$MSFT, $GOOG, $SPOT earnings breakdowns + Coco CEO Zach Rash | E1596 | Summary and Q&A

TL;DR

Microsoft, Google, and Spotify reported earnings with Microsoft showing slow revenue growth, Google missing expectations, and Spotify experiencing larger than expected losses.

Key Insights

• ✋ The weakest companies and products, such as cryptocurrency, meme stocks, and high-growth tech stocks, were the first to experience the effects of the recession.
• 🐢 Microsoft's slow revenue growth indicates potential headwinds in the market and the need for belt-tightening measures.
• 😥 Google's challenges lie in the slowdown of ad revenue growth, but their cloud revenue shows promise.
• 😋 Spotify's losses and quality-focused approach present opportunities for improvement and differentiation in the food and grocery delivery market.
• 👻 The reliance on human operators for Coco's delivery robots allows for better quality control and reliability, with autonomy as a future enhancement.
• 🇨🇷 Hardware costs are a challenge in scaling a delivery robot business, but Coco's low-cost approach and payback period help mitigate this challenge.
• 😮 The delivery industry as a whole faces obstacles in generating profits due to regulatory fees, rising minimum wages, and driver supply demands.

Transcript

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Questions & Answers

Q: Why did Microsoft experience slow revenue growth?

Microsoft's slow revenue growth can be attributed to the weaker performance of certain segments like Windows OEM Revenue and a challenging market environment.

Q: How did Google fare in their earnings report?

Google missed expectations due to slower growth in ad revenue, particularly in YouTube ads. However, their cloud revenue showed growth.

Q: What challenges did Spotify face in their earnings report?

Spotify reported larger than expected losses but showed growth in premium and ad-supported users. The company is focusing on improving the delivery quality and scaling their operations.

Q: How did the pandemic affect Spotify's business?

The pandemic provided a tailwind for Spotify as contactless delivery became more important. This led to an increase in users and the adoption of their service.

Summary

In this video, the host discusses the earnings reports of Microsoft, Google, and Spotify. He explains the impact of the recession on these companies and analyzes their revenue growth, cloud services, and ad-based businesses. He also shares his thoughts on market trends and the potential strategies these companies might adopt in the future.

Questions & Answers

Q: How did Microsoft perform in their earnings report?

Microsoft reported their slowest revenue growth in five years. Their shares are down and their market cap has decreased by $150 billion. However, their revenue is still significant at $50 billion for the quarter, up 11% from last year.

Q: Why is Microsoft's revenue growth slowing down?

The slowdown in revenue growth is likely due to the recession and the impact it has on companies' spending and investment decisions. With the uncertainty in the market, businesses are tightening their belts and reevaluating their cloud computing and advertising expenses.

Q: Why is Google down in their earnings report?

Google missed their expectations slightly and their stock is down 8%. They are experiencing headwinds in their ad-based business, as companies reduce their advertising spending during the recession. However, their cloud revenue is growing at 37% year over year.

Q: How is Google's cloud business performing?

Google Cloud revenue is up 37% year over year, but the growth rate has slowed down. This could be due to increased competition from other cloud service providers like Azure and AWS. Google is making efforts to catch up and has been investing more in their cloud services recently.

Q: Why are PC sales down and how does it affect Microsoft's revenue?

PC sales have decreased because many companies provided employees with computers for remote work during the COVID-19 pandemic. Consequently, Windows OEM revenue has dropped by 15% year over year for Microsoft. The decrease in PC sales affects Microsoft's revenue as the company relies on OEMs to pay for Windows licenses.

Q: How is Spotify doing in their earnings report?

Spotify is down 11% after reporting larger than expected losses in Q3. Their market cap has decreased by $29 billion year-to-date. However, they are still growing their user base, with 195 million premium subscribers and 456 million monthly active users.

Q: What are Spotify's future plans?

Spotify is expanding beyond music and podcasting, with ambitions to compete in the video streaming space. They have the potential to produce video shows, documentaries, and reality TV series. By doing so, they can attract more users and advertisers, diversifying their revenue streams.

Q: How is Spotify's ad-supported revenue growing?

Spotify's ad-supported revenue accounts for 13% of their total revenue, up 19% year over year. They have over 4.7 million podcasts on their platform, which helps to drive ad-supported revenue growth. However, the number of podcasts is not as important as the number of listening hours and the podcasts that can be monetized.

Q: What challenges does Spotify face?

Spotify's cost of revenue is high because they need to pay a significant portion of their revenue to music labels. To improve their gross profit, they need to reduce their reliance on the music industry. Additionally, they may face tough competition in the video streaming market as they try to expand their content offerings.

Q: How do the earnings reports of these companies reflect the current market conditions?

The earnings reports show that even the strongest companies are not immune to the challenges posed by a recession. All major companies, including Microsoft, Google, and Spotify, are facing headwinds and need to tighten their belts and reevaluate their expenses. This creates a unique opportunity for startups to thrive and differentiate themselves in the market.

Takeaways

This video highlights the earnings reports of Microsoft, Google, and Spotify and delves into the challenges they are facing in the current market. The recession has impacted their revenue growth and profitability, leading to stock price declines and the need to cut costs. Despite this, it is an opportune time for startups to enter the market and take advantage of the weaknesses of these large companies. The key takeaway is that startups should focus on providing innovative solutions and be agile in adapting to the changing market conditions.

Summary & Key Takeaways

• Microsoft reported their slowest revenue growth in five years, with shares down and a $150 billion drop in market cap.

• Google missed expectations with a slowdown in ad revenue growth, while their cloud revenue increased.

• Spotify reported larger than expected losses but showed growth in premium and ad-supported users.