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Wow, the numbers that AAPL, AMZN, FB have reported. While everyone struggled I guess mid/big tech companies were unaffected. I am surprised ad industry is not

Wow, the numbers that AAPL, AMZN, FB have reported. While everyone struggled I guess mid/big tech companies were unaffected. I am surprised ad industry is not affected heavily. Isn't ads the first thing a company will cut if things look bleak.

overcast 6y ago
Those AMZN numbers are completely nonsensical, how do you beat estimates by 9x? Who the hell did that estimating???
- selectodude 6y ago
  Amazon promised to spend all of their profits on reinvestment into the company, but they didn't.
  - donor20 6y ago
    Uh? They expected to have $4B in profit, said they may spend $4B on extra expenses this period -> but demand has SOARED and they already huge, so absolutely pumping out the $. I know we've read about the major strikes by Amazon workers here repeatedly (supposedly all of them walking out etc). Doesn't seem to have affected the top line sales at least.
- crdrost 6y ago
  Possible that estimates were before COVID was affecting us?
- nostrademons 6y ago
  Because Amazon is comparatively low-margin vs. other tech companies, improved revenue has a much greater effect on earnings. Amazon's revenue was $88.9B vs. $81.24B expected. That's each household spending about 10% more from Amazon, which is pretty reasonable with lockdown and nobody going to brick & mortar retail outlets. But with expenses at around $80B, that translates into earnings of $10.30/share vs. $1.51.
  - mikeschmatz 6y ago
    > Because Amazon is comparatively low-margin vs. other tech companies, improved revenue has a much greater effect on earnings. Are you saying that 10% revenue increase has led to 10x earnings beat? That doesn't make any sense.
    - UncleMeat 6y ago
      If a lot of their costs are fixed it makes sense.
    - esoterica 6y ago
      How does basic arithmetic not make sense? If you were expected to make $1.01 and spend $1, and instead you made $1.10 and spent $1, your revenue only beat by 9% but your income beat by 900%.
- mikeschmatz 6y ago
  You purposely set them very low, then "beat" them and watch stock price go to the moon.
adventured 6y ago
I think the ad market was heavily affected. We saw that with Snap for example (their stock fell badly on the earnings release as it disappointed). Google just reported the first revenue decline in their history. Facebook's sales growth rate was a mere 11%, which is the slowest in their history and is very slow for them. It probably would have been considerably higher in normal times (more like ~18%-25% or more). Forecasts across the ad industry are quite weak going forward.
mic47 6y ago
They will not cut ads off. They will try to consolidate ads and use ad budget more efficiently. Most likely, google, facebook ads are more likely more effective than non-targeted ads like TV, so while total ads budget goes down, targeted ads budget don't. Or there could be other effect...
Snoozle 6y ago
Not really. Ads done properly are heavily tracked from appearance on a page to purchase of an item. When campaigns are no longer bringing in more revenue than they are costing, those campaigns are suspended. It has nothing to do with anything else, just if money in > money out.
mytailorisrich 6y ago
These good results were expected. Working from home and lockdowns in general.
basch 6y ago
Facebook has a very long tail of advertisers in line for spots. The biggest companies boycotting just gave the same ad space to smaller companies. Facebooks business is built exceptionally well to be resilient to these sorts of boycotts, and the results are in the pudding. Facebook revenue YoY up 11% and Alphabet down 2%. >[At Facebook] Q1 2019 the top 100 advertisers made up less than 20% of the company’s ad revenue; most of the $69.7 billion the company brought in last year came from its long tail of 8 million advertisers. >This focus on the long-tail, which is only possible because of Facebook’s fully automated ad-buying system, has turned out to be a tremendous asset during the coronavirus slow-down. >This explains why the news about large CPG companies boycotting Facebook is, from a financial perspective, simply not a big deal. Unilever’s $11.8 million in U.S. ad spend, to take one example, is replaced with the same automated efficiency that Facebook’s timeline ensures you never run out of content. Moreover, while Facebook loses some top-line revenue — in an auction-based system, less demand corresponds to lower prices — the companies that are the most likely to take advantage of those lower prices are those that would not exist without Facebook, like the direct-to-consumer companies trying to steal customers from massive conglomerates like Unilever. >In this way Facebook has a degree of anti-fragility that even Google lacks: so much of its business comes from the long tail of Internet-native companies that are built around Facebook from first principles, that any disruption to traditional advertisers — like the coronavirus crisis or the current boycotts — actually serves to strengthen the Facebook ecosystem at the expense of the TV-centric ecosystem of which these CPG companies are a part. from https://stratechery.com/2020/apple-and-facebook/ https://stratechery.com/2020/apple-and-facebook/
- actuator 6y ago
  Yeah, that's interesting. I would have assumed the tail to shorten as well though. I am guessing digital businesses are a significant part of the tail.
elorant 6y ago
The majority of ads on FB are from e-commerce sites, and e-commerce skyrocketed during the pandemic.
reaperducer 6y ago
Isn't ads the first thing a company will cut if things look bleak. It depends on the advertiser and the industry. For example, immediately after 9/11, and again when states started locking down, ads for local auto dealers evaporated almost overnight. But others were ready to take their place. I wonder if it's also because these are Q2 results, and those ad campaigns would already have been budgeted and allocated. But I don't know what Facebook's Q2 months are.

