August 14, 2022: A Good Week, But A Technical Bull Market?

Last week, the Dow Jones was up 2.9%, the S&P 500 was up 3.25%, and the Nasdaq composite was up 3.1%. The Nasdaq is now up 20%+ since it’s June 16th low. SoftBank reported a record net loss of US$23.4 billion for Q2 2022, as the global stock market rout dealt a severe blow to the vast portfolio of the company’s Vision Fund. The company now expects to book a gain of more than US$34 billion by reducing its stake in Chinese e-commerce giant Alibaba. Shares of Nvidia dropped 8% after a preliminary earnings announcement for the July quarter warned that weaker-than-expected demand for its gaming chips caused it to fall far short of the revenue target it had shared with investors last quarter. Palantir plunges 14% after scaling back its annual forecast. Trade Desk stock soars toward best day since 2018 amid ‘standout’ performance. AppLovin offers to buy video game software maker Unity in US$17.5 billion deal. Elon Musk sells nearly US$7 billion worth of Tesla stock amid Twitter uncertainty. South Korean investors pour more cash into SpaceX at US$125 billion price tag. Apple tells suppliers to make at least 90 million iPhone 14 units. BlackRock launches Bitcoin Trust for big clients. In Canada, D-Wave listed on the NYSE following the close of a SPAC deal. With a new team, Framework Venture Partners secures US$100 million first close for its second fund. Sophic Client Jasper, Commerce preannounced continued growth in Fiscal 2022 (ending July 31). Sophic Capital published a piece on client UGE International’s benefit from the largest climate package in U.S. history. We also published the first part of a CEO interview from our client Edge Total Intelligence, highlighting the company’s enterprise software platform, value proposition and end markets.

D-Wave lists on New York Stock Exchange following close of SPAC deal.

Vancouver quantum computing startup D-Wave is now publicly listed on the New York Stock Exchange. D-Wave had hoped the deal would bring in US$340 million in gross proceeds, however, SEC filings show that the company’s shareholders redeemed just more than US$291 million worth of shares at a price of US$10.01 per share. As reported by The Globe and Mail, the deal also included a separate US$40 million commitment from new and old investors, including Canadian pension fund PSP Investments, Japan’s NEC Corporation, Goldman Sachs Asset Management, Yorkville Advisors, and Aegis Group Partners. https://bit.ly/3zPDNMe

Sophic Client Jasper Commerce Inc. (JPIM-CA) preannounces continued growth in Fiscal 2022 (July 31, 2022).

For Fiscal 2022 the Company expects to announce revenue of at least $1.68 million, which is a minimum increase of 23% versus Fiscal 2021. For Fiscal 2022, the Company expects to report Subscription Revenue of around $1.2 million, which is a minimum increase of 33% over Fiscal 2021. Total customer count ending Fiscal 2022 was up 43% from Fiscal 2021.  Working capital at the end of Fiscal 2022 was approximately $2.5 million. While cash burn was elevated in the second half of Fiscal 2022, largely due to enhancing sales, marketing and business development functions, the Company expects to reduce cash burn to $240-$260 thousand per month exiting Q1 2023 (ending October 31, 2022). The Company expects cash burn will continue to decline as revenues increase further in Fiscal 2023. https://bit.ly/3peBehR

With a new team, Framework Venture Partners secures US$100 million first close for second fund.

Framework Venture Partners is on to its second fund having secured an initial US$100 million and a new investment team. Framework is targeting a US$250 million final close for its second fund, more than double the $105 million it secured for its initial fund. https://bit.ly/3A3hWlE

Properly secures $36 million, pulls back on geographic expansion plans as Canadian housing market cools.

Toronto-based proptech startup Properly has raised $36 million in a move the company says will extend its runway and support long-term growth amid shifting market conditions. Properly is describing the all-equity, all-primary round, which was financed primarily by existing investors and comes just over a year after the company closed $44 million in Series B capital, as a “Series B 2.” https://bit.ly/3BR4ClM

Bootstrapped since 2008, Evidence Partners closes $20 million to tackle automated literature review market.

