Author: PYMNTS

META – Meta Reportedly Adds Infrastructure Team and Divests Itself of Kustomer

Written by PYMNTS on . Posted in META, Stock Report.

Meta has reportedly added one team and divested itself of another.

The tech giant added 10 people experienced in artificial intelligence (AI) networking technology, Reuters reported Friday (May 5).

It also struck a deal to divest itself of business software provider Kustomer, which it acquired last year, the Wall Street Journal (WSJ) reported Friday, citing unnamed sources.

Meta did not immediately reply to PYMNTS’ request for comment.

The 10 people added by Meta had previously been building AI networking technology at Graphcore, a British chip maker. They joined Meta in February or March, according to the Reuters report.

The report said adding the team of 10 is part of Meta’s efforts to boost its data centers’ ability to handle the demand from the company’s teams who are building AI features.

“They bring deep expertise in the design and development of supercomputing systems to support AI and machine learning at scale in Meta’s data centers,” a Meta spokesperson told Reuters.

In the move involving Kustomer, Meta is trading its ownership of the firm to three venture firms in exchange for their funding the newly independent company’s continued operations, according to the WSJ report.

Meta acquired the company last year for $1 billion in hopes of integrating Kustomer’s messaging services into its own but decided to divest itself of the firm to focus on its core business, the report said.

As PYMNTS reported in May 2022, Kustomer was at the time squarely at the center of Meta’s efforts to deliver elevated commerce experiences in messaging.

The aim was to enable businesses to improve their customer service with a messaging-first platform built on top of all the channels and messaging platforms that are used for conversations with customers.

Beginning in November 2022, Meta began making reductions in all its organizations.

The firm announced that it would lay off more than 10,000 employees—13% of its workforce — in the first wide-ranging layoffs in the company’s history.

In a memo to employees, Meta CEO Mark Zuckerberg said that the expectations that the increase in eCommerce shopping that began with COVID-19 would continue beyond the pandemic turned out to be wrong.

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NCR – NCR Preps For Year-End Split as Digital-First Banking Results Remain Strong

Written by PYMNTS on . Posted in NCR, Stock Report.

As it readies to split NCR into two separate public companies, one focused on digital banking and POS systems and the other dedicated to its ATM network, the company is continuing to sign new deals for both segments.

Reporting first-quarter 2023 earnings on Thursday (May 4), NCR CEO Mike Hayford said, “We are on track to separate NCR into two public companies in the fourth quarter. Upon separation, we believe each company will benefit from increased operating and financial flexibility in pursuit of respective and distinct opportunity sets.”

Delving into Q1 results, he said that in retail systems, “we continue to deliver on a strategy to be the retail platform company of choice,” saying that in Q1, NCR expanded its relationship with the second biggest retailer in the U.K. to include self-checkout units and a professional services agreement, “for a multi-year subscription” to transform in-store solutions.

NCR has been transitioning more retail accounts to its FastLane SelfServ Checkout lanes platform, which operates on a subscription model. Chief Financial Officer Tim Oliver said, “We increased the number of platform lanes by 33,000 lanes or 125% year over year.”

In hospitality, Hayford said NCR continues “to experience strong demand across enterprise and SMB customers. In SMB, our payment attach rate for new customers remained at roughly 90% driving a 50% increase in payment sites. In enterprise, we expanded our relationship with the world’s largest fast-food chain to be the sole provider for digital menu boards in the U.S.”

Digital Banking and ATM As A Service Deliver

NCR’s digital banking business showed “positive momentum” in the quarter, he said, signing 12 new customers and renewing 12 others. Hayford called out a new deal with North Carolina’s State Employees’ Credit Union (SECU), saying, “This will deliver a modernized digital technology platform for the credit union and will advance NCR’s digital-first market position in the large regional financial institution segment.”

While acknowledging investor concern over potential impacts on NCR from the banking crisis, Hayford said, “We had a strong first quarter in self-service banking and do not expect a slowdown given the current macro environment.” In Q1, Hayford said NCR signed six ATM as a service deals, including First Citizens Bank for 500 ATMs and an end-to-end management solution, and partnered with credit union service organization (CUSO) Members ATM Alliance to be its exclusive provider of the ATM as a service solution for its credit union members.

