Q2 Earnings Blowout: Apple, Amazon, Facebook, Google

Update3 months ago
Thursday marked a big earnings day for the Titan portfolio, with four portfolio holdings each reporting earnings after hours.
Strong results were reported across all four companies, with three rising more than 5% after hours.
Key takeaways from each earnings report are below.
Apple: Strong hardware sales and a stock split
Apple rose 6% after exceeding analyst revenue and profit estimates by 14% and 26%, respectively. Despite COVID-related headwinds, the company was able to grow revenue by 11% year-over-year and book its best fiscal third quarter in history.
This outperformance was largely driven by strength across of its entire range of hardware products, from iPads to wearables.
We believe increased consumer reliance on Apple's hardware products (driven by work-from-home and shelter-in-place dynamics) helped offset the impact of COVID-related store closures and supply chain disruptions throughout the quarter.
The company also announced a stock split (the fifth in its history) that would effectively split each individual share of its stock into four.
This move is primarily aimed at making individual shares (which now approach $400 territory) more accessible for individual investors to invest in.
Amazon: International segment drives massive profit beat
Amazon rose 5% after exceeding analyst revenue and profit estimates by 9% and nearly 600%, respectively, despite incurring over $4 billion of COVID-related expenses through the quarter.
We believe the huge beat on EPS (which nearly doubled its prior year number and at over $10, breezed past analysts' $1.50 estimates) points to the strong operating leverage inherent in Amazon's heavy fixed cost model.
While analysts had projected growing losses on Amazon's more emerging international segment, surging demand in key international markets led to higher utilization of its fulfillment capacity, driving the segment to profitability in the quarter.
Management remarked seeing many of the same trends they witnessed in the U.S. previously in key international markets, such as more frequent Prime purchases and larger order/basket sizes.
While Amazon will likely continue to invest and expand its international capacity to accommodate further growth, we saw this as a strong signpost of the ultimate end-game for Amazon's long-term growth playbook.
Facebook: Solid traction on new business services
Facebook rose 6% after exceeding revenue and earnings estimates by 8% and 30%, respectively.
The company saw its monthly active users grow nearly 4% vs. the prior quarter as social distancing measures drove increases in user activity across its properties.
Despite this, management baked healthy conservatism into its financial outlook and guided for flat to slightly down active user counts in Q3 in anticipation of easing sheltering in place dynamics.
We were particularly pleased to hear the management's commentary around its nascent non-advertising focused product offerings, with Facebook Shops starting to gain traction and Whatsapp Business now boasting 50 million customers (up from 5 million last year).
We see these initiatives as very additive over the long-run as Facebook evolves from having a primarily advertising-focused toolkit to encompass a broader set of digital services and tools for businesses of all sizes.
Google: Steady recovery in search and strong cloud growth
Google rose 1% after exceeding revenue and earnings estimates by 3% and 28%, respectively.
Through the quarter, the company reported seeing month-over-month improvement in its Search business, which began the quarter down mid-teens year-over-year, but slowly recovered as search patterns returned to more commercial topics.
Despite the topline headwinds, we were pleased to see management continue to invest heavily in key growth segments like Cloud, which grew 43% year-over-year as large customers continued to make new multiyear commitments to the platform.
As of this writing, AAPL, AMZN, FB, GOOG were a portfolio holding of Titan Invest. This security may cease to be a portfolio holding at some point in the future.

Become a Titan investor today.

Titan Invest is an SEC registered investment adviser. By using this website, you accept our Terms of Use and Privacy Policy. Titan’s investment advisory services are available only to residents of the United States in jurisdictions where Titan is registered. Nothing on this website should be considered an offer, solicitation of an offer, or advice to buy or sell securities. Past performance is no guarantee of future results. Any historical returns, expected returns [or probability projections] are hypothetical in nature and may not reflect actual future performance. Account holdings are for illustrative purposes only and are not investment recommendations. The content on this website is for informational purposes only and does not constitute a comprehensive description of Titan’s investment advisory services.
Refer to Titan Invest’s Program Brochure for more information. Certain investments are not suitable for all investors. Before investing, consider your investment objectives and Titan’s fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Brokerage services are provided to Titan Clients by Apex Clearing, an SEC registered broker-dealer and member FINRA/SIPC. For more information, see our disclosures. Contact: 110 Greene Street, Suite 910, New York, NY 10012. Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice.
© Copyright 2020 Whisker Technologies, Inc. All rights reserved.