Tuesdata: How big tech stacks up after reporting season

Welcome to Tuesdata, our weekly look into the most interesting data from the media and marketing industry.

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A few weeks ago we dedicated Tuesdata to how the holding companies stacked up after the majority of them had reported their first half 2022 results. 

This week we’re going to apply similar methodology to big tech. There could be arguments as to who exactly should be included in the category of big tech, but for this example we will use the big four.

That is Alphabet (Google), Meta (Facebook), Amazon and Microsoft. For interest, we will also include the other increasingly important player in terms of advertising (and privacy), Apple. 

We’ll provide a net income comparison chart that includes H1 2021 and H1 2022 for all five businesses and we will pull out advertising business revenue or statistics where possible.

Not all include exact revenue figures for their advertising businesses in their reports but mentions are becoming increasingly key to the businesses.

Big tech, both the big four and beyond, has been a particular focus of the media lately as a large amount of significant tech companies see drops in their advertising revenue and look to cut staff. 

The current economic struggles are not unique to big tech. The majority of the market, including those listed on our own Unmade Index, have shed significant value since the beginning of the year as we entered a substantial market downturn.

What it shows is that technology, often seen as a licence to print money, isn’t immune to significant economic struggles. 

Even the largest and most talked about technology companies including Microsoft, Twitter, PayPal and Netflix have laid off staff. The platform Unmade is published on, Substack, recently shed 14% of its people.

How are the big four performing after the latest reports were released a little over a month ago? We’ll take a closer look below. 

Apple and Alphabet achieve A’s as Amazon aches 

Of the five companies included here, three have reported net income drops compared to the same time last year while one, Amazon, recorded a net income deficit. 

All figures in this section are in US dollars.

Apple

Apple’s diversified offering of products and services has seen it maintain around the $45b mark in net income. The iPhone was responsible for almost half of the total net sales of $83b while services equated to almost $20b.

It’s the advertising arm that has the media and marketing industry wide-eyed as the Cupertino-based company makes serious plays in the privacy space (reportedly costing Meta more than US$10b).

According to Bloomberg, Apple brings in around $4b annually in advertising revenue. 

Alphabet

It’s been a good first half for Alphabet, the parent company of Google, recording the highest year on year (YOY) net income increase. Unlike Apple, a large portion of that revenue comes from advertising and it is reported publicly. 

For the first half it brought in $110.9b from advertising, up from $95.1 billion the year prior. Search makes up for around 70 percent of advertising revenue for Alphabet.

While Apple is making quick and definitive moves on the privacy front, Alphabet has been dragging its heels with a further delay on the death of cookies announced in July. 

Amazon

It’s been a tough first half for Amazon, on paper at least. It’s the only company in this list recording a revenue deficit. That loss has in part been blamed on the investment in electric vehicle business Rivian. 

Its advertising services are recording solid gains despite the overall loss. H1 2022 saw the business take in $16.6b in revenue compared to $13.8b for the first half of 2021.

While it’s still one of the smaller segments of Amazon’s revenue (online stores, third party sales services and Amazon Web Services (AWS) make up the top three), it’s gaining in significance.

As a percentage, its YOY increase (18%) was only bettered by AWS (33%) if you don’t include the category of ‘other’. 

Meta

The business that includes Facebook has seen its financials in the headlines for all the wrong reasons. Analysts have been circumspect about its $10b investment in the metaverse while it recently hit the headlines again for the damage that has been inflicted on it thanks to Apple’s new hard stance on privacy. 

While Meta’s revenue dropped substantially YOY, in terms of advertising, it recorded a very slight gain. H1 2022 saw it achieve $51.2b, up from $54b the prior year. 

That increase wasn’t where it needed to be, however, and the latest earnings report suggested that Meta wasn’t expecting Q3 to deliver a much better result, noting “weak advertising demand.”

Microsoft 

There are few revenue streams that Microsoft hasn’t tried its hand in. From devices to subscriptions, software, search, gaming and more. This year marked the year that it started to be taken more seriously in terms of advertising. 

That isn’t to say it wasn’t being taken seriously before, but its deal with Netflix to support the streaming platform’s advertising play was a blinder that few expected. 

Microsoft puts search and news advertising into a category it calls ‘More Computing’. While that category isn’t entirely advertising revenue, by Microsoft’s own admission it makes up the majority of it. 

It recorded $28.9b in revenue for H1, 2022. That figure was slightly less than the same period for 2021 ($27.1b). 

Microsoft’s Bing search engine still trails Google significantly, currently holding just under a 10 percent share of the market. 

Heralding the Market Herald

As you may have noticed, we have started including Market Herald Ltd (TMH) in the Unmade Index. It’s the new owner of Gumtree, Autotrader and Carsguide. It was also the biggest mover yesterday, up 9.3 percent for a market cap closing in on $130m. That’s Australian dollars. We’re back to local currency now.

Most others lit up green with Seven West Media being the biggest faller, down 2 percent despite the coup of the AFL rights last week. 

Being upfront

It’s Tuesday and I’m sure you have things to do. Thanks for reading to the end. 

It’s an exciting week in media land this week as the first of the major upfronts takes place with Nine. Stay tuned as there will be some interesting notes coming from that.

My Tasmanian-based colleague Tim Burrowes will be in the big smoke for that.

Enjoy your Tuesday.

Stay safe,

Damian

damian@unmade.media