Introducing Protocol’s guide to a wild earnings season
We're going to focus on what the results can tell us about the wider tech industry.
As coronavirus continues to ravage the global economy, this quarter's earnings season stands to give us a fascinating insight into the fortunes and future of the tech industry.
Tech earnings season kicks off in earnest this week, with Netflix, IBM, Intel and Snap all reporting results in the coming days. Many other big names will follow next week.
- There will be big differences between how companies perform, from Netflix enjoying a potential boost from us all being quarantined at home, to Apple struggling as a result of its supply chain problems in China.
We're going to focus on what the results can tell us about the wider tech industry. Here are some of the big trends that we'll be looking out for:
- Companies' Q2 guidance will be incredibly useful. With three weeks of data in already, they've got a decent sense of what the economy's like right now — and whether the worst is behind us or yet to come. As StockTwits wrote, "it will probably be a great quarter to listen to the earnings conference calls and a poor one to attend to earnings numbers."
- We'll get clarity on China's supply chain issues, particularly in Apple's earnings. That has huge ramifications across the industry, particularly in the hardware space.
- Cloud's big boost will be quantified when the larger providers report their earnings. And chipmakers, which also report this week, could give a sense of whether cloud companies are preparing for further growth in demand this year.
- We'll find out how much ad revenue has dropped by. Analysts expect the biggest hit to be in Q2, but there was likely some pullback toward the end of March, when average daily ad spending fell over 20%, according to Pathmatics.
- And we'll see if consumers are still spending. Some analysts expect Netflix and Amazon to report an uptick in demand from quarantiners: JPMorgan's Doug Anmuth said last week that Netflix is a "a clear beneficiary of stay-at-home." But a tanking global economy and soaring unemployment could lead consumers to cut back on spending. We'll get our first sense of that soon.
Stay tuned here to keep track of tech earnings as they're reported over the coming days and weeks.