Big night for Big Tech as Apple, Google, Amazon and Facebook post strong results

It was a good night for Big Tech, with Apple, Google, Amazon and Facebook all posting strong quarterly results despite turbulent politics and the coronavirus pandemic.

Tech companies worth a combined $5.5 trillion reported their earnings within minutes of each other after the closing bell in New York.

APPLE

Apple posted record top-line results for the September quarter even as iPhone sales slipped 21 per cent from a year ago, demonstrating that the tech group is benefiting from the growth of services, hardware and accessories.

Apple reported $64.7 billion of revenue in its fiscal fourth quarter ending in September, compared with expectations of $64 billion.

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Revenue from iPhone sales last quarter amounted to $26.4 billion, versus $33.4 billion a year ago, as a result of the delayed launch of the iPhone 12.

Analysts are expecting a record quarter in December thanks to the four-model line-up of iPhone 12 units introduced earlier this month by chief executive Tim Cook, who said they signalled a "new era".

“Despite the ongoing impacts of Covid-19, Apple is in the midst of our most prolific product introduction period ever,” Mr Cook said.

GOOGLE

Google’s advertising business staged a stronger-than-expected rebound from its coronavirus slump, boosting revenue and earnings of parent Alphabet above most analysts’ expectations and sending the shares 9 per cent higher in after-market trading.

Coming just days after the search group was hit with a landmark antitrust lawsuit from the US government, its earnings showed the core search business had returned to growth after the pandemic led to its first-ever business contraction.

Chief executive Sundar Pichai called it "a strong quarter, consistent with the broader online environment".

Google was expected to benefit from stronger advertising demand as merchants shifted more of their ad budgets online to support sales during the pandemic, though the strength of the recovery outpaced most analysts’ expectations.

Advertising revenue at Google, which accounts for virtually all of Alphabet’s business, grew 10 per cent in the three months to the end of September, after falling 8 per cent in the preceding quarter.

Search advertising recovered from the 10 per cent fall in the second quarter to edge up 6 per cent, while advertising on YouTube rebounded strongly, rising 32 per cent compared with a 6 per cent gain in the previous quarter.

Overall, Alphabet reported revenue of $46.2 billion, up 14 per cent from the previous year, after a decline of 2 per cent in the second quarter. Earnings per share rose 62 per cent, to $16.40.

AMAZON

Amazon recorded another quarter of blistering profit growth, earning $6.3 billion between July and September, up from $2.1 billion in the same period last year and beating Wall Street expectations by 71 per cent.

Revenues of $96.1 billion – boosted by the effects of the pandemic, which has pushed consumers into online shopping – also came in comfortably over estimates. But its stock fell a little over 1 per cent in after-hours trading, as a result of mounting costs and continued sluggish growth in its cloud computing business AWS.

The company now employs more than 1 million people worldwide, up 50 per cent this year – not including contractors, such as delivery drivers, or seasonal workers.

Amazon gave a broad range of possible profit outcomes for the all-important fourth quarter, estimating operating income between $1 billion and $4.5 billion. Sales for the period, which includes Christmas, will be between $112 billion and $121 billion, it said.

FACEBOOK

Facebook beat analyst expectations with a more than 20 per cent rise in revenues in the third quarter and forecast growth to continue, as its ad business showed resilience despite a recent boycott from some marketers.

Revenues in the three months to the end of September rose 22 per cent to $21.5 billion, above analysts’ expectations of $19.8 billion, according to estimates compiled by S&P Capital IQ. That compared with 11 per cent growth in the second quarter, as marketers have adjusted to the coronavirus pandemic, with some markets reopening, while the company has begun to offer users more ways to shop on its apps.

“We expect our fourth quarter 2020 year-over-year ad revenue growth rate to be higher than our reported third quarter 2020 rate, driven by continued strong advertiser demand during the holiday season,” the company said.

TWITTER

Twitter’s user growth fell short of expectations as it warned of further delays to the introduction of a long-awaited new advertising system, sending its shares down more than 14 per cent.

The social media group put in a stronger financial performance in the third quarter thanks to the return of live sports and other events, driving sales up 14 per cent to $936 million, compared with analysts’ expectations for $778 million.

However, the revenue beat failed to offset disappointing user numbers. Twitter’s average monetisable daily active users grew 29 per cent year on year to 187 million, compared with the 195 million Wall Street had expected.

Twitter’s net income in the quarter fell by 22 per cent year on year to $28.7 million, as costs and expenses rose 13 per cent.

It did not provide any revenue guidance for the coming quarter, setting political uncertainty against the upsurge in ecommerce. It sounded a cautious note ahead of the US election, after many advertisers pulled back during the widespread civil rights protests in the US earlier this year.

SHOPIFY, ETSY and EBAY

Shopify, Etsy and eBay have all recorded another quarter of higher revenues and user growth, as they continue to benefit from a pandemic ecommerce boom that is expected to grow the sector by about a third this year.

The strong results have allayed some investor concerns that the pandemic boost would be short-lived, disappearing as soon as people had procured essential medical supplies or working-from-home equipment.

However, shares in all three companies fell on Thursday, suggesting investors struggled to find new sources of momentum in a trio of stocks that have recorded strong gains this year. Ebay was the worst hit, with its shares falling 7 per cent, while Etsy declined about 5 per cent.

– Copyright The Financial Times Limited 2020