Spotify has this week officially announced its plans to go public. Targeting a c.$1 billion IPO, the Swedish music-streaming platform does not plan on fundraising ahead of the exit, but instead will undergo a direct listing wherein existing shareholders will sell shares to investors on the public market. Currently trading between $90 and $132.50 per share off-market, the company is valued at $23.4 billion in the top range, but is not certain this valuation will necessarily pertain to public listing. Documents filed for the IPO show that 2017 revenue came close to $5 billion, up more than 38% from the year before, while reported losses of $1.46 billion nearly doubled compared to $657 million the previous year. Both ad-supported and paying monthly active users for the streaming company have grown consistently over the last three years, with paying subscribers having grown at a faster rate.
Elsewhere in the SaaS world, Salesforce CEO Mark Benioff recently shared that their goal of reaching $20 billion in revenue by 2022 just became “much more realistic.” Citing an excellent fourth quarter and the 28% growth of Salesforce’s deferred revenue on the balance sheet, Benioff said that it was “the company’s best quarter in a long time.” Indeed, Salesforce signed a record number of million-dollar contracts, bolstered by deals with global brands like Adidas and Deutsche Bank, which contributed significantly to the increase in revenue. Finally, Hangouts Chat, Google’s intra-office communication tool, came out of beta this week. Announced for the first time at Google Cloud Next 2017, Chat began in an invite-only preview beta of their heavily G-suite integrated and AI-focused communications tool. Hoping to capture part of the increasingly-concentrated communications app space, Hangouts Chat is now available for public use and offers integration with tools like Salesforce and UberConference, even leaving room for developers to add their own desired functionality.
In e-commerce news this week, Amazon has acquired doorbell and security camera producer Ring for $1 billion, according to Reuters, just as competitor Nest plans the release of their first smart video doorbell. Just two months ago Amazon acquired connected camera and doorbell startup Blink, a tech company founded in 2014 that builds integrated Wi-Fi home security cameras. Having already moved into the doorbell hardware space, Amazon’s recent acquisitions of Ring and Blink align with their home security growth strategy resting on startups who have already completed research and development for smart security products, rather than building the products in-house.
Also in Amazon news this week, beginning April 1, FBA sellers’ monthly inventory storage fees will increase by $0.05 per cubic foot for standard and oversize items, which will be first reflected in May statements for inventory stored in April. Additionally, beginning September 15, long-term inventory storage fees will be billed per month rather than semi annually, with a new $0.50 minimum charge on each unit stored in warehouses for 365 days or more. Amazon will charge sellers the greater of either the long-term per-unit storage fees or the monthly long-term storage fee. For more on the updates to inventory fees, FBA owners can read each policy on their seller’s central page.
New in e-commerce business listings this week we have a $1.1M sports and medical apparel business, with strong revenue growth reaching a 39% CAGR for the 2016 to 2017 period, dozens of high-quality SKUs driving c.25% customer repeat rates, a leading brand with a 99% positive seller feedback rating on Amazon and low owner involvement with a team of two VAs transitioning with the business. If you are interested in this business, follow the link to request a Prospectus.
In events news this week, SaaS entrepreneurs should note that LTVConf early bird tickets are now on sale, and our additional 50% discount, exclusive to FE International clients, is good for only a little while longer. Use code FEINTERNATIONAL at checkout to apply your discount on tickets for this expert-packed conference by clicking here. Founder Thomas Smale and SingleGrain CEO Eric Siu hosted a networking drinks event in San Diego this past Monday after the Traffic & Conversion Summit 2018. Thanks to our fellow affiliate entrepreneurs who came out and chatted with us! Thomas quickly jetted back to the East Coast to join CEO Ismael Wrixen in hosting our Investor and Buyer Drinks exclusively for FE clients in New York. Thanks to everyone who came out! It was great catching up with our long-time clients and investors, as well as getting to know some new partners. Next up, Thomas is delivering a keynote speech and workshop on Increasing the Value of Your Online Business at FemtoConf in Germany which concludes on Sunday, March 4. Reply to this email to set up a meeting if you are in the area!
Continue reading below for more on Spotify’s IPO, Salesforce’s 2022 revenue goals and Google Chat’s release from beta.
