The big picture is that public companies altogether did see higher revenue for Q2 2024 compared to the year-ago period, although smaller firms saw a smaller revenue gain than their larger brethren.

Net income, however, tells a different story. Large firms saw net income rise by 5.7 percent, but smaller firms and those that are domiciled internationally— that is, everyone outside the S&P 500 — saw net income plunge by a painful 24.4 percent.

We submit Figure 1, below. It breaks out year-over-year change in net income for all firms together, all non-financial firms, S&P 500 firms, non-financial S&P 500 firms, and all firms outside the S&P 500.

As you can see, every category enjoyed some amount of net income growth except for those non S&P500 firms. They collectively saw net income fall from $139.1 billion one year ago to $105.2 billion this quarter.  Once you remove international firms from that mix, the smaller US domiciled firms saw Net Income flat as it grew year over year by some 30 basis points.

The data suggests that net income growth is concentrating at the top, rather than across Corporate America overall.

Now consider what happened in the markets for the last six weeks. Large companies filed first, and they were reporting revenue and net income growth in the high single digits; and stock market averages rose. Then the smaller companies started to file, with net income declining, and the market declined. 

Well, share price is a function of expected growth in net income. If net income isn’t growing, share price declines. So what we’ve seen on Wall Street lately shouldn’t be a surprise.

The larger question, so to speak, is whether large companies will also see net income declines when they start filing Q3 earnings reports next month. So stay tuned as earnings releases start to arrive in about four weeks’ time, and the Calcbench Earnings Tracker cranks back up again.