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
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.
Read More: Google Integrates Gemini AI Into Search Ads Platform
META
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.
AMAZON
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.
Read More: Amazon and Reach Partner for Targeted Ads Ahead of Third-Party Cookie Phase-Out
MICROSOFT
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.
Read More: Vodafone and Microsoft Sign 10-year Strategic Partnership for IoT, Cloud, AI and More
APPLE
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
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.
Read More: Decoding Big Tech Giants Quarterly Results: Insights Await!
Decoding Big Tech Giants Quarterly Results: Insights Await!
Big tech companies recently released their quarterly results for Q3 2023. Here are some key insights for industry enthusiasts.
ALPHABET
Alphabet, the parent company of Google, released third-quarter earnings that were above analyst projections. The business was satisfied with the quarterly results. The tech giant credited Cloud, YouTube, and Search for the overall boost. Out of all three, Search continued to be the key driver of their revenue expansion. However, Google’s Cloud business division failed to meet its revenue projections. Since Q1 of 2021, this has been the slowest documented growth in the Cloud business.
Because of this, Alphabet keeps investing in the cloud industry, which is growing in significance as generative AI emerges. YouTube’s advertising income exceeded experts’ forecasts thanks to increases in direct response and brand awareness. This is attributed to Shorts, the TikTok competitor of YouTube with 70 billion views every day.
By the numbers
- Revenue reported was $79.69B, up 11%.
- Google Search and other advertising revenues were $44B, a rise of 11% Y-O-Y.
- Google Cloud computing revenue rose 22% to $8.41B against estimates of $8.64B.
- Advertising revenue was up 9% to $59.6B as against an estimated $59.1B.
- YouTube advertising revenue reported $8B, up 12% Y-O-Y.
- Network advertising revenue was down 3% to $7.7B.
- Traffic acquisition costs were up $12.64B vs estimates of $12.63B.
- Search ad revenue was up 18%.
Google disclosed its quarterly results in the middle of its antitrust lawsuit. Government authorities claim Alphabet uses unlawful monopolistic methods to maintain control over its search engine. Additionally, it’s predicted that more advertisers will spend money on Google advertisements, which could lead to increased rivalry among them. In addition, Google keeps funding its attempts to develop Generative AI in an attempt to overtake its rivals.
Sundar Pichai, CEO of Alphabet, said in the earnings call,
I’m pleased with our financial results and our product momentum this quarter, with AI-driven innovations across Search, YouTube, Cloud, our Pixel devices, and more. We’re continuing to focus on making AI more helpful for everyone; there’s exciting progress and lots more to come.
Ruth Porat, President and Chief Investment Officer; CFO said,
The fundamental strength of our business was apparent again in Q3, with $77 billion in revenue, up 11% year over year, driven by meaningful growth in Search and YouTube, and momentum in Cloud. We continue to focus on judicious capital allocation to deliver sustainable financial value.
META
In terms of earnings and revenue, Meta exceeded the third-quarterly results. This was attributed to the increase in digital advertising spending. Exceeding expectations, the results showed the fastest growth rate, with revenues rising by 23%. Additionally, the company’s user base has grown in the face of fierce competition from rivals such as TikTok.
As its clients recover from a challenging 2022, Meta is witnessing faster growth in its core digital ads businesses. Right now, Meta’s business is doing better than its rivals. Its recovery can be largely traced to increasing the impact of its online ads. Additionally, Meta has cited its significant investments in AI as a crucial technological advancement that has enabled it to attract businesses seeking to serve clients with tailored incentives.
By the numbers
- Revenue rose 23% to $34.15B.
- Facebook DAUs were 2.09 billion on average, a 5% increase Y-O-Y.
- Facebook MAUs were 3.05 billion, an increase of 3% Y-O-Y.
- Family Daily Active People (DAP) was 3.14 billion on average, up 7% Y-O-Y.
- Family Monthly Active People (MAP) was 3.96 billion, higher by 7% Y-O-Y.
- Ad impressions across all Meta apps increased 31% Yo-Y and the average price per ad was down 6%.
Meta anticipates its spending in 2024 will exceed that as it continues to invest in AI infrastructure. Meta expressed a distaste for falling behind in the race towards generative artificial intelligence. To boost engagement, the internet giant intends to roll out AI-powered avatars on Facebook and Instagram. Users may be able to engage with the platform in new ways, receive recommendations, and do more with these identities.