Nearly 15 years after its formation, Kanata-based research software firm Evidence Partners has secured its first round of venture capital. Evidence Partners, which has established a strong presence in the pharmaceutical and medical device spaces, has raised $20 million in growth financing. With the round, the company aims to build on the “uptick” in demand it has seen for its artificial intelligence (AI)-enabled platform during the pandemic. The startup said customers turned to Evidence Partners to navigate the flood of new COVID-19 research emerging on a daily basis as quickly as possible. https://bit.ly/3zIHNhr

Interaxon secures US$9.5 million to roll out subscription model for brain sensing headband, Muse.

Toronto-based neurotechnology startup Interaxon has closed a $12.1 million (US$9.5 million) Series C round to support the roll out of a membership model for its wearable tech offering. The funding was jointly led by BDC Capital, Alabaster (family office of Sunny Vu, founder of Misfit), and Export Development Canada. It also included participation from new investors Phyto Partners, Iter Investments, Intretech(HK) Co, and The Clavis Foundation. In 2013, Interaxon raised US$6 million in Series A financing followed by a US$10 million Series B round in 2015. https://bit.ly/3zKyuNW

Canvass Analytics secures US$3.3 million top-up for Series A round.

Toronto industrial AI startup Canvass Analytics has raised US$3.3 million in what it calls a Series A 2. A spokesperson for Canvass told BetaKit that the additional funding was an internal round led “mainly” by Yamaha Motor Ventures. They did not disclose which other existing Canvass investors participated in the round. This financing is part of Canvass’ cumulative US$14.23 million Series A round, which was raised across three separate financings that span nearly two years. It includes an initial US$6.5 million close in 2020, in which Yamaha Motor Ventures also participated, as well as US$4.43 million from the Federal Economic Development Agency for Southern Ontario (FedDev Ontario). Founded in 2016 by CEO Humera Malik, Canvass’ artificial intelligence (AI)-driven software allows manufacturers to monitor and predict future output to help engineers optimize their processes, as well as reduce water consumption and carbon emissions. The platform is used by large industrial companies in the automotive, chemicals, energy, food and beverage, and metals and mining sectors. https://bit.ly/3bWc98k

Home and auto insurance marketplace YouSet raises $2.1 million, launches in Ontario.

The financing, which closed in December came primarily from a group of angel investors, according to YouSet. YouSet co-founder CEO Xavier Freeman told BetaKit that the $2.1 million involves $1.6 million in equity. Led by Freeman and Fellipe Monteiro (CTO), YouSet’s online platform connects consumers with multiple insurance companies to find the best rates for home and auto insurance. Customers that buy insurance through YouSet can delegate post-purchase processes to the company, such as policy modifications, renewals, and communications with the insurance company. YouSet claims a user base of more than 75,000. https://bit.ly/3Aj9ui5

Hootsuite restructuring, laying off 30 percent of employees.

Hootsuite is set to lay off 30 percent of its global workforce, approximately 400 employees. The company confirmed the layoffs to BetaKit, with a statement from CEO Tom Keiser noting that the Hootsuite “made the difficult decision to restructure the company and reduce our global workforce by 30%,” citing a need to “refocus” on efficiency, growth and financial sustainability. Hootsuite has been on a growth spurt over the past year, having made two landmark acquisitions in 2021 that were part of the company’s expansion beyond social media management. Hootsuite also announced it was opening a new Atlanta office with plans to hire over 60 Atlanta-based positions by the end of 2022. https://bit.ly/3SK1Ch8

SoftBank reports record US$23.4 billion loss on stock market rout.

SoftBank Group reported a record net loss of 3.16 trillion yen (US$23.4 billion) for the quarter through June, as the global stock market rout dealt a severe blow to the vast portfolio of the Japanese company’s Vision Fund. During the quarter, the prices of publicly traded tech stocks plummeted amid macroeconomic headwinds and concerns about inflation, while the valuations of privately held startups also declined. SoftBank’s Vision Fund, the world’s largest tech investment fund, recorded a loss of 2.33 trillion yen. In the fund’s portfolio of listed stocks, some of the biggest losses in the quarter came from DoorDash, South Korean e-commerce firm Coupang and Chinese artificial intelligence firm SenseTime, according to SoftBank. To cope with the challenging environment, SoftBank has sold some of the stocks in its portfolio and slowed down the pace of its dealmaking, becoming more selective with its bets on highly valued private tech companies. https://bit.ly/3PkV6KM

SoftBank expects US$34 billion gain from sale of Alibaba shares.

