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Slack narrows losses, displays healthy revenue growth

Posted by on May 31, 2019 in Accel, Airbnb, Andreessen Horowitz, Earnings, economy, Finance, initial public offering, Kleiner Perkins, operating systems, slack, Softbank, SoftBank Group, Spotify, t.rowe price, TC, U.S. Securities and Exchange Commission | 0 comments

Workplace messaging powerhouse Slack filed an amended S-1 with the U.S. Securities and Exchange Commission on Friday weeks ahead of a direct listing expected June 20.

In the document, Slack included an updated look at its path to profitability, posting first-quarter revenues of $134.8 million on losses of $31.8 million. Slack’s Q1 revenues represent a 67% increase from the same period last year when the company lost $24.8 million on $80.9 million in revenue.

For the fiscal year ending January 31, 2019, the company reported losses of $138.9 million on revenue of $400.6 million. That’s compared to a loss of $140.1 million on revenue of $220.5 million the year prior.

Slack is in the process of completing the final steps necessary for its direct listing on The New York Stock Exchange, where it will trade under the ticker symbol “WORK.” A direct listing is an alternative approach to the stock market that allows well-known businesses to sell directly to the market existing shares held by insiders, employees and investors, instead of issuing new shares. The method lets companies bypass the traditional roadshow process and avoid a good chunk of Wall Street’s IPO fees.

Spotify completed a direct listing in 2018; Airbnb, another highly valued venture capital-backed business, is rumored to be considering a direct listing in 2020.

Slack is currently valued at $7 billion after raising $1.22 billion in VC funding from investors, including Accel, which owns a 24% pre-IPO stake, Andreessen Horowitz (13.3%), Social Capital (10.2%), SoftBank, T. Rowe Price, IVP, Kleiner Perkins and many others.


Source: The Tech Crunch

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Surging costs send shares of ecommerce challenger Pinduoduo down 17 percent

Posted by on Mar 14, 2019 in alibaba, alibaba group, Amazon, Asia, bytedance, China, e-book, E-Commerce, Earnings, eCommerce, online marketplaces, Qutoutiao, shanghai, supply chain, tiktok | 0 comments

China’s new tech force Pinduoduo is continuing its race to upend the ecommerce space, even at the expense of its finances. The three-year-old startup earmarked some big wins from the 2018 fiscal year, but losses were even greater, dragging its shares down 17 percent on Wednesday after the firm released its latest earnings results.

The Shanghai-based company is famous for offering cheap group deals and it’s able to keep prices down by sourcing directly from manufacturers and farmers, cutting out middleman costs. In 2018, the company saw its gross merchandise value, referring to total sales regardless of whether the items were actually sold, delivered or returned, jump 234 percent to 471.6 billion yuan ($68.6 billion). Fourth-quarter annual active buyers increased 71 percent to 418.5 million, during which monthly active users nearly doubled to 272.6 million.

These figures should have industry pioneers Alibaba and JD sweating. In the twelve months ended December 31, JD fell behind Pinduoduo with a smaller AAU base of 305 million. Alibaba still held a lead over its peers with 636 million AAUs, though its year-over-year growth was a milder 23 percent.

But Pinduoduo also saw heavy financial strain in the past year as it drifted away from becoming profitable. Operating loss soared to 10.8 billion ($1.57 billion), compared to just under 600 million yuan in the year-earlier period. Fourth-quarter operating loss widened a staggering 116 times to 2.64 billion yuan ($384 million), up from 22 million yuan a year ago.

Pinduoduo is presenting a stark contrast to consistently profitable Alibaba, which generates the bulk of its income from charging advertising fees on its marketplaces. This light-asset approach grants Alibaba wider profit margins than its arch-foe JD, which controls most of the supply chain like Amazon and makes money from direct sales. Pinduoduo seeks out a path similar to Alibaba’s and monetizes through marketing services, but its latest financial results showed that mounting costs have tempered a supposedly lucrative model.

Where did the ecommerce challenger spend its money? Pinduoduo’s total operating expenses from 2018 stood at 21 billion yuan ($3 billion), of which 13.4 billion yuan went to sales and marketing expenses such as TV commercials and discounts for users. Administration alongside research and development made up the remaining costs.

