As the second quarter of the year ended, and some of the global biggest companies started to share their results for the period – some of them last week, while others are still waiting to share their numbers – let’s take a look at how the big techs performed in 2019’s Q2:
$33.72 reached vs. 32.77 expected. Yes: we are talking billions. Microsoft surpassed the market forecast for the company’s global revenue in this last quarter. In figures, this represented a 12% growth in sales. Bill Gates’ big tech also unveiled $13.2 billion in profit, exceeding the $9.4 bi the market was expecting.
The star of such impressive results was Azure: the cloud-computing product increased 68% compared to the same period of 2018, and, as announced by Microsoft itself, the intelligent-cloud unit, which includes Azure and other cloud-computing services, produced $11.4 billion in this quarter – about a third of the company’s overall revenue.
As the cloud-computing market grows, Azure’s good results play a special role in strengthening competition – especially against Amazon’s AWS. And the company is well aware of it. Last week, Microsoft announced a massive $1 billion investment in the AI research company OpenAI to partner with Azure, seeking to enhance the cloud-computing usage of artificial intelligence and broaden Azure’s presence.
Microsoft Teams is another of the company’s products experiencing a surge: The team collaboration software, competitor of Slack, recently announced the milestone of 13 million daily active users.
Google‘s parent company Alphabet reported revenue of $31.7 billion, excluding traffic acquisition costs, 20.8% more than the previous year and higher than the $30.84 billion that was expected by the market. In terms of profit, the number reached was $9.95 billion.
Google advertising remains the leading actor with revenue having reached $32.6 billion, in comparison to $28.1 billion in the same period last year. But the Q2 announcements are by far the least important of Google’s concerns, since the firm has been facing some antitrust investigations from the US government, who has been targeting big tech companies.
Covering about half of the US retail market, Jeff Bezo’s empire performed above market expectations and reached $63.4 bi in sales during the last quarter, a 20% increase over the previous year. The net income of $2.6 billion was the weakest since last year’s Q2 – but the reason for this decrease, as explained by the CFO Brian Olsavsky to investors, has nothing to do with any flaw in the business, but is due, quite the contrary, to a heavy investment of $800 million on reducing delivery for Prime members from two days to one, as reported by The Telegraph.
AWS, Amazon’s most lucrative business and global major cloud-computing company, generated $8.3 bi during the period, 37% more than 2018’s Q2. However, analysts had forecast $8.5 billion. Operating income reached $2.1 billion in the period, representing more than two-thirds of the company’s overall operating profit. In the first quarter of 2019, AWS reported 41% increase – and this recent drop goes hand in hand with market forecasts of an escalating competition for Amazon Web Services, as Microsoft keeps gaining ground in the cloud-services segment.
Tim Cook‘s company released its results for the last quarter yesterday, reaching a 1% increase in revenue of $53.8 billion and a 7% decline in earnings per share of $2.18. Expectations were of $53.39 billion and $2.10 per share. With the iPhone sales representing less than half of the total revenue for the first time in 7 years, Apple‘s CEO told Reuters that this change means a well-played diversification away from a single product, thanks to other services and products gaining pace.
“Non-iPhone revenue grew 17%. We grew in every category outside of iPhone,” Tim Cook explained to the media outlet.
iPhone global sales dropped 12% to $25.99 billion, after dropping 17% in the previous quarter, while revenue from wearables and other accessories climbed about 50% and surpassed market expectations. In terms of services, Apple reached 12.6% more revenue and reached $11.46 billion. The services category performed a bit below the analyst’s forecast, but introduced a new record for the company.
Recently, Apple has invested $1 billion on Intel‘s smartphone-modem chip business, in a deal below market expectations. Around 2 thousand Intel employees will join Apple, along with intellectual property, equipment, and leases, as reported by Business Insider.
Mark Zuckerberg‘s big tech reported great results in Q2, a period that, notwithstanding, brought several discussions regarding the company’s controversial privacy practices, overshadowing such results with the buzz around an antitrust investigation.
Surpassing Wall Street’s expectations, Facebook announced a $16.89 billion in revenue, 28% more than in the same period of 2018 and reaching $400 million more than the market forecast of $16.49 billion. On the same day of Q2 announcements, the US Federal Trade Commission fined the company for misconduct of user data handling, imposing an unprecedented $5 billion penalty.
As Business Insider Prime reported, despite the several regulation fines and penalties, Facebook knows how to influence and play a central role when it comes to shaping regulations across the globe – something that leverages the company’s expertise in predicting and anticipating such risks – similar to what happened with the $5 billion FTC penalty, which was already on the company’s radar – and this kind of predictability skill tends to please Wall Street.
Moreover, the gradual expansion of Instagram, mainly due to its success in implementing ads through Instagram Stories and the Shopping format within that particular social network, has placed the company in a firm financial situation, despite suffering a record fine of $5 billion dollars
In a company’s press release with both the positive Q2 results and the FTC settlement, Facebook announced an estimate of more than 2.1 billion people using Facebook, Instagram, WhatsApp, or Messenger every day on average, and more than 2.7 billion people using at least one of their services each month.
Facebook’s social media counterpart Twitter reached an 18% growth in revenue compared to 2018’s Q2, getting to $841 million and pleasing the market. In the company’s financial report for the quarter, released two days after Facebook’s results, the operating income registered $76 million.
From the overall revenue, the US market represented $455 million, an increase of 24%, while the total international revenue was $386 million, an increase of 12%. Twitter also revealed in its report that Japan remains their second largest market, adding $133 million, or 16% of total revenue in Q2.
Regarding daily active users, the company has recently adopted another metric, called Monetizable Daily Active Users, which has reached 139 million, 14% more than the previous year, claimed the company.
The underdog of the social networks saga seems to be recovering from exile, since Instagram Stories stepped into the scene in 2016. Snapchat reached a growth of 203 million daily users in the last quarter, up to the 190 million that the market forecast. The company’s revenue has also climbed to $388 million, once again surpassing the $360 million estimated by experts.
Not surprisingly, while some of the global tech giants have outperformed this Q2, disappointing the market due to regulatory challenges or other matters; others have surely surpassed expectations, reaching impressive growth in some of the metrics. But in spite of this common landscape, one thing’s for sure: with market’s race mostly in the AI and cloud-services sector, and increasing antitrust investigations in the tech world, competition is definitely getting stiffer for these leading players.