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CRED’s move, Adobe’s deal, and stuff from the week before.

Aug 21, 2021

Hi 👋, Tanvi here.

Filter Coffee hits your inbox every morning with notable tech and business news scoops to jump start your day.

Let’s go ahead and get started:

Market summary: 📊

Despite the decent run up earlier in the week, India finished flat after a couple back to back down days. US continued to remain volatile, bouncing back sharply on the back of some solid earnings!

US:

S&P 500 - up 0.81%
Nasdaq - up 1.06%

India:

Nifty 50 - down 0.71%
Sensex - down 0.54%

Weekend cold-brew ☕

✅ CRED’s made a move — CRED made one of its first steps towards monetization, launching a P2P lending service that would connect retail “lenders” on its platforms with other retail “borrowers”, matching them for quick loans. CRED users on average apparently hold about ~₹2L in their savings accounts, and letting folks harvest some interest on that idle cash would be a nice way to put their money to work. Strategically a genius move, practically one of the least expected, and DEFINITELY not the end-game!

✅ IPO party spoiled — CarTrade’s IPO lacked fizz, with stock closing the first day in the markets down almost 8%. Conservatives were quick to bring out their “told you so” placard, warning of growth-story led froth. Honestly, 8% down ain’t as terrible but the party downstream will be dented a bit, questions on private valuations will be stiffer, and the used-car business will still have plenty of work to do to convince investors the trend is here to stay!

But Venture Street won’t stop 🔥

Anothaa one — Zetwerk, a B2B marketplace for manufactured goods closed a $150 million Series E round from D1 Capital Partners, pushing valuation over a billion dollars, sealing spot as the 25th unicorn of the year!

Zetwerk basically connects SMEs looking to outsource highly specialized custom manufacturing jobs with skilled manufacturing facilities, with operations spread across 15 countries, catering over 25 industries. Last year, the business made nearly ₹950 crores in revenues!

Meanwhile, MSFT and Oyo happened 🥴

...but the arrangement did not live up to the hoopla. Microsoft wrote a petty $5 million check into the company to basically get Oyo locked in as a Microsoft Azure cloud services vendor, as Nadella doubles down on India as a key market for Azure.

Only good part for Oyo? The deal revised its valuation to an upside, at $9.6 billion.

Shantanu went shopping 🛒

Adobe expanded its arsenal of productivity tools by acquiring video review and collaboration platform, Frame.io, in a $1.3 billion deal.

Frame.io basically sells a software tool for filmmakers, broadcasters as well as enterprises to instantly upload their recorded videos to the cloud, and make follow-on real-time editing easy. If you’ve worked with editing videos in groups, you know how painful things can get with large sizes and stupid tools.

Adobe, which primarily sells a bunch of design tools, productivity and e-signature platforms, is building a portfolio of services suiting the needs of an average white-collar worker in the post-COVID world.

Key takeaway — excellent margins, robust growth, an unrivaled industry distribution, and a $300B market cap exactly because of such well measured moves! Investors love $ADBE

Aight, that’s it for today folks, quick look at what went down this week.

👴 OF changes its game — OnlyFans is having a hard time convincing traditional investors to get on board, so the company will make a 360 degree change in its business, banning all explicit content starting October. Meanwhile, Axios got its hands on OF’s numbers, which are mind-boggling with $400 million in revenues, decent profitability, and over 130 million monthly active users.

👑Content is king — MyGlamm, one of India’s promising DTC cosmetics companies, acquired BabyChakra, a new-parents focused content platform that runs a bunch of communities on FB, Insta, combined with an online forum with a Q&A for young parents. MyGlamm is committing to invest upto ₹100 crores expanding a content operation around BabyChakra, which it will leverage to upsell its own products in emerging categories.

✨Crypto shines — Home-grown crypto startup Polygon Network acquired another blockchain venture called Hermez in a $250 million deal, one of the largest in the crypto space. Both Polygon and Hermez are in the business of making popular blockchains like Ethereum more scalable and faster. Hermez leverages a framework called zero-knowledge, which limits how much data is shared with 3rd parties, and Polygon will now integrate that capability into its own network.

🛒Big commerce moved hard on omnichannel —

First up, Walmart reported a pretty solid quarter, showing offline commerce is just as alive and thriving. Revenues topped $140 billion, up 5% YoY. Also, some eyebrows were raised when Walmart disclosed its advertising business is doubling YoY.

Then, Amazon did a total flip, announcing it is entering the offline departmental stores business, with Walmart-like mega locations around the US, for starters. The agenda is to counter Walmart and other big-box retailers' position, and build up a dual-presence, with these locations also doubling up as delivery and logistics hubs.

👎 Robinhood's first — $HOOD’s first quarterly earnings turned out to be a flop show. Revenues grew nicely, doubling from last year to $560 million, with 22 million+ users, growing more than 100% YoY. But management said they don’t expect the trading mania to continue aggressively into the next quarter, as stimulus dries up, the economy opens, and people have to return to their day jobs, so stock was hammered 8%.

🤧 Lastly, Vodafone continues to limp — revenues came down 14% YoY, and the business lost ₹7.4K crores during the quarter. Margins shrunk down to 40.5%, from ~46%, and average revenue per user contracted too. Similar straight decline will likely continue until the business is rammed into the ground, unless timely government intervention doesn’t breathe some hope into management as well as lenders, who are keen on pulling the carpet from under the business.

Hit that 💚 if you liked today’s issue.

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