Retail, hospitality and digital banking segments will form NCR Remain Co. (name pending) after the separation transaction, Oliver said, while its ATM business will become its own company. Oliver said, “We continue to have success transitioning our self-service banking business from one-time sales into a multi-year subscription-based revenue stream.”

He added that ATM service units increased 293% year over year to 17,000 units, with “significant growth” in India and incremental growth in the United States.

Payments & Network and self-service banking are the segments that will comprise NCR ATM Co. after the separation transaction, he said. Oliver is the CEO designee for NCR ATM Co. upon separation, while David Wilkinson, President of NCR Commerce, is the CEO designee for NCR Remain Co. Both will continue in their current roles until the businesses are separated.

During the briefing, Hayford addressed the April 13 ransomware attack that caused an outage in its Aloha POS platform used in restaurant services, saying, “We determined that a single data center outage that impacted some functionality for a subset of our commerce customers was caused by a cyber ransomware incident. At this time, we are well on our way to recovering the majority of the most critical functions impacting our customers.”

UPWK – Macro Pressures Flatten Upwork Volumes as Larger Clients Face Budget Constraints

Written by PYMNTS on . Posted in Stock Report, UPWK.

Upwork’s first quarter results show macro pressures coming to bear on the gig economy, while management laid out plans to reduce costs — and pointed to the long term potential in generative AI.

As noted in the company’s earnings materials, gross services volume (GSV) — the amount that clients spend on Upwork’s offerings and fees charged by the company for other services — in the first quarter of 2023 was flat year over year at $1 billion. GSV was down approximately 3% quarter over quarter, which the company said was “primarily driven by continued impacts from the macroeconomic environment.” In the midst of the pandemic, GSV growth rates topped 50% year over year by mid-2021.

Active clients were up 4% year over year in the March quarter to 827,000 clients, which was up nearly 2% quarter over quarter. GSV per active client increased 5% year over year to $4,967 as of March 31, a slowdown from the  growth rate had been 18% in the same quarter a year ago.

During the conference call with analysts, CEO Hayden Brown noted that the company hit a milestone in the quarter,  having logged $20 billion in lifetime freelancer earnings on Upwork, up $10 billion in three years.

Nonetheless, as the CEO said, “we saw some unanticipated deterioration in certain client metrics due to macroeconomic uncertainty, which was most pronounced with our enterprise customers and large businesses in the self-service marketplace.”

And against that backdrop, the company has laid off 15% of its full time staff. Enterprise revenues were up 6% in the March quarter, year over year, down from 22% in the fourth quarter of 2022, and down from 55% year over year growth in the first quarter of last year.

“We’re also pausing our brand media investment indefinitely,” Brown said, adding, “In the current macroeconomic environment, we do not have enough visibility into exactly when we will see brand awareness translate into client conversion to continue prioritizing the investment at this time.” Those measures, according to the company, will drive $80 million of annualized net cost savings.

Looking Towards AI

Generative artificial intelligence (AI) will continue to be in focus, said Brown, for Upwork’s talent on the platform and client firms looking to harness expertise in that technology. Brown said that the average weekly number of search queries related to generative AI in the first quarter increased over 1,000% compared to the fourth quarter of 2022, and the average number of weekly job posts related to generative AI increased more than 600% over the same time period.

“We’re testing generative AI-powered solutions for transforming core customer experiences,” said Brown, “like getting started, posting jobs, receiving support, and having questions answered.”

During the question-and-answer session with analysts, management noted that larger clients are feeling budgetary pressure, and some clients are going through budget cuts and layoffs — thus reducing the size of the spend that they have allocated to Upwork.

Spending from smaller clients has been resilient, said Brown, but the average spend for client has been a bit smaller than would have been seen with other macro environments.  The impact is being more keenly felt within the tech sector, where layoffs have been mounting, according to commentary on the call.

Drilling down a bit more into the dynamics surrounding AI, Brown noted that demand and job postings are growing in categories such as data sciences and analytics — where postings here are up 33% year on year and up 22% sequentially.

“As we look across the work that’s happening on the platform, some of the more interesting things we see is in pretty much every category we serve, talent is using AI tools to augment their workflows,” Brown said. As much as 85% of the company’s GSV comes from longer and complex projects and jobs — so AI augments work, she said, rather than replaces it.

