Tag: Earnings

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Spotify CEO says AI progress is both “really cool and scary,” may pose risk to creative industry

In its first-quarter earnings call, streaming music service Spotify talked in more detail about how AI advances are impacting its business. On the positive side, the company offered an update on the user adoption of its new AI DJ feature, which offers personalized music selections introduced by a realistic-sounding DJ voice powered by AI. But other AI advances have the potential to cause harm – including the use of AI to create music that clones the voices of existing artists without their consent, leading to copyright concerns and further complications for streamers like itself.

The latter issue recently made headlines when a song that used artificial intelligence to clone the voices of Drake and The Weeknd was uploaded to a number of streaming services, including Spotify, Apple Music, Tidal, YouTube, and Deezer.

A new Drake x The Weeknd track just blew up — but it’s an AI fake

Spotify and others quickly took the track down but faced criticism from publishers like Universal Music Group, which asked which “side of history” did “stakeholders in the music ecosystem want to be on: the side of artists, fans, and human creative expression, or the side of deep fakes, fraud, and denying artists their due compensation?”

On the Q1 2023 investor call, Spotify was asked how it intended to approach this sort of problem going forward.

In response, Spotify CEO Daniel Ek called the issue complex and fast-moving and didn’t seem to have a proposed solution at this time.

“First off, let’s acknowledge that this is an incredibly fast-moving and developing space. I don’t think in my history with technology I’ve ever seen anything moving as fast as the development of AI currently is at the moment,” he said.

Ek noted that Spotify had to balance two objectives, including being a platform for allowing innovation around creative works, and one that needs to protect existing creators and artists. Both roles it takes very seriously, he said.

“We’re in constant dialogue with the industry about these things. And it’s important to state that there’s everything from…fake tracks from artists which falls in one bucket to…just augmenting using AI to allow for expression, which probably falls in the more lenient and easier buckets,” Ek continued.

“These are very, very complex issues that don’t have a single straight answer…But we’re in constant discussion with our partners and creators and artists and want to strike a balance between allowing innovation and, of course, protecting artists,” he added.

When later pushed as to what material impact AI developments could have on the business, Ek admitted that the progress in AI is both “really cool and scary” and that there is a risk to the wider ecosystem.

“I think the whole industry is trying to figure that out and trying to figure out [AI] training…I would definitely put that on the risk account because there’s a lot of uncertainty, I think, for the entire ecosystem,” he said.

Meanwhile, the company is benefitting from the use of AI in other areas, Ek stressed.

For example, Spotify’s recently launched AI DJ feature has been gaining traction.

The feature is still in its early days, having only begun rolling out to Spotify users ahead of its product launch event Stream On in March, where the company also introduced a revamped, video-focused user interface, powered by algorithms and machine learning, and new tools for artists and podcasters, among other things.

Though limited to the North American market and still in beta, the AI DJ is now reaching “millions” of active users every week, Spotify reported, representing more than 25% of user consumption on days that they use the DJ feature.

That’s solid traction for the still experimental new feature and also a positive indication of the benefit of Spotify’s investment in AI technologies.

The CEO also spoke to AI’s potential to help people create music without having to understand how to use complicated music production tools. He envisioned artists instructing the AI to make a song sound “a little more upbeat,” just using a voice command, for example, or telling the AI to “add some congas to the mix.”

“That has the chance I think, to meaningfully argument that creative journey that many artists do,” he noted.

Ek also felt it was important to stress the difference between something like an AI-powered feature like the DJ and the concerns around AI in creating fake tracks.

“I do think it’s important to kind of separate AI DJ from the AI conversation. So AI DJ, in and of itself – I think we’ve had nothing but positive reactions from across the industry. I think the AI pushback from the copyright industry or labels and media companies…it’s really around really important topics and issues like name and likeness; what is an actual copyright; who owns the right to something where you upload something and claim it to be Drake, and it’s really not; and so on. And those are legitimate concerns,” Ek said.

And obviously, those are things that we’re working with our partners on in trying to establish a position where we both allow innovation but, at the same time, protect all of the creators that we have on our platform,” Ek said.

