Q1 financial results: all major companies at a glance
The Q1 financial results have been released this week by all major IT and Social Media companies, making it clear that while the revenues have been strong, the post-pandemic landscape raises questions regarding users’ acquisition and engagement challenges. This is a summary of all the major reports:
Google parent Alphabet Inc. announced record profits for a third straight quarter during the pandemic. The tech giant reported net income of $17.93 billion, compared with net income of $6.84 billion in the year-ago quarter.
Revenue after removing traffic-acquisition costs increased to $45.6 billion from $33.7 billion in the year-ago period, while overall revenue soared 34% to $55.3 billion.
Search was the big breadwinner, with $31.9 billion in sales, compared with $24.5 billion a year ago. YouTube ad sales jumped 49% year-over-year to reach $6 billion.
The most notable improvement however was recorded in the company’s cloud results. Google Cloud grew from $2.777 billion in revenue and an operating loss of $1.73 billion in the year-ago quarter to revenues of $4.047 billion and an operating loss of just $974 million.
According to Bloomberg, Google is also saving 1 billion USD per year, by having people working from home and not travelling.
MICROSOFT
Microsoft met analysts’ sales expectations and beat profit estimates, even though there was some skepticism about one-off benefits included in the results.
Net income for the third quarter ended March 31 jumped 44% to $15.5 billion, while revenue reached $41.7 billion versus the estimated $41.03 billion.
Microsoft’s solid financial performance was driven by Office 365 and Azure cloud services revenue. The company’s cloud solutions generated $17.7 billion in commercial cloud revenue, up 33% YoY.
Microsoft reaches 1.3 billion Windows 10 users
Following its earnings call, Microsoft announced that it had added 300 million users in the last year. The software company that had celebrated surpassing 1 billion users in March 2020, revealed that it reached a new all-time high of 1.3 billion users.
AMAZON
Amazon continued to benefit from the world-wide increase of e-shopping during the pandemic with strong rise in sales and tripled profits reported for Q1. The report came in the same week as the other big platforms all reported strong sales during the pandemic. Amazon said the company expects the strong sales to continue at least for the next few months.
Revenue was up from USD 75 billion in Q1 last year to USD 108.5 billion. Profit was USD 8.1 billion, up from USD 2.5 billion a year ago.
CEO Jeff Bezos, who soon will change to the position as executive chairman, stressed the company’s streaming service Prime Video and webservice division AWS emphasizing that Amazon is also a content provider in the media business.
“As Prime Video turns 10, over 175 million Prime members have streamed shows and movies in the past year, and streaming hours are up more than 70% year over year,” he said.
He said AWS had grown in its first 15 years to deliver USD 54 billion annual sales “competing against the world’s largest technology companies.”
Bezos will be succeeded as CEO by AWS director Andy Jassy.
Facebook and Apple both reported quarter results above expectations but both of them with concerns for future worries. Facebook stressed Apple’s new privacy-related software changes will make it more difficult to target advertising. Apple referred good results to interest in 5G iPhone upgrades but warned that the global chip shortage could cut iPads and Mac sales by several billion dollars.
Facebook has benefited from increase in digital ad spending for online shopping and higher ad prices. The company said it will focus on building e-commerce features to broaden revenue streams beyond advertising.
CEO Mark Zuckerberg said the company will focus on building augmented and virtual reality, e-commerce features and helping content creators earn money on Facebook’s platforms.
Total revenue, mostly ad sales, was USD 26.17 billion in the first quarter. First quarter net income was USD 9.5 billion compared with USD 4.9 billion a year earlier.
Monthly active users on Facebook was up 10% to 2.85 billion.
APPLE
Apple reported for the fiscal second quarter ended March 27 sales and profits were USD 89.6 billion and USD 1.40 per share. iPhones were the biggest driver of growth.
Apple said iPhone sales were USD 47.9 billion and sales of Macs and iPads were USD 9.1 billion and USD 7.8 billion.
The company has 660 million paying subscribers on its platform, up from the 620 million in the fiscal first quarter.
Pinterest’s quarterly results beat expectations concerning ad revenues, but the social site noted that user growth is slowing and engagement is lowering as a result of easing Covid-19 restrictions.
Monthly active users (MAUs) grew 30% to 478 million, disappointing markets that had predicted (FactSet) a 480.5 million MAUs and causing a 10% fall of the share price. Pinterest said it expects “flat” user growth in the U.S. market in the second quarter, from the year-ago period.
“We continue to navigate uncertainty given the ongoing Covid-19 pandemic and other factors,” the company wrote in a letter announcing its Q1 results.
“Starting in mid-March, the easing of pandemic restrictions slowed US MAU growth and lowered engagement year over year as people spent less time online,” Pinterest said. “In Q1, we saw good retention of the MAUs we gained during 2020, but we still don’t know if or how long this retention will last. Our understanding of future engagement levels is similarly limited.”
On the good news, the company reported revenue of $485 million for the quarter, up 78% compared with a year prior. Pinterest’s net loss shrunk 85% to $21.7 million, from a loss of $141.2 million a year ago.
NETFLIX
Netflix reported slowing number of people signing up for the streaming service. Markets had expected more and shares fell 11% after the announcement. The company said a lack of new shows and COVID-19 production delays was part of the explanation. However, it is also a fact that competition on the home entertainment market has been increasing during the pandemic with households having more and more alternatives to market leader Netflix.
The company said it expects continued slow customer growth with an additional 1 million new customers in the second quarter compared to previously predicted 5 million.
About 3.98 million people signed up for Netflix between January and March, well below expected 6 million.
The company reported 15.8 million new subscribers last year with Asia representing 9.3 million of them, up 65% compared to 2019.
Talking about the market and the stiffer competition, CEO Reed Hastings was quoted by news agency AFP saying:
“We had those ten years where we were growing smooth as silk. It is just a little wobbly right now.”
SPOTIFY
Spotify says it expects total premium subscribers around 162 million to 166 million for the second quarter with a total revenue in a Euro 2.16 billion to Euro 2.36 billion. Spotify launched its services in 86 new countries in the first quarter and reports that growth in the US, Mexico, Russia, and India offset lower-than-expected growth in Latin America and Europe.
Premium subscribers, which account for most of the company’s revenue, were up 21% to 158 million from a year earlier which was more or less as the markets had expected.
Spotify revenue was Euro 2.15 billion for the the first quarter and up from 1.85 billion euros a year earlier.
Total monthly active increased 24% to 356 million.
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