When the pandemic began, “consumers in lockdown had no choice but to do all of their shopping online,” said PayPal CEO Dan Schulman on a quarterly call Wednesday. The vast majority of consumers now say that post-COVID-19 crisis, “they will continue to shop online at their current elevated levels because it is more convenient,” he said. “Retailers are rapidly adapting to a new landscape.” PayPal estimates the pandemic “accelerated a digital wave of change across almost every industry by three to five years, unleashing a profound and permanent structural transformation,” he said. The service added 16 million net new active customers in the quarter, he said. The stock closed Thursday up 7.4% at $270.43. See Q4 materials here.
Amazon blew past Q4 guidance of $112 billion-$121 billion -- and analysts' consensus of $119.6 billion -- posting $125.6 billion in revenue, up 44%, in a holiday quarter padded with October Prime Day receipts. Third-party units were 55% of total paid units during the quarter, said Chief Financial Officer Brian Olsavsky on Tuesday’s earnings call. Olsavsky downplayed changes resulting from Tuesday’s announcement that CEO Jeff Bezos will transition to executive chair in Q3. The move is part of succession planning put in place five years ago, he said. Amazon Web Services CEO Andy Jassy will assume the corporate CEO title when Bezos steps down in Q3. Wedbush analyst Michael Pachter wrote in a Tuesday investor note it’s not clear that Bezos will withdraw from day-to-day oversight of the business, “as we expect him to continue to be integrally involved in company strategy.” The analyst doesn’t foresee major changes at the company with Jassy at the helm and expects the transition to be “seamless and largely inconsequential.” Amazon assumed $4 billion in COVID-19 operating costs in the quarter -- including additional employee pay during the holidays -- bringing total 2020 pandemic costs to over $11.5 billion, Olsavsky said. Amazon's revenue guidance for Q1 is $100 billion-$106 billion, for growth of 33-40% vs. Q1 2020. Operating income is expected to be $3 billion-$6.5 billion vs. $4 billion in Q1 2020. Guidance assumes about $2 billion of COVID-19 costs, said the company.
Spotify shares closed 8% lower Wednesday, at $317.25, after conservative Q1 revenue guidance based on pandemic uncertainties and ongoing effects on user, subscriber and revenue growth. Revenue guidance for Q1 is $2.4 billion-$2.6 billion with 354 million-364 million monthly active users (MAUs), including 155 million-158 million paid, said the company's Q4 shareholder letter Wednesday. Q4 revenue was $2.6 billion vs. $2.3 billion in the year-ago quarter. MAUs rose 8% to 345 million -- 155 million premium, 199 million ad-supported -- but premium user retention rate slipped year on year; the company expects churn to decline in 2021. Average revenue per user (ARPU) among premium subscribers fell by $5.12. Moving into 2021, COVID-19 “still has the potential to be a headwind, as it's difficult to fully gauge its impact,” said CEO Daniel Ek on a Wednesday investor call. Though sheltering at home in 2020 led to more listeners turning to Spotify for music and podcasts, “it also created disruption in listening habits, consumption hours and the release of new music and podcasts,” Ek said. Responding to an analyst question on whether conservative guidance is an indication user growth has peaked, Chief Financial Officer Paul Vogel cited promotional activity in Q1 2020 that didn’t repeat in Q1 this year. He also noted a pull-forward of listeners in a strong Q4. Spotify announced family plan price hikes Monday in 25 additional markets and full portfolio price increases in Sweden, Norway, Finland and Iceland to improve ARPU, Ek said. The music service had 2.2 million podcasts on the platform in Q4, up from over 1.9 million in Q3. A quarter of total MAUs engaged with podcasts last quarter, up from 22% in Q3, Ek said, and consumption hours doubled from Q4 2019.
Google grew its “merchant community” by more than 80% in the past year, “with significant growth in small- and medium-sized businesses,” said Google Chief Business Officer Philipp Schindler on a Q4 call Tuesday. The pandemic has obviously been “a very, very challenging environment for SMBs,” said Schindler. “Many weren't online” at all, and others “lost line of sight to demand overnight” due to COVID-19, he said. About a year ago, “as soon as we saw the scale of the impact, we really accelerated product” that gave SMB customers “signals to help them actually navigate and pivot” to the new reality, he said. As more consumers moved online during COVID-19 lockdowns, “and advertisers obviously responded by reactivating spend, we also saw our advertiser base grow,” said Schindler. “As traditional TV ratings continue to decline, TV advertisers are turning to streaming platforms like YouTube to reach people who are no longer watching TV.” Smart TVs “are our fastest-growing screen” for YouTube viewing, said Schindler. The stock closed 7.3% higher Wednesday at $2,058.88.
Social media usage and online shopping traffic "exploded" during COVID-19 lockdowns, forcing many brands to embrace augmented reality and virtual stores “to remain competitive and engaged with their customers,” reported ABI Research Wednesday. It estimates the global AR market in retail and commerce will exceed $12 billion in 2025. “Within the next two years, more and more brands will transfer their marketing campaigns and online shopping platforms from static webpages and 2D images to interactive experiences and platforms,” said analyst Eleftheria Kouri. “Online shopping will continue to grow after the pandemic, especially in product categories supported by AR experiences."
Uber will buy Drizly, the e-commerce alcohol marketplace, for $1.1 billion, 90% in stock, they said Tuesday. Drizly’s marketplace will be integrated into the Uber Eats app, they said. The deal is expected to close by June 30.
Lexus is letting customers choose how they want to buy a car in a retail pilot with a “complete online experience” rolling out market by market starting in spring, it said Monday. Sister brand Toyota is offering similar.
Charter Communications will spend $5 billion, including $1.2 billion from Rural Digital Opportunity Fund Phase 1 (see 2012070039), to bring up to 1 Gbps service to more than 1 million locations in mostly rural areas of 24 states, it said Monday: Timing for the "multiyear" buildout will depend partly on utility pole permitting and make-ready efforts. "The more cooperation we have with the pole owners and utility companies, the faster" the work, CEO Tom Rutledge said.
Charter Communications ended 2020 with 19,000 more video customers than it had a year earlier, and it expects to do better in its video trends this year than the MVPD industry overall, CEO Tom Rutledge said during an analyst call Friday as the company announced Q4 results. Rutledge said the growth was driven in part by its broadband connectivity growth. He said industry growth will continue to decline "at a moderate pace," while Charter "won't have quite the internet growth … we had in 2020." Charter ended 2020 with 15.6 million residential video subscribers. It also ended the year with 27 million residential broadband subs, up 2.1 million year over year; 9.2 million residential voice subs, down 228,000; and 2.3 million residential mobile subscriptions, up 1.2 million. Rutledge said this year should have a return to pre-pandemic trends in internet subscriber additions, plus a full recovery of the advertising business as the economy also fully rebounds. He said that during Q4, Charter's minimum broadband speed offering of 200 Mbps went from being available in about 60% of its footprint to 75%. Rutledge said the 210 citizens broadband radio service priority access licenses that Charter bought for $465 million will be used on targeted 5G small cells. He said that over the next four to five years, up to a third of Charter's traffic might end up on the CBRS spectrum. The stock closed down 7.2% at $607.56.
The best on-demand streaming services are YouTube TV (for value), Hulu + Live TV (families), Netflix (original content), Hulu (newer content) and Sling TV (live TV budget pick), Reviews.org reported. Average monthly costs are $57.25 for internet, $50.17 for cellphone plans and $39.96 for streaming services. Canceling one $10 monthly streaming service adds up to saving $7,253 over a lifetime over 78.5 years.