Friday, Oct 30th 2020

Record earnings for big tech


Thursday afternoon represented the biggest earnings event of the quarter as Apple, Amazon, Facebook, and Google each reported blowout quarters.

On the whole, we were impressed with performance across the board as each company reported record calendar Q3s. Our top takeaways from the earnings-palooza are below:


  • Amazon handily beat expectations on both revenues and earnings, exceeding estimates by 4% and 67%, respectively
  • The core driver was continued acceleration of broader eCommerce adoption, as Prime members continued to shop more frequently and across a greater number of product categories vs. prior to the pandemic
  • While $4 billion in COVID-related costs drove down Q4 earnings guidance, we were overall very pleased with bottom line performance
  • Rapid growth in Amazon's small but high-margin advertising business helped accelerate growth in free cash flow to more than 71% year-over-year


  • Apple beat revenue and earnings estimates by 2% and 3%, respectively
  • While work-from-home dynamics helped power a $1 billion beat on Mac product sales, investors were mostly focused on the roughly equivalent shortfall in iPhone sales
  • We believe the shortfall on iPhone was primarily a matter of timing, and was attributable to the several week delay in this year's latest-gen iPhone launch. Prior to mid-September, iPhone sales had actually been tracking to double digit growth
  • With Apple's subscription bundle "Apple One" set to launch on Friday, we expect services to increasingly occupy the center of investors' focus


  • Facebook handily topped expectations on both revenues and earnings, exceeding analyst estimates by 8% and 43%, respectively
  • These blowout results were tempered by a small sequential decline in US/Canada user counts, which is expected to continue into Q4 as user metrics continue to normalize from the "peak pandemic" surge seen in Q2
  • We were pleased to hear commentary suggesting growing monetization across the platform as the company increasingly integrates its digital properties (including the perennially undermonetized WhatsApp) and ramps its efforts in eCommerce with Shops


  • Google surged past expectations on both revenues and earnings, beating estimates by 8% and 45%, respectively
  • We were most impressed by growth in YouTube, which topped analyst estimates by nearly 15%, reflecting a sharp rebound in brand advertiser spending
  • Additionally, the company finally announced that it would break out its Cloud business into its own reporting segment, which we view as a strong signal of internal confidence in the business and Google's intent to cement its position within its broader growth story
As of this writing, AAPL, AMZN, FB, GOOG were a portfolio holding of Titan. This security may cease to be a portfolio holding at some point in the future.
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