Earnings from the U.S. tech sector kick off this week with Netflix (NASDAQ:NFLX) and Intel (NASDAQ:INTC) reporting their quarterly results. High-profile companies such as Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon.com (NASDAQ:AMZN) and Facebook (NASDAQ:FB) will also print earnings this month.
While most of the attention is centered on those blockbuster names, for savvy tech investors, three powerhouse stocks should be in focus. All three have enjoyed accelerating earnings and revenue growth in the past thanks to robust demand for their innovative products and services. This trio is well worth considering ahead of their quarterly reports:
1. Snap
- EPS Estimate: +17% YoY
- Revenue Growth Estimate: +44% YoY
Snap (NYSE:SNAP), the parent company of social media messaging app Snapchat, was one of the big winners of 2019, rallying an astonishing 196% as investors turned bullish on the San Francisco-based social media company. Shares have picked up where they left off last year, climbing 16% so far in 2020, well outpacing the benchmark S&P 500’s year-to-date gain of roughly 3%. The stock closed at $19.00 on Tuesday with a market cap of $26.6 billion.
The social media company, once thought to be dead in the water, managed to beat EPS and revenue expectations in every quarter last year. We anticipate this trend to continue when Snap next reports financial results after the U.S. market closes on Tuesday, Feb. 4.
Consensus calls for a loss of $0.12 per share for the fourth quarter, compared to a loss of $0.14 per share in the year-ago period. Revenue is forecast to surge 44% from the same period a year earlier to $561.9 million.
Beyond the top- and bottom-line figures, details regarding the active users will draw attention. Market watchers are looking to see if the recent resurgence of active users has continued after hitting an all-time high of 210 million in the third quarter. The monthly active user base is just above 500 million, while Twitter (NYSE:TWTR), by comparison, has around 335 million users.
Another figure set to be under close examination: Snap's overall average revenue per user. In the third quarter, the average revenue per user jumped 33%, demonstrating the social media company's improved ability to monetize its user base.
2. HUYA
- EPS Estimate: +47% YoY
- Revenue Growth Estimate: +59% YoY
HUYA (NYSE:HUYA) is China's largest live-streaming platform for video games and e-sports. The Guangzhou-based tech firm is often considered the “Twitch of China”—the live-streaming platform purchased by Amazon for $970 million back in 2014. Shares, which ended at $20.48 last night, have had a powerful start to the new year, rising 14%. The company has a valuation of $8.95 billion.
The game live-streaming provider is projected to report fourth quarter results on Tuesday, Feb. 11. Consensus estimates call for earnings of $0.66 per share, which would indicate a YoY EPS growth rate of roughly 47%. Revenue is set to soar 59% from the same period a year earlier to $2.39 billion.
More importantly, investors will keep an eye on HUYA’s update regarding their average monthly active users to see if it can maintain its torrid pace of growth. The past earnings report showed 146.1 million monthly active users, representing an increase of 47.6% from 99.0 million in the third quarter of 2018. HUYA’s total number of paying users, which rose 28.5% in the third quarter to 5.3 million, will also be widely watched.
As China's largest live-streaming platform for video games and e-sports, HUYA is positioned to continue to benefit from the rise of mobile internet penetration, gaming video content and e-sports popularity in the largest video game market.
3. Square
- EPS Estimate: +50% YoY
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Revenue Growth Estimate: +27% YoY
Square (NYSE:SQ) made a name for itself by providing cutting-edge alternative payment processing methods to businesses. The range of offerings include financial and merchant services, mobile payments platform as well as hardware such as point of sale equipment. After closing 2019 with an annual gain of just 11.5%, shares of San Francisco-based Square, which is run by Twitter CEO Jack Dorsey, are up already 9% so far this year. The stock settled at $68.31 yesterday with a market cap of $29.3 billion.
The digital payments provider next reports earnings after the bell on Wednesday, Feb. 26. Consensus calls for earnings per share of $0.21 for the fourth quarter, up 50% from earnings of $0.14 per share in the year-ago period. Revenue is forecast to shoot up 27% from the same period a year earlier to $591.27 million.
Perhaps of greater significance will be the mobile payment processor’s update regarding gross payment volume growth. In the third quarter, the value of all transactions processed on Square's platform, rose 25% YoY to $28.2 billion.
Growth rates at Square's subscription and services-based revenue will be a valuable figure. Sales from the segment totaled $280 million in the third quarter, up 68% YoY, driven by rapid growth in its Cash App, Square Capital, and Instant Deposit services.