Amazon primes the revenue pump
Huge tech completed earnings season with a bang on Thursday as Amazon completely crushed earnings expectations, whereas Apple, PayPal, and Airbnb provided extra modest excellent news. All figures on this part are in U.S. {dollars}.
Tech incomes highlights this week
- Amazon (AMZN/NASDAQ): Earnings per share of $0.65 (versus $0.35 predicted) and revenues of $134.4 billion (versus $131.5 billion predicted). Share costs shot up greater than 10% in prolonged buying and selling after the earnings announcement. Whereas Amazon’s 48-hour Prime Day could get many of the headlines, it’s necessary to notice that Amazon Internet Service (AWS) accounted for 70% of Amazon’s working revenue for the quarter.
- Apple (AAPL/NYSE): Earnings per share of $1.26 (versus $1.19 predicted) and income of $81.80 billion (versus $81.69 billion predicted), had been largely taken in stride in after-hours buying and selling on Thursday night, with shares down 2% following the earnings announcement. Whereas companies income was up 8% year-over-year, iPad income was down 20%, Mac income fell 20%, and even the mighty iPhone noticed income dip 2% in comparison with final yr’s 2nd quarter. Our favorite random Apple stat from the report was that the corporate has $166.54 billion money readily available. For context, that’s greater than the whole provincial tax income of Quebec and Nova Scotia put collectively.
- PayPal (PYPL/NASDAQ): Earnings per share of $1.18 (versus $1.16 predicted), and revenues of $7.29 billion (versus $7.27 billion predicted). Inventory worth was down 8% in after-hours buying and selling on Wednesday.
- Airbnb (ABNB/NASDAQ): Earnings per share of $0.98 (versus $0.78 predicted), and revenues of $2.48 billion (versus $2.42 billion predicted). Sky-high expectations for the holiday rental on-line market meant that regardless of rising nights booked by nearly 11%, and including 18% income in year-over-year comparisons, shares had been down 6% in prolonged buying and selling.
Canadian REITs climate rate of interest storm
Two of Canada’s most outstanding actual property funding trusts (REITs) launched their quarterly stories this week.
REIT highlights this week
- RioCan (REI-UN/TSX) introduced on Wednesday that dedicated occupancy had elevated to 97.4% and second-quarter web earnings had risen from $78.5 million a yr in the past, to $112 million. The inventory was down 1.12% in buying and selling on Thursday, largely indicating no main surprises.
- Canadian Condo REIT (CAR-UN/TSX) additionally reported quarterly outcomes on Thursday, with CEO and President Mark Kenney commenting: “Our operational efficiency remained sturdy within the second quarter of 2023, with close to 99% occupancy on the Canadian residential portfolio maintained alongside sturdy and secure margins […] We additionally proceed to behave on our asset administration program, and to this point this yr have offered $293 million price of non-strategic buildings, whereas reinvesting $208 million of web proceeds into newly-built rental properties positioned in thriving areas all through Canada. These high-quality, trendy buildings now signify 10% of our Canadian portfolio worth, and we are going to proceed to extend that allocation. Above all else, this serves a higher function in supporting the provision of recent development rental housing in Canada’s highest-density and fastest-growing cities.”
As one in every of Toronto’s largest landlords, RioCan is intently watching its small enterprise section for indicators of rate of interest fatigue. CEO Jonathan Gitlin said that whereas he expects some small companies to “endure and shut,” the REIT’s portfolio of grocers, pharmacies, greenback shops, and liquor shops was in very secure situation. For extra info, take a look at my article on Canadian REITs for 2023 at MillionDollarJourney.ca.
Shopify bets on AI
It was a combined bag of stories for Canada’s fourth-largest firm based mostly on market cap when it launched earnings on Wednesday. Backside-line numbers had been stable, as Shopify (SHOP/TSX/NYSE) reported earnings per share of USD$0.14 (versus USD$0.05 predicted) and revenues of USD$1.69 billion (versus USD$1.63 billion predicted).
Regardless of displaying important enchancment in year-over-year metrics, Shopify’s share worth was down greater than 5% on Thursday.
Shopify continued to execute its sport plan to streamline operations by finishing the sale of Deliverr Inc., in addition to reducing about 30% of its workforce over the past two years.
CFO Jeff Hoffmeister said that severance pay and a loss on the Deliverr sale had led to an general working lack of US$1.6 billion on the quarter, regardless of a 17% year-over-year improve in gross merchandise quantity and a 21% improve in subscriptions-related income.
Very similar to each firm today, Shopify was fast to advertise loads of synthetic intelligence-related alternatives with out being particular about how precisely these would translate into earnings. Whereas we will see how Shopify is ideally positioned to learn from elevated knowledge on buyer gross sales—and will theoretically use AI to optimize based mostly on that knowledge benefit—it stays to be seen simply what impact all this might have on the underside line. Utilizing AI to auto-write e-mail topic traces and to create a chatbot known as “Sidekick” sound like enjoyable concepts, however the path to elevated earnings!?