Deal Highlights
New:
E-Commerce – Sports & Medical Apparel – $136K gross/mo
- Strong revenue growth, with earnings reaching a 39% CAGR for the period 2016 to 2017
- Dozens of high-quality SKUs driving c.25% customer repeat rates
- Leading brand with well-received products allowing for a 99% positive seller feedback rating on Amazon
- Robust supplier relationships providing a competitive advantage via unique and customized product designs
- Low owner involvement with a team of two VAs transitioning post-sale
Yearly net profit: $473,000
Asking price: $1,116,000
Sold:
Display Advertising – Lifestyle – $1.8K gross/mo
Affiliate – Outdoor Games – $1.2K gross/mo
Affiliate – Hardware & Tools – $950 gross/mo
Affiliate – Outdoor Games – $920 gross/mo
In the News…
Spotify Files for IPO
Earlier this week Spotify announced that they filed for IPO and released files along with the application.
In placeholder documents submitted with the filing, the streaming company announced a $1 billion goal for the exit, though the company does not plan on conducting a round of fundraising before the exit. While they recognize that it will be a risky move, the IPO will be a direct listing, meaning shares will be sold from existing stakeholders like employees and investors to stock market investors. The company is expected to be seen in public markets in late March or early April under the ticker SPOT in the NYSE, though it is not yet defined how much shares will cost. Currently, shares are trading on the private markets between $90 to $132.50, and the company’s high end valuation is sitting at $23.4 billion. Spotify owners from past rounds of funding include Goldman Sachs, Fidelity, along with CEO and co-founder Daniel Ek’s stake (which is partially on behalf of companies Tiger, TME Hong Kong and Image Frame) which grants him voting power that represents 23.8% of the company. According to the prospectus, Ek does not receive a base salary but is eligible for a $1 million annual bonus based on relevant metrics like subscriber growth and active users.
Spotify streams in 61 countries and boasts 159 million monthly active users, 71 million of who are premium (paying) subscribers.
Salesforce Optimistic for 2022 Revenue Goal
In an interview with “Mad Money” host Jim Cramer Salesforce CEO Mark Benioff shared the company’s optimism that they will hit their $20 billion revenue goal by 2022.
In the most recently reported quarter, Salesforce beat analysts share estimates by 1 cent and posted higher-than -anticipated revenue, up 24% from the previous year. Deferred revenue for the CRM giant grew in the fourth quarter of the year, up 28% YoY, while unbilled off-balance sheet revenue grew 48% YoY. The increase in the quarter’s revenue was bolstered by big contracts with global brands in Europe like Adidas and Deustche Bank. Proud of the company’s best quarter “in a long time,” Benioff touted “If you’ve been to Adidas.com and bought your Yeezy 350s, you know that it’s all Salesforce. If you’re on Adidas.com, it’s Salesforce. If you get an email from Adidas, it’s Salesforce,” Benioff said. “We’re building a single view of the customer for Adidas and that’s giving them the ability to sell and connect with their customer in an all-new way.” According to Benioff, Salesforce reached $10 billion in revenue faster than any cloud or software company in history.
Benioff closed the interview with an emphasis on the company’s devotion to customer support and community of stakeholders.
Google Chats Comes out of Beta
Google’s Hangouts Chat recently came out of beta testing this week, after having first been introduced at 2017’s Google Cloud Next.
Released as their own take on work communications systems like Slack, Hangouts Chat hopes to capture part of the intra-office communication market by positioning itself to a highly functionality-oriented audience. The platform is, understandably, heavily integrated with the G-suite of products, and boasts a focus on AI and machine learning. A good example of the focus on AI is the @Meet bot, which helps workers schedule meetings, along with the @Drive bot that sends notifications of files being shared in the Google suite. Currently, users can communicate in 28 supported languages and each room has a capacity for up to 8,000 members. Additionally, users can start video conferences through the Hangout Meet video capability. Built-in file uploads to Google Drive, Docs collaboration, and integrations with tools like Trello, RingCentral, Xero, UberConference, Kayak and a designated Giphy bot are all part of their value proposition.
Developers will also be able to build their own integrations and desired functionality, making it a tech-oriented tool in the already saturated communications market.