Meta presented mixed results against low expectations, with its ad business a concern in the age of privacy.
Reels is at the core of the company’s strategy to win users given heightened competition, but its monetisation challenge persists.
Meta spent $3.7 billion on its metaverse gamble in the quarter. A higher-end device will help address strengthening enterprise demand for VR headsets, but the route to profitability remains unclear.
Alphabet’s growth slowed in Q1, but search remains the premier advertising product: protected against privacy changes, and poised to grow on a return to travel.
Investors focused on YouTube’s disappointing growth. Its exposure to brand advertising has slowed it relative to search, and it now has to compete with an increasingly formidable TikTok. User subscriptions could be a hidden strength.
The US remains the core of Alphabet’s business as uncertainty and energy price jumps hit Europe.
Mobile service revenue growth improved slightly to -1.7% in Q4 as a higher mobility boost outweighed drags from continuing B2B weakness and MTR cuts.
Q1 prospects look mixed but the real turning point remains Q2 when the impact of inflation-linked price rises looks set to boost growth by 2-5ppts—nudging sector growth into positive territory for the first time since 2018.
Ofcom’s market review did not outline a change of stance on investment and consolidation in our view, but its inclination to have fewer consumer-focused initiatives is a welcome development.
The UK mobile operators are increasingly vocal about their concerns regarding the tech giants, namely Apple and Google, encroaching on the mobile connectivity market.
eSIMs enhance the case for the tech giants launching their own MVNOs (such as Google Fi in the US) or, perhaps more realistically and concerningly, becoming gatekeepers to mobile airtime subscriptions.
Many things would need to line up for the tech giants to effect this and the MNOs need to stand as one to ensure that they are not successful. Policy makers should be equally reticent.
ITV is combining its three domestic digital services—ITV Hub, Hub+ and BritBox—into a single product, ITVX, which will have a free and paid tier and see the addition of FAST channels. It will launch in Q4
The Hub and BritBox UK have underwhelmed in their respective markets, hampered by the broadcaster favouring linear revenues and the competitiveness posed by the surfeit of free British content. ITV is looking to change this direction, with shifts in content windowing and some additional content spend
Total external revenues were up 24% YoY in 2021 (and up 4% on 2019) to £3,450 million, driven by the highest advertising revenue on record, however Studios has not yet returned to pre-COVID levels, with both revenues (£1,760 million) and margin (12%) still down on 2019 (£1,830 million and 15%, respectively)
Amazon has capitalised on the pandemic’s boost to ecommerce, reporting 67% global revenue growth from 2019 to 2021. While Shopify’s impressive trebling of B2B revenues was from a lower base, at 44% of Amazon’s Marketplace it is closing the (still huge) gap
Shopify appeals to brands around the world, leveraging the open internet to establish a direct-to-consumer (D2C) business, undermining Amazon’s position as the B2B ecommerce one-stop-shop in 17 markets
Shopify is not a direct platform competitor to Amazon, which boasts a captive audience of Prime members and fulfilment. Shopify’s expansion to fulfilment in North America is the first threat to Amazon’s grip
VMO2 finished 2021 with muted revenue and EBITDA growth, but stronger subscriber progress, with underlying ARPUs a touch weak but not totally out-of-line with industry trends.
The company has a (justifiably) high level of confidence that this can be turned around in 2022, with a significant boost from price rises, the waning of some temporary effects and backed up by solid subscriber dynamics.
Expecting to not be impacted at all by Openreach’s FTTP roll-out into its current and prospective footprint would however be too confident, and for this reason we remain sceptical of VMO2’s accelerated roll-out ambitions.
TikTok has reached a billion users worldwide just four years after its global launch, much quicker than social media rivals, though its ban in India is a drag on growth.
TikTok’s popularity with under-25s has contributed to a hollowing-out of Meta’s active userbase. During the pandemic, TikTok also expanded its reach among older demographics, cementing its position within the mainstream and posing a further threat to Meta.
TikTok could earn twice as much revenue as Snap in 2022, making it the first app to break out of the mid-league in years, with a huge runway for growth backed up by ByteDance’s remarkable success in China.
Sky’s performance across 2021 significantly improved, driven in Q4 by a nice c.5% growth rate in UK consumer revenues and the advertising rebound, but effects of the pandemic are still being felt with EBITDA down 30% on 2019.
The decline in Group revenue accelerated in Q4 due to the severe shock to the Italian operation from its loss of most premium football coverage, although we see upsides in a possible rights reshuffle.
In 2022, Sky can leverage growth vectors including bigger content bundles, Glass, advertising innovations and broadband. Consolidating SVOD and telecoms markets may be more favourable to price increases.
BT had a solid Q3, with some mixed results but key metrics all improving, and a (perhaps unsurprisingly) slow post-lockdown recovery the only negative.
The price increase in April should drive dramatic (for BT) revenue and EBITDA acceleration at Consumer, Openreach and BT as a whole, and easily cover pressures within BT’s own cost base.
Longer-term growth is dependent on FTTP performance, which continues to look promising with improving metrics across the board in the quarter, and no news is good news in terms of ISPs signing with competitor networks.