30th October 2020
Alphabet, Amazon, Facebook, Twitter and Snap have released their Q3 earnings. Here are the headlines.
Alphabet: Google’s parent Alphabet reported a 14% YoY increase in revenue to $46.2bn, far more than analysts expected and a reversal of its first ever revenue decline in Q2. Google’s total Q3 advertising revenue was $37.1bn, of that, YouTube ad growth was particularly strong at $5.04bn up 32% YoY and the company’s “Search and Other” advertising category also showed growth of 6% YoY. Google Cloud revenue was $3.44bn vs expected $3.31bn and “Google other revenues” (which includes hardware, Play Store, and non-advertising YouTube revenues) reported $5.48bn vs $4.05bn in the same quarter last year.
Amazon: More astonishing results from Amazon this quarter. The company reported a 37% jump in revenue YoY to $96.1bn and profits hit a record $6.3bn, nearly three times last year's total. The rise was driven by its e-commerce business, as people increasingly turned to online shopping. This demand is expected to continue through the holiday season, as Amazon gave revenue guidance in the range of $112bn to $121bn, above analyst expectations of $112.7bn. The company's ‘other’ segment which is mostly advertising business reported $5.4bn in sales, a 51% YoY increase and its cloud computing business (AWS) also saw significant gains, up 29% to $11.6bn. The growth has not come without cost as Amazon said it had $2.5bn in Covid-related expenses in Q3 and expects to spend another $4bn in Q4.
Facebook: Facebook also exceeded expectations with its Q3 earnings, with revenue of $21.5bn (vs $19.8bn expected), up 22% YoY. Facebook notes that the pandemic has accelerated the shift of commerce to online which led to an increase in demand for its advertising services. Its Daily Active Users (DAUs) were also up 12% YoY to 1.82 billion. For Q4, YoY ad revenue is expected to grow further and Oculus Quest 2 orders are expected to benefit other revenue earnings.
Snap Inc.: Snap’s Q3 revenue smashed analysts’ expectations. Revenue increased 52% YoY to $679mn beating estimates by more than $100mn. Daily Active Users (DAUs) increased 18% YoY to 249 million which was also up nearly 4% from the 238 million the company reported in July. Much of the growth in DAUs came from Snap's international presence outside of North America and Europe as Snap saw 43% year-over-year growth in ‘rest of world’. The platform also saw increased engagement in key markets with the average number of Snaps created every day growing 25% YoY.
Twitter: Twitter’s revenue also beat expectations, reaching $936mn in its Q3 earnings, almost $150mn more than expected and up 14% YoY. The increase in revenue is due to increased ad revenue which grew 15% despite a decline in ad spending earlier this year. Average mDAUs (monetizable daily active users) was at 187 million for Q3, up significantly compared to 145 million in the same period last year, however this fell short of the 195 million mDAUs analysts predicted.
Q3 earnings from all of these companies have exceeded many analysts’ predictions, with results that reflect how people around the world have increased their usage of these platforms and services during the pandemic and how the shift of commerce from offline to online has accelerated. As ecommerce booms, so does the demand for their advertising services.