Return to Growth: A Corporate Earnings Summary 

The past four years have been tumultuous, with executives, across industries, forced to navigate market-wide headwinds, high-interest rates and a weakening labor market. Thankfully, the recession many feared, never materialized. Yet, leaders prepared for the worst, with 2023 widely considered the “Year of Efficiency.” Companies minimized and cut costs, optimized productivity and — at times — restructured their organizations to get closer to the market and remain above water.  

However, the tide is shifting, and 2024 is widely regarded as a return-to-growth year in which resiliency will reign supreme. To better understand what is behind this sense of optimism, Prophet analyzed over 50 corporate earnings reports from some of the world’s largest businesses, across industries. 

Our research found that last year’s “doing more with less” strategy paid off for most organizations, creating 85% year-over-year growth in net income across the companies studied. That’s a drastic improvement from similar research we conducted last year, which found a 22% decrease in earnings in 2022. 

Now that companies have optimized their organizations, they are getting back to the basics of growth. They are investing in flexible growth strategies that can endure beyond cost-cutting initiatives and efficiency maneuvers, and, thus, 2024 is shaping up to be the “Year of Resiliency.” 

Five Top Learnings From This Pivotal Earnings Season 

Leaning into Growth, Once Again 

“Efficiency” and “budget cuts” were the flash words that bounced around in the first half of 2023. Now, “innovation” and “expansion” are center stage. This earnings cycle saw exciting announcements for new products, services and experiences that transcend traditional industry boundaries.  

In retail, for example, Target announced Target Circle 360, its new paid membership program. It is pulling a page out of Amazon’s and Walmart’s playbooks and living up to CEO Brian Cornell’s promise of “making sure that we make Target a growth company again.” After Walmart’s year of optimizing, it witnessed a significant 23% year-over-year growth burst in e-commerce sales, bolstered by the announcement of a new B2B purchasing site, Walmart Business. 

Others are also expanding their portfolio of offerings and innovating their go-to-market strategies. Apple is rolling out a new B2B service platform, Apple Business Connect. Pfizer is extending its expertise (and brand) beyond respiratory as it goes deeper into oncology. And Peloton is launching “Peloton for Business.” These expansions represent the beginning of an accelerating trajectory toward growth.  

Embracing GenAI as a Strategic Growth Lever 

Almost all the companies in Prophet’s study say GenAI is a top priority, playing a role in driving not just efficiency but sustainable growth. Major technology players are paving the way, both as exemplars of “moving from talking about AI to applying AI at scale” within their business to launching new products like Microsoft Copilot, Google Gemini, and Amazon Rufus that allow other industries to use AI to power growth.  

EdTech company Chegg is embracing GenAI by developing automated, higher-accuracy question-and-answer services. In entertainment, DraftKings is using GenAI to lower customer acquisition costs and improve its targeting capabilities across its marketing efforts, resulting in it raising its 2024 revenue guidance. In the energy sector, GenAI has helped ExxonMobil leverage automated deep-sea drilling and optimize its widely dispersed field assets, helping it beat earnings expectations. 

To be clear, GenAI faces challenges, with mounting social concerns — and lawsuits — tied to privacy and cybersecurity issues. And then, there are the massive costs associated with training, upskilling and managing new systems. While introducing new technologies into an organization is not new news, GenAI is at a scale that requires massive paradigm shifts for most companies to maximize its positive impact while minimizing the downsides mentioned.  

Harnessing Customer-Centricity to Fuel World-Class Experiences 

Companies with the most substantial potential to break through increasingly competitive interconnected marketplaces are discovering ways to harness technologies to enhance customer-centricity, establish deeper levels of relevance and deliver unmatched value. 

In healthcare, CVS Health realized 11.9% revenue growth by harnessing advanced analytics, machine learning, and process automation to predict customer needs and generate tailored care services, such as its ExtraCare loyalty experience. It provides personalized health and beauty products, and members can choose “benefits that best fit their needs.” MetLife uses advanced technologies to create personalized insurance products that cater to specific customer needs and risk profiles. United Health Group, Walgreens and Cigna are all leveraging technologies to coordinate value-based care, enhance digital offerings and improve the patient experience. As a result of these investments, every healthcare company in Prophet’s analysis beat analyst estimates for revenue and earnings in the fourth quarter. 

In transportation, Ford Motor Company brought in a former Apple executive, Peter Stern, to help adapt to the changing EV landscape and build customer experiences through Ford+. CEO Jim Farley describes that hire as “transformational for this strategically vital part of our business.” 

In another way to get closer to customers, GE HealthCare is acquiring MIM Software to complement Predix, its industrial manufacturing cloud platform. MIM Software’s AI and analytical capabilities across practices are reshaping the possibilities of precision care for patients and providers, enabling GE to “meet customers’ most complex and pressing needs, today and into the future,” says CEO of MIM Software Andrew Nelson, proving once more how customer-driven solutions continue to elevate experiences.  

Driving Next-Generation Employee Value Propositions 

It is no secret the workplace has vastly changed as executives grapple with the COVID-induced remote-hybrid debate, the repercussions of mass lay-offs and quiet quitting and the undeniable risks posed by rapid automation. Executives in Prophet’s analysis believe their talent are the critical lynchpin to driving the transformative growth most are seeking. Accordingly, many companies are backing up their claims with significant investments and shifts in compensation, development and employee well-being. 

The Home Depot’s 2023 decision to invest approximately $1 billion in annualized compensation for its frontline, hourly associates — even in a down year — illustrates the importance of nurturing what it considers its key differentiator: the “Orange Aprons.” This strategic move underscores the company’s recognition that maintaining a satisfied, skilled, and motivated workforce is essential for navigating economic uncertainties and securing sustained growth. It is paying off, too, with meaningful improvement in attrition rates and an increase in its customer service score by 600 basis points. 

In leisure, Hilton adapted to the changing dynamics of work by launching the innovative “Hilton Work Anywhere” initiative. By enabling corporate employees to work remotely from its global network of hotels, Hilton taps into the growing demand for flexibility and remote work opportunities. Comparatively, Cisco focused on building external economic resilience by partnering with global HR services company Randstad to equip over 25 million people with digital skills through Cisco’s Networking Academy. Such partnerships and reskilling programs are pivotal in powering the future of innovation, growth and global competitiveness. 

Moving to Profitable Sustainability Impact 

While sustainability has continued to be a top priority for consumers, more companies in Prophet’s analysis are now proving that “doing the right thing” isn’t the only benefit of pushing an innovative sustainability agenda. For instance, building materials and provider Holcim set a goal of achieving 100% renewable energy in U.S. operations by 2050, and its eco-friendly solution ECOPact concrete, now accounts for 19% of Holcim’s ready-mix net sales. The company is also “driving fast-paced growth in circular construction” through its waste-minimizing ECOCycle practice, helping it differentiate and grow as a leader in sustainable construction. 

Eastman Chemical is working to solidify its position as “a leader in creating a circular economy,” capitalizing on customer demand and growth opportunities by replacing plastics with recycled-content-made products and innovative molecular recycling facilities.  

By embedding sustainability into their core growth strategies and moving beyond 2030 or 2040 Net-Zero Carbon commitments, companies are addressing pressing environmental challenges and positioning themselves as forward-thinking leaders in their respective industries, setting a new standard for corporate responsibility and innovation…and driving sustainable growth. 

Acknowledgments: Jason Tan, Jane Lee, Zach Lipkin, Mae Mourtisen, Will Littlejohn, Erik Muenster