Pinduoduo’s spending spree recalls the path of another up-and-coming Chinese tech startup, Qutoutiao . Like Pinduoduo, Qutoutiao has embarked on a cash-intensive journey by burning billions of dollars to acquire users. The scheme worked, and Qutoutiao, which runs a popular news app and a growing e-book service, is effectively challenging ByteDance (TikTok’s parent company) in smaller Chinese cities where many veteran tech giants lack dominance.

Offering ultra-cheap items is a smart bet for Pinduoduo to lock in price-intensive consumers in unpenetrated, smaller cities, but it’s way too soon to know whether this kind of expensive growth will hold out long-term.


Source: The Tech Crunch

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IAC-owned publishing company Dotdash grew revenue by 44 percent last year

Posted by on Feb 7, 2019 in dotdash, Earnings, IAC, Media | 0 comments

Holding company IAC just released its fourth quarter earnings report, which includes positive numbers for Dotdash, the rebranded company formerly known as About.com — revenue increased 32 percent in the quarter (to $40.2 million), and it was up 44 percent (to $131 million) for the fiscal year.

This comes after big layoff announcements from BuzzFeed, Vice and Verizon Media Group (which owns TechCrunch).

Unlike those companies — and unlike The New York Times, which actually seems to be doing well — Dotdash isn’t really a news publisher. Instead, it focuses on the same kinds of evergreen, informational and how-to content that you used to find on About.com, now divided up across more vertically focused brands like Verywell (health and wellness) and The Spruce (home improvement).

Still, it’s worth highlighting a media business model that seems to be working. IAC attributes the improved financials (adjusted EBITDA was $21.4 million for the year, compared to a loss of $2.8 million in 2017) to “strong advertising growth across several verticals,” as well as affiliate commerce revenue.

Dotdash has a disarmingly simple approach centered on quality content, site speed, and respectful monetization,” said IAC CEO Joey Levin in the letter to shareholders. “The company doesn’t buy traffic nor rely heavily on social networks. Dotdash’s brands simply help people to answer questions, solve problems and find inspiration when they’re searching for answers. Our readers come with specific intent, enabling us to connect advertisers to consumers based on stated interests using high-performing ads in a safe online environment.”

Levin added that Dotdash properties saw a total of 87 million unique visitors in December, compared to 51 million for About.com before the rebrand and new strategy.

Dotdash is also providing guidance for 2019, predicting revenue growth of 10 percent for the first quarter and 20 percent for the whole year, with adjusted EBITDA of $30 million to $40 million for the year.

Turning to other IAC properties, ANGI Home services (which owns Angie’s List) saw Q4 revenue increase 25 percent to $279 million, while Vimeo’s revenue increased 28 percent to $44.2 million.

In total, IAC brought in $1.10 billion in revenue for the quarter, a year-over-year increase of 16 percent, and beating analyst estimates of $1.07 billion. Adjusted EBITDA increased 40 percent, to $268 million.


Source: The Tech Crunch

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Google’s still not sharing cloud revenue

Posted by on Feb 5, 2019 in Alphabet, Cloud, cloud computing, cloud revenue, Diane Greene, Earnings, Enterprise, G Suite, Google, google cloud platform, ruth porat, Sundar Pinchai | 0 comments

Google has shared its cloud revenue exactly once over the last several years. Silence tends to lead to speculation to fill the information vacuum. Luckily there are some analyst firms who try to fill the void, and it looks like Google’s cloud business is actually trending in the right direction, even if they aren’t willing to tell us an exact number.

When Google last reported its cloud revenue, last year about this time, they indicated they had earned $1 billion in revenue for the quarter, which included Google Cloud Platform and G Suite combined. Diane Greene, who was head of Google Cloud at the time, called it an “elite business.” but in reality it was pretty small potatoes compared to Microsoft’s and Amazon’s cloud numbers, which were pulling in $4-$5 billion a quarter between them at the time. Google was looking at a $4 billion run rate for the entire year.