Susan Li, Meta’s Chief Financial Officer stated that for Reality Labs, Meta’s augmented reality and virtual reality division, the company expects operating losses to increase meaningfully Yo-Y due to its ongoing product development efforts and investments to further scale the ecosystem.
Mark Zuckerberg, Meta founder and CEO said in the announcement,
We had a good quarter for our community and business. I’m proud of the work our teams have done to advance AI and mixed reality with the launch of Quest 3, Ray-Ban Meta smart glasses, and our AI studio.
MICROSOFT
Microsoft released the first quarterly results of its 2024 financial reports, and the company was off to a great start to the fiscal year. The favorable outcomes were ascribed to Microsoft Cloud’s strength, which outperformed analyst predictions. Microsoft completed its $68.7 billion acquisition of Activision Blizzard, a publisher of video games, earlier this month.
Microsoft claims to have the greatest AI infrastructure and the widest cloud footprint. Furthermore, compared to other cloud providers, it has more regions where AI services are installed. Furthermore, while search income growth was still influenced by third-party agreements, the rise in search and news advertising revenue was linked to higher interaction on Bing and Edge.
By the numbers
- Revenue recorded $56.5, higher by 13%.
- Microsoft’s Intelligent Cloud Unit revenues were $24.3, up 19% beating estimates of $23.4B.
- Azure revenues rose 29% against an estimated 26.2%.
- LinkedIn’s revenue increased by 8%.
- Microsoft Cloud Revenue was $31.8B, up 24%.
Microsoft is still dedicated to making investments in the cloud and AI potential. In order to increase consumer productivity, it is concentrating on quickly integrating AI into all facets of its technological and business processes. In addition, it will maintain strong growth in the upcoming year thanks to its leadership in the commercial cloud and AI platform wave.
Satya Nadella, CEO of Microsoft said,
With copilots, we are making the age of AI real for people and businesses everywhere, we are rapidly infusing AI across every layer of the tech stack and for every role and business process to drive productivity gains for our customers.
Amy Hood, Chief Financial Officer, Microsoft, commented,
We saw healthy renewals, particularly in Microsoft 365 E5, and the growth of new business continued to be moderate for standalone products sold outside the Microsoft 365 suite. In Azure, as expected, the optimization trends were similar to Q4. Higher-than-expected AI consumption contributed to revenue growth in Azure.
Read More: Delve Into What the Quarterly Results For Big Tech Titans Are Saying
AMAZON
Amazon outperformed analysts’ expectations and exceeded its own projections for the third quarter. Growing online sales in its retail section and significant cost reductions drove growth. Additionally, a notable increase in advertising revenue and growth in its cloud business, which kept stabilizing, were its main drivers. According to Amazon, the increase in AWS revenues of over $900M was offset by customers’ shifting focus towards fostering innovation and delivering new workloads to the cloud.
Amazon is still concentrating on buyer behavior and customer happiness. Thanks to the Prime Day event, when over 375 million goods were purchased globally by Prime members, Q3 revenues increased 11% YoY. The company’s introduction of generative AI capabilities into its products and services compensated for the decline in advertising revenue. Demand for daily necessities in areas like health, beauty, and personal care has remained high on Amazon.
By the number
- Revenue posted $143.1B, up 11% Yo-Y vs analysts’ expectations of $141.41B.
- AWS revenue was $23.1B, higher by 12% Yo-Y.
- Advertising sales jumped to $12B, rising 26%.
In addition to warehouse robots, which were already a prominent business for the corporation, Amazon continues to make large investments in generative AI. Further, AWS and Anthropic, Amazon’s generative AI, will work together on future advancements in AWS Trainium and AWS Inferentia chip technology, according to CEO Andy Jassy of Amazon. He thinks that the partnership will support the ongoing acceleration of the benefits to customers in terms of pricing and performance.
Amazon chief executive Andy Jassy said,
We had a strong third quarter as our cost to serve and speed of delivery in our Stores business took another step forward.
