Last week, Dow Jones rose 1.3%, S&P 500 gained 1.45%, and Nasdaq composite was up 1.4%. Federal Reserve Chairman Powell indicated interest rate cuts are imminent. The next catalyst for tech investors is Nvidia earnings next week. AMD is acquiring ZT Systems, which sells AI infrastructure for cloud computing firms, for US$4.9 billion in cash and stock. Palo Alto Networks shares traded up nearly 3% in after-hours trading after the Company’s earnings report, and are up nearly 20% year-to-date. Snowflake posted stronger than projected growth and raised its projection for full year growth. Even so, Snowflake shares fell 8% in after-hours trading. Sophic Client, Kraken Robotics reported strong Q2 results – revenue increased 67% to $22.8 million, Adjusted EBITDA increased 79% to $5.4 million. Guidance remains unchanged — revenue $90.0 to $100.0 million, Adjusted EBITDA $18.0 to $24.0 million. The stock was also called out as a top pick on BNN by a portfolio manager. Sophic Client, Legend Power reported Q3 F2024 results. Revenue of $1.04 million versus $470 thousand in Q3 F2023. Adjusted EBITDA loss of $392 thousand versus a $884 thousand loss in Q3 F2023. Initial orders and deliveries of Gen3 systems and an LOI for another $3 million from the DOD, brought order visibility to $5.5 million over the last few quarters. Sophic Client, Xcyte Digital announced a significant expansion of its partner ecosystem, marking a major step forward in its mission to revolutionize the virtual and hybrid event landscape. As TikTok Shop gains traction, YouTube expanded its partnership with Shopify to onboard more brands for its YouTube Shopping affiliate program. Bitfarms agreed to acquire Stronghold Digital Mining for ~US$125 million in stock while the Company fends off a takeover attempt by Riot Platforms. Agilysys acquired Markham based Book4Time for $204 million.
Canadian Technology Capital Markets & Company News
Sophic Client Kraken Robotics (PNG-TSXV, KRKNF-OTC) reports strong Q2 2024 financial results.
Consolidated revenue for Q2 2024 increased 67% to $22.8 million compared to $13.7 million for the quarter ending June 30, 2023. Gross profit in Q2 2024 increased 50% to $11.6 million implying a 51.0% gross margin percentage compared to 56.7% in Q2 2023. Adjusted EBITDA increased 79% in the quarter to $5.4 million compared to $3.0 million in the prior year due to increased revenue. Adjusted EBITDA margin in the quarter improved to 24% compared to 22% in the comparable quarter. Net income in the quarter increased 31% to $2.6 million, compared to net income of $2.0 million in Q2 2023. Industry demand signals are solid with an increasing focus on the surveillance and security of critical underwater infrastructure (CUI), and subsea warfare driven by increased geopolitical tensions. Against this backdrop, the growth of unmanned systems in the subsea domain is accelerating as subsea drones are seen as a complement to very expensive, exquisite surface warfare assets and submarines, providing an attritable capabilities gap filler. On the subsea battery front, the Company is planning for additional capacity as current customers are seeing strong growth. In addition, Kraken has engineering and business development discussions with a variety of other companies working subsea. These discussions pertain to both existing and next generation designs. Annual financial guidance remains unchanged. Kraken expects revenue between $90.0 million to $100.0 million and Adjusted EBITDA in the $18.0 million to $24.0 million range. https://bit.ly/3XcKULg
Sophic Client Kraken Robotics (PNG-TSXV, KRKNF-OTC)– Hot picks in small and midcap stocks – BNN Bloomberg.
Graeme Kreindler, analyst at NewGen Asset Management Limited, joins BNN Bloomberg to share his top picks in small and midcap stocks. Sophic Capital Client Kraken Robotics (PNG-TSXV, KRKNF-OTC) is pick #1. https://bit.ly/4dVLIKl
Sophic Client Legend Power Systems Inc. (LPS-TSXV, LPSIF-OTC) reports Q3 F2024 financial results.
