enormous social media company keeps on adding new users across all platforms.
Overall, Meta’s Q4 revenue increased by 25% over the previous year. Threads, the business’s Twitter-like social app that launched in July 2023, now has over 130 million monthly active users, according to the company. As is usual, almost all of Meta’s revenue came from sales of digital advertising. Chinese retailers have increased their spending to reach customers worldwide, which has contributed to Meta’s financial turnaround during the past year. They have been heavily investing in Facebook and Instagram ads.
By the numbers
- Revenue was $40.11 billion, an increase of 25% Yo-Y, and $134.90 billion, an increase of 16% Yo-Y for the full year.
- Facebook DAUs were 2.11 billion on average, an increase of 6% Yo-Y.
- Facebook MAUs were 3.07 billion, an increase of 3% Yo-Y.
- Family DAPs were 3.19 billion on average, an increase of 8% Yo-Y.
- Family MAPs were 3.98 billion, an increase of 6% Yo-Y.
- Ad Impressions delivered across all Meta apps increased by 21% Y-o-Y and the average price per ad increased by 2% Yo-Y.
Strong sales of the company’s Quest device during the holiday season drove record sales of $1.1 billion for the metaverse-focused Reality Labs division. Additionally, Zuckerberg stated that the ad business, which is expanding more quickly than Google, has benefited from advancements in artificial intelligence. By the end of the year, Meta plans to completely launch Meta AI assistant and further AI chat experiences in the United States using generative AI.
Meta Chief Executive Mark Zuckerberg said in a news release,
We had a good quarter as our community and business continue to grow. We’ve made a lot of progress on our vision for advancing AI and the metaverse.
Susan Li, CFO, stated that Meta’s big areas of focus in 2024 will be working towards the launch of Llama 3, expanding the usefulness of Meta AI assistant, and progressing on our AI studio roadmap to make it easier for anyone to create an AI.
For the fourth quarter of 2023, Amazon reported better-than-expected revenues, exceeding sales forecasts thanks to new generative AI capabilities in its cloud and e-commerce businesses, which drove strong growth throughout the Christmas season. The e-commerce behemoth had a great holiday season. Over 1 billion items were bought on the site in the course of the company’s 11-day Black Friday and Cyber Monday sales. Additionally, the events helped bring in new Prime members and save consumers billions of dollars.
With 26% Yo-Y growth in worldwide advertising, Amazon had a great result. Because machine learning has improved ad relevancy, sponsored products have been the main driver of advertising strength. The shift in customer attention towards encouraging innovation and introducing new workloads to the cloud was attributed to the increase in AWS revenues.
By the numbers
- Revenue was reported at $169.9 billion versus expectations of $166.2 billion, up 13.9% Yo-Y.
- AWS Revenue 13% increase in sales over the prior year to a total of $24.4 billion.
- Advertising sales of $14.7 billion.
- Subscription services were up 13%, reporting $10.4 billion in revenue.
Amazon has launched Rufus, a new AI shopping assistant trained in Amazon’s product catalog and other web-based information. The tool, driven by generative AI, may provide product recommendations and respond to queries from users of the Amazon mobile app. The corporation believes that advancements in AI might bring in tens of billions of dollars for its cloud computing division.
Chief Executive Andy Jassy said in Amazon’s press release
This Q4 was a record-breaking holiday shopping season and closed out a robust 2023 for Amazon. While we made meaningful revenue, operating income, and free cash flow progress, what we’re most pleased with is the continued invention and customer experience improvements across our businesses.
Amazon’s Chief Financial Officer Brian Olsavsky added,
We’re coming off a period where we’ve done a lot of hiring. There’s a general feeling in most teams that we’re trying to hold the line on headcount.
Microsoft had a record-breaking quarter, mostly due to Microsoft Cloud’s ongoing growth. Strong executions in the commercial areas and device advancements were credited for the anticipated growth in its quarterly results. The robust demand for Microsoft Cloud offerings, particularly AI services, led to enhancements in Azure, which in turn drove revenue growth.
On October 13, 2023, Microsoft completed the acquisition of Activision Blizzard. With the acquisition, the business expanded its player base by hundreds of millions. It broke previous records for MAUs on Xbox, PC, and mobile devices with over 200 million MAUs in a single month. The business has been integrating AI into every aspect of the IT stack, bringing in new clients and fostering increased efficiency. Additionally, the business reported increased revenue from Windows OEM sales and improved performance in consumer markets.
By the numbers
- Revenue recorded was $62.0 billion, an increase of 18%.
- Intelligent Cloud unit $25.9 billion, increasing 20% ahead of expectations.
- Azure revenues increased by 30%.
- LinkedIn’s revenues increased by 9%.
- Microsoft Cloud Revenue was $33 billion, up 24%.
- Search and news advertising revenue excluding traffic acquisition costs increased by 7%
AI is helping to drive revenue in the Azure consumption business. Over the past year, Microsoft, Amazon, and Google have all invested billions of dollars in artificial intelligence (AI) in an attempt to overtake one another as the leading providers of AI software.
Satya Nadella, chairman and chief executive officer of Microsoft said,
We’ve moved from talking about AI to applying AI at scale. By infusing AI across every layer of our tech stack, we’re winning new customers and helping drive new benefits and productivity gains across every sector.
