Big Tech giants have revealed their quarter financial performance and here are the key stats and takeaways for marketers.
Alphabet’s first quarter with revenue growth was led again by Search and Cloud. It reported revenue of $68 billion, up from $55.3 billion in Q1 2021. Zooming in on Google search, which accounted for 58% of Alphabet’s revenues.
Google’s Russian operations were greatly curtailed by the Ukraine invasion during the quarter. Google’s chief financial officer, Ruth Porat, said on the earnings call that about 1% of its revenues in 2021 were from Russia, largely from advertising. The growth rate of revenues in the European region, which also includes the Middle East and Africa, slowed to 19% in the first quarter from 33% a year ago. Advertisers in Europe significantly pulled back their spending on YouTube.
- Total Google advertising revenue is $54.7 billion $6.87 billion vs. $7.51 billion expected, according to StreetAccount.
- Google Search & other: $39.6 billion against $31.9 billion in the same period the last year.
- Google Network reported $8.2 billion up 20% vs. $6.8 billion in Q1 2021.
- YouTube revenue was $6.9 billion, a growth of 14%.
Philipp Schindler, Alphabet’s Senior Vice President & Chief Business Officer said that Maps searches for [shopping near me] were up 100% globally year-over-year.
YouTube is also testing ads on Shorts with products like app install and video action campaigns. Philipp Schindler said that they are encouraged with initial feedback and results from the advertisers.
“YouTube Shorts is now averaging over 30 billion daily views. That’s 4x as much as a year ago. In the first quarter, we added new capabilities to video editing, and we are continuing to invest in making Shorts a fantastic experience for creators and viewers alike.”
CFO Ruth Porat said on the analyst call that YouTube experienced “modest growth” mostly in direct response ads. However, they are excited to tap into the shift to streaming and reach new audiences in smarter and more efficient ways.
“Over 135 million people in the U.S. were reached via YouTube on connected TVs in December. We’ve recently rolled out new tools to help advertisers consistently plan and measure their CTV spend across platforms. And later this year, in partnership with Nielsen, we’ll help brands directly compare their YouTube reach to linear TV, including the ability to measure co-viewing.”
Meta is breathing a sigh of relief as its daily active users, which declined in the fourth quarter for the first time, bounced back a bit. The reported earnings for the first quarter topped analysts’ estimates even as revenue was disappointing. Meta’s quarterly revenue rose by 7%, missing analysts’ 7.8% expectation. As reported by Axios, with current growth levels, Zuckerberg said,
“We are now planning to slow the pace of some our investments.”
He further added the company would focus on growing revenue from its core business, social media and messaging, to help fuel investments in its virtual reality technologies moving forward.
Meta cited a decline in ad revenue due to the Russian war on Ukraine, in the same way, that its competitors Snapchat and YouTube did. Its increased DAUs and lower-than-expected ad revenue are due to Meta’s apps growing in Asian markets, where the cost of advertisements is lower than in the U.S. and Europe.
The results as reported by CNBC.
- Revenue: $27.91 billion vs $28.2 billion expected, according to Refinitiv
- Daily Active Users (DAUs): 1.96 billion vs 1.95 billion expected, according to StreetAccount
- Monthly Active Users (MAUs): 2.94 billion vs 2.97 billion expected, according to StreetAccount
- Average Revenue per User (ARPU): $9.54 vs. $9.50 expected, according to StreetAccount
- Ad impressions and price per ad – In the first quarter of 2022, ad impressions delivered across our Family of Apps increased by 15% year-over-year and the average price per ad decreased by 8% year-over-year.
Late in the quarter, Horizon Worlds, Meta’s social VR app, began rolling out in-app purchases. This won’t impact the platform’s performance much if the platform doesn’t attract a significant number of users. Soon, Meta will roll out a web version of Horizon Worlds to make it easy for people to experience Metaverse without headsets. Zuckerberg said that “Horizon is the centerpiece of the company’s strategy to develop the metaverse.”
