Tech giants Meta, Amazon, and Apple reported their quarterly earnings after hours on Thursday, offering insights into the performance of some of the world's most influential companies.
Apple's Slight Miss in China Impact Shares
Apple reported its first quarterly revenue growth in a year, alongside better-than-expected earnings. However, a notable drop in revenues, amounting to 13%, in China marred its overall performance, leading to a lukewarm reception from investors. Apple shares initially rose slightly in after-hours trading but ultimately ended down around 1.4%.
The company refrained from providing guidance for the current quarter ending in June, a pattern it has recently adopted. Apple's quarterly sales reached $119.58 billion, marking a 2% growth, which broke a streak of four consecutive quarters with declining annual revenues. Apple's gross margin increased from 45.3% to 45.9% compared to the previous year. Net earnings for the quarter stood at $33.92 billion, a 13% increase from the same period last year. The quarter had one less week compared to the previous year, making these gains even more significant.
iPhone sales exceeded analyst expectations, with a nearly 6% increase to $69.70 billion, largely driven by the iPhone 15 models released in September, marking Apple's first full quarter with iPhone 15 revenue. Apple's services business, including Apple Music, warranties, licensing revenue, and Apple Pay, experienced an 11% rise in revenues, reaching $23.11 billion.
Apple reported 2.2 billion active devices in use, up from 2 billion in the same period the previous year. This figure is critical for analysts tracking Apple's services growth. The company claimed to have over one billion paid subscribers across its various services.
While Apple experienced growth in most regions, its sales in Greater China fell by nearly 13%, raising concerns about the company's performance in its third-largest market. Competition from local competitors like Huawei posed challenges in the region.
Sales for Apple's Mac range grew marginally by less than 1% in the quarter to $7.7 billion, signifying a recovery for the product line following a steep decline in the previous quarter. iPad sales, however, slumped by 25% during the quarter to $7.02 billion, attributed to the absence of a new iPad model in 2023, though a revamped range is expected later in the year.
Apple's wearables business, including AirPods headphones and the Apple Watch, faced challenges, with an 11% decline in sales to $11.95 billion due in part to patent issues with some of its watches, which will be resolved in upcoming legal proceedings.
Meta Surges After Declaring First-Ever Dividend
Meta, the parent company of Facebook and Instagram, reported robust results that thrilled investors. The company's shares surged 14% in after-hours trading following the announcement of its inaugural dividend of 50 US cents per share and an expanded $50 billion share buyback program.
Meta recorded impressive revenue growth, with a 25% increase from $32.2 billion to $40 billion compared to the previous year. This performance was bolstered by cost-cutting measures, including thousands of job cuts in the previous year, which reduced expenses by 8% year-over-year to $23.73 billion.
Monthly active users across all Meta platforms increased by 6% to 3.98 billion, while Facebook active users rose by 3% to 3.07 billion. The company's operating margin more than doubled from the previous year to 41%, a direct result of cost-cutting measures.
Quarterly net profit also saw a substantial increase, more than tripling from $4.65 billion to $14 billion. This remarkable financial performance enabled Meta to join the ranks of tech giants like Apple, Microsoft, and Oracle by offering regular dividends. The first dividend payout is scheduled for March to all shareholders of record as of February 22.
The company's expanded share buyback program, coupled with its market capitalization of $1 trillion, is expected to have a positive impact on earnings per share in 2024.
Meta's Reality Labs unit, responsible for the Metaverse, reported an operating loss of $4.65 billion, slightly higher than analysts' expectations of $4.26 billion. However, the unit achieved a significant milestone by surpassing $1 billion in sales for the first time, despite accumulating losses of over $42 billion since the end of 2020.
Amazon's AWS Takes the Lead in Profit Generation
Amazon revealed that its cloud computing division, Amazon Web Services (AWS), has become the company's primary profit driver, surpassing its well-known online retail and services business. AWS experienced a 13% increase in revenue for the quarter, reaching $24.20 billion, aligning with analyst expectations and showing improvement from the 12% growth reported in the previous quarter.
Although AWS's growth rate was slower than the previous year's 20%, it demonstrated significant profitability, reporting $7.17 billion in operating income, reflecting a 38% increase. This meant that AWS contributed 54% of Amazon's total operating income of $13.21 billion for the quarter, even though its revenue accounted for only 14% of the company's total revenue during that period.
Amazon's overall revenue for the quarter increased by 14% to $170 billion, driven by strong performances during Black Friday, Prime Day in October, and the holiday season. The company also generated over $14 billion in advertising revenues during the quarter.
Looking ahead, Amazon expects first-quarter sales to grow between 8% and 13%, with revenue projections ranging from $138 billion to $143.5 billion.
Amazon's cost-cutting measures included significant staff reductions, with layoffs beginning in late 2022 and continuing throughout 2023, resulting in a total reduction of 27,000 jobs. Additionally, hundreds of jobs were eliminated from Amazon's Prime, Prime Video, MGM, and other businesses in January.
The positive quarterly results propelled Amazon's shares up by more than 9% in after-hours trading, underscoring the growing significance of AWS as a profit generator for the tech giant.