Brian Olsavsky, Amazon’s Chief Financial Officer added,
We’re ready to make this a great holiday season for customers. Overall, consumers have shown resilience in their spending despite rising interest rates and stubbornly high inflation that has steadily eased since last year. Amazon said Thursday its retail business grew by 6% during the third quarter. It was boosted by the company’s popular Prime Day sales event held in July. It’s also seeing strong customer demand across categories like beauty, health, and personal care items. But we still see customers being cautious about price, trading down where they can and seeking out deals.
He further added that as Amazon enters the holiday season, its operations network and inventory are in the optimal position like never before.
SNAP INC.
Snap INC. reported the third-quarterly results of 2023 and numbers that were better than anticipated by Wall Street. Its ad platform enhancements were the cause of the improvement in outcomes. For quite some time, Snap’s company has been in turmoil. This is because of TikTok’s rivalry, Apple’s modifications to iOS’s ad tracking, and a number of other issues. It was encouraging to see sales rise again. Moreover, Snap improved the ML ranking and optimization for the web, app, and Dynamic Product Ad (DPA) platform by implementing over 17 significant changes.
By the numbers
- Revenue posted $1,19B, up 5% from estimates of $1.11 B.
- DAUs 406 million, high 12% (43 million) Yo-Y.
- Snapchat+ reached more than 5 million subscribers.
By concentrating on investing in ML models to enhance content ranking and personalization across all content offerings, Snapchat is aiming to increase the depth of engagement with its content. Additionally, it will keep utilizing AI technology to provide the community with new services and goods. In addition, the business declared that over 200 million users have sent over 20 billion messages on My AI since its debut.
Evan Spiegel, CEO of Snap INC. said in the earnings call,
Our revenue returned to positive growth in Q3, increasing 5% year-over-year and flowing through to positive adjusted EBITDA as our reprioritized cost structure demonstrated the leverage in our business model. We are focused on improving our advertising platform to drive higher return on investment for our advertising partners, and we have evolved our go-to-market efforts to better serve our partners and drive customer success.
OMNICOM MEDIA GROUP
Beyond estimates, Omnicom revealed remarkable revenue growth in the 2023 third quarterly results. With consistent growth in media, advertising, and precision marketing, the business is still on track for the entire year. The outcomes follow significant recent victories, like the $600 million Uber media contract, which was transferred from competitor WPP to Omnicom Media Group in September.
With the release of Omni Assist, Omnicom’s customized version of ChatGPT that improves every task with Omni, it continues to develop its Generative AI capabilities. In addition, it keeps evaluating how Generative AI will impact Omnicom’s operations throughout the entire company and plans ahead.
By the numbers
- Global revenue reported $3.58B, a high of 3.3% or $113.1M organically.
- Advertising and media posted a 6.1% growth to $1.9B.
- Public Relations was down 5.5% against 12.6% delivered in Q3 2022.
- Third-party service costs increased $90.6M or 15.4% to $678.6M organic growth.
Omnicom is confident that its clients will receive the greatest creative skills and capabilities from the newly established Omnicom Advertising Services.
John Wren, Chairman and Chief Executive Officer of Omnicom stated,
We are pleased with our strong organic revenue growth of 3.3%, with notable performances in our Advertising and media, Precision Marketing, and Healthcare disciplines. Our year-to-date organic growth of 4.0% remains in line with our full-year expectations, which reflects the resiliency of our business even in periods of economic uncertainty. Omnicom continued to post strong profitability and earnings growth in the quarter, and our recent business wins validate the benefits of our client strategy in this rapidly evolving marketplace. We are very well positioned for a recovery in business conditions, with a strong balance sheet and leading creativity in all of our service disciplines.
Read More: OMG’s Rudra Khanna on Navigating Marketing’s Dynamic Landscape
Delve In What the Quarterly Results For Big Tech Titans Are Saying
The quarterly results for big tech companies are out. Here are some key takeaways for advertisers and marketers.
Microsoft
Microsoft’s fiscal year has been challenging on many fronts. The acquisition of Xandr, the ad-buying platform, and the increase in search volume revenues failed to produce satisfactory results, making Microsoft miss the mark in Q4. With continuous commitments to investing in artificial intelligence technologies, analysts predicted the quarter to be successful for Microsoft. The company attributed stagnant growth to a decline in advertising spending, which was lower than a quarter on quarter.