Amy Hood, Chief Financial Officer added,
While it’s early days for Microsoft 365 Copilot, we’re excited about the adoption to date and continue to expect revenue to grow over time.
In its first-quarterly report, Apple exceeded analysts’ projections for both revenue and profits, but it revealed a 13% drop in sales in China, one of its most significant regions. The tech giant surpassed 2.2 billion active devices, setting a new milestone for its installed base. Apple attributes this to extremely high levels of customer satisfaction and unmatched customer loyalty.
According to projections, Mac sales increased by less than 1% throughout the quarter. Nonetheless, this is a noteworthy comeback for the product line, which had an annual decline of about 34% in the September quarter. iPad sales are still declining. For the first time in iPad history, Apple did not introduce a new model in 2023.
By the numbers
- Revenue was $119.6 billion, up 2% Yo-Y.
- iPhone Revenue was $69.70 billion 6% up.
- Mac $7.78 billion 1% up Yo-Y.
- iPad $7.02 billion down 25% Yo-Y.
- Wearables, home, and accessories revenue was $11.95 billion, down 11%.
- Service Revenues $23.13 billion up 11% Yo-Y
Additionally, Apple unveiled the Apple Vision Pro, their most sophisticated personal electronics gadget to date. Customers in the United States will be able to purchase it via Apple stores; later in the year, it will also be available in other countries. It is considered a groundbreaking gadget that is years ahead of anything else and is based on decades of Apple ingenuity. Additionally, the company announced that customers may select any Apple Watch model that is carbon neutral for the first time.
Tim Cook, Apple’s CEO said in the conference call,
Today Apple is reporting revenue growth for the December quarter fueled by iPhone sales, and an all-time revenue record in Services. We are pleased to announce that our installed base of active devices has now surpassed 2.2 billion, reaching an all-time high across all products and geographic segments. And as customers begin to experience the incredible Apple Vision Pro tomorrow, we are committed as ever to the pursuit of groundbreaking innovation — in line with our values and on behalf of our customers.
Snap Inc. released a forecast that was slightly below Wall Street expectations. The company has now recorded six consecutive quarters of single-digit growth or revenue contraction. Snap Inc. struggled to recover from the downturn in the digital ad sector.
Snap Inc. has announced a new publisher partnership with Spotify in the United States, which will bring short-form highlights from Spotify’s podcasts to Spotlight and Stories. Additionally, the social media giant revealed new AI-powered tools for Snapchat+ users, enabling them to edit and share Snaps as well as create and send AI-generated images in response to text prompts.
By the numbers
- Revenue was $1,361 million, an increase of 5% Yo-Y.
- DAUs were 414 million, an increase of 39 million or 10% Yo-Y.
- MAUs increased 8% Yo-Y and surpassed 800 million in Q4.
- Subscriptions for Snapchat+ have reached over 7 million
Snapchat made a large investment in its augmented reality system. On average, almost 300 million Snapchat users use its augmented reality feature every day. Additionally, it has invested in automation and technology, used generative models, and optimized the ML Lens generation workflow.
Evan Spiegel, CEO said in the announcement,
2023 was a pivotal year for Snap, as we transformed our advertising business and continued to expand our global community, reaching 414 million daily active users. Snapchat enhances relationships with friends, family, and the world, and this unique value proposition has provided a strong foundation to build our business for long-term growth.
OMNICOM MEDIA GROUP
Omnicom exceeded analyst forecasts with impressive Q4 and full-year 2023 results. The growth in advertising and media during the quarter was driven once again by the performance of global media, with softer results from Omnicom’s advertising agencies serving as a partial offset.
Additionally, Omnicom completed the acquisition of Flywheel Digital, which will contribute to the introduction of scaled capabilities in the retail, media, and digital commerce sectors—the fastest-growing areas of the business. Furthermore, Omnicom disclosed that it has partnered with Getty Images as a first mover, giving them early access to a new generative artificial intelligence tool.
By the numbers
- Revenue reported increased $192.7 million or 5% organically, to $4,060.9 million.
- Advertising and media were up 9.3%.
- Public Relations was 2.9% down.
- Third-party service costs increased by $97.5 million or 12.4% to $884 million
Omnicom has reportedly spent tens of millions of dollars developing artificial intelligence over the past ten years, according to CEO John Wren. With the recent June 2023 launch of Omni Assist, a generative AI-powered virtual assistant that organizes, carries out, and produces advertising campaigns through cooperation with Microsoft, Omnicom became the first agency holding company to get access to the most recent Open AI GPT models.
John Wren, Chairman and Chief Executive Officer of Omnicom commented,
Omnicom finished 2023 with 4.4% organic revenue growth in the fourth quarter and 4.1% for the year. Looking out to full year 2024, we are set up well with solid fundamentals, tremendous opportunities in digital commerce and retail media from our Flywheel acquisition, and momentum in new business wins. Our accelerated investments in analytics and AI will enhance our ability to drive the best outcomes for our clients, while shareholders remain supported by our profitable operations and balanced deployment of capital through dividends, acquisitions, and share repurchases.
- Netra is a Dual Masters graduate in International Business and Marketing. She is a content-writing enthusiast and a social media addict. In her downtime, you will find her headbanging to Pop songs from around the world. She is also a sports fanatic and especially loves F1, Volleyball, and Cricket. Her hobbies are baking and watching Anime.
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