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Remote Work Had Several Implications for Dropbox

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Despite its increased importance in the new ‘home office’ normal, the document storage and cloud company has been ignored compared to Zoom Video (NASDAQ: ZM), DocuSign (NASDAQ: DOCU) and Fastly (NYSE: FSLY). Last Thursday, Dropbox (NASDAQ: DBX) showed how much it benefited from the work-from-home trend as it reported better-than-expected fourth-quarter revenue. Quarterly sales topped $500 million for the first time as revenue improved 13% but Dropbox suffered a $400 million real estate hit as it sought to make remote work more permanent.

Fourth quarter

Revenue of $504.1 billion brought in adj anusted net income of $117.9 million, or 28 cents a share. In the same period a year ago, earnings were 16 cents a share on sales of $446 million.

The remote work trend

Before Dropbox committed to having its people work remotely, technology companies including Twitter (NYSE: TWTR) had said they would allow employees to continue working from home even after the pandemic subsides. Earlier this month, San Francisco’s biggest employer, Salesforce (NYSE: CRM) said that most of its employees will be in offices one to three days per week once it’s safe enough to return, In October, after thousands of its employees had gotten used to working without being next to their colleagues, Pinterest (NYSE: PINS) said it had agreed to pay $89.5 million to stop a lease for 490,000 square feet of office space near its San Francisco headquarters to avoid paying at least $440 million in rent.

Dropbox’s “virtual first”

Last quarter, Dropbox announced is “Virtual First” strategy that makes remote work primary. At the end of third quarter, the company had over $1 billion in total lease liabilities on its balance sheet which includes assets other than just office space, so from an investment perspective, the cost savings could significantly boost profit margins. Dropbox stated that trimming 11% of its workforce was part of the “Virtual First” strategy to increase operational efficiency.

The impairment charge

The one-time impairment charge of “right-of-use and other lease related assets”amounted to $398.2 million.  Dropbox is known for its lavish office space in San Francisco’s South of Market neighborhood but going forward, only the tasks that require collaboration between team members will be executed in Dropbox Studios.

During the first three quarters of 2020, Dropbox generated a net income ending its years-long losing streak. But the impairment charge that Dropbox disclosed reverses that streak, resulting in a nearly $346 million loss, compared to third quarter’s profit of $33 million. The charge was excluded from non-GAAP results which showed an annualized increase in profit.

Dropbox ended the year with strong margin expansion, free cash flow, and more than $2 billion in ARR as itcontinued to make progress toward its long-term financial targets.

Customers

Putting all those millions that downloaded Dropbox aside, the company’s revenue depends on users that pay for its premium services. A big concern is the potential for those individuals and businesses to churn to the titans such as Google (NASDAQ: GOOG) or Microsoft, (NASDAQ: MSFT) that can easily undercut them on price. But a steady march up in customer count should continue to alleviate these concerns and Dropbox’s average revenue per user (ARPU) is a good indicator of the company’s pricing power.

Dropbox ended the quarter with 15.48 million paying users, compared to 14.31 million for the same period last year, up 8.2% on a YoY basis. In the previous, third, quarter that ended last September, paying customers grew to 15.25 million as they were 14 million in Q3 of 2019. Increases in paying users drove growth as ARPU stood at $130.17 for the quarter, up 4.14% YoY.

Cash flow

Dropbox’s measures profitability with free cash flow or more precisely, by deducting capital investments from cash generated from business operations. Management’s long-term goal is $1 billion in annual free cash flow by the fiscal year 2024. In the fourth quarter, free cash flow was $158.4 million compared to third quarter’s $187 million.

From operations, Dropbox generated cash flow of $570.8 million in 2020 compared to $528.5 million in 2019. Free cash flow for 2020 was $490.7 million compared to $392.4 million reported in 2019. The company will have to continue working hard if it is to hit its 2024 free cash flow guidance.

New products

Dropbox has integrated several new products such as HelloSign, a digital signature company it acquired in 2019 for $230 million. Notably, HelloSign witnessed strong traction in the fourth quarter as it witnessed a 70% increase in end user signature requests.

Perhaps the most important updates released in November with the progress of Dropbox Spaces 2.0. that aims to provide users a virtual workspace in a home office environment. Spaces is Dropbox’s key tool in winning customers in a post-pandemic world.