overcast 6y ago

Those AMZN numbers are completely nonsensical, how do you beat estimates by 9x? Who the hell did that estimating???

selectodude 6y ago
Amazon promised to spend all of their profits on reinvestment into the company, but they didn't.
- donor20 6y ago
  Uh? They expected to have $4B in profit, said they may spend $4B on extra expenses this period -> but demand has SOARED and they already huge, so absolutely pumping out the $. I know we've read about the major strikes by Amazon workers here repeatedly (supposedly all of them walking out etc). Doesn't seem to have affected the top line sales at least.
crdrost 6y ago
Possible that estimates were before COVID was affecting us?
nostrademons 6y ago
Because Amazon is comparatively low-margin vs. other tech companies, improved revenue has a much greater effect on earnings. Amazon's revenue was $88.9B vs. $81.24B expected. That's each household spending about 10% more from Amazon, which is pretty reasonable with lockdown and nobody going to brick & mortar retail outlets. But with expenses at around $80B, that translates into earnings of $10.30/share vs. $1.51.
- mikeschmatz 6y ago
  > Because Amazon is comparatively low-margin vs. other tech companies, improved revenue has a much greater effect on earnings. Are you saying that 10% revenue increase has led to 10x earnings beat? That doesn't make any sense.
  - UncleMeat 6y ago
    If a lot of their costs are fixed it makes sense.
  - esoterica 6y ago
    How does basic arithmetic not make sense? If you were expected to make $1.01 and spend $1, and instead you made $1.10 and spent $1, your revenue only beat by 9% but your income beat by 900%.
mikeschmatz 6y ago
You purposely set them very low, then "beat" them and watch stock price go to the moon.

adventured 6y ago

I think the ad market was heavily affected. We saw that with Snap for example (their stock fell badly on the earnings release as it disappointed). Google just reported the first revenue decline in their history. Facebook's sales growth rate was a mere 11%, which is the slowest in their history and is very slow for them. It probably would have been considerably higher in normal times (more like ~18%-25% or more). Forecasts across the ad industry are quite weak going forward.

mic47 6y ago

They will not cut ads off. They will try to consolidate ads and use ad budget more efficiently. Most likely, google, facebook ads are more likely more effective than non-targeted ads like TV, so while total ads budget goes down, targeted ads budget don't. Or there could be other effect...

Snoozle 6y ago

Not really. Ads done properly are heavily tracked from appearance on a page to purchase of an item. When campaigns are no longer bringing in more revenue than they are costing, those campaigns are suspended. It has nothing to do with anything else, just if money in > money out.

mytailorisrich 6y ago

These good results were expected. Working from home and lockdowns in general.

basch 6y ago

Facebook has a very long tail of advertisers in line for spots. The biggest companies boycotting just gave the same ad space to smaller companies. Facebooks business is built exceptionally well to be resilient to these sorts of boycotts, and the results are in the pudding. Facebook revenue YoY up 11% and Alphabet down 2%. >[At Facebook] Q1 2019 the top 100 advertisers made up less than 20% of the company’s ad revenue; most of the $69.7 billion the company brought in last year came from its long tail of 8 million advertisers. >This focus on the long-tail, which is only possible because of Facebook’s fully automated ad-buying system, has turned out to be a tremendous asset during the coronavirus slow-down. >This explains why the news about large CPG companies boycotting Facebook is, from a financial perspective, simply not a big deal. Unilever’s $11.8 million in U.S. ad spend, to take one example, is replaced with the same automated efficiency that Facebook’s timeline ensures you never run out of content. Moreover, while Facebook loses some top-line revenue — in an auction-based system, less demand corresponds to lower prices — the companies that are the most likely to take advantage of those lower prices are those that would not exist without Facebook, like the direct-to-consumer companies trying to steal customers from massive conglomerates like Unilever. >In this way Facebook has a degree of anti-fragility that even Google lacks: so much of its business comes from the long tail of Internet-native companies that are built around Facebook from first principles, that any disruption to traditional advertisers — like the coronavirus crisis or the current boycotts — actually serves to strengthen the Facebook ecosystem at the expense of the TV-centric ecosystem of which these CPG companies are a part. from https://stratechery.com/2020/apple-and-facebook/ https://stratechery.com/2020/apple-and-facebook/

actuator 6y ago
Yeah, that's interesting. I would have assumed the tail to shorten as well though. I am guessing digital businesses are a significant part of the tail.

elorant 6y ago

The majority of ads on FB are from e-commerce sites, and e-commerce skyrocketed during the pandemic.

reaperducer 6y ago

Isn't ads the first thing a company will cut if things look bleak. It depends on the advertiser and the industry. For example, immediately after 9/11, and again when states started locking down, ads for local auto dealers evaporated almost overnight. But others were ready to take their place. I wonder if it's also because these are Q2 results, and those ad campaigns would already have been budgeted and allocated. But I don't know what Facebook's Q2 months are.