Meta faces competition from TikTok as it aims to overtake the platform as the leader in short-form video and the company plans to use artificial intelligence more actively to recommend content to users instead of just showing them posts by their friends and family.
The macroeconomic factors will also impact revenue. The company expects a sequential decline in MAUs in Europe in the next quarter because of the government ban in Russia. Also, recent changes in Apple’s iPhone operating systems and inflation could impact digital ads too.
On the earnings, Chief Operating Officer Sheryl Sandberg explained their ad strategy.
“It’s focused on three main areas: one, growing video monetization, especially short-form video like Reels; two, evolving our ad systems to do more with less data; and three, investing in AI and machine learning to support our ads infrastructure.”
She also told the analysts that they have “been able to close a good part of the underreporting gap and shared that with advertisers, but the rest of the gap will take us longer to close.”
In the not too distant future, Twitter’s public company status will soon change to a private company run by Elon Musk. Meanwhile, it remains publicly traded, and the social media platform recently published its first-quarter earnings, showing a degree of transparency into its operation.
It also corrected previously reported mDAU numbers that overcounted some accounts from Q1 2019 through Q4 2021. In the quarter that was involved with the error, Twitter reported roughly 1.4 million to 1.9 million extra mDAUs per quarter. Twitter said the error was caused by a new feature that allows users to easily switch between their separate accounts. The company explained that as a result, during that period, all linked accounts were counted as mDAUs if their primary account took action.
Advertising is the major source of revenue for Twitter and this metric was designed to help advertisers know how many people on the platform could potentially be targeted with their marketing messages over a given period of time.
- Revenue reached a total of $1.2 billion, up 16% from the revenue figures last year.
- Advertising revenue amounted to $1.1 billion, up 23% from last year.
- A one-time gain of $970 million from the sale of its stake in MoPub.
- Monetizable Daily Active Users (mDAUs): 229 million vs 226.9 million expected, according to StreetAccount
In light of the acquisition, the company canceled the usual earnings conference and did not provide forward-looking guidance. It is expected that Musk’s deal to acquire Twitter to close this year.
Musk has indicated he wants to use Twitter’s ownership to promote openness, both in terms of transparency in its algorithms and processes and by being more tolerant of different viewpoints. As a result, advertisers have mixed reactions and are uncertain of the future post Musk takeover.
Twitter has assured advertisers that it will be a safe place post takeover too. Advertisers currently have adopted a ‘ wait and watch ’ policy.
Amazon reported slow growth rates and gave a revenue forecast that trailed analysts’ estimates. Revenue in the first quarter increased 7% compared with a 44% expansion in the year-ago period. In a statement, CEO Andy Jassy said that the company is transforming itself to meet the ongoing challenges of supply chain pressures, inflation, or Ukraine invasion after rapidly growing during the early days of the pandemic.
“The pandemic and subsequent war in Ukraine have brought unusual growth and challenges. Today, as we’re no longer chasing physical or staffing capacity, our teams are squarely focused on improving productivity and cost efficiencies throughout our fulfillment network. ”
- Revenue: $116.44 billion vs. $116.3 billion expected, according to Refinitiv
- Amazon Web Services: $ 18.44 billion vs. $18.27 billion expected, according to StreetAccount
- Advertising: $7.88 billion vs.$6.4 billion a year earlier.
Amazon’s ad business was another bright spot. Amazon’s Q1 ad revenue advertising revenue was up 25% year over year, and that’s a strong run rate compared to the revenue growth rate. Brian Olsavsky, Chief Financial Officer of Amazon said,
” So a strong quarter and continue to roll out new and new products for sellers to manage their advertising and increase the ability to analyze and calculate the payback on marketing investments with us.”
Adweek reported Amazon’s ad business appears to have eclipsed YouTube in overall size and [is] nearly one-third the size of Facebook. Advertisers—even those who don’t sell products on Amazon—are wise to pay attention to Amazon Advertising offerings, including those related to streaming TV and its Freevee [video-on-demand] service.
