• US Tech earnings season for Q2 2022 kicks off this week

  • We await the financial year 2022 earnings from the Australian tech sector

  • US tech stock earnings will provide guidance on the multi-billion-dollar Australian tech sector

US tech giants Q2 2022 earnings announcement timings:

  • Apple Inc NASDAQ:AAPL (AAPL) 28th July after market hours.

  • Microsoft Corp NASDAQ:MSFT (MSFT) 26th July after market hours.

  • Alphabet Inc. d.b.a. Google NASDAQ:GOOG (GOOG) 26th July after market hours.

US software and technology companies are intertwined in every facet of the global economy. Being the largest companies by market capitalisation in the world, there is little in the way of international commerce that this industry does not interact with.

As direct competitors and commercial partners of the US tech behemoths, Australian major tech companies have their future revenue stream growth outlook closely paired to that of their American counterparts.

Let us look at the four biggest Australian tech companies by market capitalisation to assess the impact the US tech earnings season might have on their share price.

Atlassian Corp PLC NASDAQ:TEAM (TEAM)

 

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TEAM’s marquee product is the project management tracker and team coordination software tool, JIRA. JIRA is popular with many multi-national corporations that have to coordinate product and product support application development with legal, compliance, merchant, and operations.

JIRA is a tool to quickly highlight any project blockages and redirect resources to ensure deadlines are met and development lead times are kept within budget.

A poor showing from one of the US tech majors at earnings time might suggest that soon, additional spend on JIRA will be kept in check as companies hold off on product development or new releases and wait for better market conditions.

Project and product deferrals across TEAM’s broad customer base would result in lower spending on Atlassian’s JIRA and lower the TEAM share price due to reduced near-term projected TEAM revenues.

Block Inc. d.b.a Afterpay ASX:SQ2 (SQ2)

Earlier this year, the payments service provider Block acquired the Australian buy now, pay later provider Afterpay. The listing was kept on the ASX and renamed SQ2.

Afterpay is a horizontal acquisition for Block as it broadens the product offering to Block customers without having to develop the technology and the customer base through marketing themselves.

Block competes with AAPL and GOOG in the payments space, and a positive outlook from these sectors in their earnings report for Q2 2022 will reflect positively on the SQ2 share price.

REA Group ASX:REA (REA)

REA is a large online real estate service provider operating several brands across Australia and Asia. REA relies heavily on digital marketing spending for its revenue stream.

GOOG’s flagship product is the search engine, and it relies heavily on digital marketing spending for its headline revenue stream.

A positive figure in the digital marketing spend sector of GOOG earnings will lift the near-term REA outlook and serve to prop the share price.

Xero Ltd ASX:XRO (XRO)

XRO’s primary concern is native cloud bookkeeping application support for small to medium-sized enterprises (SMEs).

GOOG has a large SME cloud business support sector across email, storage, and business applications. A positive read on earnings from GOOG will indicate that businesses are continuing to spend and looking to grow.

Indications of growth in the SME sector will be a positive sign for XRO, given an improved outlook for their wallet share and is likely to send the share price higher.

Summary

Technology innovation continues to break down the old ways of doing business. The cloud platform makes new business tools easy to access, speeding up and lowering the costs of operations in enterprises large and small.

The accelerated pace of change, while improving productivity, also means that business networks are increasingly connected, and our own outcomes are more closely tied to those of our international partners.