Tag: Business

Zoom went on Nasdaq with the IPO price of $36 (target range of $33 to $35 per share), opened at ~$65 and closed at $62 (up 72%), making it in par with Lyft.

Several things to note here:

• • Zoom is relatively young. It maintained high growth (2018 revenue of $331 million, 2017 revenue of $151 million) and is expected to grow fast.
• • Zoom is making a net profit in 2018 (~2.3% profit margin) and has maintained a high gross margin (~80%).

• • Growth in customers – “As of January 31, 2017, 2018 and 2019, we had approximately 10,900, 25,800 and 50,800 customers with more than 10 employees.” they “represented 69%, 75% and 78% of revenue“
• • Market Size – In the US, business with
• • • 10-19 employees: 46,635
• • • 20-49 employees: 37,495
• • • 50-249 employees: 23,065
• • • 250 or more: 5,672
• • • ~113k in total, so Zoom has another 50% room to grow (will be harder and more costly)

• • market penetration and growth opportunity in large enterprise customers – “greater than 50% of the Fortune 500 had at least one paid Zoom host, compared to only 4% that contributed more than $100,000 of revenue. We believe this demonstrates that our product has already gained a foothold in many of the largest enterprises in the United States, and there is a large opportunity to expand within these large enterprise customers”
• • Revenue per large enterprise customer will grow, easily – “Some of our larger enterprise customers start with a single deployment of Zoom Meetings with one team, location or geography, before rolling out our platform throughout their organization.” “As of January 31, 2017, 2018 and 2019, we had 54, 143 and 344 customers that contributed more than $100,000 of revenue in each of their respective fiscal years”
• • Zoom’s future depends on its business outside video conferencing; it could grow into an essential infrastructure for business operations; it could do more than video conferencing, but also scheduling, internal messaging and other management tools.
• • It should be compared with Slack ($221 million revenue in the year ended in January 2018, currently in the process of a direct listing on NYSE with valuation $10 billion)

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Zoom, Slack, Alibaba’s Dingding (DingTalk), WeChat for Enterprise will meetup in the future, in the battle of office app/platform.

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Read More on Zoom’s IPO

Future is closer than most will believe. Drone delivery is yet another example.

Imagined Reality

A few days ago (around April Fools’ Day), a FAKE video (by rendering) populated on Twitter, presenting an Amazon mothership equipped with drones.

However, this may not be far away from what the future will look like, especially for the drone part.

Amazon’s Plan

The idea could be seen in an Amazon patent US000009305280B120160405 filed in December 2014 and issued by the USPTO in April 2016.

This is part of Amazon Prime Air program first announced in 2013. It looks more viable on the drone-only side, the first delivery made in December 2016 in Cambridge, UK.

First-ever #AmazonPrimeAir customer delivery is in the books. 13 min—click to delivery. Check out the video: https://t.co/Xl8HiQMA1S pic.twitter.com/5HGsmHvPlE

— Jeff Bezos (@JeffBezos) December 14, 2016

And in 2017, an Amazon Prime Air drone dropped off some bottles of sunscreen for attendees at the company’s invite-only MARS conference in California. [The Verge]

US Pilot Programs Granted

In the US, FAA has selected 10 state, local and tribal governments for pilot programs in drone testing in May 2018. [More about the program]

• • Choctaw Nation of Oklahoma, Durant, OK
  • City of San Diego, CA
  • Innovation and Entrepreneurship Investment Authority, Herndon, VA
  • Kansas Department of Transportation, Topeka, KS
  • Memphis-Shelby County Airport Authority, Memphis, TN
  • North Carolina Department of Transportation, Raleigh, NC
  • North Dakota Department of Transportation, Bismarck, ND
  • The City of Reno, NV
  • University of Alaska-Fairbanks, Fairbanks, AK

Alphabet’s Wing in Australia – First to Commercial

Another exciting move is made by Alphabet’s Wing on Tuesday, which was granted approval in Canberra by Australian aviation authority CASA. Wing officially becomes world’s first drone delivery business according to The Guardian.

The deliveries will start with roughly 100 homes in the Canberra area. The drones are required to operate during daylight hours, banned from crossing over major roads and there’s a minimum distance they have to maintain from people on the ground.

Meanwhile, according to Wing’s website, they are going to launch the drone delivery service in Finland in spring of 2019, which will be their first operations in Europe.

Before this approval, in September 2016 at Virginia Tech, Wing (a Google X project then) has tested food delivery (Chipotle burritos) in the US for a tenth of a mile, maintaining the kind of line-of-sight flights that the FAA prefers (before any pilot programs). Virginia Tech is home to a U.S. FAA test site.

Wing made its first test in 2014 in Queensland, Australia, delivering a first aid kit, candy bars, dog treats and water to farmers.

Wing graduated from Google X in July 2018.

JD’s Drone in Asia

Earlier this year, JD.com announced that it has completed the first government approved drone flight in Indonesia, delivering backpacks and books to students in a local elementary school.

In China, JD has been approved for drone delivery services in provinces including Shanxi, Jiangsu, Qinghai, Guangdong, Hainan and Guangxi.

Snap (Before 2019 Q1)

Once characterized as the challenger for Facebook, Snap Inc. has faced fierce competitions from FB’s Instagram, which introduced a similar story feature in August 2016.

Snap went IPO in March 2017 onto NYSE, valued at more  than $33 billion on the first day of trading, surpassing the previous $3 billion acquisition offer from Facebook in 2013 and a $30 billion acquisition offer from Google in 2016 (not verified, reported in August 2017, when Snap’s stock price had been declining to around $14).

