More confirmation that, for the megatechs, the three months to September were pretty good – even discounting the growing concerns about Facebook.
Tuesday saw a trio of solid reports from Alphabet, Microsoft and Twitter which confirmed the quarter was pretty sweet.
Still to come Apple and Amazon in the next two days.
Revenues at YouTube, Alphabet’s (Google) gigantic video site again surged in the quarter, almost catching up with streaming video giant Netflix digital ad revenues growth again rebounded for the Google search business.
Alphabet’s report showed it rode continued the post pandemic momentum in digital advertising in the quarter, reporting total revenue of $US53.6 billion in the quarter, not counting traffic acquisition costs, up from $US37.1 billion a year earlier.
That made up most of the $US65.1 billion in total revenue for the whole business (including traffic acquisition costs). That was up 41% from a year earlier and means revenue for the whole group is running at near $US300 billion annual pace.
But YouTube’s revenues leapt 43% from the same quarter in 2020 to $US7.2 billion (from $US5.04 billion) just short of the $US7.48 billion reported by Netflix, which remains the largest revenue figure for a video related business in the quarter.
Alphabet is approaching a market value of $US2 trillion, with its shares reaching an all-time high of $US2,936 over the summer. The stock closed Tuesday at $US2,793.44, up a fraction. It has risen 57% in 2021 to date.
In the earnings release, CEO Sundar Pichai said the results stemmed from a commitment made five years ago to make artificial intelligence a bedrock of the company’s offerings. “This quarter’s results show how our investments there are enabling us to build more helpful products for people and our partners,” he said.
Google managed to avoid the impact of the privacy changes that Apple made to iOS 14 earlier this year. Snap and Facebook both mentioned the adverse impact of the change, which allows consumers to opt out of targeted ads on apps, as the main reason for business disruption during the period.
Google is more protected than those companies because it owns the Android operating system for mobiles.
Facebook shares fell near 4% in regular trading on Tuesday while Google shares eased a touch in after-hours trading as investors generally liked the results.
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Meanwhile Twitter said the Apple changes didn’t have the big impact in the quarter that many analysts had feared. The company’s results were skewed by the impact of a one time legal cost of $7US66 million related to an $US809.5 million settlement the company announced in September for allegedly misleading investors about user growth.
Because of the legal settlement, Twitter reported a net loss of $US537 million, compared to a profit of $US29 million a year ago. That was on revenue growth of 37% in the third quarter to $US1.284 billion.
Twitter’s total number of daily users grew by 5 million from the second quarter to 211 million. The user base was up nearly 13% from a year ago.
Twitter shares were up nearly 4% in after-hours trading on the comments about the limited impact of the Apple privacy changes. They had been down 1% in the regular session.
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Earlier Microsoft revealed stronger than expected figures for the quarter. Total revenue climbed almost 22% year over year to $US45.32 billion.
That’s the fastest growth since 2018. Revenue grew 21% in June quarter.
Microsoft reported a 48% leap in net profit to $US20.5 billion in net income.
Microsoft’s Intelligent Cloud segment, which comprises the Azure public cloud, enterprise services, GitHub, SQL Server, System Center, Visual Studio and Windows Server, delivered $US16.96 billion in revenue, which was up 31% from the same quatrer in 2020.
The Productivity and Business Processes unit, which includes Dynamics, LinkedIn and Office, contributed $US15.04 billion in revenue, up 22%
The company’s More Personal Computing business, which includes Windows, devices, gaming and search advertising (for Bing), posted $US13.31 billion in revenue, up 12%.
Microsoft shares rose 0.7% after the results were released.
That saw them edge above $US2.31 trillion in market value. Google was just over $US1.85 trillion and Twitter was valued at just under $US50 billion – a tiddler.
Netflix’s value was just under $US300 billion at the close on Tuesday, more a toddler than a tiddler compared with the valuations for Google and Microsoft. Facebook’s value slipped under $US930 billion – still a giant, but on the nose.