Outlook

Overall, the next year will be crucial for for the cloud-based storage and  workflow management company. The company is sitting on an increase in demand for its cloud-based management tools due to the global transition to distributed work environments.. Going into 2021, the company is focused on executing its strategy and building essential products for the new era of distributed work. Dropbox shares have risen about 20% since the company last reported earnings on November 5th. But only time will tell if it can succeeded winning new customers over its many strong competitors.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

BenzingaEditorial

Coca Cola Confirms Its World’s Beloved Brand Status

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For more than a century, The Coca-Cola Company (NYSE: KO) has been “refreshing the world in mind, body, and spirit”. The company aims to inspire moments of optimism, to create value and make a difference.

On Wednesday, the beverage giant revealed second-quarter earnings and revenue that beat Wall Street’s expectations, allowing it to raise its full year forecast for adjusted earnings per share and organic revenue growth. Most importantly, some markets rebounded from the pandemic, fueling revenue to surpass 2019 levels. Shares rose more than 2% in morning trading.

Q2 figures

Net income rose from $1.78 billion as it amounted to $2.64 billion. It resulted in adjusted earnings per share of 68 cents, exceeding the expected 56 cents. Net sales rose 42% with revenue of $10.13 billion that also exceeded the expected $9.32 billion. Excluding acquisitions and foreign currency, organic revenue rose 37% compared to last year’s biggest plunge in quarterly revenue in at least three decades due to lockdowns that severely dented demand.

A significant increase in marketing and advertising spend fueled the rebound but Coca Cola’s approach isn’t just about boosting spend, but also about increasing the efficiency of that spend. CFO John Murphy revealed that marketing dollars were doubled compared to last year’s quarter, when the pandemic forced the beverage giant to slash its costs to preserve cash.

Unit performance

All drink segments reported double-digit volume growth. Away-from-home channels, like restaurants and movie theaters, were rebounding in some markets, like China and Nigeria, but there are also markets that are still being heavily pressured by the pandemic such as India.

The department that contains its flagship soda saw volume increase by 14% in the quarter. The nutrition, juice, dairy and plant-based beverage business saw a volume growth of 25%, partly fueled by Minute Maid and Fairlife milk sales in North America. The same volume growth was seen by hydration, sports, coffee and tea segment. Costa cafes in the United Kingdom reopened and drove 78% increase in volume for coffee alone.

The risk of raising commodity prices

Like its F&B peers, Coke is facing higher commodity prices but it plans to raise prices and use productivity levers to manage the volatility in the second half of the year.

Outlook

For the full year, Coke improved its organic revenue growth outlook from high-single digit growth to a range of 12% to 14%. It also raised its forecast for adjusted earnings per share growth from high single digits to a low double digits range of 13% to 15%.

Putting it all together, executives emphasized the range of possible outcomes given the asynchronous recovery and dynamic of the pandemic. Coca Cola plans to build on the strong momentum by intensifying the amount and efficacy of promotions and continuing to innovate, what it does better than anyone and what helped it earn its brand status.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Automakers Are Hitting the Accelerator in the EV Race

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On Thursday, Daimler AG (OTC: DDAIF) has officially hit the accelerator in the e-car race with Tesla (NASDAQ: TSLA), revealing it will invest more than 40 billion euros in EVs by 2030. From 2025, three new vehicle platforms will only make battery-powered vehicles. One will cover passenger cars and SUVs, one will be devoted to vans and last but not least, the third will be home to high-performance vehicles that will be launched in 2025. Under its EV strategy, the inventor of the modern motor car will be renamed Mercedes-Benz as it spins off its trucks division by the end of the year. With its partners, it will build eight battery plants to ramp up EV production.

Upon the news that come just over a week after the EU proposed an effective ban on the sale of new petrol and diesel cars from 2035, shares rose 2.5%.

Automotive peers

Ahead of the EU’s announcement that is only part of a broad strategy to combat global warming, many automakers announced major investments in EVs. Earlier this month, Stellantis (NYSE: STLA) revealed its own EV strategy that includes investing more than 30 billion euros by 2025. Mercedes Benz isn’t the only one ‘going for it’ to be dominantly, if not all electric, by the end of the decade. Geely Automobile Holdings Limited’s (OTC: GELYF) Volvo Cars committed to going all electric by 2030, while General Motors Co (NYSE: GM) is aiming to be fully electric by 2035 and Volkswagen AG (OTC: VWAGY) even plans to build half a dozen battery cell plants in Europe.