SoftBank Group said it expects to book a gain of more than US$34 billion by reducing its stake in Chinese e-commerce giant Alibaba Group from 23.7% to 14.6%. The Japanese tech investment firm said in a statement that its board on Wednesday approved the plans to sell Alibaba shares through the settlement of prepaid forward contracts on the Chinese company’s U.S.-listed shares. The settlement will happen in stages and will likely be completed by the end of September, SoftBank said. The move comes as SoftBank, whose Vision Fund is the world’s largest tech investment fund, has struggled to cope with this year’s global stock market rout that has dealt a severe blow to its vast portfolio of public and private tech companies. Earlier this week, SoftBank reported a record net loss of more than US$23 billion for the quarter through June. https://bit.ly/3SOHryf

Nvidia issues revenue warning for July quarter, shares drop 8%.

Shares of Nvidia dropped 8% after the chipmaker, in a preliminary earnings announcement for its July quarter, warned that weaker-than-expected demand for its gaming chips caused it to fall far short of the revenue target it had shared with investors last quarter. Revenue from gaming chips fell 33% to US$2.04 billion compared to last year and dropped 44% from last quarter. But Nvidia’s newest business unit—chips and software for data centers—was a bright spot, with sales jumping 61% to US$3.8 billion compared to last year’s quarter even as the company struggled with supply chain challenges. Overall, Nvidia reported US$6.7 billion in revenue for the three months to July 31, down 3% compared to last year’s quarter and 19% from last quarter. Nvidia had set a sales target of US$8.1 billion after its last quarter. Nvidia reports second-quarter earnings on Aug. 24. The results show that Nvidia’s data center investments, which include its US$7 billion acquisition of Mellanox Technologies in 2020, could help it weather an economic downturn. That puts Nvidia in a similar situation as AMD, whose sales increased 70% to US$6.55 billion in its July quarter, largely on the strength of its data center chip business. And it marks a contrast with Intel, whose data center and AI unit saw a 16% annual sales decline last quarter. https://bit.ly/3PnnTyn

Palantir plunges 14% after scaling back its annual forecast.

Enterprise data analytics company Palantir posted strong revenue growth on Monday that beat its own guidance but projected sharply lower sales and profits for the fiscal year. Shares fell 14% after the results. Palantir grew revenue 26% year-over-year to US$473 million, slightly up from its forecast. The company’s government contract sales, the bulk of its revenue, grew 13%. Its commercial business grew 46% year-over-year and rose to 44% of quarterly sales up from 38% a year ago. Palantir posted 23% operating margins, exceeding its 20% forecast. The company generated nearly US$57 million in free cash flow after adjusted for share based compensation, a non-cash expense, despite generating a net loss of US$179.3 million. But the company said it now expects total annual revenue of US$1.9 billion to US$1.902 billion, which implies 23.5% top line growth, far below the 27% growth the company forecast last quarter. The company also lowered its forecast for operating income to a range between US$341 million to US$343 million, implying an 18% operating margin, down from the 20% it forecast previously. CEO Alex Karp did not say much about the new guidance on a call with analysts but said his 2025 target remains US$4.5 billion in annual sales. https://bit.ly/3PlGdI3

Trade Desk stock soars toward best day since 2018 amid ‘standout’ performance.

Shares of Trade Desk Inc. rocketed 33% in Wednesday morning trading after the advertising-technology company offered a better-than-expected revenue forecast for the current quarter despite fears about the advertising landscape. The shares are on track for their largest single-day percentage gain since Aug. 10, 2018, when they rose 37.1%, according to Dow Jones Market Data. Shares of Trade Desk have surged 67% over the past three months as the S&P 500 has added 5%.  https://bit.ly/3BWjejK 

AppLovin offers to buy video game software maker Unity in US$17.5 billion deal.

