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Microsoft, Alphabet & Snapchat Record Growth In Q3

Alphabet, Microsoft and Snapchat recorded an increase in revenues in quarter 3 earnings. The three companies attributed the growth to Artificial Intelligence (AI) innovations, Pixel devices, Chatbot, Open AI, generative AI and ChatGPT.

According to Alphabet, its Q3 earnings after the closing bell on Tuesday exceeded analyst expectations on both revenue and earnings per share. Alphabet’s advertising business reported $59.7 billion in revenue, beating consensus estimates of $58.9 billion.

Sundar Pichai, Google CEO, in a statement said: “I’m pleased with our financial results and our product momentum this quarter, with AI[1]driven innovations across Search, YouTube, Cloud, our Pixel devices and more. We’re continuing to focus on making AI more helpful for everyone; there’s exciting progress and lots more to come.”

Ruth Porat, President and Chief Investment Officer; CFO added: “The fundamental strength of our business was apparent again in Q3, with $77 billion in revenue, up 11% year over year, driven by meaningful growth in Search and YouTube, and momentum in Cloud. We continue to focus on judicious capital allocation to deliver sustainable financial value.”

On its part, Microsoft reported revenue of $56.5 billion in the quarter, beating consensus estimates of $54.5 billion.

Adjusted earnings per share (EPS) were $2.99 compared to an expected $2.66 per share, while. Microsoft’s Intelligent Cloud segment brought in $24.3 billion while expectations were $23.6 billion. Azure and other cloud services saw revenue jump 29% in the quarter, also beating Wall Street expectations of 27%.

The company made a major focus on AI business including a $10 billion investment in ChatGPT developer OpenAI and the launch of generative AI-enhanced versions of Bing search and the Edge browser earlier this year.

Satya Nadella, Microsoft CEO, in a statement said: “With copilots, we are making the age of AI real for people and businesses everywhere. We are rapidly infusing AI across every layer of the tech stack and for every role and business process to drive productivity gains for our customers.”

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SnapChat reported revenue of $1,189 million, compared to $1,128 million in the prior year, an increase of 5% year-over-year. Snap’s net loss was $368 million, compared to $360 million in the previous year.

Along with reporting DAUs at 406 million in Q3 2023, an increase of 43 million, or 12%, year-over-year, Snap said that over 200 million people have used their Chatbot My AI, sending more than 20 billion messages. The company also signed up 5 million people for its premium subscription Snapchat+, adding a potential annual income of more than $200 million.

According to the company more creators are posting content to Snapchat with nearly three times more public Stories posted in the US compared to Q3 2022.

Evan Spiegel, CEO SnapChat in a statement said: “We are focused on improving our advertising platform to drive higher return on investment for our advertising partners, and we have evolved our go-to-market efforts to better serve our partners and drive customer success.”

Revenue was $1,189 million, compared to $1,128 million in the prior year, an increase of 5% year-over-year, Net loss was $368 million, compared to $360 million in the prior year, Adjusted EBITDA was $40 million, compared to $73 million in the prior year, Operating cash flow was $13 million, compared to $56 million in the prior year, Free Cash Flow was $(61) million, compared to $18 million in the prior year and Trailing twelve months operating cash flow was $207 million and trailing twelve months Free Cash Flow was $2 million.

Spiegel continued saying: “Due to the unpredictable nature of war, we believe it would be imprudent to provide formal guidance for Q4. Our internal forecast assumes a revenue range of $1,320 million to $1,375 million, implying year-over-year revenue growth of approximately 2% to 6%.”

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