As earnings season continues, a number of tech companies are coming into focus this week. Three worth watching are digital payments company PayPal (NASDAQ:PYPL), software giant Microsoft (NASDAQ:MSFT), and social network Twitter (NYSE:TWTR). PayPal and Microsoft will both report their quarterly results after market close today and Twitter will report its results before market open on Thursday.
Ahead of these three tech companies' quarterly updates, here's a brief overview of some key areas to watch when their results go live.
After market close today, investors will be looking for digital payments company PayPal to have a better showing than it did when it reported its second-quarter results. Shares of PayPal sold off following its second-quarter update since management lowered its full-year outlook for revenue. PayPal guided for 2019 revenue between $17.6 billion and $17.8 billion, down from a previous forecast for revenue between $17.85 billion and $18.1 billion. Management said the lower revenue outlook was primarily due to delayed deployments of its payment product and other features with partners. "[W]hile these delays have slightly affected our revenue guidance for the year, we remain quite confident that the majority of these will be implemented by year-end," explained PayPal CEO Dan Schulman in the company's second-quarter earnings call.
When PayPal reports earnings, investors should look for management to at least maintain its lowered full-year outlook for its top line.
For the company's third quarter, management said it expects constant-currency revenue to be between $4.33 billion and $4.38 billion, representing 18% to 19% year-over-year growth.
For Microsoft's earnings report after market close today, the key metric to watch will be growth in commercial cloud revenue. This category, which includes revenue from Azure, Office 365 Commercial, and Dynamics 365, represents the company's most important catalysts.
While this revenue category saw strong growth in the company's most recently reported quarter, rising 39% year over year, this was down from 41% growth in the prior quarter.
While some more deceleration in this fast-growing category would be natural, investors should look for deceleration to be only moderate. Specifically, investors should look for commercial cloud revenue to rise around 37% year over year in Microsoft's first quarter of fiscal 2020.
With Twitter posting very strong revenue growth recently, investors will likely continue paying close attention to the top-line results when the company reports second-quarter results. Revenue in Q2 increased 18% year over year -- in line with the revenue growth Twitter saw in Q1. For Q3, the consensus analyst estimate calls for revenue of $874 million, representing 15.3% year-over-year growth.
But investors will likely also pay close attention to Twitter's growth in monetizable daily active users. These users increased 14% year over year in Q2 -- an acceleration from 11% growth in the prior quarter. Did this strong double-digit growth in monetizable daily active users persist in Q3?
Twitter reports its second-quarter results before market open on Thursday, Oct. 24.