The company reported its Q1 revenue was up 14% year-over-year to €3.04 billion, and its ad revenue was up 17% year-over-year to €329 million. Spotify hit a new milestone with the news it has reached 500 million users, but its premium subscriber portion fell to a ratio of 40% paid-to-free listeners, with 210 million premium subscribers and 317 million on the ad-supported plan.

 

Spotify passes 500M users, but its premium subscriber portion falls to 40%

Spotify CEO says AI progress is both “really cool and scary,” may pose risk to creative industry by Sarah Perez originally published on TechCrunch

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Salesforce strikes back

It would be an understatement to say that Salesforce has been having a rough ride of late — from activist pressure to executive departures and layoffs — it seems like everyone was piling onto a company that was already struggling as profits declined.

It needed a strong quarter, and all indications were they wouldn’t get it. Against all odds, though, the CRM leader defied the street with a strong report.

Today after the bell, Salesforce reported its fiscal fourth-quarter earnings, including revenue that topped expectations and guidance that came in ahead of street estimates.

The street had expected Salesforce to report revenues of $7.99 billion in its most recent quarter; it reported top line of $8.38 billion, up 14% compared to the year-ago period, and three points better in constant currency terms.

In terms of the future, investors had forecast that Salesforce would generate revenues of $8.05 billion in its present quarter (Q1F24), and $34.03 billion for its new fiscal year; instead, Salesforce expects revenue between $8.16 billion and $8.18 billion in its current quarter, and revenues of $34.5 billion to $34.7 billion for the full fiscal year.

TechCrunch noted earlier this week that the way for Salesforce to get out of its jam would be to beat growth estimates and improve profitability. The company certainly managed the former. The company is forecasting stronger profits as well. Salesforce reported GAAP and non-GAAP operating margins of 3.3% and 22.5%, respectively. In its newly started fiscal year, the company expects GAAP and non-GAAP operating margins of around 10.8% and 27.0%, respectively.

Salesforce crushed expectations and doubts concerning its recent growth, forecast better-than-anticipated growth for the year, and told investors to expect an overall stronger operating profit result for its new fiscal year.

This could take some wind out of the sails of Salesforce’s critics. The company’s many detractors of late were lining up to find fault with its spending, especially compared to others in the industry, and these operating numbers in particular could help Salesforce executives as they continue to negotiate with a legion of activist firms.

It’s worth noting that just this morning, Elliott Management, one of the five activists working inside Salesforce at the moment, announced a slate of candidates for the board of directors, a move that usually means it wants to force its agenda onto a company. A bad report would have made that job a lot easier.

Investing critics of the company might also have wanted to see, say, a greater level of anticipated shareholder return. That can come in various forms, including dividends, share buybacks and other efforts. Salesforce has historically opted for share buybacks, given its strong cash generation. After noting in its report that it returned 57.5% of the $4 billion it spent on buybacks last fiscal year in its trailing quarter, the company also announced that it is increasing the size of its buyback to $20 billion in total.

Naturally you could argue that Salesforce is amping up its share repurchases to dampen external criticism and appease the activists who are looking for a better return; true, but even if so it has a similar effect. It will repurchase the shares and has the cashflow to do so. It’s hard to argue about intent when the expected result is likely in line with what external investors wanted.

Salesforce will retain critics concerning its cost structure and the fact that its expected growth in its current fiscal year is just 10%. But compared to where the company was earlier this week, its earnings report has proven a good sheaf of its critics wrong, and perhaps bought it more time to make the case that it really does know what it is doing.

Salesforce strikes back by Ron Miller originally published on TechCrunch

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Coinbase shares rise after non-trading revenues increase amid a continued crypto winter

Coinbase, the second-largest crypto exchange by trading volume, released its Q4 2022 earnings on Tuesday, giving shareholders and market players alike an updated look into its financials. In response to the report, the company’s shares are down modestly in early after-hours trading.

In the fourth quarter of 2022, Coinbase generated $605 in total revenue, down sharply from $2.49 billion in the year-ago quarter. Coinbase’s top line was not enough to cover its expenses: The company lost $557 million in the three-month period on a GAAP basis (net income) worth -$2.46 per share, and an adjusted EBITDA deficit of $124 million.

Wall Street expected Coinbase to report $581.2 million in revenue and earnings per share of -$2.44 with adjusted EBITDA of -$201.8 million driven by 8.4 million monthly transaction users (MTUs), according to data provided by Yahoo Finance.