Q3 F2024 Highlights. Revenue of $1.04 million versus $470 thousand in Q3 F2023. Adjusted EBITDA loss of $392 thousand versus a $884 thousand loss in Q3 F2023. Net loss of $482 thousand versus a $1.02 million loss in Q3 F2023. Cash of $806 thousand, no debt, and $1.5 million in working capital at June 30, 2024. “The third quarter of fiscal 2024 illustrated several key milestones we have been talking about over the last few quarters,” said Randy Buchamer, Legend Power Systems CEO. “These include, gross margin improvement to 50% illustrating the power of our financial model, initial orders and deliveries of our Gen3 systems and an LOI for another $3 million from the DOD, bringing order visibility to $5.5 million over the last few quarters. As we work to close additional deals, our pipeline continues to grow. We continue to manage our cash carefully and expect that with deposits and working capital we have the funds necessary to execute on our business model. I look forward to being able to update investors as additional deals are finalized in the coming quarters.” https://bit.ly/3WPqS8o
Sophic Client Xcyte Digital (XCYT-TSXV) expands its event technology ecosystem with mutual strategic partnerships.
Xcyte Digital Corp., announced a significant expansion of its partner ecosystem, marking a major step forward in its mission to revolutionize the virtual and hybrid event landscape. This expansion includes new mutual collaborations with Planned, Virtual Wild and Virtway among many others, representing a comprehensive enhancement of Xcyte Digital’s event technology offerings while simultaneously expanding the service bases of its partners. With this partnership expansion, Xcyte’s Ecosystem now consists of a wide variety of diverse partners since the initial launch of its “Xperience” subscription service in May 2024. These strategic partnerships are uniquely structured as reciprocal relationships, with Xcyte Digital serving as a managed services partner to each collaborator. https://bit.ly/3yOWUt6
YouTube takes on TikTok Shop with expanded Shopify (SHOP-NYSE, SHOP-TSX) partnership.
As TikTok Shop gains traction, YouTube is expanding its partnership with Shopify to onboard more brands for its YouTube Shopping affiliate program, the company announced on Tuesday. The expanded partnership means creators will get access to thousands of new brands to tag in their shopping videos, marking a significant increase from the few hundred brands they currently have access to. As part of the expansion, all eligible Shopify Plus and Advanced merchants in the U.S. can now sign up for the Shopping affiliate program. The expanded partnership will allow YouTube to be better poised to take on TikTok, which is reportedly aiming to grow its TikTok Shop U.S. business tenfold to US$17.5 billion this year. Although TikTok is newer to the U.S. e-commerce space when compared to YouTube, the company has been onboarding merchants at a relatively fast pace, as TikTok reported in April that it had 500,000 merchants in the U.S. on TikTok Shop by the end of 2023. https://tinyurl.com/mvhpkpff
Bitcoin miner Bitfarms (BITF-TSX) buys stronghold for US$125 million in stock transaction.
Bitcoin mining company Bitfarms Ltd. agreed to acquire Stronghold Digital Mining Inc. for about US$125 million in stock while it fends off a takeover attempt by Riot Platforms Inc. Stronghold shareholders will receive 2.52 Bitfarms shares for each share held, the companies said in a statement Wednesday. That’s a premium of around 70% of Stronghold’s 90-day volume-weighted average price on Nasdaq as of Aug. 16. The transaction also includes assumed debt of about US$50 million. Shares of Stronghold, which announced in May that it was considering the sale of the company and other alternatives, rose as much as 83% to US$5.37. The Kennerdell, Pennsylvania-based firm burns waste coal to generate energy to power its mining operations. The company posted a second-quarter loss of US$21.3 million on revenue of US$19.1 million. Bitfarms had US$41.5 million in revenue in the second quarter. The purchase should boost Bitfarms’ mining capacity by providing more access to power through Stronghold, which has its own power generation and interconnection to local grids. Riot, which has built a nearly 19% stake in Bitfarms, made an unsolicited, US$950 million offer to buy the company. The smaller miner rebuffed its takeover approach in April. In response to the takeover attempt, Bitfarms adopted a “poison pill” defense strategy to prevent hostile takeovers. The company scheduled a special shareholder meeting on Oct. 29 after Riot sought to replace three board members with candidates it has suggested. https://archive.ph/aHgws
American hospitality tech firm Agilysys acquires Book4Time for $204 million.
