Here’s one big thing that stood out in each of the tech giants’ calendar Q2 calls, which were held on Thursday afternoon.
1. Apple Reeled in a Large Number of First-Time Hardware Buyers
On Apple’s call, CFO Luca Maestri disclosed that more than 75% of June quarter Apple Watch purchases, and roughly half of the quarter’s iPad and Mac purchases, were first-time buyers.
While Maestri made similar disclosures about March quarter sales activity three months ago, his comments mean that the absolute number of first-time iPad and Mac buyers rose sharply on a sequential basis, since iPad and Mac sales saw 51% and 32% sequential growth, respectively, in the June quarter.
Separately, Tim Cook indicated that the iPhone SE, which was refreshed in April, both provided a major boost to June quarter iPhone sales and is generating a larger portion of its sales from Android users than it was a year ago.
Aside from giving Apple a larger hardware installed base to sell on upgrades down the line, hardware sales to first-time buyers benefit the company by giving it more opportunities over the long run to cross-sell other hardware and services.
2. Amazon Is Investing a Ton in Warehouse Expansion This Year
On Amazon’s call, CFO Brian Olsavsky said that his company, which just saw annual revenue growth accelerate to 40% in Q2 from 26% in Q1, plans to grow its fulfillment network square footage by about 50% this year, with much of the capacity coming online in late Q3 and in Q4. By comparison, fulfillment network square footage rose only 15% in 2019.
Separately, in its Q2 report, Amazon disclosed that (after backing out proceeds from property and equipment sales) its direct spending on property and equipment rose 151% annually in Q2 to $6.62 billion.
Over the long run, all this spending should -- by doing things such as increasing economies of scale, reducing shipping distances and lowering delivery times -- serve to strengthen the competitive moat provided by Amazon’s massive fulfillment and logistics infrastructure. This comes as Amazon deals with competition from both retailers such as Walmart (WMT) - Get Report and Target (TGT) - Get Report and e-commerce platform and marketplace providers such as Shopify (SHOP) - Get Report, Facebook and Google.
3. Google Saw Ad Spending Trends Gradually Improve in Q2
On Google’s call, CFO Ruth Porat said that Google’s search ad revenue gradually went from seeing a mid-teens percentage annual decline at the end of March to being “basically flat” at the end of June. She added that the growth rate saw “modest improvement” in July.
Likewise, Porat said that the “substantial headwind” seen for YouTube’s ad sales from lower brand ad sales at the end of Q1 “moderated modestly” in Q2 and saw “further improvement” in July. She added that YouTube’s direct response ad sales, which cover ads meant to drive actions such as e-commerce transactions and mobile app installs, have been “consistently strong.”
Alphabet’s “Google Search & Other” ad revenue, most of which involves search ads, fell 10% annually in Q2 to $21.3 billion, thanks in large part to weak demand from verticals such as travel and hospitality. YouTube ad revenue rose 6% to $3.81 billion.
For its part, online ad agency Merkle reported that Google search ad spend among its travel clients fell 47.4% annually in Q2, while spending among its retail and consumer goods clients rose 11%.
4. Facebook Is Even Less Dependent on Its Biggest Advertisers Than Before
On Facebook’s call, CFO Dave Wehner disclosed -- at a time when Facebook continues seeing ad boycotts from some major brands that want it to more aggressively police perceived hate speech -- that his company’s 100 biggest advertisers accounted for just 16% of its Q2 revenue. Previously, Facebook had only disclosed that its top-100 advertisers made up less than 20% of its revenue.
Separately, Mark Zuckerberg said that Facebook had more than nine million active advertisers during the quarter. In January, Facebook reported having eight million active advertisers.
Facebook reported its ad sales rose 10% annually in Q2 to $18.32 billion, and were also up about 10% during the first three weeks of July. The company, which has often guided conservatively, also said it expects its Q3 ad sales growth rate to be “roughly similar” to its performance over the first three weeks of July.