“The first quarter of 2022 proved more challenging than we had expected,” said Snap CEO Evan Spiegel.
The company missed Wall Street’s expectations for profit and sales and forecast disappointing revenue growth in the current quarter. However, daily users grew 18% annually, more than expected. Revenue from Dynamic Ads more than tripled year-over-year, as more advertisers leverage their product catalogs to automatically create ads in real-time.
Spiegel attributed Snap’s problems during the quarter to macroeconomic conditions, as well as advertisers who canceled campaigns after the Russian invasion of Ukraine in February.
Below are key numbers by CNBC
- Revenue: $1.06 billion versus $1.07 billion expected, according to Refinitiv
- Global Daily Active Users (DAUs): 332 million versus 330 million expected, according to StreetAccount, up 18% year-over-year
Average Revenue per User (ARPU): $3.20 versus $3.25 expected, according to StreetAccount, up 16.8% year-over-year
Even though Snap’s revenue increased 38 percent year over year, the company reported a higher net loss and a less free cash flow during the quarter ended March. Snap CFO Derek Andersen said,
“In addition to these ongoing platform-related headwinds, supply chain shortages and labor disruptions, rising inflation, and geopolitical unrest, are presenting challenges for a wider array of industry verticals than in the prior quarter.”
He also added that they may continue to face the challenging situation in the future leading to further campaign pauses or advertiser budget reductions. Snap is also facing challenges related to Apple’s 2021 privacy change that makes it harder to target and measure ads on iPhones. In fact, Andreasen said that the company developed a tool to improve the issue that now accounts for 90% of direct response advertising income.
As for content, Snap reported that total time spent in Spotlight, a TikTok-style user-generated content area, rose 230% year-over-year in Q1. The company said six Discover media partners reached over 100 million global viewers each in the quarter and over 10 million viewers have watched “Breakwater,” its new original series that featured episodic AR Lenses sponsored by Verizon.
Microsoft released its Q3 earnings report. The company’s posted double-digit growth yet again. Microsoft’s revenue increased by 18% and the profit represents an 8 percent jump Y-o-Y. Search and news advertising revenue excluding traffic acquisition costs increased by 23%. LinkedIn is experiencing dramatic growth. Microsoft is crediting a chunk of this quarter’s growth to its cloud segment.
Xbox hardware revenue was up 14 percent, with a 4 percent jump for Xbox content and services revenue. It is driven by growth in Xbox Game Pass subscriptions and first-party titles for an overall 6 percent boost for gaming revenue to $3.74 billion. In an earnings call, the company said 10 million people have now streamed games from Microsoft’s cloud.
- Microsoft reported revenue of $49.4 billion, vs. $49.05 billion as expected by analysts.
- Net income was $16.7 billion and increased 8% GAAP.
- The company combines search and news advertising. That revenue was $2.9 billion in Q3 2022 vs. $2.4 billion in Q3 2021.
- LinkedIn revenue grew to $3.4 billion, up 34% from $2.6 billion a year ago. LinkedIn advertising revenue was up 61% Y-o-Y
These earnings didn’t indicate Microsoft’s purchase of Activision Blizzard, which will make it the world’s third-largest gaming company, behind Tencent and Sony – it won’t close until next year.
Next quarter, Microsoft says to expect more revenue growth — though now single-digit growth in some businesses and expect minimal impact on operating expenses from the war in Ukraine. Gaming revenue is expected to decline. Microsoft CFO Amy Hood warned that Chinese production shutdowns could affect future hardware sales, including “constrained console supply.”
- Neha Mehta
- Neha started her journey as a financial professional but soon realized her passion for writing and is now living her dreams as a content writer. Her goal is to enlighten the audience on various topics through her writing and in-depth research. She is geeky and friendly. When not busy writing, she is spending time with her little one or travelling.
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