POV

POV: Quarterly Earnings Roundup

Background:

It’s the first quarterly earnings roundup of 2019 from the tech giants. Here’s what you need to know.

Details and Implications:  

Alphabet: Revenue for Q4 2018 grew 22% year-on-year from $32.32bn to $39.28bn beating Wall Street expectations of $38.9bn. Alphabet’s ad revenue was 83% of its revenue with sales rising at least 20% quarter on quarter for the last six quarters. Meanwhile, “other revenues” which includes apps, cloud software and devices, brought in $6.49bn. Despite strong revenue, fears over rising costs saw stock down slightly.

Facebook: Reported revenue for Q4 2018 of $16.9bn vs forecasted $16.39bn - a 30.4% increase year-on-year. Daily Active Users (DAU) and Monthly Active Users (MAU) both grew 9% to 1.52 billion and 2.32 billion respectively and Facebook now estimates 2.7 billion MAUs across its combined portfolio that includes Instagram, WhatsApp and Messenger as well as Facebook itself. Facebook estimates over 2 billion users interact daily with at least one of those platforms. There seems to be plenty of upside for advertising options on Facebook’s other properties. Speaking to the FT, Jim Cridlin, Global Head of Innovation at Mindshare said Facebook’s challenge was now to “monetise Facebook’s other assets without turning consumers off.”

Snap: Q4 reported revenue of $389.9m beat analyst predictions of $277.5m. Stock prices soared 18% in after-hours trading. The company maintained 186 million DAUs for the second quarter in a row but down 1m from the same period last year. Snap said it would be working on updating its Android app, which it hopes will attract back Android users who have struggled with the platform. Revenue outlook for Q1 is expected to be between $285 million and $310 million, up between 24% and 34% compared to Q1 2018.

Twitter: Q4 revenue of $909m, outperforming Wall Street expectations of $868.1m but stocks tanked 10% after announcing 20% increase in expenses in order to support and sustain its services and offerings in ‘health, conversation, revenue product and sales and platform.’ MAUs down from 326 million to 321 million - the third consecutive quarter of decline. Twitter announced it will no longer report MAUs and instead will report a new monetized metric, mDAU - monetized Daily Active Users, which are users who log into the platform and are able to view ads. While MAUs have been decreasing, Twitter’s DAUs were reported in actual figures for the first time - 126m - a change from reporting the usual percentage growth in DAUs.

Spotify: Reported revenue of $1.7bn for Q4 2018, slightly under predictions of $1.71bn for the quarter. Spotify says this is from its growing user base and its premium services. MAUs increased 29% year-on-year to 207 million, outperforming its guidance range of 199 million to 206 million users. Premium users also rose 36% to 96 million for the quarter. Stocks were down up to 7% after revenues rose less than expected.

Further Reading:

Business Wire |  CNBC | Business Insider | Facebook | Market Watch | Forbes | Financial Times