Both companies reported that in addition to other segments of their businesses, their cloud and advertising services were a large part of the reason for their better than expected (or feared) results.
Much of the world has been forced to adjust their behavior over the last few years, with many spending more time online during the pandemic, whether it was working from home or shifting their buying habits, so showing growth in these areas would seem to make logical sense.
The CEO of Alphabet and Google, Sundar Pichai, commented on this in his statement, saying, The investments weve made over the years in AI and computing are helping to make our services particularly valuable for consumers, and highly effective for businesses of all sizes. As we sharpen our focus, well continue to invest responsibly in deep computer science for the long-term.
Microsoft executive vice president and chief financial officer, Amy Hood, similarly commented, In a dynamic environment we saw strong demand, took a share, and increased customer commitment to our cloud platform.
Microsoft revenue totaled $51.9 billion and increased 12% over the same period last year. Their operating income increased by 8% to $20.5 billion. A net income of $16.7 billion saw a 2% increase, and the diluted earnings per share were $2.23, up 3%. The company showed its best ever sales for the cloud service, Azure, which were up 28%.
The company this month was also selected by Netflix to partner in their newest ad-supported, cheaper subscription service, a potentially significant new source of revenue.
Alphabets figures show its lowest growth rate since the 2020 April-June quarter, but they are still in an enviable position compared to most other non-tech companies in the current landscape. Its revenue totaled $69.69 billion and increased 13% compared to the same period last year. Their operating income increased to $19.45 billion, up from $19.36 billion. A net income of $16 billion saw a small drop from last years $18.52 billion, and the diluted earnings per share were $1.21, down from $1.36.
Google Cloud fell short of target earnings by around $1 million at $6.3 billion, and ads through YouTube came in under budget, with $7.3 billion as opposed to $7.5 billion in estimates.
So far, these two firms have avoided the pitfalls that other large businesses across the world have been experiencing. Supermarket giant Targets shocking first-quarter earnings are one such example, as is Walmarts predicted decline in profits for its upcoming report due in August. Many point to the ongoing issues with inflation, household costs increasing, and supply chain issues as having a huge impact on such retailers.
Online rivals in the social media world, Twitter and Snap have also just seen negative fourth-quarter earnings, with some analysts pointing to the fact that ad content can be more expensive through these types of social media as opposed to search engines, as it requires more than just text.
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