eResearch | On July 18, 2019, Microsoft Corporation (NASDAQ: MSFT; LSE: 0QYP; DB: MSF) released earnings for Fiscal Q4/2019 and reported a record performance for Fiscal 2019, which pushed its market valuation over US$1 trillion. Investors are now focused on other major technology companies that are expected to release earnings at the end of July, including Alphabet Inc. (NASDAQ: GOOGL; LSE; 0RIH; DB: ABEA), Amazon.com, Inc. (NASDAQ: AMZN; LSE: 0R1O; DB: AMZ), Apple Inc. (NASDAQ: AAPL; LSE: 0R2V; DB: APC), and Facebook, Inc. (NASDAQ: FB; LSE: 0QZI; DB: FB2A). Ride sharing platform companies Uber Technologies Inc. (NYSE: UBERLSE: 0A1U; DB: UT8) and Lyft Inc. (NASDAQ: LYFT; DB: LY0) are expected to release earnings early August.
Microsoft reported a 14% increase in revenue to US$124.8 billion in F2019 compared with US$110.4 billion in F2018. In FQ4/2019, revenue grew 12% to US$33.7 billion beating expectations of US$32.7 billion, mainly due to continued high margin sales from its cloud business, which increased by 64% and accounted for US$11.4 billion of total revenue. Microsoft focused on investing in data centers for their cloud business, Azure, which resulted in increased capital expenditure to US$5.3 billion in FQ4/2019 compared with US$4.1 billion year-over-year. The investments are key for future contracts and partnerships, such as the US$2 billion cloud contract from AT&T won by Microsoft this week, which will include Azure’s cloud infrastructure services and Office 365. Over 95% of Fortune 500 companies use Azure, as more companies integrate Azure into an already existing Microsoft ecosystem which includes Microsoft Office and Windows.
Alphabet Inc. (NASDAQ: GOOGL; LSE; 0RIH; DB: ABEA): CapIQ Consensus Estimate suggest analysts are expecting revenue of US$38.2 billion in Q2/2019, up 17% year-over-year. In Q1/2019, even though Alphabet reported a 16.9% revenue growth to US$36.3 billion year-over-year, it was the lowest growth rate in three years and significantly lower than its 26% growth rate in Q1/2018. Its main revenue stream, Google advertising revenue, increased by 17% year-over-year, to US25.7 billion. Investors are curious to see if revenue growth rate will continue to slow down this upcoming earnings.
Amazon.com, Inc. (NASDAQ: AMZN; LSE: 0R1O; DB: AMZ): CapIQ Consensus Estimate suggest analysts are expecting revenue of US$62.6 billion in Q2/2019, up 18% year-over-year. In Q1/2019, Amazon reported revenue growth of 17% to US$59.7 billion compared with US$51 billion year-over-year, which now includes its Whole Foods acquisition. Revenue growth rate in Q2/2019 is expected to slow down as CFO Brian Olsavsky mentioned on last quarter’s earnings call that Amazon Prime’s planned two-day delivery offering will cost approximately US$800 million in expenses.
Apple Inc. (NASDAQ: AAPL; LSE: 0R2V; DB: APC): CapIQ Consensus Estimate suggest analysts are expecting revenue of US$53.4 billion in FQ3/2019, flat year-over-year. In FQ2/2019, Apple reported a revenue decline of 5% to US$58 billion compared with US$61billion year-over-year, attributed to a 17% decline in iPhone sales which accounts for 53.5% of Apple’s total revenue. Although investors are focused on iPhone sales growth in the upcoming earnings release, Apple’s CEO Tim Cook mentioned that it will increase profitability through its Services arm (Subscriptions and Apps), which grew to more than 390 million paid subscribers in Mach 2019, up 30 million in the last quarter.
Facebook, Inc. (NASDAQ: FB; LSE: 0QZI; DB: FB2A): CapIQ Consensus Estimate suggest analysts are expecting revenue of US$16.5 billion in Q2/2019, up 25% year-over-year. In Q1/2019, Facebook reported a revenue increase of 16% to US$15 billion compared with US$12.9 million year-over-year, and an increase in daily active users to 2.4 billion compared with 2.3 billion a year ago. Positive financial performance is keeping the stock price stable even though the Federal Trade Commission recently announced an approximate US5$ billion in fines for settlement on a privacy violations case.