PYPL – Venmo to Begin Enabling Crypto Transfers in May

Written by PYMNTS on . Posted in PYPL, Stock Report.

Venmo will soon enable its customers to transfer cryptocurrency.

With a new feature that will be rolled out beginning in May, Venmo customers will be able to transfer crypto to other Venmo users, PayPal accounts, other wallets and exchanges, the mobile payment service owned by PayPal said in a Friday (Apil 28) press release.

“We’re excited to connect Venmo’s customers to the community, other wallets and exchanges, and we intend to continue to roll out additional crypto products and services in the year ahead,” the company said in the release.

PYMNTS research has found that nearly one-third of consumers said they held crypto in the 12 months prior to being surveyed in the fourth quarter of 2022.

When using Venmo’s new feature, customers open the Crypto tab on the Venmo app, view their coins, tap the Transfer arrows, and choose to Send crypto to another Venmo account or to a wallet address, according to the press release.

Customers can also tap Receive to share their crypto address QR code with others, the release said.

“Venmo remains committed to providing easy, quick and secure services for the Venmo community,” the company said in the release. “Since introducing the ability to buy, hold and sell crypto on Venmo in 2021, we’ve also added Cash Back to Crypto for Venmo Credit Card customers, and introduced price alerts for customers to track the price of cryptocurrencies in real-time.”

The company began offering its customers the ability to buy, sell and hold crypto from the app in April 2021, saying at the time that more than 30% of Venmo users were already using crypto or equities and that 20% of them had begun doing so during the COVID pandemic.

Venmo’s crypto price alert tool was unveiled in November 2021, enabling customers to set price alerts for four cryptocurrencies — bitcoin, Ethereum, Litecoin and Bitcoin Cash — and receive alerts when the price of these currencies rises or falls by 5% or 10%.

In August 2021, the company added the Cash Back to Crypto program in which customers using its credit card can automatically buy crypto using cash back earned from Venmo card purchases.

ML – FinTech IPO Index Slides 5.4% Led by MoneyLion

Written by PYMNTS on . Posted in ML, Stock Report.

The FinTech IPO Index slid 5.45%, even as earnings season has yet to fully hit home in the sector.

MoneyLion shares sank 29.7% through the past five sessions. The company said that it would affect a 1-for-30 reverse stock split of its Class A common stock. In other MoneyLion news, as reported by PYMNTS, the company still maintains its first-place position among personal loan providers.

Opendoor Technologies slid 13.4%. The company was cut to “neutral” by Wedbush on a weakening outlook for iBuying in the residential real estate sector. As reported earlier in the month, the company has announced it would cut 22% of staff.

SEC Filings Pour In

OneConnect filed its 20-F report with the Securities and Exchange Commission.

And in that annual report, the company detailed that revenue from third-party customers increased by 6.5% in 2022, year over year, to RMB 1.5 billion. The number of premium-plus customers was up 9% year on year to 9%.  

The company, in looking ahead, said in its filing that it would seek to continue to expand outside of China to various international markets. The stock was off 5.1%.

 Elsewhere, shares in Huize lost 6.9%. The company also filed its annual report with the SEC. 

The company said that Goss Written Premiums facilitated on its platform for the full year of 2022 remained stable at RMB 4,907.8 million compared to the same period of 2021. As the company reported previously, renewal premiums crossing Huize’s platform in the fourth quarter of 2022 increased by 80.8% to RMB 1,032.5 million from RMB 571.0 million in the fourth quarter of 2021.

Elsewhere, Payoneer shares gave up 3.9%.

The company said late last week that it is collaborating with Zoho, which provides software solutions to businesses. The collaboration will enable Payoneer to provide payment solutions to businesses using Zoho Books, the cloud accounting platform. The companies said the joint efforts would benefit small and medium-sized businesses (SMBs) and freelancers working globally in India, Australia, New Zealand, the U.K. and the Philippines, with plans to expand the offering into new markets over time.

In terms of the mechanics, businesses can select Payoneer as a payment solution when invoicing their clients, and their funds will be received in the Payoneer account. Businesses in India, Australia, New Zealand, the U.K. and the Philippines can then hold the funds in different currencies, spend online or pay suppliers, according to the release.