Before its Q4 earnings were released, Coinbase’s stock had risen 86% year-to-date. Even with that rally, the value of Coinbase when measured on a per-share basis is still down significantly from its 52-week high of $206.79.

3 questions for Coinbase as we count down to its Q4 earnings

That Coinbase beat revenue expectations is notable in that it came with declines in trading volume; Coinbase historically generated the bulk of its revenues from trading fees, making Q4 2022 notable. Consumer trading volumes fell from $26 billion in the third quarter of last year to $20 billion in Q4, while institutional volumes across the same timeframe fell from $133 billion to $125 billion.

The overall crypto market capitalization fell about 64%, or $1.5 trillion during 2022, which resulted in Coinbase’s total trading volumes and transaction revenues to fall 50% and 66% year-over-year, respectively, the company reported.

As you would expect with declines in trading volume, trading revenue at Coinbase fell in Q4 compared to the third quarter of last year, dipping from $365.9 million to $322.1 million. (TechCrunch is comparing Coinbase’s Q4 2022 results to Q3 2022 instead of Q4 2021 as the latter comparison would be less useful given how much the crypto market has changed in the last year; we’re all aware that overall crypto activity has fallen from the final months of 2021.)

There were bits of good news in the Coinbase report. While Coinbase’s trading revenues were less-than-exuberant, the company’s other revenues posted gains. What Coinbase calls its “subscription and services revenue” rose from $210.5 million in Q3 2022 to $282.8 million in Q4 of the same year, a gain of just over 34% in a single quarter.

And even as the crypto industry faced a number of catastrophic events, including the Terra/LUNA and FTX collapses to name a few, there was still growth in other areas. The monthly active developers in crypto have more than doubled since 2020 to over 20,000, while major brands like Starbucks, Nike and Adidas have dived into the space alongside social media platforms like Instagram and Reddit.

With big players getting into crypto, industry players are hoping this move results in greater adoption both for product use-cases and trading volumes. Although there was a lot of movement from traditional retail markets and Web 2.0 businesses, trading volume for both consumer and institutional users fell quarter-over-quarter for Coinbase.

Looking forward, it’ll be interesting to see if these pieces pick back up and trading interest reemerges in 2023, or platforms like Coinbase will have to keep looking elsewhere for revenue (like its subscription service) if users continue to shy away from the market.

Coinbase shares rise after non-trading revenues increase amid a continued crypto winter by Jacquelyn Melinek originally published on TechCrunch

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Roku soars past revenue expectations as it bets on streaming devices to boost growth

Over a month after Roku announced its first Roku-branded TVs, which will launch in the U.S. in spring 2023, the hardware company reported its quarterly earnings this afternoon, which showed Roku beat its own revenue expectations, reporting a total net revenue of $867.1 million for Q4.

The company previously cautioned investors of a shaky fourth quarter, predicting total revenue at around $800 million, a 7.5% decrease year over year. In Q3, Roku had total revenue of $761 million. Analysts predicted a year-over-year decline of 7% to $804.19 million.

However, the company’s Q1 2023 guidance is still cautious of the current macroenvironment. Roku predicts a total net revenue of $700 million.

Also, Roku recently announced that it surpassed 70 million active accounts globally in 2022, an impressive milestone for the company. It had 65.4 million active accounts in Q3. For comparison, rival Tubi, Fox’s free ad-supported streaming TV service, revealed yesterday that it reached 64 million monthly active users.

Plus, Roku had a 19% year-over-year increase in global streaming hours, with a total of 87.4 billion streaming hours in 2022 and 23.9 billion for the fourth quarter.

Despite the growth in accounts, Roku continued to see operating losses widen to $249.9 million, compared to a loss of $147 million in the prior quarter. Due to the economic challenges, Roku wrote in an SEC filing in November that it planned to cut 200 jobs in the U.S. between Q4 2022 and Q1 2023.

“We plan to continue to improve our operating expense profile to better manage through the challenging macro environment while building on our platform’s monetization and engagement tools and partnerships,” the company wrote in its letter to shareholders. “Through a combination of operating expense control and revenue growth, we are committed to a path that delivers positive adjusted EBITDA for full year 2024. Our platform and industry leadership positions us well for reaccelerated revenue growth as the ad market recovers and the shift to TV streaming continues.”