Moving the debate

Daimler’s chief executive stated that  spending on ICE-related technology will be “close to zero” by 2025 but he did not specify when it will end the sales of fossil fuel-powered cars. Källenius wants to move the debate away from when will the last combustion engine be built to how quickly they can scale up to being close to 100% electric.

Tough decisions for Mercedes Benz

The undergoing shift will result in an 80% drop in investments in ICE vehicles between 2019 and 2026. This will have a direct impact on jobs because EVs have fewer components and so require fewer workers compared to their ICE counterparts. As of 2025, Daimler expects EVs and hybrids will make up half of its sales, with all-electric cars expected to account for most that figure, which is earlier than its previous forecast for 2030.

The battery- the Holly Grail

By 2023, Daimler plans to have a fully operational battery recycling plant in Germany. The industry leader Tesla just signed a deal with the world’s largest nickel miner to secure its battery resources as it prepares to begin its own tables battery in-house. Then there’s Worksport (OTC: WKSP) who will bring solar power to the EV table with its solar fusion TerraVis which will be fine-tuned and validated for prelaunch by the end of 2021. Although the first prototype is a solar-powered tonneau cover for pickup truck drivers, the company is also developing TerraVis COR which is a standalone product that offers remote power generation and storage. In other words, with its two-year partnership with Ontario Tech University, Worksport is fully equipped to power many automakers step into the electrification era.

The EV race is a journey like no other we have witnessed – and the participants are going full-speed ahead as they race to reshape the energy matrix of automotive industry.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Intel’s Q2 Results Show It Is Not Losing Focus

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Intel Corporation (NASDAQ: INTC) revealed its second-quarter 2021 financial results yesterday. The digitization transformation and switching to cloud services continue to accelerate, and a company like Intel sees that as the opportunity for an even bigger growth. Even with the current semiconductor shortage, Intel is not losing its focus on both innovations and the implementation of new solutions. The company’s CEO, Pat Gelsinger, appointed earlier in 2021, believes we are at the beginning of the semiconductor industry’s decade of sustained growth and that Intel has a unique position to capitalize on that trend. As the momentum is strengthening, execution is increasing, the company’s products are being chosen for top and flagship products. We can also see good results in other companies in the semiconductor business, like Texas Instruments Incorporated (NASDAQ: TXN) and Advanced Micro Devices, Inc. (NASDAQ: AMD).

 Second-quarter results

Intel’s second-quarter results are positive and the proof of the momentum building up, as mentioned by Gelsinger. GAAP revenues for Q2 were $19.6 billion, significantly higher than the expected $17.8 billion, and there was no change when looking back year over year. However, non-GAAP revenues were $18.5 billion, exceeding the April guidance by $700 million, and that is 2% up compared to the previous year. Intel’s Data Center Group (DCG) generated $6.5 billion compared to the expected $5.9 billion. Client computing generated the expected revenues of 9.95 billion, while the actual revenues were $10.1 billion. GAAP earnings per share were $1.24, while the non-GAAP EPS were $1.28, which also surpassed April’s guidance of $1.07.

 The good trend in the semiconductor industry

Another chipmaker, Dallas-based Texas Instruments, also reported Q2 earnings that topped the expectations. These good results were due to revenues growth and an increase in profits. The analysts expected revenues of $4.36 billion, and the company managed to generate $4.58 billion. That is a sales increase of 41% when looking year over year. Expected earnings per share were $2.05, while the analysts expected $1.83. However, the sales guidance for the current quarter was below the investors’ wishes, so the share price dropped upon the news.

 Outlook

As revenue, EPS, and gross margin exceeded the Q2 guidance, Intel raised its 2021 full-year guidance. So expected GAAP revenues are $77.6 billion and non-GAAP revenues are expected to amount to $73.5 billion (which is an increase of $1 billion), resulting in expected GAAP EPS of $4.09 and non-GAAP EPS of $4.80. Planned CAPEX is between $19 billion and $20 billion and free cash flow should be $11 billion, which is an increase of $500 million versus prior expectations. Gelsinger estimates that the semiconductor shortage will start loosening in the second half of the year, but it will take another one to two years until the demand is completely met.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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