Gaming software company AppLovin made an offer on Tuesday to buy its peer Unity Software in a US$17.54 billion all-stock deal, threatening to derail Unity’s announced plan to acquire AppLovin’s smaller competitor ironSource. AppLovin has offered US$58.85 for each Unity share, which represents a premium of 18% to Unity’s Monday closing price. Unity will own 55% of the combined company’s outstanding shares, representing about 49% of the voting rights. AppLovin hired advisers to work out an offer after Unity last month said it would buy ironSource in a US$4.4 billion all-stock transaction, sources familiar with the matter told Reuters. Unity’s board will have to terminate the ironSource deal if it wants to pursue a combination with AppLovin, according to the proposal. Unity said its board would evaluate the offer. The company reported US$297 million in quarterly revenue on Tuesday, growing 9% year-over-year, while its operating loss widened. The stock slipped 2.68% after the market closed. https://reut.rs/3PmcG0S

Vista Equity Partners to acquire automated tax compliance company Avalara for US$8.4 billion.

The company had raised around US$341 million ahead of its 2018 IPO, and like many companies in recent times, Avalara has undergone something of a “correction,” with its market cap falling over the past year by roughly 60% to US$6 billion last month, though it had bounced back up to more than US$8 billion as of last week. Alongside today’s acquisition news, Avalara also posted its Q2 financials, where it reported a year-on-year revenue jump of 23%, though its operating loss nearly doubled to US$56 million over the same period. Still, the US$8.4 billion price tag is sizeable, and is indicative of the broader appeal that automated tax compliance software holds in the investment sphere — in the past eight months alone, we’ve seen German startup Taxdoo raise US$64 million, while Ireland’s Fonoa last month locked down US$60 million. https://tcrn.ch/3d9btMT

Axios is being sold to Cox Enterprises for US$525 million.

The media company Axios is being sold to its lead investor Cox Enterprises, Cox announced on Monday. The deal, which was first reported by The New York Times and Axios, is worth US$525 million, according to a person with knowledge of the agreement. Axios was launched in 2017 by former Politico reporters Jim VandeHei, Mike Allen, and Roy Schwartz, who will remain on the company’s board. It’s raised US$57 million over four rounds, per Crunchbase. https://bit.ly/3C9k7FV

Elon Musk sells nearly US$7 billion worth of Tesla stock amid Twitter uncertainty.

Mr. Musk, Tesla’s chief executive and largest shareholder, sold around 7.9 million shares between last Friday and Tuesday, the disclosures show, leaving him with a 15% stake in the company. The Tesla boss has been on a selling spree over the past year, during which he has cashed out roughly US$32 billion worth of shares in the electric-vehicle maker. That includes around US$8.5 billion of sales in April, while Mr. Musk was lining up financing to take over Twitter. At the time, he tweeted: “No further TSLA sales planned after today.” Mr. Musk has since tried to walk away from buying Twitter, which is suing him to enforce the takeover. The case is headed to court in October. If the judge were to force Mr. Musk to consummate the transaction, he could be on the hook for more than US$33 billion in equity financing, according to a regulatory filing. https://on.wsj.com/3SIlmBq

South Korean investors pour more cash into SpaceX at US$125 billion price tag.

As tech companies struggle to justify sky-high private market valuations, SpaceX remains a rocket ship, quadrupling in value over the last three years. And with a new extension to its most recent funding round, it’s added more global investors to its supporter mix. South Korea’s Mirae Asset Global Investments was among two investors to lead a US$250 million cash injection into SpaceX as an extension of its most recent funding round, a source with knowledge of the transaction tell Forbes. The new round, which maintained SpaceX’s pre-money valuation at US$125 billion — the highest for any U.S. startup — means SpaceX now carries an effective valuation of US$127 billion. Its fundraising haul for the year now stands at US$2 billion. https://bit.ly/3QFP6gK

Squaring Databricks’ 2021 valuation as it crosses a US$1 billion annual run rate.

Databricks, an enterprise software company focused on data and analytics, announced that it has surpassed a US$1 billion annual revenue run rate. The Wall Street Journal first reported news of the financial result. The milestone comes after the company raised a mammoth US$1.6 billion round last August at a US$38 billion valuation. At the time, Databricks announced that it had cleared the US$600 million annual recurring revenue (ARR) mark. By the end of 2021, Databricks said that it crossed US$800 million in ARR. https://tcrn.ch/3vKc5iw

Apple tells suppliers to make at least 90 million iPhone 14 units.