The company added that Roku’s operating system (OS), which will power the forthcoming Roku-branded TVs, grew to 38% of units sold in the U.S. Q4 2022, per NPD. This means Roku OS continues to be among the top-selling smart TV OS in the U.S. The new Roku-branded TVs, announced last month, were another significant move for the company.

Roku recently closed a few deals with major companies to boost its streaming business. For instance, the company closed a deal with Warner Bros. Discovery, getting 2,000 hours of movies and TV shows, including HBO’s “Westworld,” “The Bachelor,” “Cake Boss” and “Say Yes to the Dress,” among others.

Earlier this week, the company struck an exclusive programming deal with Pocket.watch, a kids and family entertainment studio, to bring more children’s content to the Roku Channel.

Also, Roku partnered with DoorDash earlier this month to give customers a free six-month subscription to DashPass and launched interactive shoppable ads for DoorDash businesses on Roku devices.

Roku ends 2022 with new milestone, tops 70M active accounts

Roku unveils its first-ever TVs designed and built by the company

 

Roku soars past revenue expectations as it bets on streaming devices to boost growth by Lauren Forristal originally published on TechCrunch

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Airbnb posts a record Q4 as travel recovers post-pandemic

Airbnb is raking in the dough. The company reported a record Q4 today, beating its previous benchmark both in terms of revenue and net income.

In Q4, Airbnb’s revenue grew 24% year-over-year to $1.9 billion, according to the company, driven by an uptick in stays and Experiences, Airbnb’s curated selection of tours and events. Nights and Experiences booked increased 20% in Q4 2022 compared to a year ago, the company said, while guests stayed at locations longer. Gross nights booked in Q4 2022 for more than a week — a profitable customer segment — were 40% higher than in Q4 2019.

Another boost to Airbnb’s bottom line, no doubt, was the company’s decision to stop offering COVID-19-related refunds. Perks for hosts likely helped, too, plus growth-oriented features like a toggle that shows the price of stays inclusive of fees.

Somewhat surprisingly, the decision to remove mainland China listings in July was a nonfactor where it concerned revenue, the way Airbnb tells it. During the earnings call this afternoon, Chesky said that Airbnb remains focused on outbound business from China, which it sees as a large (albeit slow-growing) opportunity.

“We think that there’s gonna be hundreds of millions of people that want to leave China to travel the world,” Chesky said. “We think it’s going to be the best way for essentially Gen Z people [based in China] to travel — I think they really want an authentic experience while traveling around the world.”

On the net income side, Airbnb notched $319 million in Q4 2022 compared to $264 million in Q4 2021, which it attributes to revenue growth and “expense discipline.” Unclear is the extent to which Airbnb’s embrace of a fully remote workplace might’ve played a role; Airbnb’s headcount is down 5% from 2019.

For the full year 2022, Airbnb generated $1.9 billion of net income — its first profitable full year. That’s quite a turnaround from 2021, when the company lost $352 million.

In 2023, Airbnb says it’s seeing “strong demand” and plans to focus on raising awareness around hosting, improving community support and building new products and services. Telegraphing one area of investment, Airbnb recently launched a tool that helps find renters an apartment so they can Airbnb it.

During the earnings call, Airbnb CEO Brian Chesky mused that AI had an increasing role to play in bolstering Airbnb’s business.

“I’m really excited about the possibility of AI. I think Airbnb will uniquely benefit from this,” Chesky said. “The reason why is because Airbnb is a very difficult product challenge, which is, unlike hotels, we don’t have SKU — there’s no representative inventory … Guests left more than 100 million reviews last year. And just parsing through all these reviews is very laborious. I think AI is going to really benefit our long tail of data and the fact that our search problem isn’t really a search problem, it’s a [customer-inventory] matching problem.”

Airbnb stock is up around 5% as of publication time.

Airbnb posts a record Q4 as travel recovers post-pandemic by Kyle Wiggers originally published on TechCrunch

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Airbnb posts a record Q4 as travel recovers post-pandemic

Airbnb is raking in the dough. The company reported a record Q4 today, beating its previous benchmark both in terms of revenue and net income.

