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MacKenzie Scott alone accounted for one-third of America's $19.2 billion in megagifts last year

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Apple, Google, and Microsoft just posted astonishing numbers

By
Jonathan Vanian
Jonathan Vanian
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By
Jonathan Vanian
Jonathan Vanian
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July 27, 2021, 8:10 PM ET
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Apple, Google parent company Alphabet, and Microsoft collectively brought in nearly $190 billion in sales during their latest fiscal quarters, underscoring how the COVID-19 pandemic has benefited the tech giants’ various business units. 

The three tech behemoths reported quarterly earnings on Tuesday, each posting rising sales and soaring profits. The tech giants’ combined quarterly profits reached $57 billion. 

But Wall Street welcomed the tech giants’ revenue growth with a collective shrug amid a tough day on the stock market, likely brought on by rising concerns over the COVID-19 pandemic’s effect on the economy as the deadly Delta variant continues to spread. Apple shares were down 1.7% in after-hours trading on Tuesday to $144.63 while Microsoft’s shares were relatively flat at $289.05.

Meanwhile, Alphabet’s shares were up 3.11% in after-hours trading to $2.718.90, likely due to investor enthusiasm over massive growth in the company’s core online advertising business, which jumped nearly 69% year-over-year to $50.44 billion. Whereas Apple and Microsoft revealed certain figures that indicate the companies may be experiencing some negative impacts of COVID-19, the core Google advertising business appears to be untouched by the pandemic.

Here’s some interesting tidbits from the tech giants’ latest earnings.

YouTube’s current boom benefits Alphabet

Alphabet’s overall sales jumped 62% year-over-year to $61.88 billion in its latest quarter while the company’s net income more than doubled to $18.53 billion. 

Online advertising sales for Alphabet’s YouTube video service skyrocketed 83.7% year-over-year to $7 billion in the company’s fiscal second quarter, just shy of the $7.34 billion that rival Netflix recently landed for its most recent quarter. And Alphabet CFO Ruth Porat indicated during an earnings call that YouTube’s overall sales could have been even bigger this quarter when she said that growth in YouTube’s non-advertising related revenue—which includes YouTube’s subscription service and movie rentals—was the primary reason why revenue in the“Google Other” category jumped 29% year-over-year to $6.6 billion. The “Google Other” category includes sales of Alphabet’s hardware products like the Pixel smartphone and the Google Play store.

Apple Services on the rise…for now

Apple’s total sales climbed 36% year-over-year to $81.4 billion in the company’s latest quarter while its profits rose 93% to $21.7 billion. 

During a call with analysts, Apple CEO Tim Cook boasted about sales in the Apple Services unit, which rose 32.9% to $17.49 billion in the company’s fiscal third quarter. He said that the Services unit, which includes Apple TV and Apple Music, set a “new all-time revenue record.”

But Apple senior vice president and CFO Luca Maestri noted that the Services unit may not experience such high growth next quarter. Last year during the same quarter, not as many people were using some Apple Services like the Apple Care warranty product because of shelter-in-place rules during that time, Maestri explained. Therefore, Apple Services grew exceptionally high this quarter, but may not for the following quarter.

Cook also commented about supply chain issues that Apple, like many big companies, are facing this year, saying that Apple is “paying more for freight than I would like to pay.” Still, he said that “component costs continue in the aggregate to decline,” which will lower the overall cost of Apple’s hardware production. 

“In terms of supply constraints and how long they will last, I don’t want to predict that today,” Cook said when asked about supply chain issues. “We’re going to take it sort of one quarter at a time [and] we’ll do everything we can to mitigate whatever set of circumstances we’re dealt.”

Microsoft’s Xbox gaming subscription business takes a hit

Microsoft’s overall sales rose 21% year-over-year to $46.15 billion during its fiscal fourth quarter, while the company’s profits increased 47% year-over-year to $16.5 billion.

Microsoft’s personal computing unit, which includes Windows and video games, rose 9% year-over-year to $1.2 billion. One interesting note is that Microsoft executives did not brag about high-growth in the company’s Xbox Game Pass video game subscription service like they have in previous quarters.

That video game subscription service is crucial to Microsoft’s overall gaming business, and it’s been racking up sales every quarter. But as Microsoft CFO Amy Hood told analysts, Xbox content and services sales decreased 4%-year-over-year to $128 million in the latest quarter. She explained that the sales drop was due to “a decline in third-party titles on a strong prior year comparable that benefitted from stay-at-home scenarios.”

Translation: People are foregoing video games and heading outdoors for the summer, with a lack of compelling new games luring them back indoors.

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About the Author
By Jonathan Vanian
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Jonathan Vanian is a former Fortune reporter. He covered business technology, cybersecurity, artificial intelligence, data privacy, and other topics.

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