Alphabet Q1 23 – 25/04 – when Alphabet reported back in February the shares popped to their highest levels since September, before sliding back down again in early March on the back of the wider stock market selloff.
We've since revisited those peaks but are currently struggling below the $110 level. The main focus of their Q4 numbers was on their advertising business as well as YouTube revenues, which have come under pressure in recent months as advertising budgets get cut and the economy slows. Q4 revenues came in at $76.05bn, slightly below expectations of $76.5bn, with net income falling to $13.6bn, or $10.05c a share. The main drag was in advertising with YouTube ad revenue coming in light at $7.96bn, down from $8.6bn a year ago, while advertising revenue came in at just over $59bn, also down from last year. The cloud business did see an improvement last year, rising to $7.3bn. Investors will also be hoping that the glitches that have affected its AI release known as Bard are closer to being resolved. Alphabet said it expects to incur charges of up to $2.3bn in respect of severance costs for 12,000 employees in its Q1 numbers when it reports later this week. Profits are expected to come in at $1.10c a share.
The Facebook owner also announced a $40bn share buyback. Meta also said it expects to see Q1 revenues come in between $26bn to $28.5bn, which was in line with expectations, as the company saw active daily users rise to 2bn a day, also beating forecasts. The Reality Labs business continues to haemorrhage cash to the tune of a -$4.28bn operating loss in Q4, above expectations of a -$3.99bn loss, although revenues did increase, coming in at $727m. In March Meta said it was looking to cut thousands of more positions on top of the 11k it announced at the end of last year, which is likely to see costs rise in the short term. The share price gains seen so far this year have far outstripped its peers, up over 70%, however, these need to be set in the context of the falls last year which saw the shares tank over 70% from its record highs of $384 back in September 2021. Q1 profits are expected to come in at $1.99c a share.
In Q3 Amazon downgraded expectations around their Q4 revenues to between $140bn to $148bn, so it was welcome that they managed to beat on this, coming in at $149.2bn, while they also managed to eke out a profit of $300m or 3c a share. This was a nice bonus given warnings that we might see another loss due to another $2.3bn write-down from its stake in Rivian, which weighed on the top-line numbers. AWS was slightly weaker than expected, with revenues of $21.3bn, but these were still up 20% year over year. For the full year, Amazon posted $514bn in net sales, compared with $496.8bn in 2021, however, the company posted a net annual loss of $2.7bn, with Rivian knocking $12.7bn off that profit number, compared to a $33.4bn profit in 2021. In an attempt to better control its cash flow Amazon is slowing its capex expenditure pausing construction on its second HQ in Virginia. For its Q1 guidance, Amazon said it expects to deliver between $121bn and $126bn, which was slightly on the lower side of forecasts of $125.5bn. Profits are expected to come in at $0.20c a share.
