FAANG Earnings Roundup
Over the past two weeks the members of FAANG have reported their Q4’18 earnings. The results were a mixed bag, which speaks to the slowing growth of the tech sector and business challenges each company is facing. Here’s a quick summary of how the companies did.
- Facebook: Despite all the drama around Facebook’s data leaks, in-app spying, and general black hat wearing by Mark Zuckerberg and Sheryl Sandberg, the company is outperforming expectations. MAUs were flat YoY, but ARPU (avg rev per user) shot up to $7.37 – very high for a non-sub publisher. FB’s overall rev beat the Street’s call by 9%.
- Amazon: The Jeff Bezos freight train continued to blow past revenue guidance with 20% YoY growth. However, Amazon signaled lower net profits in 2019 due to planned new investments (healthcare, anyone?) As a result Amazon’s stock dropped slightly after their earnings call.
- Apple: While EPS and revenue were in line with Wall Street expectations , Apple has some storm clouds on the horizon. YoY iPhone sales rev dropped 15%, as consumers shied away from the latest $1,000+ models. International sales are also hurting Apple, with China alone being off $5B YoY. To counter this erosion Apple is trying to diversify into Services and In-App rev streams.
- Netlfix: Revenue was up 20% YoY while adding 8.8M new subscribers during Q4’18. But all that growth is coming with hefty content costs and cash burn. For full year 2018 Netlfix lost $3B and is forecasting to lose another $3B in 2019. Eeek!
- Google: Overall Alphabet’s (Google’s parent co) business is in good shape with double digit growth for both its advertising and AWS cloud services divisions. But Google’s cash cow Search business is starting to get squeezed on both sides, with a 29% YoY drop in CPC pricing and traffic acquisition costs increasing 15% YoY. Having to pay more for traffic and selling clicks for less has Google investors nervous.
So the starting line for 2019 has officially been set. It’ll be interesting to watch these digital media giants navigate some choppy waters over the next 12 months.