Markham, Ont.-based Book4Time has been acquired by Alpharetta, Ga.-based Agilysys for US$150 million ($204 million), the companies announced Tuesday. Founded nearly 20 years ago by Roger Sholanki, Book4Time is a software-as-a-service (SaaS) company that provides revenue and spa management for the hospitality and wellness industries. https://tinyurl.com/4kvkk6y5
Ex-Google DeepMind leaders bring Reliant AI out of stealth with $15.4 million seed round.
Montréal and Berlin, Germany-based data processing software startup Reliant AI has officially launched out of stealth and announced it has raised $15.4 million (US$11.3 million) in seed funding. The round was co-led by Inovia Capital and Seattle-based Tola Capital. https://tinyurl.com/yb7jvy4c
MKB raises $145 million for third cleantech fund mostly from government agencies.
Montréal-based growth equity firm Mackinnon, Bennett & Company (MKB) has closed $145 million from government investment agencies for its third cleantech fund. Fund III will target North American growth-stage businesses commercializing emission-reduction technologies. https://tinyurl.com/2fh6vnuf
Global Markets: IPOs, Venture Capital, M&A
China’s self-driving startup WeRide delays U.S. IPO as deadline looms.
Self-driving technology company WeRide delayed its plan for an initial public offering in the U.S., citing its need for more time to complete documents. “Updating transaction documents is currently taking longer than expected, and WeRide is working to complete the documentation necessary to move forward with the transaction,” the company said in a statement Thursday. WeRide was expected to offer 6.5 million ADS (American depositary shares) in the range of US$15.50 to US$18.50. It was looking to raise up to US$440 million in a U.S. listing. https://tinyurl.com/yc2yd485
AMD to buy AI infrastructure firm ZT Systems for US$4.9 billion.
AMD is acquiring ZT Systems, which sells AI infrastructure for cloud computing firms, for US$4.9 billion in cash and stock. The acquisition is aimed at boosting AMD’s ability to sell AI technology for data centers. ZT “adds world class systems design and rack scale solutions expertise,” said AMD CEO Lisa Su in a statement. While Nvidia dominates the market for AI chips, AMD has been trying to catch up. We noted here that AMD’s MI300X chips have twice as much memory as Nvidia’s H100s, which could give AMD a chance to gain ground with developers in video generation. https://tinyurl.com/3fv29ukt
Walmart sells stake in China’s JD.com for US$3.6 billion.
Walmart has sold its stake in Chinese e-commerce platform JD.com for US$3.6 billion, Bloomberg reported, eight years after the American retail giant made the investment as part of a strategic partnership that let Chinese consumers buy Walmart products on JD.com. Walmart sold 144.5 million JD.com shares for US$24.95 apiece, a discount to Tuesday’s close of US$28.19 for JD.com’s Nasdaq-listed stock, according to Bloomberg. JD.com’s Hong Kong-listed shares were down nearly 10% as of Wednesday afternoon. JD.com’s market capitalization based on Tuesday’s close on Nasdaq is US$43.8 billion. China’s retail sector is grappling with slow growth due to the country’s sluggish economy and weak consumption. Last week, JD.com said its revenue in the second quarter grew just 1.2% from a year earlier. https://tinyurl.com/yc7pjn2k
Palo Alto Networks shares rise after steady growth in security sales.
Palo Alto Networks on Monday said revenue rose 12% to US$2.2 billion in the July quarter, or 1 percentage point higher than the cybersecurity software seller had projected three months ago. The company said revenue growth would be similar in the October fiscal quarter, and that its free cash flow margin for the July quarter rose 2 percentage points compared to the same period a year ago. Palo Alto shares traded up nearly 3% in after-hours trading after the earnings report and are up nearly 20% this year as it has sold more cloud-based security software that competes with products from other cloud providers and startups such as Wiz. Palo Alto also said new artificial intelligence-based products were on pace to generate US$200 million in revenue over the next 12 months. The result was a positive signal for the cybersecurity sector, after sales slowed at some companies earlier this year. In February, Palo Alto had said it had been giving away some software for free in an effort to boost the number of subscriptions customers paid for multiple of its products. That bet appears to be paying off. CEO Nikesh Arora also told analysts on Monday that Palo Alto stands to benefit from the recent web system outage caused by rival firm CrowdStrike. https://tinyurl.com/2p9pxkpm
Snowflake posts stronger than projected growth.