Google apparently didn’t like the reaction it got from that disclosure so it stopped talking about cloud revenue. Yesterday when Google’s parent company, Alphabet, issued its quarterly earnings report, to nobody’s surprise, it failed to report cloud revenue yet again, at least not directly.

Google CEO Sundar Pichai gave some hints, but never revealed an exact number. Instead he talked in vague terms calling Google Cloud “a fast-growing multibillion-dollar business.” The only time he came close to talking about actual revenue was when he said, “Last year, we more than doubled both the number of Google Cloud Platform deals over $1 million as well as the number of multiyear contracts signed. We also ended the year with another milestone, passing 5 million paying customers for our cloud collaboration and productivity solution, G Suite.”

OK, it’s not an actual dollar figure, but it’s a sense that the company is actually moving the needle in the cloud business. A bit later in the call, CFO Ruth Porat threw in this cloud revenue nugget. “We are also seeing a really nice uptick in the number of deals that are greater than $100 million and really pleased with the success and penetration there. At this point, not updating further.” She is not updating further. Got it.

That brings us to a company that guessed for us, Canalys. While the firm didn’t share its methodology, it did come up with a figure of $2.2 billion for the quarter. Given that the company is closing larger deals and was at a billion last year, this figure feels like it’s probably in the right ballpark, but of course it’s not from the horse’s mouth, so we can’t know for certain.

Frankly, I’m a little baffled why Alphabet’s shareholders actually let the company get away with this complete lack of transparency. It seems like people would want to know exactly what they are making on that crucial part of the business, wouldn’t you? As a cloud market watcher, I know I would. So we’re left to companies like Canalys to fill in the blanks, but it’s certainly not as satisfying as Google actually telling us. Maybe next quarter.


Source: The Tech Crunch

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Snapchat shares soar as it stops losing users, shrinks losses in Q4

Posted by on Feb 5, 2019 in Apps, Earnings, Evan Spiegel, snap inc, Snapchat, Snapchat earnings, Snapchat earnings q4 2018, Social, TC | 0 comments

Snapchat isn’t growing again, but at least it didn’t hemorrhage any more users in its Q4 earnings report. The company stayed flat at 186 million daily users after falling from 191 million in Q1 to 188 million in Q2 to 186 million in Q3. It exceeded an expected quarterly count of 184.2 million user, though 186 million is still down 0.3 percent year-over-year. It reached record revenue of $390 million in the holiday quarter, up 36 percent year-over-year to beat the $378 million Wall Street estimate, and Snapchat lost just $0.04 per share compared to Wall Street’s $0.08 loss estimate for a beat in Q4 earnings.

The highlight of the earnings report was that Snap has managed a 68 percent year-over-year improvement in its adjusted EBITDA losses, which came in at $50 million (though net loss was still $158 million). With 43 percent full-year revenue growth in 2018, “This limited our Q4 losses to just 13 percent of our revenue, compared to just one year ago when our Q4 losses totaled more than 50 percent of revenue” CEO Evan Spiegel wrote in his opening remarks. That means Snap might make it to profitability in the next year or two before running out of cash and having to take more from big investors or consider being acquired.

After closing at $7.04 today, Snap was up around 17 percent in after hours trading to hover around $8.27 — still way down from a peak of $20.75 a year ago.

Importantly, Snapchat grew its Europe user count from 59 million to 60 million and stayed flat at 79 million in North America. Since those are its two best monetizing markets, stopping the shrinkage there was critical. That helped spur a 37 percent year-over-year increase in global average revenue per user, and a 30 percent boost over Q3.

Looking forward, Snap expects between $285 million and $310 million in Q1 2019, which would be a 24 percent to 34 percent year-over-year increase, while its adjusted EBITDA losses are expected to be between $165 million and $140 million, down from $218 million in Q1. It ended the year with $1.3 billion in cash and securities.

On the content and engagement front, Snap is reaching 70 percent of total US 13 to 34 year olds with premium mobile video, which could be very lucrate if it can keep its user count stable or growing. 70 precent of users played with or viewed a lens each day, though Snap didn’t provide an update on its Snaps Created Per Day metric that’s useful for judging the health of its messaging feature. But it does say that users still average 30 minutes per day on the app.