Its Talent Solutions contributed to the company’s revenue growth exceeding expectations. Despite the increased revenue, Microsoft reported a reduction in numbers due to low ad spending. The tech giant concluded it was due to marketing solutions decline. LinkedIn’s revenue increased due to growth in Talent solutions. Microsoft Cloud showed promising growth in all of its businesses with improvements in its verticals. Search and news advertising went up with the Xandr acquisition.
By the numbers:
- Revenue was up by 8% increasing to $56.2 billion.
- Advertising and news search revenues up to $86 million, a 3% increase including traffic acquisition cost, 8% increase excluding traffic acquisition cost.
- Azure Cloud revenue growth slowed from 27% to 26%.
- LinkedIn revenue increased by 5%.
- Microsoft Cloud’s quarterly revenue was 21% or $30.3 billion YoY.
Currently, the company is prioritizing developing and spearheading safe generative AI models and practices. Their aim is to help customers use Microsoft Cloud to make the most of their digital resources and drive operations control.
Satya Nadella, Chairman and Chief Executive Officer, Microsoft stated in the Q4 results announcement,
We remain focused on leading the new AI platform shift, helping customers use the Microsoft Cloud to get the most value out of their digital spend, and driving operating leverage.
Amy Hood, Executive Vice President and Chief Financial Officer at Microsoft cited,
Advertising spend was slightly lower than anticipated which impacted Search and News advertising and LinkedIn Marketing Solutions. For LinkedIn, we expect revenue growth in the low to mid-single digits.
She further added,
Even with share gains in our hiring business, growth will continue to be impacted by the overall markets for recruiting and advertising, especially in the technology industry where we have significant exposure.
Meta
Meta produced results in Q2 that exceeded analysts’ expectations. Revenues from advertising rose robustly. The revenue uptick signaled the social giant’s ad business recovery after previous years of gloom and cross-border concerns. Meta cited the increase in DAUs for Reels, the company’s short-form video content app. This attracts 200 billion people to Facebook and Instagram. The app also generated $10 billion annually, which is a $3 billion increase Q/Q.
The company credits the increase in ad revenues to Threads, the text-based app, and continued investment in artificial intelligence. The company ascribed the increase in ad impressions to a heightened focus on TikTok’s rival Reels and AI-driven products as the key factors in the positive outcome. Meta commits to AI advancements and data centers. The CEO has also highlighted AI as the focal point of Meta’s growth strategy. He predicts revenue from AI-powered structures for marketers, AI chat agents, and productivity tools for employees.
By the numbers:
- Revenue up to $32 billion, up 11%.
- Facebook DAUs are 2.06 billion on average, an increase of 5% year over year.
- Facebook’s MAUs of 3.03 billion increased by 3% year-over-year.
- Family daily active people (DAP) 3.07 billion on average, 7% up Yo-Y.
- Family monthly active people (MAP) 3.88 billion and 6% higher Yo-Y.
- Ad impressions in Q2 2023 increased 34% year-over-year and the average price per ad decreased 16% Yo-Y.
Susan Li, Meta’s Chief Financial Officer however stated that their ongoing commitment to invest in Reality Labs, Meta’s unit for metaverse-related initiatives negatively impacted their results. However, it will not hamper their ambition to spearhead metaverse developments.
Mark Zuckerberg, CEO of Meta added,
We had a good quarter. We continue to see strong engagement across our apps and we have the most exciting roadmap I’ve seen in a while with Llama 2, Threads, Reels, new AI products in pipeline, and the launch of Quest 3 this fall.
Alphabet
Alphabet, Google’s parent company overcame its advertising slump in the Q/Q, signaling a return to momentum with favorable results. The revival of their revenue graph was needed to reshape the competitive AI technology landscape. The Q2 results erased concerns about Google losing digital ad prowess to AI advancements on the financial forefront.
The company attributed the overall growth to increasing Google Cloud Services demand, which is anticipated to adopt AI as it advances. The rise in revenues can be traced to costs from YouTube subscriptions and the Pixel family’s content acquisition. YouTube witnessed a surge in stabilized ad spending despite competition from TikTok. Google Cloud revenues were up due to its AI-optimized structure which piqued consumer interest.
