US Companies Set New Records in Q2... A Preview of Q3

Record High Demand for Contactless Services
Uncertainty Due to Supply Chain Disruptions
Concerns Over Growth Slowdown in Q3

[Asia Economy Reporter Yujin Cho] Major US big tech companies such as Apple, Google, Facebook, and Microsoft (MS) posted better-than-expected strong earnings in the second quarter of this year. The explosive demand for non-face-to-face services drove a surge in demand for IT hardware and software, as well as a sharp increase in online advertising revenue, which propelled their performance.

Apple, which was the first to announce its earnings on the 28th, reported $81.434 billion in revenue for the second quarter (Apple's own fiscal third quarter), a 36.4% increase compared to the same period last year. This significantly exceeded Wall Street's estimate of $73.3 billion. Net income for the same period rose 93.2% to reach $21.744 billion.

Apple's iPhone sales increased by 49.8% compared to the same period last year, with all business divisions achieving double-digit revenue growth. Service revenue grew by 33%, other products by 40%, Mac computers by 16%, and iPad sales by 12%, all increasing simultaneously.

Google's parent company Alphabet also posted a surprise performance with second-quarter revenue of $61.88 billion, a 62% increase year-over-year. This also significantly exceeded Wall Street's expectations and marked the highest growth rate in 14 years. Net income for the same period more than doubled to $18.525 billion.

The Wall Street Journal (WSJ) reported that Google's surprise earnings were attributed to increased online advertising demand from companies preparing for the post-COVID-19 economic reopening.

Google's advertising revenue rose 69% compared to the same period last year, which was hit hard by the COVID-19 pandemic, and YouTube revenue also increased by 84% year-over-year.

Satya Nadella MS CEO

The world's largest social media company, Facebook, also continued its strong earnings streak, with second-quarter net income surpassing $10 billion.

Facebook's second-quarter revenue was $29.077 billion, up 56% from $18.687 billion in the same period last year, exceeding Wall Street's estimate of $27.81 billion. Net income was $10.394 billion, a 101% increase compared to $5.178 billion in the same period last year.

The number of ads delivered to nearly 3 billion users increased by about 6%, and the average price also rose, leading to increases in both revenue and net income.

MS also posted strong earnings with a 49% year-over-year increase in earnings per share for the second quarter (MS's own fiscal fourth quarter), driven by a surge in cloud segment revenue centered on Azure. This exceeded market expectations of $1.92 per share.

Azure, the cloud service competing with Amazon's AWS, saw revenue grow 51% in the second quarter, surpassing market expectations of 45.3%, continuing its rapid growth following 50% growth in the first quarter.

Photo by AP Yonhap

Although big tech companies all posted strong earnings in the second quarter, concerns about a peak-out are emerging from the third quarter onward. This is due to increasing business uncertainties such as the spread of the COVID-19 Delta variant, interest rate hikes, and the global semiconductor supply shortage.

Apple's Chief Financial Officer (CFO) Luca Maestri said, "The impact of the global semiconductor supply shortage on earnings will be greater in the third quarter than in the second quarter," and Alphabet CFO Ruth Porat also stated, "Revenue growth in the third quarter will be weaker than in the second quarter."

Facebook also stated that the reduction in targeted advertising revenue due to Apple's data collection restrictions will become more pronounced from the third quarter, making a slowdown in growth inevitable.

Facebook explained, "We expect revenue growth rates in the third and fourth quarters of this year to slow significantly compared to the current rate," adding, "The impact on advertising revenue from Apple's mobile operating system (iOS) updates is expected to be greater from the third quarter than in the second quarter."

This content was produced with the assistance of AI translation services.