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3 Impressive Tech Earnings Reports Last Week

By Daniel Sparks - May 9, 2021 at 10:30AM

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All three of these companies reported results that crushed analysts' estimates.

It was a wild week for tech. Growth stocks were slammed throughout most of the week. Though they recovered some ground on Monday, as the Nasdaq Composite rose about 1%. Despite weakness in growth stocks, however, many more established and slower-growing tech stocks performed very well during the week. This caused the Nasdaq to rise a total of 2% for the week.

Looking beyond this broader-market volatility, there was plenty of information for long-term investors to digest as earnings season continues. Three tech stocks' earnings reports from last week that are worth taking a closer look at are Activision Blizzard (ATVI 0.35%), PayPal Holdings (PYPL 2.01%), and Datadog (DDOG 0.82%). All three of these companies released better-than-expected results, sending their shares higher following their earnings releases.

Let's take a look.

A diagram showing three laptops connected to a cloud.

Image source: Getty Images.

Activision Blizzard

Video game franchise company Activision Blizzard said on Tuesday that its first-quarter revenue rose 27% year over year to $2.275 billion, exceeding management's forecast for the period for revenue of $2.015 billion. Earnings per share grew from $0.59 in the year-ago quarter to $0.79.

A key catalyst for the quarter was its Activision segment, which saw revenue increase 72% year over year, "driven by Call of Duty: Black Ops Cold War and Warzone in-game revenues, strong premium sales, and Call of Duty Mobile," the company said in its first-quarter earnings release. The segment's operating income notably more than doubled year over year. 

PayPal

Financial technology company PayPal announced a 31% year-over-year increase in revenue to $6.03 billion, driven by a 50% year-over-year increase in total processed payment volume.

"Our strong first quarter results demonstrate sustained momentum in our business as the world shifts into the digital economy," said PayPal CEO Dan Schulman in the company's first-quarter earnings release on Wednesday. "Our addressable market continues to grow as we launch new products and services for our 392 million active accounts."

The company's fast-growing peer-to-peer payment app, Venmo, continued to fire on all cylinders. The app processed $51 billion of total payment volume, up 63% year over year.

Highlighting PayPal's impressive improvement in profitability, PayPal's non-GAAP earnings per share increased 84% year over year to $1.22.

Datadog

On Thursday, monitoring and analytics specialist Datadog announced that its first-quarter revenue surged 51% year over year. This was fueled by a 50% year-over-year increase in customers contributing $100,000 of annual recurring revenue or more.

Highlighting the company's momentum, Datadog said it expects full-year revenue to be between $880 million to $890 million, up from 2020 revenue of $603 million. The company was previously expecting 2021 revenue to be between $825 million and $835 million. But Datadog's rapid innovation and product launches, as well as strong tailwinds from growing demand for services that enable organizations' digital transformations, are driving outsized performance.

What's most notable about all three of these companies' updates last week is that they didn't just report strong results -- their management teams signaled confidence about their expected performance for the rest of 2021 and their long-term growth opportunities.

Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends Activision Blizzard, Datadog, and PayPal Holdings. The Motley Fool recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Activision Blizzard, Inc. Stock Quote
Activision Blizzard, Inc.
ATVI
$80.79 (0.35%) $0.28
PayPal Holdings, Inc. Stock Quote
PayPal Holdings, Inc.
PYPL
$101.10 (2.01%) $1.99
Datadog, Inc. Stock Quote
Datadog, Inc.
DDOG
$115.72 (0.82%) $0.94

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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