In Q4, Airbnb’s revenue grew 24% year-over-year to $1.9 billion, according to the company, driven by an uptick in stays and Experiences, Airbnb’s curated selection of tours and events. Nights and Experiences booked increased 20% in Q4 2022 compared to a year ago, the company said, while guests stayed at locations longer. Gross nights booked in Q4 2022 for more than a week — a profitable customer segment — were 40% higher than in Q4 2019.

Another boost to Airbnb’s bottom line, no doubt, was the company’s decision to stop offering COVID-19-related refunds. Perks for hosts likely helped, too, plus growth-oriented features like a toggle that shows the price of stays inclusive of fees.

Somewhat surprisingly, the decision to remove mainland China listings in July was a nonfactor where it concerned revenue, the way Airbnb tells it. During the earnings call this afternoon, Chesky said that Airbnb remains focused on outbound business from China, which it sees as a large (albeit slow-growing) opportunity.

“We think that there’s gonna be hundreds of millions of people that want to leave China to travel the world,” Chesky said. “We think it’s going to be the best way for essentially Gen Z people [based in China] to travel — I think they really want an authentic experience while traveling around the world.”

On the net income side, Airbnb notched $319 million in Q4 2022 compared to $264 million in Q4 2021, which it attributes to revenue growth and “expense discipline.” Unclear is the extent to which Airbnb’s embrace of a fully remote workplace might’ve played a role; Airbnb’s headcount is down 5% from 2019.

For the full year 2022, Airbnb generated $1.9 billion of net income — its first profitable full year. That’s quite a turnaround from 2021, when the company lost $352 million.

In 2023, Airbnb says it’s seeing “strong demand” and plans to focus on raising awareness around hosting, improving community support and building new products and services. Telegraphing one area of investment, Airbnb recently launched a tool that helps find renters an apartment so they can Airbnb it.

During the earnings call, Airbnb CEO Brian Chesky mused that AI had an increasing role to play in bolstering Airbnb’s business.

“I’m really excited about the possibility of AI. I think Airbnb will uniquely benefit from this,” Chesky said. “The reason why is because Airbnb is a very difficult product challenge, which is, unlike hotels, we don’t have SKU — there’s no representative inventory … Guests left more than 100 million reviews last year. And just parsing through all these reviews is very laborious. I think AI is going to really benefit our long tail of data and the fact that our search problem isn’t really a search problem, it’s a [customer-inventory] matching problem.”

Airbnb stock is up around 5% as of publication time.

Airbnb posts a record Q4 as travel recovers post-pandemic by Kyle Wiggers originally published on TechCrunch

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Apple stock drops on rare Q4 earnings miss

Apple has thus far been lauded for a deliberate hiring approach that saved the company from the mass layoffs conducted by top competitors like Alphabet and Amazon. But not even the iPhone maker is immune from economic headwinds. In quarterly earnings posted today, the company notched its first year-over-year loss since before the pandemic.

The company’s quarterly revenue, for the quarter ending December 31, 2022, was $117.2 billion, down 5% year over year, according to a release tied to the news. 

CEO Tim Cook attempted to accentuate the positive in the earnings report. “As we all continue to navigate a challenging environment, we are proud to have our best lineup of products and services ever, and as always, we remain focused on the long term and are leading with our values in everything we do,” Cook wrote.

The executive opened up a bit more in an interview with CNBC, noting a trio of key headwinds, including iPhone production issues in China, the broader economic climate and the strength of the U.S. dollar. He noted that Apple, much like the rest of the world, will be making strategic cutbacks. “We’re also recognizing the environment that we’re in is tough,” Cook added. “And so we’re cutting costs. We’re cutting hiring, we’re being very prudent and deliberate on people that we hire.”

After enjoying boosted hardware sales over the pandemic as people restructured their professional and school lives during a relative economic boom time, the company is now seeing that sales activity fall off. The last quarter represented the biggest drop in quarterly revenue for the company since 2016.

Mac and iPad revenue dropped nearly 30% each from the previous year, while revenue for the iPhone was down 8%. Supply chain and manufacturing issues have created a major bottleneck for the handset in recent year. Meanwhile, a new wave of lockdowns in China exacerbated issues during what is traditionally the company’s most profitable time of year. Apple says it is now comfortable with iPhone production levels.

