quarterly revenue

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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