A growing demand for digital products is helping to fuel the global boom of startup investment. These same tailwinds, which are supporting smaller tech companies, are also helping to power the giants.
You would be forgiven for having low expectations about other Big Tech companies, especially after Snap's weak Q4 growth forecast and Facebook's revenue miss.
Today, however both Alphabet Googles parent company and Microsoft surpassed revenue expectations, despite what could have been seen as a budding narrative.
These are the numbers:
After-hours trading saw shares of Microsoft rise 1% while Alphabet shares are down a little.
Each report has many more details. Alphabet, Microsoft and other companies are closer to corporate empires than they are to individual companies. For more context, let's take a look at each.
Microsofts Q1 fiscal 2022
Microsofts key statistic is its growth in Azure, its public cloud business. This revenue source increased 50% year-over-year, or 48% in constant currency terms. Azure saw a slight increase in its growth rate due to currency fluctuations.
Despite this nuance, Azure growth has remained at 50% for some time, which means that Microsofts overall top line is likely to be quite large.
We also noticed other numbers in Microsoft's earnings that stood out to our analysis. Search and news advertising revenues increased 40% year-over-year. This figure has been adjusted to exclude traffic acquisition costs. Alphabet does this too and it is a fair adjustment. Surface revenues declined 17%. However, new hardware is on the horizon, so that could be a sign of a turnaround.
The Microsoft subscription picture is mixed. Office 365 revenues grew 23% year-over-year, while the number of consumer incomes from the same product range grew by 10%. LinkedIn revenues grew by 42% which is quite impressive for Microsoft.
Alphabets Q3 2021
Alphabet's financial results are concise enough to be included here, which is a nice thing about it. Take a look at these:
YouTube's remarkable revenue growth is still evident, even though the company has removed that line item. Google suffered more than other tech giants in 2020 as search advertising demand plummeted due to the COVID-19 pandemic. Other search products also saw a drop in revenue.
CNBC's street estimates show that Google Cloud fell short of its quarterly growth targets. CNBC collected $5.07 billion of street estimates. This means that Mountain Views cloud bucket, despite its growth rate at the end Q3, was less than investors expected.
It's nice to see other Bets posting a modest revenue gain, even though their operating losses increased during the quarter. The collective skunkworks posted an operating loss in excess of $1.10 billion during the previous quarter.
The two Big Tech companies did not ramble on about financial nuance. They posted solid growth numbers, made a billion dollars together, and spent $23.5 million on shareholder-friendly activities such as share buybacks, dividends, and other shareholder-friendly activities. It's a great time to be a tech titan.