Top Takeaways from Big Tech’s Record-Breaking Quarterly Earnings

Last week delivered a string of record-breaking earnings reports from Silicon Valley’s biggest companies as outsized profit margins demonstrated just how big Big Tech has become. This chart from Axios best illustrates the incredible surge tech companies Apple, Alphabet, Facebook, and Microsoft have seen in recent months across income and market valuation.

Chart by Axios

In today’s post, let’s zero in on the top takeaways from the earnings posted by key strategic partners Amazon, Facebook, Google, and more.

Facebook beat analysts’ expectations for earnings and revenue in its second-quarter earnings report, with the company bringing in a staggering $29.08 billion versus $27.9 billion as anticipated by analysts. Revenue grew by 56 percent YOY, the company’s fastest growth rate in years. Daily active users (DAUs) and monthly active users (MAUs) were also higher than expected, coming in at 1.91 billion DAUs and 2.90 billion MAUs. The earnings were largely driven by the rising cost of ads, as the total number of ads delivered rose six percent YOY while the average price per ad rose 47 percent YOY. 

In a statement with the earnings report, Facebook said it expects “increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recent iOS update,” which will slow sales growth. Facebook’s Chief Financial Officer David Wehner said the tech company anticipated a larger impact from iOS 14.5 in the third quarter as opposed to the second quarter due to the slow opt-in rates of App Tracking Transparency (ATT). 

On a conference call with analysts, Facebook CEO Mark Zuckerberg spoke to successes in key areas such as creators and e-commerce, though he spent most of the time talking about Facebook’s newest ambition: the metaverse. “In the coming years, I expect people will transition from seeing us primarily as a social media company to seeing us as a metaverse company,” said Zuckerberg on the call. Facebook is investing in building the tools and experiences to enable a metaverse experience for users, as the company expects the metaverse to be the “successor to the mobile internet.” 

Similar to Facebook, Google beat Wall Street expectations as advertising growth continues to surge. Total revenue hit $61.88 billion versus the projected $56.16 billion, according to Refinitiv. During Q2, Google ad revenue reached $50.44 billion, up nearly 70 percent from last year’s numbers, with advertisers in the retail category contributing the most to Google’s bottom line. The star of Google’s earnings this week was not advertising or Google Cloud but YouTube, with revenue topping $7 billion, which drew close to Netflix’s quarterly revenue of $7.34 billion.

Notable YouTube performance trends include: 

YouTube’s television viewing is growing faster than ever, with more than 120 million people watching YouTube on their TVs every month. 

YouTube advertising revenue is up 83 percent from a year ago as the global shift to online video and streaming continues. 

According to CNBC, Nielsen reports that more people are watching YouTube and Netflix than any other streaming service. 

YouTube’s TikTok competitor YouTube Shorts is growing quickly, too, and recently surpassed 15 billion daily views, up from 6.5 billion daily views in March.

As more people cut the cord and migrate away from traditional linear, Google is at the “forefront of this shift,” with YouTube pulling in more than two billion monthly users as two billion hours of videos are watched every day on the platform. 

Amazon posted $7.8 billion in profit, up 48 percent from the same period last year. Revenue increased 27 percent in the second quarter, up from $88.9 billion in 2020, though it was still the first time Amazon missed financial expectations since the beginning of the pandemic. According to The Information, Amazon reported “a major slump in sales from its online store.” 

Amazon recorded $53.2 billion in online sales, which was up only 13 percent YOY. As mentioned in The Wall Street Journal, the slowdown came even as Amazon “moved up its annual Prime Day shopping event, which is usually held in the third quarter.” In contrast, Amazon’s ad business continues to surge, with ad sales growing 87 percent YOY in Q2, up from 77 percent in Q1. 

Amazon CFO Brian Olsavsky cited that the change was “likely due in part to changing consumer behaviors as the pandemic begins to subside, and people begin to spend slightly less time shopping online.” Looking ahead, Amazon expects sales to hit between $106 billion and $112 billion in the third quarter, and an operating profit between $2.5 and 6.2 billion. Amazon will have difficulty matching the results of 2020 as millions of shoppers shifted to online shopping amid the pandemic, though the Delta variant and new mask mandates around the country have clouded the outlook for U.S. economic growth heading into the back half of the year, which could result in more Americans retreating to their homes and shopping online. 

Snapchat blew away Wall Street expectations with record revenue and its best user growth numbers in four years.

Comcast’s Q2 2021 earnings reported an impressive Q2 for NBCUniversal overall, with ad revenue up 32.8 percent YOY. 

Spotify podcast ad revenue jumped 627 percent in Q2.

LinkedIn surpassed $10 billion in annual revenue for the first time.