By the numbers:
- Revenue was $74.6 billion, up 7%.
- Ad sales rose 3% to $58.1 billion.
- YouTube revenues increased by 4% to $77 billion driven by brand advertising.
- Network advertising revenues were down 5% at $7.9 billion.
- Google Search and other advertising revenues were up 5%, to $42.6 billion.
- Google Cloud revenues are up 28%, at $23.5 billion.
Alphabet is certain that the money needed to finance AI advancements will come from Google’s advertising engine. As such, Google has predicted that it will face more difficulties not only from rivals like ChatGPT, Microsoft, and Bing but also from Amazon’s shopping unit and TikTok and Reddit in trending topics. As part of its efforts to strengthen cybersecurity capabilities, search, and advertising capabilities, the CEO mentioned that AI would be integrated across its product groups.
Sundar Pichai, CEO, said in the announcement,
There’s exciting momentum across our products and the company, which drove strong results this quarter. Our continued leadership in AI and our excellence in engineering and innovation are driving the next evolution of Search and improving all our services.
CFO Ruth Porat commented,
We expect elevated levels of investment in our technical infrastructure, increasing through 2023 and continuing in 2024. The primary driver is to support AI opportunities across Alphabet, including investments in GPUs and proprietary TPUs, as well as data center capacity. With all that said, we remain committed to durably re-engineering our cost base to help create capacity for these investments in support of long-term, sustainable financial value.
Amazon
Amazon released its second-quarter earnings, and the numbers were impressive. According to CEO Andy Jassy, Amazon saw developments in areas they had been steadily advancing in for the past quarters. The e-commerce giant attributes its revenue growth to the rise in price points, selections, and convenience available to its consumers. Amazon continues to see strong demand for everyday essentials, positive feedback from customers, and updates to its website, mobile apps, and customizations.
AWS growth stabilized in Q2. Moreover, it continues to grow with customers, partner networks, functionality, and operational presentation. AWS revenues were twice as high as any other provider. Amazon is constantly working to further AWS technologies and features to aid customers in leveraging generative AI, productivity, and security. Ad revenue increased due to performance-based advertising efforts, improved customer relevance of ads, and ML benefits to understand ROI and ad spending for brands.
By the numbers:
- $134.4 billion revenue, an increase of 11% Y-o-Y vs estimates of $131.5 billion by Refinitiv analysts.
- Advertising revenue is up 22% Yo-o-Y, to $10.68 billion.
- AWS sales revenue growth of 12% Yo-Y to $22.1 billion.
- Subscription service revenues including Prime memberships were up 14%, at $9.8 billion.
Amazon is currently working on enhancing Machine Learning models to help marketers access audiences that were difficult to reach with Amazon ads. During an AWS event in New York, Amazon also committed to enhancing generative AI-powered applications with the latest and improved pre-trained large language models (LLMs).
CEO Andy Jassy mentioned in the earnings call,
As the economy has been uncertain over the last year, AWS customers have needed assistance cost optimizing to withstand this challenging time. They have also needed assistance reallocating spending to new initiatives that better drive growth. We’ve proactively helped customers do this.
Apple
Apple reported their results for the third quarter that were better than their expectations, however, revenue was down Yo-Y. The company attributed the growth in its revenue to healthy iPhone sales across the world. Apple set an all-time high record for services revenues, including advertising, the app store, and music, exceeding its predictions. The slump in iPad sales revenue was accredited to the iPad Air launch in the prior year. They continue to invest in product enhancements to encourage customer satisfaction which was reported to be 98% across the U.S.
By the numbers:
- Revenue was $81.8 billion, down 1% Yo-Y.
- iPhone revenues are $39.7 down 2% Y-o-Y.
- $6.8 billion, down 7%, for Mac.
- iPad $5.6 billion, down 20%.
- Wearables home, and accessories revenues were $8.3 billion up 2% with expectations.
- Services revenue $21.2 acceleration of 8%.
Apple is releasing its most ambitious and advanced personal electronic device, the Apple Vision Pro early next year for ordinary consumers. It is currently only available to advertisers, content creators, etc for demo purposes and has received stellar reviews.