30 percent more people are watching its Discover section’s Publisher Stories and Shows every day versus last year, with Snapchat’s new algorithmically personalized Bitmoji Stories seeing 40 million viewers in December. That’s powerful because since Snap makes the content in-house, it doesn’t have to share ad revenue with anyone.

Meanwhile, Snapchat announced it’s finally starting to roll out its Android rebuild to some users, and the initial test results were promising. App startup time was reduced 20 percent, and the improvements could reinvigorate Snapchat for Android’s growth after years of bugs and slow loading dragging down Snapchat’s user count.

Snapchat’s future hinges on its ability to get to profitability so it can keep financing R&D in augmented reality and hardware. Snap won’t be able to keep up with dedicated AR companies like Magic Leap or tech giants like Facebook and Apple if it’s constantly trying to cut costs. It could still be years before fashionable and useful AR eyewear is feasible and Snap must weather the storm until then. The fact that it’s no longer bleeding users and its losses are falling shows great progress in that direction. Most tech giants like Apple and Google end up sitting on their cash, unsure what to invest in. Snapchat seems to have plenty of options if it can just start stockpiling cash instead of spending it all.


Source: The Tech Crunch

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Snapchat’s Android usage keeps falling but rebuild tests well

Posted by on Feb 5, 2019 in Apps, Earnings, Evan Spiegel, Mobile, snap inc, Snapchat, Snapchat Android, Snapchat earnings, Snapchat earnings q4 2018, Social, TC | 0 comments

Snap has finally begun publicly testing the engineering overhaul of its slow and buggy Android app that for years has cost Snapchat users. Promising early results and reduction in app startup time could help Snapchat fix its growth problem after daily active users sank in Q2 and Q3 before staying put at 186 million in Q4, Snap announced today in its earnings report today.

“We ended the year with user engagement stabilizing and have started rolling out the new version of our Android application to a small percentage of our community” CEO Evan Spiegel wrote. “Early tests show promising results especially on less performant devices, including a 20 percent reduction in the average time it takes to open Snapchat.” The problem is that because “Our engineering team remains focused on rebuilding our Android application”, they haven’t been dedicated to fixing the existing version. That means that despite iOS daily active users and average time spent growing faster than last year, Android dragged Snapchat again to see no total daily user growth.

Interim Chief Financial Officer Lara Sweet noted that “While we are not going to give specific guidance on daily active users, we are cautiously optimistic and we do not foresee a sequential decline in daily active users in Q1 2019.” It seems Snap believes the new year is going well and the Android rollout could stem losses so it might finally grow its user count again, or at least stop shrinking.


Source: The Tech Crunch

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Alphabet revenues are up 22% but the stock is still dropping

Posted by on Feb 4, 2019 in Alphabet, Earnings, Google, TC | 0 comments

Despite delivering a Q4 earnings revenue beat, Google parent company Alphabet’s stock is seeing a bit of a drop.

The massive search company reported revenue of $39.3 billion, up 22 percent year-over-year with an EPS of $12.77. Alphabet stock dropped more than 2 percent in after-hours trading.

The company’s beat of analyst estimates would have been a miss if not for a $1.3 billion unrealized gain “related to a non-marketable debt security.” Alphabet didn’t detail this further, but it kind of skews the earning beat based on what analysts actually had reason to expect.

Advertising revenues were up 20 percent YoY in Q4 to $32.6 billion. “Other” revenues (Cloud, hardware) were reported at $6.49 billion, up 31 percent year-over-year. “Other Bets,” which includes ventures like Waymo, Fiber and Verily, saw losses climb sharply to $1.3 billion with revenue sitting at $154 million, short of Wall Street estimates.

A number that analysts were increasingly looking closely at, traffic acquisition costs, climbed to $7.4 billion in Q4 up 15 percent year-over-year and up 13 percent from last quarter.


Source: The Tech Crunch

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Sony posts strong music earnings, as gaming business disappoints

Posted by on Feb 1, 2019 in Earnings, Nintendo, Sony | 0 comments

Sony posted record quarterly earnings this week on the strength of very strong music profits. Those numbers were catapulted thanks to the company’s $2.3 billion acquisition of EMI as part of an ever-consolidating music industry.