Nuvei, whose shares were down 5.7%, continued to grab headlines this week. The company said that its payment platform is fully available on Sabre Corp.’s multiple reservation platforms for the travel and hospitality industries. Through that availability, Nuvei is also enabling Sabre to offer over 600 alternative payment methods for its partners to integrate into their online checkouts through a single integration.

AMTD said in its most recent earnings announcement that core revenue, excluding net fair value changes on financial assets at fair value through profit and loss and derivatives, increased by 22.74% from 2021 to 2022; Net assets as of the end of 2022 amounted to HK$7.8 billion, representing approximately a 35% increase year on year. The company’s stock lost 4%. 

Nubank said this week that in April, it notched a milestone, having expanded its user base to 80 million customers in Latin America, where it maintains operations in Brazil, Mexico, and Colombia.

The Brazilian operation, the company said, ended March with a growth of 31.5% in 12 months, reaching more than 75.2 million customers. The number of entrepreneurs with a Nubank PJ (legal entity) account surpassed 2.7 million, a 66% jump year on year.

“The first three months of 2023 have represented significant progress for Nu México and Nu Colombia, which registered more than 3.8 million customers together — a 66% increase in one year,” Nubank said. The company became one of the few “winners” through the past five sessions, as its shares gained 3.3%.

FRC – First Republic Bank Reportedly Considering Selling Long-Dated Mortgages and Securities

Written by PYMNTS on . Posted in FRC, Stock Report.

First Republic Bank is reportedly looking to sell assets as it works on a turnaround plan.

The bank is weighing the sale of long-dated mortgages and securities amounting to $50 billion to $100 billion, Bloomberg reported Tuesday (April 25), citing unnamed sources.

Reached by PYMNTS, a First Republic Bank spokesperson said the firm declined to comment on the report.

The lender is working to boost its balance sheet to avoid being seized by the Federal Deposit Insurance Corp. (FDIC) and to prepare for a possible capital raise, according to the Bloomberg report.

First Republic Bank is faced with an asset-liability mismatch because of mortgages made when interest rates were at historic lows. Now that interest rates have risen, the rates the bank pays depositors are higher than those it has charged borrowers, the report said.

The sales of assets the bank is now considering would aim to reduce that asset-liability mismatch.

However, First Republic faces a challenge in trying to sell the loans at near face value because the loans are worth less now, according to the report.

This report comes a day after First Republic said during its quarterly earnings call that it is working to strengthen its business, restructure its balance sheet and reduce expenses.

The bank aims to increase insured deposits, reduce borrowings from the Federal Reserve Bank and decrease loan balances, it said in a Monday (April 24) press release.

It is also cutting executive officer compensation, condensing corporate office space and decreasing its workforce by 20% to 25%, according to the release.

First Republic is one of the regional banks that was impacted by continued waves of worry over bank runs after the March closures of Silvergate Capital, Silicon Valley Bank and Signature Bank.

To support First Republic amid the turmoil in the banking industry at the time, 11 large U.S. banks announced March 16 that they were making uninsured deposits totaling $30 billion into the bank to ensure that it had the liquidity it needed.

WMT – Discount Stores Remodel to Capture Walmart Grocery Share

Written by PYMNTS on . Posted in Stock Report, WMT.

Major remodels by the country’s top two dollar store chains signals expectations for prolonged higher food prices. As reported by FT earlier this week (Apr. 19), both Dollar Tree and Dollar General each plan to increase the number of existing store renovations by double-digit percentages compared to the previous year. Both chains are making these overhaul investments, including increased refrigerator and freezer capacity, to accommodate consumer demand across income brackets for cheaper groceries than those found at traditional grocers.

Consumers’ increased leaning toward value retail is noted in PYMNTS’ January “Consumer Inflation Sentiment” report, which found that 69% of consumers fought rising food costs over the last 12 months by reducing quality or quantity — or some combination — of grocery purchases.

This trade-down has benefitted discount grocers such as the dollar chains and big box retailers who are trying to woo higher-income shoppers into discretionary spend with competitive grocery prices.