Uber Technologies Inc. (NYSE: UBERLSE: 0A1U; DB: UT8): CapIQ Consensus Estimate suggest analysts are expecting revenue of US$3.3 billion in Q2/2019. In Q1/2019, Uber released its first earnings release since inception as a public company, and reported a revenue increase of 20% to US$3.1 billion compared with US$2.58 billion year-over-year, and a net loss of US$1 billion compared with a net income of US$3.75 billion year-over-year. Although investors are wary of Uber burning large amounts of cash, in Q1/2019, it reported a 34% increase in gross bookings to US$14.7 billion and a 33% increase in monthly active platform consumers to 93 million users.
Lyft Inc. (NASDAQ: LYFT; DB: LY0) is expecting consensus revenue of US$808 million in Q2/2019. In Q1/2019, Lyft raised US$2 billion in an initial public offering and reported a revenue increase of 95% to US$776 million compared with US$397.2 million year-over-year, and a net loss of US$1.1 billion (US$894 million in stock-based compensation) compared with US$234.3 million year-over-year. Similar to Uber, Lyft is burning through cash, but in Q1/2019, Active Riders grew 46 percent to 20.5 million compared with 14 million year-over-year
Amongst the major tech companies that are releasing earnings in the coming weeks, the most focused metric from analysts is revenue growth, and specifically, revenue growth rate. Soon, it will become transparent which Tech companies are sustaining revenue growth rates that match its forecasted revenues, which derives its premium market valuations.
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Microsoft Corporation (NASDAQ: MSFT; LSE: 0QYP; DB: MSF)
Headquartered in Washington, United States, Microsoft is a multinational technology company that focuses on manufacturing and licensing computer software, cloud computing, and consumer electronics. It is best known for its software products Microsoft Windows and Microsoft Office Suite. Microsoft currently trades at US$136.98 with a market capitalization of US$1.05 trillion.
Alphabet Inc. (NASDAQ: GOOGL; LSE; 0RIH; DB: ABEA)
Headquartered in California, United States, Alphabet is a multinational conglomerate of technology companies that was created through a corporate restructuring of Google in 2015. It is now the world’s fifth largest technology company with continued leadership in its search engine. GOOGL currently trades at US$1,131.55 per share with a market capitalization of US$785.2 billion.
Amazon.com, Inc. (NASDAQ: AMZN; LSE: 0R1O; DB: AMZ)
Headquartered in Washington, United States, Amazon is a multinational technology company with diversified operations in e-commerce, cloud computing, digital streaming, and artificial intelligence. Its cloud computing arm, Amazon Web Services, currently accounts for the highest percentage of cloud infrastructure servicing companies. Amazon currently trades for US$2,010.10 per share with a market capitalization of US$990 billion.
Apple Inc. (NASDAQ: AAPL; LSE: 0R2V; DB: APC)
Headquartered in California, United States, Apple is a designer, developer, and seller of consumer electronic products, best known for their iPhone, Macbook, iPad, AirPod, and Apple watch products. AAPL currently trades at US$202.59 per share with a market capitalization of US$932.1 billion.
Facebook, Inc. (NASDAQ: FB; LSE: 0QZI; DB: FB2A)
Headquartered in California, United States, Facebook is a social media and social networking company that utilizes its online platform for advertisements and data aggregation. It is currently involved in a controversial case as Facebook announced its own development of a global cryptocurrency called Libra, which the U.S. government thinks will risk the stability of the U.S. monetary policy. FB currently trades at US$197.36 per share with a market capitalization of US$566.2 billion.
Uber Technologies Inc. (NYSE: UBER; LSE: 0A1U; DB: UT8)
Headquartered in California, United States, Uber is a multinational peer to peer transportation platform and network, which include ride sharing, ride service hailing, food delivery, and bicycle sharing. Uber listed as a public company and started trading on the New York Stock Exchange in May 2019. Uber is currently trading at US$43.18 per share with a market capitalization of US$73.2 billion.
Lyft Inc. (NASDAQ: LYFT; DB: LY0)
Headquartered in California, United States, Lyft is a peer-to-peer ridesharing company that operates in the United States and Canada. It listed as a public company and started trading on the NASDAQ in March 2019. LYFT is currently trading at US$67.45 with a market capitalization of US$19.6 billion.
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