Spoiler: big tech.

Specifically, two tech giants — Microsoft ($MSFT) and Google ($GOOG) — account for 15.8 percent of all first-quarter net income reported so far by more than 1,100 non-financial companies. Indeed, total net income for the 1,144 non-financials that have filed first-quarter earnings so far actually declined compared to the year-ago period by 3.6 percent. 

In other words, the software sector is propping up everyone as a whole, and Google and Microsoft are propping up the software sector specifically. That is what the Q1 2024 earnings season looks like so far.

Let’s step back and look at the larger picture. Figure 1, below, shows the data from the Calcbench Earnings Tracker as of May 6. 

Total revenue is up 2.26 percent, but total net income is down 3.6 percent, presumably caused by a jump in capex spending (up 10.5 percent) and marginally higher cost of revenue and inventory.

OK, but now let’s look specifically at all filers whose SIC code starts with the digit 7. That includes a wide range of service companies: hotels, consulting, movies, amusement parks — and, yes, prepackaged software. Figure 2, below, displays those results in a nifty bar chart.

This is quite a different story from Figure 1. Among this group of companies (197 firms in total) revenue rose a healthy 12.5 percent. Net income jumped an impressive 37.2 percent, from $62 billion one year ago to $85.1 billion today.

Now let’s zoom in even further, to companies whose SIC code starts with the digits 73. That is the code for prepackaged software, which includes names such as Microsoft, Google, Facebook ($META), Oracle ($ORCL), and Adobe ($ADBE). See Figure 3, below.

Performance is even better. For this group of 158 firms, net income went from $58.5 billion to $81.4 billion, an increase of 41.6 percent. Revenue rose 13 percent.

And that brings us to the nitty-gritty. Within that group of 158 firms that reported total net income of $81.4 billion… 

• Google reported $23.66 billion;

• Microsoft reported $21.94 billion;

• Facebook reported $12.37 billion.

Nobody else came even close. Oracle was a distant fourth-place with $2.4 billion in net earnings, and others trailed behind from there. 

So Google and Microsoft alone had $45.6 billion in net income. That’s more than half of net income for the entire prepackaged software sector, and 15.8 percent of all net income reported by, well, everyone so far.

Indeed, if you strip out the results for Google and Microsoft, then revenue for everyone else in the sample — 1,142 firms across a wide range of sectors — fell by 6.8 percent, net income by 12 percent. Nobody would feel good about that performance except maybe Jerome Powell at the Federal Reserve.

We will, of course, keep updating earnings performance with our Earnings Tracker for at least another month as more earnings releases arrive. If Calcbench subscribers wish to get their hands on the template we use for this analysis, so you can conduct your own experiments at home, use this link to the file. 

Please note that our template will only work with an active Calcbench subscription. If you need an active subscription (and who doesn’t, really, when swift access to real-time data is so important?), contact us at info@calcbench.com.