Daily Management Review

Technology companies report skyrocketing revenues for the "quarantine" quarter


Google, Amazon, Facebook and Apple have kicked off their second quarter corporate reporting season, which saw the most stringent restrictive measures due to the COVID-19 pandemic. The restriction measures have resulted in an explosive growth in the use of all kinds of Internet services, and for those companies that were able to take advantage of the market conditions, this period turned out to be very successful.

Kristina Alexanderson
Kristina Alexanderson
Google, Amazon, Facebook and Apple reported their second quarter results last night. A day earlier, their leaders took part in video mode in the hearings of the US Congress, where representatives of the Republican and Democratic parties sharply criticized the companies: some - for bias and censorship against conservative media and figures, and others - for monopoly and unfair treatment of independent players.

Unlike the congressmen, the attitude of investors towards high-tech companies turned out to be more favorable - after the publication of reports, their shares rose by 5-6%. And this is not surprising - unlike companies in other sectors reporting either a sharp drop in profits in the second quarter or large losses, Google, Amazon, Facebook and Apple made a total of $ 28 billion in profit over the same period, and revenues - by $ 143 billion

The most impressive revenue growth - doubled - was recorded by Facebook and Amazon.

Facebook, as Mark Zuckerberg himself noted in comments to the reporting, "is proud that people were able to rely on our services to communicate with each other and stay connected, even when they could not see each other in person." FB's revenue for the quarter was $ 18.7 billion, up 11% from a year earlier. At the same time, revenue from advertising on FB grew by 40%. The company's quarterly profit was $ 5.2 billion, or 98% more than a year earlier.

A similar dynamics of results is shown by the online retailer Amazon, which has become one of the most popular means for purchasing and delivering goods during the quarantine. The company's revenue grew 17% to $ 27.5 billion, and net income doubled to $ 5.2 billion. "This was another very unusual quarter, and I can't even fully express all my pride and gratitude to all of our employees." - said the founder and head of Amazon Jeff Bezos. The demand for Amazon's services during the quarantine was so high that, unlike many other companies that cut employees by the thousands, Amazon, on the contrary, was constantly recruiting new people for temporary or permanent work - since March, their number has reached 175 thousand.

Apple's quarterly results were not as impressive as FB and Amazon, pretty solid. Revenue rose 11% to $ 59.6 billion and profits rose 12% to $ 11.2 billion. As CEO Tim Cook noted, “The record high for the past quarter was driven by double-digit growth in sales and our products and our services in all regions of the world.” Indeed, an increase in Apple's performance in the second quarter was noted in all segments: in sales of both iPhone (+ 2%), and Mac computers (+ 20%), and iPad tablets (+ 30%), and wearable devices (+16, 5%), and services (+ 14.9%).

Of all the “big high-tech four”, the most modest results were shown by Alphabet (Google's holding company), whose head Sundar Pichai also got the most at the hearings in Congress. Alphabet's revenue for the quarter was $ 38.3 billion, down 2% from a year earlier, marking the company's first ever decline in revenue. Net profit fell 30% to $ 6.9 billion. However, Google's results were in line with analysts' forecasts, who had expected the company to show more modest results compared to other high-tech companies - due to a general slowdown in economic activity and companies cutting Internet costs -advertising. Therefore, after the publication of reports, Google shares, despite the decline in revenue and profits, increased in price by 1%.

source: ft.com