Critiques of US tech financial reporting tend to target the inclusion by bosses of additional, non-GAAP, numbers. Companies use these to flatter their performance. Uber, Pinterest and Lyft are among many that promote adjusted ebitda numbers. But as much attention should be paid to the numbers that are not provided as to those that are.
By choosing not to break out large segments of their businesses, companies such as Amazon make it difficult for investors to judge performance.
Last year, the tech giant took its advertising business out of the “Other” category and revealed $31bn of annual revenue. This ranked Amazon as the third-largest online ad seller in the US, behind Meta and Alphabet. In the last set of earnings, Amazon’s ads business grew faster than bigger rivals. But the company has yet to reveal how profitable the unit is.
Amazon divides revenues and operating income into three segments: North America, International and the cloud computing business, Amazon Web Services. It also provides a breakdown of revenue into six segments, including advertising and physical stores. But it does not extend this detail to operating income.
Meta might equally have unveiled data for its metaverse business Reality Labs. It still does not show user numbers, revenue or net income for individual apps Instagram or WhatsApp. And although it shows users across its “family” of apps, it does not offer any other engagement statistic, such as time spent on site.
Apple does not disclose subscriber numbers for its streaming service, making it difficult to compare against competitors such as Netflix and Disney Plus. In 2018, Apple also decided to stop providing unit sales data for iPhones, iPads and Macs. This was shortly after missing expectations. Netflix has, for its part, stopped providing subscriber growth forecasts.
Many companies have tried and failed to abandon quarterly earnings, arguing that reduced disclosure would allow them to focus on the long term. In tech, disclosure has simply been limited by other means: skimpy segmentals and an overall lack of detail.
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