Microsoft Earnings, Peloton Earnings

In today’s update, we will wrap up our Big Tech earnings reviews with Microsoft. We will then conclude the discussion with a look at Peloton earnings.

To set the scene, Microsoft and Peloton are in some ways complete opposites. Microsoft has been reporting some of the cleanest, all-around solid earnings releases in Big Tech. Peloton is in the most precarious of positions in terms of companies that we check in on from time to time. It’s been six months since we looked at Peloton’s earnings.

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Alphabet FY3Q23 Earnings, Microsoft FY1Q24 Earnings

Hello everyone. We conclude this week’s updates with Alphabet’s and Microsoft’s earnings.

Next week is shaping up to be a busy one with an Apple event on Monday evening followed by earnings a few days later. The current plan is to prepare for Apple’s earnings on Monday with the discussion possibly being continued on Wednesday. Let’s jump into today’s update.

Alphabet FY3Q23 Earnings

Alphabet’s earnings were fine with revenue up 11%. While that growth rate is up from the 6% reported last year, the difference is due to FX no longer being a headwind. Gross margins were up 300 basis points year over year. Operating income was up 25%. Free cash flow was $23B (which benefited from tax payment deferrals).

Diving deeper into the results, Google Search led the way with $4.5B revenue growth contribution (59% of total revenue growth). Revenue for Google – other, which includes everything from YouTube Premium and YouTube TV subscription revenue to Pixel, was up $1.4B (18% of the total), roughly the same as Google Cloud. YouTube proper (advertising) was up $0.9B.

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Microsoft FY4Q23 Earnings, The Microsoft Business, Apple vs. Microsoft

Hello everyone. We will continue our earnings reviews with the second-largest market cap company: Microsoft. The discussion includes Neil’s thoughts on Microsoft’s FY1Q24 guidance, the big picture regarding Microsoft’s business, and the competitive dynamic found with Microsoft and Apple.

Microsoft FY4Q23 Earnings

When it comes to Microsoft's quarterly earnings releases, there usually aren’t many surprises. Management gives very detailed segment guidance for the current quarter. It’s not common for results to deviate from those numbers. This is one benefit found with having so much enterprise-focused recurring revenue – it’s easier for management teams to forecast out for the remainder of the quarter (i.e. two months). As a result, earnings focus is usually put squarely on management’s new guidance and insights as to how business has been trending during the current quarter.

Along those lines, there weren’t many surprises found with Microsoft’s FY1Q24 guidance, although it’s easy to see why some people may have been spooked. Microsoft (smartly) downplayed revenue contribution from AI in the near-term (i.e. don’t expect much acceleration in cloud revenue growth) while mentioning a larger increase in cost of revenue (i.e. don’t expect much margin improvement) and a need for greater capex in FY24.

It's been easy to talk away slowing or steady revenue growth in the current environment as long as

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Alphabet Earnings, Pichai Comments on Google's Mobile Search Deals, Microsoft Earnings

Hello everyone. We wrap up Big Tech earnings reviews with Alphabet and Microsoft. There are a handful of earnings from smaller companies worth going over – we will do that at some point next week. We kick off today’s update with Neil’s thoughts on Alphabet’s 1Q23 earnings. The update goes over Sundar Pichai’s comments on Google’s various services partnerships with Android OEMs as well as Apple for mobile search. We conclude with a look at the main takeaways from Microsoft’s FY3Q23 earnings.

Let’s jump right in.

Alphabet Earnings

Alphabet reported 1Q23 earnings back on April 25th. From a financial perspective, results were good. In a quarter that won’t be remembered for any particular financial line item, Alphabet reported $17B of free cash flow. That is testament to Google’s ad machine kicking off an incredible amount of cash quarter in and quarter out. The company possesses some of, if not the most, valuable pieces of digital real estate. As seen with a growing list of much smaller companies, most other ad-funded digital paths are nowhere near as attractive as Google’s.

Here are Alphabet’s major financial line items compared to those of Apple, Meta, and Amazon:

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Microsoft Earnings, Asking the Tough Questions About Surface, Strava Acquires Fatmap (Daily Update)

Hello everyone. Happy Wednesday.

We will kick things off with Microsoft's FY2Q23 earnings. The discussion includes Neil’s thoughts on Microsoft’s Surface business. The update then looks at mapping news with Strava acquiring Fatmap.

Let's jump right in.

Microsoft Earnings

Yesterday, Microsoft reported FY2Q23 (October to December) earnings.

If there were still questions as to why Microsoft was the latest company to announce layoffs, this earnings report provided answers. It was the weakest earnings report for Microsoft in years. Business trends worsened as the quarter progressed. Management commentary suggests little improvement in early 2023.

Here is our earnings recap table looking at the key numbers:

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Amazon 3Q22 Earnings, The Shift in Selling Amazon Prime, Microsoft 1Q23 Earnings (Daily Update)

In today’s update, we wrap up our earnings reviews for the four tech giants (and Meta) by circling back to cover Amazon’s and Microsoft's CY3Q22 earnings. To recap, these are the dates when we covered earnings from the others:

The five companies represent 21% of the S&P 500 index. The discussion includes Neil’s thoughts on the most interesting takeaways from the reports.

Amazon 3Q22 Earnings

Amazon reported 3Q22 results back on October 27th, one day prior to Apple’s earnings.

Overall, the quarter was more negative than what the company reported three months earlier.

Amazon has stood out among Big Tech for facing the most direct impact from macro issues.

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