December 11, 2023

What we’re looking for in the upcoming tech earnings cycle

A lot of The world is busy digesting Twitter being rebranded as “X,” but something more serious is happening in tech: Worldcoin is here!

I am joking. What really matters today is that we’re entering another earnings cycle, which means we can study the performance of the biggest and wealthiest companies in tech to understand the economics of tech products and services. In other words, hardware and software.

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Sure, we’ll see some familiar themes during this cycle, but enough new trends are happening that I’d like to stop and touch on some key points we should all be paying attention to.

Note that earnings season impacts the startup world in a number of ways. Most importantly, it provides a directional signal: When public tech companies report rapid growth in a particular segment of their market, investors turn to younger companies that could benefit from a similar wave of demand.

Of course, startups should care about these outcomes because they can reprice public companies that make up their core comparable group, which can make financing easier or harder and help determine exit value.

In other words, it’s a big deal.

As we noted this morning on Equity, this week we’ll be hearing from Microsoft, Alphabet, Spotify, Snap, Roku and more. Given the breadth of companies reported this week, we’re officially in the breach.

Now, let’s talk about what we should keep in mind during this particular earnings cycle! I promise it will be fun.

Four things to watch out for

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