Its road after IPO was not an easy one.

DAU growth peaked right before Instagram’s story launch. Other problems included the questionable change of Snapchat’s interface, departure of CFO (twice, first CFO departed in May 2018, second CFO departed in Jan 2019), etc.

Snap Partner Summit 2019 And Going Forward

The summit was held on April 4, on which new strategies and partnerships were detailed/projected.

By and large, Snap is learning from Facebook and is pivoting to becoming an “infrastructure”.

Broadly speaking, many firms are pursuing the infrastructure play: AWS wants to be the infrastructure for internet services (servers); Facebook & Google want to be the infrastructure of ads; Twitter & Youtube contents can be embedded in various ways, etc.

Snap now has updated its Snap Kit, to include a new Story Kit enabling other apps/sites to implant Snapchat Stories. Namely, users will be able to show/embed/insert their Snapchat Story in Tinder and Houseparty, two initial partners announced.

Snapchat Audience Network is also being built to help other apps to monetize – a revenue-sharing practise to expand the audience/utility of Snap Ads, so that people who are not on Snapchat will be broadcasted the ads created by advertisers through Snap. [Read more about Facebook Audience Network]

Additionallly (besides ads), Snap announced the partnership with Fitbit to integrate Bitmoji avatars to Fitbit’s devices (Fitbit Ionic™ and Fitbit Versa™), a clock face that dynamically updates throughout the day based on your personal health and fitness data, activity, time of day, and weather. Also, Bitmoji will be seen on Venmo.

 

Apple announced 3 new (subscription) services today: Apple News+, Apple TV+, Apple Arcade. [they are actually very similar to a previous post Apple’s Service Bundle]

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Apple News+ is a $10 per month subscription bundle. Essentially, it is a product of “securitization” of reading magazines & newspapers – just like Spotify as a securitization of listening to musics.

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Apple TV+ will be offered through new Apple TV app. This is important as it might be the first major service/software by Apple that doesn’t require an Apple device.

It doesn’t have a price tag yet. And it is reported that Apple will partner with brands like HBO to offer an add-on option (i.e. additional $10 per month), just like what Hulu, DirectTV and many other streaming plans are providing.

Another question tho, is how the Apple TV app (and the Apple TV+ service) will impact the sales of Apple TV as it will be available on many smart TVs such as Roku, Fire TV (Amazon), Samsung, etc.

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Apple Arcade is coming sooner that I thought. And it will be a cross-platform product working across iPhone, iPad, Mac, and Apple TV.

It is a very good showcase/test of how Apple is merging or making it compatible between iOS and MacOS (and tvOS).

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What’s next?

A master membership from Apple is possible – something like $98 per month that includes Apple TV+, Apple News+, Apple Music, Apple Arcade, iCloud storage, AppleCare, etc.

Or a modular membership system.

At the core could be the financing of Apple devices’ purchases – maybe around $30-50 per month – and each subscription will be an add-on. This may provide an extra synergy with the new credit card service by Apple and Goldman Sachs.

Apple has those great plans to translate sales and customers into cash flows.

But for consumers, there will be some psychological differences between purchasing a device (as an asset) and paying an indefinite monthly fee (as an expenditure). And services are not as showable as devices. Apple (and Apple investors) might need to prepare and think carefully about those subtle changes.

Following upon a previous post about all those tech companies’ rush to Nasdaq, a group of companies have filed S-1 the past weeks, including Lyft, Pinterest and Zoom.

Plus the previous filings from companies such as Snap, we could get a glimpse into the empire of AWS… as the infrastructure of the current tech industry and all these companies’ commitments to pay Amazon.

Several examples. Starting with Pinterest:

• • 2018 revenue $775.9 million
  • 2018 cost fo revenue $241.6 million
  • Total commitment: at least $750 million in 7 years, from July 2017 to June 2023, first year of $125 million
  • Remaining $441.1 million as of Dec.31 2018
  • On average used: $206 million/yr [estimation: (750-441.1)/1.5=206]

Lyft

• • 2018 revenue $2,157 million
  • 2018 cost of revenue $1,243 million
  • Total commitment: at least $300 million in 3 years, from Jan 2019 to Dec 2021, each year at least $80 million
  • On average used: $60 million/yr [estimation: (144-24)/2=60]

Snap

• • 2018 revenue $ 1,180 million
  • 2018 cost of revenue $799 million
  • Total commitment: at least $1.1 billion in 6 years, from Jan 2017 to Dec 2022, ($90.0 million in 2018, $150.0 million in 2019, $215.0 million in 2020, $280.0 million in 2021, and $349.0 million in 2022)
  • On average used: $60 million/yr
  • Snap relies more on Google Cloud: at least $2 billion in 5 years, Jan 2017 to Dec 2021, at least $400 million/yr
  • estimated usage: at least $530 million/yr in 2018

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AWS achieved a revenue of $25,655 million in 2018, equivalent to the usage of ~48 Snap combined.

It will be interesting to see how AWS is going to renew/grow those contracts (should be easy, considering the friction to change a cloud provider) and how those companies will negotiate those terms, as more providers are as legit.

And when tech companies are using a blend of private cloud and those services, how AWS and others are going to fill the revenue “hole/gap”.

After all, the Cost of Revenues (partially due to AWS) will be limited by the Revenues (of internet companies); the growth heavily rely on new usages and the overall revenue of all internet companies.