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Market summary: 📊
Back to back down sessions in India, although this one was a lot kinder. US had a soft day too, with high growth tech starting to quickly go out of fashion with the markets.
US:
S&P 500 - down 0.68%
Nasdaq 100 - down 0.71%
India:
Nifty 50 - down 0.44%
Sensex - down 0.51%
What’s brewing hot? ☕
✅ Dark horse just entered the room—crypto heat is peaking, and there’s no better time to roll out that coin Zuck has been hiding in the R&D closet for almost 3 years now… Facebook will be actively testing its currency called Diem (earlier called Libra) as early as this year, despite vehement pushback from regulators and crypto enthusiasts. It’s still too early to say, but with a network of 3 billion people at its disposal, the services that FB could deliver in P2P payments, ecommerce, and perhaps even basic banking could seriously spike FB’s earnings, landing the stock on the moon faster than a blink of an eye!
✅ Discord tells Nadella to F’off—yep. Rumors are Discord isn’t interested in a $13 billion payout by Microsoft, and told the company’s executives to take a walk. Instead, the gaming-chat company will be setting up a date with Wall Street for an IPO. That’s a pretty embarrassing turn down for Microsoft, but importantly it's a setback for their grand ambitions to build a “community” driven product around their gaming franchise. Far as Discord is concerned, well… investors will lap up every last share no doubt, and cheers to those who don’t bend the knee!
Mr. Fix It doing his job well 🔨
tech stocks start reporting one by one, giving investors an update on the state of digitization.
Yesterday we had IBM and let's just say, in a long time, there were some bright smiles coming out of the Big Blue camp.
Revenues grew, reversing almost 12 months of straight decline, while profits looked healthy and margins expanded.
Quick look at the numbers:
Revenues of $17.7 billion, grew 1%
Cloud revenues grew 21%
Red Hat, gigantic software acquisition that IBM had made betting everything it had on, grew 17% YoY
Stock popped 3%
After multiple failed attempts to get IBM to light some fireworks, shareholders had finally brought in veteran Arvind Krishna to do a clean up job, and it seems the move has been working well.
Moment he took the seat, Krishna announced a major spinoff, throwing out IBM’s low-margin managed infrastructure business, while structuring the company around high-growth areas like the cloud business. Clients got a message, and employees got a quick morale boost.
And so far the numbers indicate that the transition looks pretty smooth. Now the markets are asking the next question, is this another Nadella-Microsoft-like epic turnaround moment in the making here?
Bottomline: IBM’s numbers make one thing clear though—we’re looking at a promising quarter for cloud software, with everyone from Amazon to young SaaS platforms likely to see the benefit of the momentum.
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It’s SaaS day on Venture Street 💰
literally printing a unicorn a day...
First up, we have subscription and billing management platform Chargebee, which tripled its valuation to $1.4 billion after raising $125 million from Tiger Global, Sapphire, and Insight Venture Partners, making it the 11th unicorn of the year!
Chargebee basically provides enterprises with a comprehensive SaaS platform that simplifies collection of payments, management of bills, and related operations including invoicing, reporting, and all the boring stuff around it, with its foot kinda into the SaaS and the fintech game at the same time.
Sales are growing at 100%+ rates, and the business has managed to scale to an appealing base of 3,000+ customers globally.
What matters: as companies like Stripe and Razorpay expand the market for digital payments processing, there will be a growing whitespace for tools built on top of such gateways streamlining payment related operations and analytics. It’s an ever expanding market, tightly competitive, but with a HUGE addressable runway in the long run.
Turning heads to another major SaaS deal,
Cloud data management platform Druva, one of the hottest SaaS companies in India, raised $147 million from CDPQ and old-school investment manager Neuberger Berman, pushing valuation to over $2 billion.
Druva basically sells a software platform that helps large companies optimize their data assets by removing duplicate data, ensuring data integrity before information is stowed away in large storage systems. Last we know, the business was booking $100 million in ARR, growing 40%+ at the beginning of 2020, and we’re guessing from the raise things are even rosier...
We’re also hearing some chatter about an IPO, but I dare you say a SPAC…
Them maggies sellin’ well 📈
Maggie-maker Nestle, with its tentacles into almost everything food and beverage, reported a pretty solid first quarter of 2021, with profits and revenues both rising, signaling respectable progress in domestic consumer spending.
Quick look at numbers:
Revenues increased 9% YoY to ₹3,611 Crores, better than anticipated
Profit of ₹602 crores, was up 15% YoY, again better than expected
Domestic sales grew 10%, with ecommerce sales up a solid 66%
Margins are improving
However, the past is no longer not indicative of the future, and navigating the ship through COVID 2.0 will be challenging, which is why despite being pleased with the numbers, investors seemed to be holding back enthusiasm, for now.
What matters: almost for 12 months now, the unique choppiness of demand faced by these companies has tested them for the worst possible scenario—through gut wrenching layoffs, cost cutting, raw input shortages, strained supply chains, you name it! And many passed with flying colors, which only makes them even more attractive propositions going into recovery.
Closing out—influencers rule da world 👑
...we just live in it.
McDonald's, one of the foremost restaurant operations in the world, will take the help of Korean pop music band BTS to help it sell more fries! McD’s will tune its menu in over 50 countries so the fans of BTS can directly order the band’s favorite meal.
Pretty basic stuff, we know—but that’s a $175 billion company, with one of the most recognizable brands in the world, leaning on the whims of a pop band to stay relevant and move its sales needle!
Also, last year McD’s launched a similar campaign with rap sensation Travis Scott, and sales numbers flew through the roof putting many restaurants into acute food shortages. Expect some blowout beats coming in this time…
Meanwhile, some brands can’t even manage to get influencers to sign:
Bottomline: direct and raw distribution with an audience base that connects with you is becoming invaluable and irreplaceable, especially with the younger demographic.
What else are we snackin’ 🍿
💻 Gearing up for WFH 2.0- Zoom is launching a $100 million Apps Fund to stimulate growth of its ecosystem getting more entrepreneurs to build software, hardware, and integrations on the video platform.
💇Amazon techifying beauty - AMZN is launching a fancy AR equipped beauty salon in London, using fancy screen displays, point and learn tech, and other automated systems to help consumers try out makeup and hair shades before they purchase. World we're going into!
Hit that 💚 if you liked today’s issue.
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