Apple asked suppliers to build 90 million iPhone 13 units last year. This means Apple expects iPhone 14 demand to at least match that of the iPhone 13 last year. In years prior, Apple planned for around 75 million units for the initial production increase.  For the full year, Apple is still expecting to assemble around 220 million iPhones for the entire year. https://bit.ly/3pf2bSp

Baidu to operate fully driverless commercial robotaxi in Wuhan and Chongqing.

Chinese internet giant Baidu has secured permits to offer a fully driverless commercial robo taxi service, with no human driver present, in Chongqing and Wuhan via the company’s autonomous ride-hailing unit, Apollo Go. Baidu’s wins in Wuhan and Chongqing come a few months after the company scored a permit to provide driverless ride-hailing services to the public on open roads in Beijing. The difference here is the service in Beijing is still not a commercial service — Baidu is offering free driverless rides in the name of R&D and public acceptance — and Beijing’s permit still requires a human operator in the front passenger seat of the vehicle. https://tcrn.ch/3p5bZhE

California DMV accuses Tesla of falsely advertising Autopilot and Full Self-Driving features.

The California Department of Motor Vehicles has accused Tesla of false advertising in its promotion of the company’s signature Autopilot and Full Self-Driving technologies. The agency alleges the electric-car maker misled customers with advertising language on its website describing Autopilot and Full Self-Driving technologies as more capable than they actually are. A DMV spokesperson said Friday via email that if its action succeeds, “the DMV will ask that Tesla will be required to advertise to consumers and better educate Tesla drivers about the capabilities of its ‘Autopilot’ and ‘Full Self-Driving’ features, including cautionary warnings regarding the limitations of the features, and for other actions as appropriate given the violations.” https://lat.ms/3A2fpYR

Disney+ revises streaming subscriber target.

The Hollywood giant’s flagship service had set guidance of 230 million to 260 million subscribers by the end of 2024, but now leadership is separating Disney+’s forecast from Disney+ Hotstar, which operates in India and other markets. The company has separated its streaming guidance and now expects to hit 135 million to 165 million Disney+ subscribers by 2024. And it additionally expects Disney+ Hotstar subscribers to reach up to 80 million subscribers by the same year. The revised forecast arrives as Disney’s direct-to-consumer streaming division disclosed a quarterly loss of US$1.06 billion. https://bit.ly/3BZuITr 

Walmart ponders streaming deal with Paramount, Disney and Comcast.

Walmart has held discussions with major media companies about including streaming entertainment in its membership service, according to three people with knowledge of the conversations, part of an effort to extend its relationship with customers beyond its brick-and-mortar stores. https://nyti.ms/3zQcpxD

Netflix is expanding its push into video games, but few subscribers are playing along.

Netflix is accelerating its push into video games with plans to double its catalog of offerings by the end of the year, but for now, few of the streaming giant’s subscribers are playing. The games are accessible only to subscribers, but have to be downloaded as separate apps. The games have been downloaded a total of 23.3 million times and average 1.7 million daily users, according to Apptopia, an app analytics company. That’s less than 1% of Netflix’s 221 million subscribers. As the streaming field gets more crowded, the biggest media companies have turned to giants in other industries to find new subscribers. Wireless providers like Verizon and T-Mobile have struck deals to offer their customers free or discounted subscriptions to streaming services like Disney+ or Paramount+ as an extra incentive to sign up. https://cnb.cx/3QBsvl8

Cisco confirms its network was breached by ransomware hackers.

Cisco Systems has revealed that a group of hackers that have previously spread a type of ransomware called Yanluowang gained access to its corporate network in late May and tried to extort the networking giant by threatening to release sensitive files online. The incident shows how even one of the world’s largest cybersecurity companies, which has one of the industry’s largest threat response teams, can fall victim to sophisticated cybersecurity attacks. In this case, hackers used phone-based phishing to trick a Cisco employee into giving them access to their personal Google account, then used that to gain access to a Cisco virtual private network. Many other large companies, including Microsoft and Google, have previously been breached by hackers. Cisco, which disclosed the incident after the hackers published a list of the stolen files on the dark web, says it immediately booted the hackers from its network and hasn’t found any evidence that they absconded with sensitive data or installed ransomware, which typically prevents victims from accessing their files by encrypting them unless they agree to pay for them to be unlocked. https://bit.ly/3QlAPWA

Adtech giant Criteo faces US$65 million fine in France for GDPR consent breaches.