AI and machine learning will continue to be an integral part of product design. Apple is planning to introduce AI and ML-powered live voicemail in iOS 17. They have also invested in research into generative AI and continue to responsibly enhance their products with these technologies. This is with the goal of enriching people’s lives.
Tim Cook, Apple’s CEO said,
We are happy to report that we had an all-time revenue record in Services during the June quarter, driven by over 1 billion paid subscriptions, and we saw continued strength in emerging markets thanks to robust sales of iPhone. From education to the environment, we are continuing to advance our values, while championing innovation that enriches the lives of our customers and leaves the world better than we found it.
Luca Maestri, Apple’s CFO, further remarked,
Our June quarter year-over-year business performance improved from the March quarter, and our installed base of active devices reached an all-time high in every geographic segment.
Snapchat.INC
Snapchat reported its quarterly results and they were mixed. Although revenue was up Q/Q, it still saw a Yo-Y dip. Just like its competitors, Snapchat is grappling with a slump in advertising revenues. Snapchat also introduced an exciting and innovative AI feature a few months back to keep the platform happening and engaged. My AI, Snapchat’s AI chatbot is now integrated into group chats, recommendations, and ‘Lens’ suggestions.
By the numbers:
- Revenue was $1,068 million compared to $1,111 million the previous year
- DAUs 397 million, an increase of 50 million or 14% Yo-Y
- 4 million global users for paid subscriptions introduced in the previous year
This quarter, the social media company pledged to improve advertisers’ expectations through machine learning technology. It will do so to upgrade its framework, find creative approaches to measuring and optimizing ad spending, and encourage new leadership. Its continuous investment in ML infrastructure has improved company ranking and content personalization.
Snapchat believes that it will face healthy community growth in the next quarter with expected DAU increases of 405 to 406 million.
Evan Spiegel, Snapchat’s CEO said,
We are excited by the progress we have made delivering increased return on investment for our advertising partners, growing our community to 397 million daily active users, and reaching more than 4 million Snapchat+ subscribers.
Omnicom Media Group
Omnicom Media Group ended its second quarter of 2023 on a high note. The organic growth rate was up 3.4% compared to the previous quarter’s results, placing it within its projected range. Omnicom spearheads generative AI developments in the media business. Their ongoing strategic alliances with companies like Adobe, AWS (Amazon Web Services), and Microsoft help them do this.
The business has also promised to invest in media sales capabilities, environmentally friendly technology, and data from first parties. They are currently realigning their staff to match strategy choices and outlook.
By the numbers:
- 3.4% organic revenue growth in Q2 23, with $3,609.9 million revenue
- Advertising Media revenue growth was 4.2%, while organic growth grew by 5.1%
- Third-party costs which include supplier costs the company incurs when providing services to clients increased to $86.8 million
- Organic growth rate for Public Relations was up 0.1%, while execution & support decreased by 3.8%
John Wren, Chairman and CEO of Omnicom said in the announcement,
While the balance of the year will continue to see economic uncertainty, we are entering a dynamic and exciting new era for our company. Omnicom has secure leading positions in generative AI technologies and partnerships to deliver on our promise to achieve the best outcome for our clients and increase the operational efficiency of our company.
eBay
EBay has exceeded Wall Street’s expectations in all key metrics and delivered positive results. However, the marketplace’s weakened momentum among active buyers was worrying. Gross merchandise sales decreased also recorded.
In spite of this, the e-commerce marketplace believes that its increasing focus on AI integration into its platform will drive further user momentum. The company currently prioritizes laying a strong foundation for generative AI tools across the website to aid marketers and product listers.
By the numbers:
- Revenue was up to $2.51 billion, an increase of 5% from the previous year
- Advertising revenues were $367 million, up 33.5% Yo-Y.
- Promoted Listings revenue was up 47%, reporting $341 million
- The active buyer base declined by 4%
In the next five years, eBay plans to implement AI enhancements in every part of its organization. They are constantly integrating generative AI features into their site. They are also working towards reinventing the e-commerce landscape. Its work has already produced stellar results and hopes to deliver long-term results.
Jamie Iannone, CEO said,
The foundational work we’ve accomplished over the past 3 years has set us up for a new phase of innovation. Our teams are focused on thinking bigger and moving faster as we build game-changing features and functionality for customers to keep eBay at the forefront of eCommerce.
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