Last big earnings day of the week, and it’s the AAA threat!
Today, I’ll be talking about Apple, Alphabet, Amazon and Shell.
I’ll do my best to refrain from political ranting when it comes to Shell’s profits… But I make no promises.
Apple (AAPL) – Q4 (Fiscal Q1 2023) Earnings
A bad quarter for Apple, missing substantially on all accounts. The company also saw sales declines in most parts of its business; though it largely attributes this to supply chain issues in December, claiming that production has now increased to sufficient levels.
Key Points:
- Revenue of $117,154m, down from $123,945m (-5.5%) a year ago
- Due to unfavourable foreign exchange rates, Apple claim that an 8% currency headwind impacted revenue
- iPhone revenue decreased by 8.2% year-over-year
- Mac revenue decreased by 28.7% year-over-year
- Wearables, home and accessory revenue decreased by 8.3% year-over-year
- iPad revenue rose by 29.6% year-over-year
- Services revenue rose by 6.4% year-over-year
- Gross profit of $50,332m, down from $54,243m (-7.2%) a year ago
- Interestingly, cost of sales only fell by 4.1% YoY, meaning other factors impacted gross margin
- Operating profit of $36,016m, down from $41,488m (-13.2%) a year ago
- Profit before tax of $35,623m, compared to $41,241m a year ago
- Profit after tax of $29,998m, compared to $34,630m a year ago
- Basic earnings per share of $1.89
- Dividend of $0.23 per share announced, to be paid on 16th February 2023
- While Apple do not give guidance, they have hinted at higher production numbers for the iPhone and Mac lines
- Apple now have over 2 billion active devices globally, a new milestone
Alphabet (GOOGL/GOOG) – Q4 Earnings
Similarly to Apple, Alphabet’s results also came in lower than analysts expected, along with disappointing YouTube Ad revenue. Google Cloud revenue also came in lower than expected. Though, with the advertising space slowing down, along with a struggling consumer and a tough macroeconomic environment, this won’t come as much of a surprise to most investors.
Key Points:
- Revenue of $76,048m, up from $75,325 (+1.0%) a year ago
- On a constant-currency basis, revenue would have seen a 7.0% increase YoY
- Google Search revenue decreased by 1.6% year-over-year
- YouTube Ads revenue decreased by 7.8% year-over-year
- Google Network revenue decreased by 8.9% year-over-year
- Google “Other” revenue increased by 7.8% year-over-year
- Google Cloud revenue increased by 32.0% year-over-year
- “Other Bets” revenue increased to $226m, up 24.9% year-over-year
- Hedging Income revenue increased to $669m, up 330% year-over-year
- Gross profit of $40,706m, down from $42,337m (-3.9%) a year ago
- Operating profit of $18,160m, down from $21,885m (-17.0%) a year ago
- Profit before tax of $17,147m, compared to $24,402m a year ago
- Profit after tax of $13,624m, compared to $20,642m a year ago
- Basic earnings per share of $1.06
- Alphabet do not provide forward guidance. However, on the earnings call, it was stressed that Q1 and 2023 as a whole will see increased corporate costs due to the recently announced layoffs, as well as restructuring and the closure of office spaces. In the long-term, it’s expected the company will become more efficient through the use of AI and other productivity-enhancing tools, thus costs will be reduced even further
- YouTube shorts now sees 50 billion daily active view. However, TikTok remains a significant competitor in the short-form video space
Amazon (AMZN) – Q4 Earnings
While Amazon beat expectations on revenue, the company reported lower-than-expected growth in its AWS (Amazon Web Services) segment, and provided a disappointing outlook for Q1 2023. Though, despite macroeconomic pressures such as high inflation, high interest rates and money-conscious consumers, Amazon expects Q1 revenue to grow between 4% and 8% year-over-year, largely helped by its services income.
Key Points:
- Revenue of $149,204m, up from $137,412m (+8.6%) a year ago
- North America revenue increased by 13.4% year-over-year
- International revenue decreased by 7.5% year-over-year
- Amazon Web Services revenue increased by 20.0% year-over-year
- Gross profit of $63,564m, up from $54,577m (16.5%) a year ago
- Cost of sales increased by 3.4%, suggesting that inflationary pressures could be easing for the company
- Operating profit of $2,737m, down from $3,460m (-20.9%) a year ago
- Loss before tax of ($962m), compared to a profit before tax of $14,934m a year ago
- Profit after tax of $278m, compared to $14,323m a year ago
- Basic earnings per share of $0.03
- Guidance for Q1 revenue of between $121,000m and $126,000m, or a growth rate of between 4% and 8%. Operating income will come in at between $0m and $4,000m, compared to $3.7m a year ago
Shell (SHEL) – Q4 Earnings
Likely unsurprising to the vast majority, Shell beat analyst expectations. While energy prices have come down somewhat compared to prior quarters, they are still very elevated compared to the year-ago quarter.
Key Points:
- Revenue of $101,195m, up from $90,223m (+18.7%) a year ago
- Gross profit of $35,706m, up from $28,714m (+24.4%) a year ago
- Profit before tax of $16,443m, compared to $16,269m a year ago
- Profit after tax of $10,409m, compared to $11,461m a year ago
- Basic earnings per share of $1.47
- Dividend of $0.2875 per share announced, to be paid on 27th March 2023
- $4,000m in share buybacks announced for the first quarter of 2023
- As at 31st December 2022, net debt was $44,800m, down from $48,300m at the end of the last quarter
- The company announced that Wael Sawan, currently the director of integrated gas, renewables, and energy solutions, will become CEO on 1 January 2023
- While these profits are eye-watering, resulting in renewed calls for a stricter windfall tax, they are down from the highs of 2022. This is in part due to reduced production in the fourth quarter, but also due to oil and gas prices coming down from their peaks. If wholesale prices continue to fall in 2023, Shell will likely see large revenue and earnings declines in the coming quarters/years. Though, this doesn’t excuse the excess profits seen so far.
Do you invest in any of these companies? Have these earnings changed your view about the company’s prospects in any way? Let me know in the comments!
