What Google, Twitter & Microsoft’s Q3 earnings tell us about the industry

Twitter takes Olympic gold

• Twitter recorded revenue growth of 37% for the period, bringing earnings up to a healthy $1.284bn on the back of a Tokyo Olympics bonanza that generated 76bn tweet impressions.

• Lauding Twitter’s capitalization of the event, chief financial officer Ned Segal said: “12 of the 14 official Olympics sponsors advertised on Twitter. Our shift to direct response ads also made great strides. For math advertisers, we launched an updated learning period model that delivers more consistent campaign performance. And for website clicks, we introduced a multi-destination CareSouth to enable advertisers to market and drive traffic to multiple products inside the same ad on Twitter.”

• Twitter also benefited from a resumption of holiday bookings, which precipitated a 40% jump in travel advertising as well as food delivery, which soared 140%.

• Unbowed by Apple’s privacy stance, macroeconomic challenges or Covid, the bullish social platform expects fourth-quarter revenue to fall between $1.5bn and $1.6bn.

• Looking ahead, chief executive Jack Dorsey pledged to do more for small and medium-sized businesses wishing to advertise by embracing performance-based solutions. He said: “... we do have a lot of small businesses on Twitter, but we have not served them well both in terms of the products and also the advertising capabilities. DR (direct revenue) is a big part of this, making sure that we continue our move toward far more performance-based advertising.”

• Twitter believes it won’t be hugely impacted by ATT or IDFA on the basis that it is confident users will opt into advertising based on their trust of the app if “given a really clear explanation of what we’re asking.”

Google rides a YouTube wave

• Google reported total services revenues of $59.9bn for the period, up 41%, of which $37.9bn was attributed to search and other advertising revenues, a rise of 44%.

• In an earnings call, chief business officer Philipp Schindler appraised investors on just how resilient advertising has been, stating: “Year-on-year performance was driven by broad-based strength in advertiser spend.”

• Google’s bottom line has been bolstered by connected TV (CTV), now the organization's fastest-growing screen, as brands such as Domino’s Pizza flock to YouTube.

• As a result, YouTube advertising revenues reached $7.2bn, an increase of 43% from the previous quarter thanks to both direct response and brand advertising.

• Dismissing any threat posed by Apple’s privacy machinations in a query from a JPMorgan analyst, Schindler added: “Our focus is on supporting developers, small and large advertisers, creators, publishers, so that they’re able to mitigate impact to their businesses. And we really see the future of digital advertising build on advances and privacy-preserving on device technologies, which support the free and open internet, and, obviously, a robust ad ecosystem.”

Microsoft shrugs off PC constraints

• Microsoft joined the earnings party with revenue growth of 22%, surprising analysts on the upside with revenues of $45.32bn, significantly ahead of the $43.97bn that had been penciled in.

• At the heart of this performance was its More Personal Computing business, a category that includes Windows devices, gaming and search advertising, which posted a 12% jump in revenue to $13.31bn – ahead of a $12.72bn consensus.

• The performance was all the more impressive for coming during a global supply chain crisis constraining PC shipments to 1% growth. Nevertheless, sales of the Windows operating system to device makers rose 10%.

• LinkedIn advertising meanwhile was up 61% year-on-year.

• Warning of possible disruption ahead in Microsoft’s investor call, chief financial officer Amy Hood said: “In Search and News Advertising X Tech, we expect revenue growth in the low to mid 20s. If supply chain uncertainty reduces advertising budgets our results would be negatively impacted.”

• Yesterday Facebook recorded a 35% surge in revenues despite headwinds emanating from Apple.