Wednesday's Headlines: Tech Beats On The Top And Bottom Line
Wednesday, Oct 27, 2021
1. Despite worrying global supply chain issues, Microsoft (MSFT) posted an impressive earnings beat last night. The company navigated semi-conductor shortages and more through its booming cloud services sector, which grew by 51%. On the financial side, Microsoft posted adjusted earnings per share (EPS) of $2.27, beating estimates of $2.07 per share, on revenue of $45.32 billion, beating estimates of $43.97 billion. With total company revenue rising by almost 22% year-over-year (YOY), this represents Microsoft's fastest growth since 2018. Furthering the bullish sentiment, CFO Amy Hood added that "we are off to a strong start in FY22 with tremendous opportunity to drive sustained, long-term revenue growth." You can read more here.
2. [Google (GOOG)] (GOOG) has trounced revenue and earnings estimates. Revenue came in at $65.1 billion v.s. $63.3 billion expected and EPS was $27.99 v.s. $23.48 expected. Despite this, Google stock remained flat after hours. On closer inspection, cloud revenue came in slightly below what analysts were hoping for, $4.99 billion v.s. $5.07 billion, but nonetheless, only a slight miss. Google couldn't protect itself from Apple's notorious iOS 14.5 privacy update either, which led to lighter revenue in YouTube ads, $7.2 billion v.s. $7.4 billion expected. However, overall advertising revenue was robust, up 43% from the year before, so it looks like Google has been able to better navigate the storm than others, likely due to its own Android operating system in place. Read more here.
3. [DraftKings' (DKNG)] (DKNG) acquisition of Entain Group (Ladbrokes and Coral) has fallen through. The U.S. betting giant was apparently in talks but the two groups were unable to agree on terms based on the cash and stock offer, which Entain wasn't happy with. Negotiations broke down as a result, even with DraftKing's offering a 43% premium over the current Entain share price. Although a great growth opportunity, entering new markets with fiercer competition from the likes of Flutter Entertainment (PaddyPower) means that DraftKings will want the right terms when it makes a move, and cementing its share of the sports betting industry in the U.S. should be a top priority otherwise. Read the full piece here.
Some more earnings from last night:
Hasbro (HAS)
Supply chain issues aren't going to stop this toymaker, which reported earnings of $1.96 per share, beating analysts' estimates of $1.69, on revenue of $1.97 billion. "We are also working tirelessly to ensure product for the holiday, and are pleased that, through today, we have delivered much of what was delayed in the third quarter," said Hasbro CFO Deborah Thomas. Read more here.
Twitter (TWTR)
Unlike its social media counterparts, Twitter appears little affected by Apple's iOS changes, reporting earnings per share of $0.18 on revenue of $1.28 billion, topping expectations across the board. Twitter CFO Ned Segal attributed the company's 41% ad revenue growth YoY to its "strength across all major products and geographies." Read more here.
There are 10 companies on the MyWallSt shortlist that will report earnings today:
Align Technology (ALGN)
Coca-Cola (KO)
Cognizant Technology (CTSH)
Ford (F)
iRobot (IRBT)
ServiceNow (NOW)
Retail Opportunity Investments Corp (ROIC)
Spotify (SPOT)
Teladoc (TDOC)
Twilio (TWLO)
David Granahan