In the current rocky economic landscape, consumers compare prices in choosing where to shop, and previous PYMNTS’ research notes consumer behavioral shifts to a mix of brick-and-mortar and eGrocery channels to accommodate their deal-seeking. Additional PYMNTS research finds that the most ardent cost-cutting grocery shoppers look for bargains in-store and that the highest share of these in-store bargain seekers are the often less-digitally connected generation of baby boomers and seniors.

Aligning with the brick-and-mortar bargain sentiment in a PYMNTS interview, Barbara Connors, vice president of commercial insights at 84.51°, a marketing subsidiary of grocery giant Kroger, noted that consumers who are worried about grocery prices tend to shop in-person. “We know that very price-sensitive customers are those that have lower engagement with eCommerce and are lower on the adoption curve, and those are the customers that are most likely to go into a store. And one of the reasons is because they are looking for sales, deals and coupons, and it is easier for them to do that in-store than online.”

Even while inflation slows, consumers don’t predict an end until fall 2024. Shoppers are partly combatting stubbornly high food costs by making value a central part of their grocery strategy. So long as families are cutting into their food budgets to make ends meet, there will be a demand for the discount groceries dollar stores may provide. And, if these chains’ confidence in the long-term value of upcoming remodeling is any indicator, that demand may be long-lasting.

JNJ – Johnson & Johnson Prepares to Test IPO Waters

Written by PYMNTS on . Posted in JNJ, Stock Report.

Johnson & Johnson is reportedly readying an investors roadshow to take its commercial healthcare unit public.

According to a Sunday (April 23) Wall Street Journal (WSJ) report, sources familiar with the matter say the company could begin meeting with investors as early as Monday (April 24) as it prepares for an initial public offering (IPO).

Sources tell the WSJ the company hopes to raise at least $3.5 billion at a valuation of around $40 billion for Kenvue, its soon-to-be spun off consumer business, which sells products like Tyleon, Band-Aids and skin-care brands like Aveeno.

As the report notes, Johnson & Johnson’s attempt to take Kenvue public will be a key test for the flagging IPO market. The WSJ cites figures from Dealogic showing that traditional IPOs have raised just $2.3 billion in the U.S. this year, the worst beginning to a year since 2009.

Last year was even worse, with listings at a 20-year low as investors, scared off by inflation and high interest rates, avoided high-growth firms.

Meanwhile, companies that have already listed are struggling too, according to PYMNTS’ FinTech IPO Index, which monitors FinTech return percentages since going public.

As noted here last month, the index saw a 51% loss last year, roughly comparable with the Global X FinTech ETF 52% decline, with IPO funding dropping 68% in the same time frame.

“Of course, now with the SVB meltdown and general jitters of banks becoming more risk-averse in its wake, funding now may be even more difficult to obtain for FinTechs,” PYMNTS wrote.

Another method of going public, the SPAC — special purpose acquisition company — has lost its pandemic-era luster, as we wrote earlier this month, and now seems like “a relic of yesteryear.”

Two years ago, the number of SPAC listings topped 600 overall, but at the end of last year, depending on the vertical, listings were in the single digits.

As PYMNTS reported last week, J&J CFO Joseph Wolk addressed the upcoming spin-off when the company announced its quarterly earnings.

“We remain focused on the successful separation of our consumer health business, Kenvue, which will position both companies to be more agile, focused and competitive,” Wolk said. “We’re also expecting a number of pipeline advancements that will provide increased confidence in our pharmaceutical and med-tech businesses.”

He added that the company plans to complete the separation this year, “assuming accommodative market conditions.”

“Since the start of the year, we have been operating our consumer health business as a company within a company,” Wolk added, noting J&J has filed documents with the Securities and Exchange Commission for the planned IPO.

FCNCA – First Citizens to Woo Startups and Rebuild SVB Business Model

Written by PYMNTS on . Posted in FCNCA, Stock Report.

Silicon Valley Bank’s new owner faces two challenges: improving business while restoring the bank’s reputation.

In a Financial Times interview published Sunday (April 23), Peter Bristow — the president of North Carolina-based First Citizens — said he is working to control deposit outflows and keep bankers from jumping ship to join competitors, all while trying to rebuild trust in a financial institution at the center of a global banking crisis.

“We are in the early days of getting them stabilized and back in business,” said Bristow, whose bank purchased Silicon Valley (SVB) last month after federal regulators took it over.