The electronics giant’s operating profit rose to $3.46 billion for the quarter — up from $3.21 billion a year prior, marking the highest single-quarter profit for the company. Things were less rosy on the gaming front, however, where the company was hit by declining hardware sales of its mature PS4 consoles for the holiday quarter.

The console sold 8.1 million units for the quarter — though the company says that’s roughly in line with its own expectations, as the latest PlayStation turns six. The long-awaited Marvel’s Spider-Man game was a hit for Sony, but not enough to make up for diminishing hardware sales. Profit for the gaming business dropped 14 percent, year over year.

The news comes as the younger (and cheaper) Switch continues to sell at a brisk pace — though Nintendo did notably trim expectations from 20 million to 17 million for the year. Sony was also hit by lowered demand for mobile imaging as the global smartphone market continues to struggle.


Source: The Tech Crunch

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Amazon reports better than expected Q4, but lowers Q1 guidance

Posted by on Jan 31, 2019 in Alexa, Amazon, AWS, Earnings, echo | 0 comments

Amazon had a heck of a holiday. The online retail giant posted Q4 earnings today, reporting $72.4 billion in revenue, topping last year’s $60.45 billion and besting the analysts’ forecast of $71.92 billion.

Extremely wealthy individual Jeff Bezos singled out Alexa’s record holiday season as a source of the robust quarter.

“Alexa was very busy during her holiday season. Echo Dot was the best-selling item across all products on Amazon globally, and customers purchased millions more devices from the Echo family compared to last year,” the CEO said of the earnings. “The number of research scientists working on Alexa has more than doubled in the past year, and the results of the team’s hard work are clear.”

Amazon Web Services also played a key role here, with a massive $2.2 billion operating income. AWS’s $7.43 billion sales beat the $7.29 billion analysts’ estimate and marked a healthy jump from last year’s $5.11 billion. 

The numbers look good, though; as CNBC notes, the 19.7 percent revenue growth for the quarter is the lowest since 2015. Wall Street reaction was further dampened by Amazon’s lowered guidance for Q1. Amazon put revenue for the upcoming quarter at between $56 billion and $60 billion, below analyst expectations of $60.99 billion.


Source: The Tech Crunch

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Samsung posts fourth-quarter profit drop, warns of weak demand until the second half of 2019

Posted by on Jan 31, 2019 in Asia, Earnings, Mobile, Samsung, Samsung Electronics, South Korea, TC | 0 comments

Samsung Electronics reported its largest quarterly profit decline in two years during its earnings report today. As the Galaxy maker warned in its earnings guidance earlier this month, its results were hurt by slower-than-expected demand for semiconductors, which had bolstered its earnings in previous quarters even when smartphone sales were slow.

Samsung’s forecast was also dour, at least for the first half of the year. It said annual earnings will decline thanks to continuing weak demand for chips, but expects demand for memory products and OLED panels to improve during the second half.

The company’s fourth-quarter operating profit was 10.8 trillion won (about $9.7 billion), a 28.7 percent decrease from the 15.15 trillion won it recorded in the same period one year ago. Revenue was 59.27 trillion won, a 10.2 percent drop year over year.

Broken out by business, Samsung’s semiconductor unit recorded quarterly operating profit of 7.8 trillion won, down from 10.8 trillion won a year ago. Its mobile unit’s operating profit was 1.5 trillion won, compared to 2.4 trillion won a year ago.

Smartphone makers, including Samsung rival Apple, have been hit hard by slowing smartphone sales around the world, especially in China. Upgrade cycles are also becoming longer as customers wait to buy newer models.

This hurt both Samsung’s smartphone and chip sales, as “overall market demand for NAND and DRAM drop[ped] due to macroeconomic uncertainties and adjustments in inventory levels by customers including datacenter companies and smartphone makers,” said the company’s earnings report.

Samsung expects chip sales to be sluggish during the first quarter because of weak seasonality and inventory adjustments by its biggest customers. The company was optimistic about the last two quarters of 2019, when it expects demand for chips and OLED panels to pick up thanks seasonal demand and customers finishing their inventory adjustments.


Source: The Tech Crunch

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