In the latest blow to the creepy ‘tracking-ads’ complex, French adtech giant Criteo has been found in breach of European Union data protection regulation and hit with a €60 million sanction (~US$65 million) by the country’s national privacy watchdog in a preliminary decision following a multi-year investigation. This year, EU lawmakers have also agreed on a ban on the use of sensitive data and children’s data being used for targeted advertising in incoming digital regulations. While a judgment just this week, by the bloc’s top court, looks set to bolster that incoming restriction by cementing a non-narrow definition of what constitutes sensitive data. https://tcrn.ch/3bC6XWQ

BlackRock launches Bitcoin Trust for big clients.

BlackRock has introduced a spot bitcoin private trust, the world’s biggest asset manager announced on Thursday, marking another significant milestone for finance firms broadening the crypto offerings they have for clients. The trust will only be available to U.S. institutional clients. The announcement comes a week after BlackRock announced that it was integrating Coinbase Prime, Coinbase’s prime brokerage platform, with its portfolio management software Aladdin to allow shared customers to see and manage their Coinbase bitcoin holdings alongside traditional investments. “Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities,” BlackRock said in a post announcing the bitcoin trust. https://bit.ly/3QpmbOf

Cooling semiconductor sales heighten fears of a global recession.

World chip sales growth has decelerated for six straight months – yet another sign the global economy is straining under the weight of rising interest rates and mounting geopolitical risks. Semiconductor sales rose 13.3% in June from a year earlier, down from 18% in May, data from the global peak industry body showed. The current slowdown is the longest since the US-China trade war in 2018. https://bloom.bg/3BQ8vXR

Biden signs China competition bill to boost U.S. chipmakers.

President Joe Biden on Tuesday signed a bipartisan bill that aims to strengthen U.S. competitiveness with China by investing billions of dollars in domestic semiconductor manufacturing and science research. The bill, dubbed the Chips and Science Act, includes more than $52 billion for U.S. companies producing computer chips, as well as billions more in tax credits to encourage investment in semiconductor manufacturing. Of that sum, $40 billion is coming from Micron’s investment in memory chip manufacturing. The White House said the company’s initiative will yield 8,000 new jobs and boost the U.S. market share of memory chip production to 10% from 2%. https://cnb.cx/3zM35uv

SK Hynix to break ground on new U.S. chip packaging plant early next year.

South Korea’s SK Hynix aims to select a U.S. site for its advanced chip packaging plant and break ground there around the first quarter of next year, two people familiar with the matter said, helping the United States to compete as China pours money into the burgeoning sector. The plant, whose estimated cost would be “several billions,” would ramp up to mass production by 2025-2026 and employ about 1,000 workers, one of the sources said, declining to be named because details about the plant have not been made public. https://reut.rs/3SNY1ye

Sophic Client UGE International (UGE-TSXV, UGEIF-OTC): Clearing the way for largest climate package in U.S. history.

On Sunday afternoon, the U.S. Senate passed the Inflation Reduction Act of 2022, a bill that provides US$369 billion of support to address climate change and energy security. Learn how the solar industry, and Sophic Capital client, UGE International can benefit. https://bit.ly/3Qo3WIZ

Sophic Client Edge Total Intelligence (CTRL-TSXV, Q5I-FRA): CEO Interview – One pane of glass to rule them all.

As much as we’d like to think that executives know what’s happening in every corner of their organization, this is more often likely not the case. Why? 34% of enterprises use more than 50 SaaS apps and 16% use more than 100 SaaS apps, creating the potential for data silos and making it challenging to view a holistic picture. edgeTI provides one platform that is easily connectable, quick to build on and scalable, providing its customers a lower cost of ownership for maximizing value from their existing technology solutions. https://bit.ly/3SMf7Nc