While First Citizens is keeping the SVB name and running it as a unit of its own bank, it has struggled to polish SVB’s tarnished brand.

“[SVB] was the number one bank in tech and life sciences for over 30 years and suddenly that went away, so we’ve spent a lot of time trying to give people confidence that we’re in the bank and plan to continue to run the model they were running,” Bristow said.

The report notes that some Silicon Valley startups and investors are skeptical of First Citizens, which has limited venture capital experience.

“A lot of what SVB did — events, mortgages, venture loans — made no sense economically unless you saw the full life cycle of the relationship,” the head of one multibillion-dollar venture operation told the FT. “They were able to do it because they knew everyone in the ecosystem.”

Bristow suggested his bank could re-examine SVB’s lending to venture capitalists and the companies they financed.

“As much as [venture lending] was a core tenet of what SVB did, the question was, did it create a lumpiness in deposits you may not want?” he said.

In an interview last week with PYMNTS’ Karen Webster, Amias Gerety, partner at QED Investors, said that venture debt will become a smaller industry with SVB under new ownership. And key players in the space will become choosier about the companies to whom they lend.

However, he emphasized that it’s not “whether you got capital from me, or a lender, or you bootstrapped,” that makes a company great but requires a great product, great growth and new ideas.

Meanwhile, PYMNTS also conducted interviews with a dozen finance chiefs in the wake of the SVB collapse, all of whom said the bank’s failure underlined the need for best practices.

Among them was Carlos Sanchez-Arruti, CFO at payments solution provider Mangopay, who said March’s banking crisis has “validated the discipline that CFOs need to have around cash management and treasury,” and served as a “wake-up call” for many companies and CFOs to return to basics.

Sanchez-Arruti added the new macroenvironment has made it vital for finance leaders to shift from a “sexier focus on just growth,” in favor of one that emphasizes long-term visibility over working capital and profitability.

BBBY – Report: Bed Bath & Beyond Private Label Strategy Fueled Demise

Written by PYMNTS on . Posted in BBBY, Stock Report.

Bed Bath & Beyond has declared bankruptcy months after warning about its future.

The downfall of the 52-year-old home goods seller came about Sunday (April 23) after the company wasn’t able to secure funding that would have allowed it to stay afloat.

“Thank you to all of our loyal customers. We have made the difficult decision to begin winding down our operations,” a statement at the top of the company’s website said Sunday morning. It notes that the company’s stores — and its offshoot buybuy Baby — will remain open.

And as The Wall Street Journal reports, Bed Bath & Beyond’s (BBBY) fate was sealed in part by a failure to compete with online retailers and an ill-timed embrace of private label products.

On paper, the company’s pandemic era push to move to private labels made sense: It carries higher margins and helps stores stand out from rivals. However, analysts and former employees told the Journal the strategy fell apart for BBBY for a number of reasons.

First, the switch happened at a time when COVID-19 was choking the world’s supply chains, leading to delays in shipping and rising costs that made it hard to keep shelves stocked. And former employees argued BBBY debuted too many private brands too fast, without the infrastructure to support them.

And after pandemic-era demand for goods began to wane, sales began to fall.

“You know if you buy Cuisinart what you are getting,” Sheryl Bilus, a 68-year-old retired bank manager from Canton, Georgia, told the Journal. “But with their own brands, you don’t know what the quality is like.”

The report notes that BBBY reported its first sales decline as a public company in 2019, by which point online retailers like Amazon had begun to cut into its territory.

“We missed the boat on the internet,” said Warren Eisenberg, one of the chain’s founders.

PYMNTS wrote about BBBY’s struggles in January soon after the company said it had doubts about its future. We noted then that “the demise of the 52-year-old retailer has caught many by surprise as the chain had been a category stalwart since its founding in the early 1970s and subsequent expansion into its buybuy Baby and Harmon brands.”

But since its founding, Amazon has come to rule the eCommerce and home delivery category and now counts furniture and home furnishing as one of its top three product lines, according to research by PYMNTS.

Speaking with investors earlier this year, CEO Sue Gove stopped short of mentioning her company’s digital shortcomings, but “she did tell investors that the beleaguered brand recognized and embraced the fact that its customers shop differently today, saying they visit stores less frequently.”

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