Last month the company announced that Cook would receive a nearly 50% pay cut for the year, pulling in a mere $49 million annual salary.

With Cook’s latest comments around strategic cutbacks, matched with what we now know about company’s financial performance, it’s fair to wonder if workforce reductions are coming for the company. What we do know is just how hard the macroeconomic environment has been on the hardware giant — which, per its latest milestone, has more than 2 billion active devices in its installed base.

Apple stock drops on rare Q4 earnings miss by Brian Heater originally published on TechCrunch

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Samsung’s quarterly profit hits 8-year low amid weak demand for memory chips, smartphones

Samsung Electronics’ operating profit plummeted 69% to $3.4 billion in the quarter that ended in December to an eight-year low, according to its preliminary estimates, as the global demand for memory chips and smartphones wanes due to high inflation and slowing economy.

“Amid continued external uncertainties, including a potential global economic downturn, overall earnings decreased sharply quarter on quarter as we saw a significant drop in the memory business results due to lackluster demand and weaker sales of smartphones,” the company said in a statement.

The memory chipmaker and smartphone producer saw sales of 70 trillion won ($55 billion) in the quarter, down roughly 8.6% over the same period a year ago.

The sharp drop in demand for memory chips, including DRAM and NAND, which are used in gadgets and data centers, has also pushed manufacturers and vendors to lower their price, according to TrendForce.

“For the memory business, the decline in the fourth quarter demand was greater than expected as customers adjusted inventories in their effort to further tighten finances by concerns over deteriorating consumer sentiment,” the market researcher said. “Profits from the mobile experience business declined as smartphones sales and revenue decreased due to weak demand resulting from prolonged macro issues.”

Many chip firms, including Micron and SK Hynix, plan to slash their capital expenditure and reduce inventories this year. Samsung has previously said it doesn’t plan to reduce its capex.

Geopolitical risk is another concern for semiconductor companies tangled in the tech war between the U.S. and China. Last October, the U.S. rolled out new export controls requiring companies to obtain licenses to sell semiconductor chips for supercomputers and artificial intelligence to Chinese firms.

Samsung reportedly has received a one-year waiver from the US government to continue ordering U.S. chip manufacturing equipment to its fabs in China, such as the NAND flash memory chip plant in Xi’an and a chip-packaging facility in Suzhou. Despite the exemption to maintain the facilities in China, there is always a risk that the U.S. restriction could broadly hit chip firms with customers in China.

South Korea said earlier this week that it plans to increase tax breaks for semiconductor companies in a bid to support Korean chip companies and beef up the country’s critical industry. The move comes after Samsung and SK Hynix paid the highest corporate taxes in 2021 among other top 100 global chip makers, including TSMC, Intel and SMIC.

The large chip conglomerates in South Korea will benefit from a tax credit of 15%, up from the planned 8%, on investment in manufacturing facilities; small and mid-sized semiconductor companies will get a tax break of as much as 25%, up from 16%, according to South Korean finance ministry.

The tech giant will announce a full earnings statement, including net profit, for the fourth quarter and provide more details on at the end of this month.

Samsung’s quarterly profit hits 8-year low amid weak demand for memory chips, smartphones by Kate Park originally published on TechCrunch

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Why did Wall Street favor Adobe’s quarter over Salesforce’s?

When you look at Adobe and Salesforce, while there are many differences, they compete directly in some areas. And when you consider their overall performance, the numbers weren’t all that different in their most recent earnings reports:

For Adobe:

  • Revenue of $4.53 billion, which was right in line with analysts’ expectations, up 10%, which translates to 14% in constant currency if the dollar weren’t so strong it was dragging down overseas earnings numbers.

For Salesforce:

  • Revenue of $7.8 billion, compared with $7.2 billion expected by the analyst class. That was up 14%, or 19% in constant currency.

On its face, that’s pretty darn similar, yet Salesforce’s stock price has gotten slammed since it revealed its results. On Friday, the day after Adobe announced its most recent results, its stock closed up nearly 3%.

To be fair, Salesforce did drop the bombshell news that Bret Taylor was leaving at the same event, which may have spooked investors some, but Adobe’s 10% number isn’t exactly something to scream from the rooftops.

