Facebook’s stock fell 21% (or $120 billion) following its Q2 earnings release this week. Facebook’s earnings report showed quarterly user growth slowing to just 1.54% (to 2.23 billion monthly users) compared to a 3.14% increase in Q1. Daily active user growth also slowed to 1.44% (down from 3.42% in Q1), however, Zuckerberg noted that 2.5 billion people use at least one of the company’s apps—Facebook, Instagram, WhatsApp, and Messenger. Reuters consensus forecast showed revenues coming in at $13.36 billion in revenue, which was marginally higher than the actual numbers posted ($13.23 billion).
Slack CEO Stewart Butterfield announced yesterday that Slack is acquiring and discontinuing HipChat and Stride, HipChat’s would-be replacement. Atlassian will make a “small but important investment” in Slack, likely a nod to the rumors of Slack going public, though not this year as Butterfield ruled out a 2018 IPO back in May when business surpassed 8 million daily active users. It does not appear as though any of Atlassian’s other products will be affected by the acquisition.
The e-commerce world saw Amazon shares rise more than 2% in after-hours trade on Thursday, posting profits of $2.5 billion for the second quarter, double forecast estimates and their highest ever reported. Earnings from Q2 showed total net sales rose 39% to $52.89 billion, just shy of the average analyst estimate of $53.40 billion. Amazon Web Services itself posted an increase in sales of 49% for a total of $6.1 billion, surpassing estimates. Higher earning enterprises held by the e-commerce giant, including cloud computing and advertising, have helped forecast a strong pre-holiday quarter.
In digital marketing news this week, Google has discontinued the public Submit to Index tool, now requiring users to go through Search Console’s Fetch and Submit tool for individual pages. Alternatively, website managers can have their CMS communicate page updates or new pages directly with Google through a sitemap file or feed. Either way, users will have to be logged into the platform to notify the search engine of new sites.
New in SaaS business listings this week we have a $1.62M B2B email marketing verification software, with a proven history of success with dozens of five-star reviews and feature-rich software, lean and scalable cost structure allowing for high net margins and strong cash flows. Also new in SaaS listings this week we have a $257K social media marketing automation tool, with strong year-over-year growth with MRR reaching c.135% CAGR for the 2016 to (e)2018 period, years of operational history with an authoritative brand and diversified customer base with multiple notable customers. If you are interested in either of the above businesses, please follow the links to request a prospectus.
In events news, the FE team had a great time co-hosting a networking drinks event alongside Lighter Capital last night, so thanks to everyone who joined! Next up, CEO Ismael Wrixen and Founder Thomas Smale will be attending Affiliate Summit East in New York this Sunday-Tuesday, where FE will be hosting a drinks event Monday 6-8pm at a local bar near the conference, so make sure to RSVP if you will be in the area!
Continue reading below for more on Facebook’s lowered stock, Slack’s acquisition of HipChat and Amazon’s higher than expected earnings report.
Listings
New
SaaS – B2B Email Marketing Verification Software – $51K MRR
- Well-known and trusted brand in the rapidly growing email marketing tools niche
- Proven history of success with dozens of five-star reviews and feature-rich software
- Lean and scalable cost structure allowing for high net margins and strong cash flows
- Simple operations with a team of freelancers transitioning with the business
Yearly net profit: $500,000
Asking price $1,622,000
SaaS – Social Media Marketing Automation – $6.9K MRR
- Strong year-over-year growth, with MRR reaching a c.135% CAGR for the period 2016 to (e)2018
- Years of operational history with an authoritative brand
- Diversified customer base with multiple notable customers
- Well-trained team and scalable cost structure driving strong margins
Yearly net profit: $70,000
Asking price $257,000
In The News…
Facebook Stock Falls 21%
Facebook shares dropped 21% following a lukewarm Q2 earnings report.
Following backlash over data breaches and fake news, Facebook’s most recent earnings report displayed underwhelming results. The social media platform’s monthly users have risen only 1.54%, now up to 2.23 billion monthly, for a much slower climb than the 3.14% growth from Q1. Revenue reached $13.23 billion, just shy of Thomson Reuters’ consensus estimates of $13.36 billion. One win reported was the marginal surpassing of EPS estimates, as it came in at $1.74 where estimates showed $1.72. Daily active users only rose 1.44% to 1.47 billion, a growth rate of nearly half of Q1’s 3.42%. Until this quarter, Facebooks’s slowest ever quarter-over-quarter, daily user growth rate was 2.18% in Q4 2017. In the same earnings call, Zuckerberg highlighted that in all, 2.5 billion people use at least one of the group’s apps: Facebook, Instagram, WhatsApp or Messenger. The stock market reacted strongly to the slow growth rates reported, as Facebook’s share price fell more than 21% in after-hours trading on Wednesday to $174.97 per share, down from $217.50 from closing. The stock price had initially dropped 7% following the news of slow user growth, but reports of slowing revenue growth spurred the dramatic decline.
Despite the subpar growth, Facebook earned $5.106 billion in profit, and revenue rose 42% year-over-year.
Slack to Acquire HipChat
Slack has announced they will acquire and subsequently discontinue HipChat.
Alassian is discontinuing intra-office communication tool HipChat, as well as its would-be replacement, Stride. Slack CEO Stewart Butterfield announced the acquisition of the IP for both products to “better support those users who choose to migrate” to its platform, adding that Atlassian intends to make a “small but symbolically important investment” in Slack—likely a sound decision given rumors of an impending Slack IPO. An investment in pre-IPO Slack is a more frictionless avenue than continuing competition wiht the leading communication tool. In a blog post following the announcement, Atlassian VP of Product Management, Joff Redfern, confirmed the news, stating it was the “best way forward” for the tool’s existing users, as well as Atlassian’s own employees, who will be moved over to using Slack.
Stride and HipChat will be functional February 15th, 2019 just about seven months from now.
Amazon Shares Rise 2%
Amazon shares rose 2% in after-hours trade on Thursday following a strong Q2 earnings report.
Amazon’s report shows the company expects an operating profit in the range of $1.4 and $2.4 billion, a significant jump from $347 million a year earlier. This also falls well above analysts’ expectations of $843 million, according to Thomson Reuters. The report demonstrates Amazon’s ability to adapt high shipping costs of fast package delivery and video streaming, and continue to drive revenue through cloud data storage. Brian Olsavsky, Amazon’s CFO, said on the reporting call, “A big contributor to the quarter and the last few quarters obviously has been strong growth in our highest profitability businesses and also advertising. We’ve seen a greater-than-expected efficiency in a lot of our spend in things like warehouses, data centers, marketing.” Prime Day, the annual July event, saw Prime members purchase over 100 million products, and th ecompany now expects third-quarter sales between $54 billion and $57.5 billion, up from $43.7 billion last year. Additionally, more people became Prime subscribers on 2018’s Prime Day than on any previous day in the company’s history.
One of the biggest wins for the company was a second-quarter profit of $2.5 billion, its largest ever recorded.