In fact, it’s dangerously close to single-digit growth doldrums, a place no public company wants to be living (except perhaps IBM). But Adobe has a couple of things going for it that Salesforce doesn’t. The first is that it’s diversifying its income in a big way, which should help as we enter the new year amid ongoing economic turbulence.

While the vast majority of the revenue still comes from the creative side of the house, as Adobe celebrates its 40th anniversary, we are starting to see long-term bets that CEO Shantanu Narayen made on marketing starting to pay off. That includes the $4.75 billion Marketo acquisition and the $1.6 billion Magento acquisition, both of which occurred in 2018.

The company also announced that Experience Cloud, which includes marketing tools and analytics products, reached $1 billion for the quarter for the first time — $1.15 billion, to be precise.

Brent Leary, founder and principal analyst at CRM essentials, who watches the marketing and sales markets closely, said it’s a big milestone for Adobe.

“I think most people still think of Photoshop, Illustrator and all the rest of the Creative Cloud apps, but Experience Cloud hitting this milestone illustrates the importance of using those tools to create and manage customer experiences to build deep, long-lasting relationships with them.

“Experience Cloud gets to come out of the shadows of Creative Cloud a bit,” Leary told TechCrunch.

And speaking of diversifying, investors may not have liked Figma’s $20 billion price tag when it was announced, but they seem to be settling into the idea of it becoming part of the company. Of course, the deal still has to clear significant regulatory hurdles in the U.S. and abroad before it becomes a reality.

Yet even without that, let’s face it: Figma revenue is not going to move the needle all that much in the short term, and Adobe is doing pretty well. But let’s take a closer look at these two reports and see if they are as similar as they appear at first glance and try to parse why Adobe is getting more favorable investor treatment.

Why did Wall Street favor Adobe’s quarter over Salesforce’s? by Ron Miller originally published on TechCrunch

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Box reaches $1B run rate in spite of a quarter dogged by currency challenges

Prior to launching as a startup in 2005, Box began as an idea that co-founder and CEO Aaron Levie had for a marketing class — to bring the power of the internet to file-sharing. The concept may not feel revolutionary today, but back then, you could email a file if it was small enough, or you could put it on a thumb drive and physically deliver it to the recipient. Other options were limited.

It’s hard to believe now, but the original academic idea grew into a startup, and later a way to take on the entrenched enterprise content management industry.

Box, which began so modestly, reported an even $250 million in revenue for the most recent quarter, the third quarter of its fiscal 2023, putting it on a $1 billion run rate for the first time. (Notably, we were told back in 2014 or so by venture capitalist Jason Lemkin that Box would reach the $1 billion run rate figure one day; he also predicted that it wouldn’t be easy. Two points, Lemkin.)

“We’re really proud of the fact that this is our first billion-dollar revenue run rate quarter, so we can now say that we’ve crossed that billion revenue threshold, which is super exciting,” Levie told TechCrunch.

Revenue was up 12% in the quarter compared to last year, more modest growth than Box has posted in recent quarters. What contributed to the slowdown? Levie said growth was affected by the strong U.S. dollar, which is impacting many companies right now. Measured using older currency exchange rates (“constant currency,” in corporate speak), Box’s growth would have been 17%, much more in line with recent reports.

“It’s pretty material actually, and the way we talk about it is that previously if we’d sold the deal for $1, we’re getting 80 cents now on that deal. So that’s a material headwind,” he said.

But in spite of the economic challenges that everyone is facing right now, Box is taking advantage of the need for customers to work remotely, or at least spend significantly less time away from a conventional office, and Levie said his company’s solutions have become mission-critical for customers.

“I think we’re being very strategic. I think the way companies manage content is very strategic, and so I think that puts us in a good position relative to other software companies because of that value proposition,” he said.

While he doesn’t have a crystal ball to see what budgets will look like moving forward, he does believe that Box remains in a strong position. The company seems to be looking at emphasizing profitability over growth, something that should please Wall Street investors right now. How did that translate into this quarter’s numbers? Let’s have a look.

Box reaches $1B run rate in spite of a quarter dogged by currency challenges by Ron Miller originally published on TechCrunch