Snowflake reported 29% revenue growth in the July quarter, slightly better than the company projected a few months ago, a sign that the data analytics firm’s business is improving after a slowdown last year. Snowflake raised its projection for full year growth, for the second time this year, to 26%. Even so, Snowflake shares fell 8% in after-hours trading. The company, once one of the hottest enterprise software stocks on Wall Street, grew its topline by 36% last year. Snowflake has faced growing competition from Databricks, as well as questions about how it will cope with new artificial intelligence-driven services emerging. Recently appointed CEO Sridhar Ramaswamy has announced a swirl of new product announcements to calm investor fears. He said on an earnings call tonight that Snowflake was “seeing broad adoption of AI” services and it expects those services to “contribute meaningfully to revenue next year.” https://tinyurl.com/mrys39k8
Zoom Video grows revenue just 2.1%.
Zoom Video Communications, whose business exploded during Covid, is barely growing. But in the July quarter, it managed to post marginally better growth than it had projected, of 2.1%, double its expectations. That was good enough for investors, who sent Zoom stock up 3% in after-hours trading to US$62. The stock, which went public in 2019 at US$36, has lately been trading around US$55, the lowest since its IPO. Despite its lack of growth, Zoom is generating huge amounts of cash. In the July quarter, it generated US$365 million in free cash flow. It finished the quarter with US$7.5 billion in cash on the balance sheet. Zoom has begun buying back its stock, spending US$287 million in the latest quarter. https://tinyurl.com/5a3nj8hd
Peloton’s revenue stabilizes. Peloton’s long decline may have plateaued.
The maker of exercise bikes and treadmills reported a 0.2% increase in revenue to US$643.6 million for the July quarter, the first time since the December quarter of 2021 that the company has increased revenue. Since its peak in 2021, Peloton’s full year revenue has shrunk by 33%, as sales of high-end fitness equipment have fallen off in the wake of Covid lockdowns which prevented people from going to gyms. In the past couple of years, under a new management team led by Netflix and Spotify veteran Barry McCarthy, Peloton shifted to focus more on selling subscriptions, using its fitness classes as the draw. That approach seems to be paying off. Two thirds of Peloton’s revenue and nearly all of its gross profit now comes from subscriptions. In the most recent quarter, Peloton generated US$26 million in free cash flow, compared with burning US$74 million in the year-earlier period. Peloton shares rose 22% to US$4.11 on Thursday. https://tinyurl.com/yma6u5h8
Emerging Technologies
North America sees 70% jump in data center supply in construction, CBRE report says.
The amount of data center supply under construction in North America’s top markets jumped by about 70% compared to a year ago to a record 3.9 gigawatts, according to CBRE Group research released on Tuesday. Data centers are essentially giant computer warehouses, but they are measured more broadly by the amount of power that they use. As the world’s largest technology companies race to expand their artificial intelligence and cloud computing businesses, power demand from data centers has ballooned. In the first half of 2024, more than 500 megawatts of new data centers, or roughly equivalent to all of the existing capacity in Silicon Valley, were rolled out in the eight biggest markets in the United States and Canada, according to CBRE. New data center inventory grew by 10% in the first six months of the year, while jumping 23% from a year earlier, the report said. The eight main North American data center markets are Northern Virginia, Dallas and Fort Worth, Texas; Silicon Valley in central California; Chicago; Phoenix, Arizona; the New York Tri-State Area; Atlanta; and Hillsboro in Oregon. https://tinyurl.com/mphs8uuh
OpenAI to let companies customize its most powerful AI model.
OpenAI is releasing a new feature that will let corporate customers use their own company data to customize the artificial intelligence startup’s most powerful model, GPT-4o. The move comes as startups face rising competition for their AI products for business, and businesses face growing pressure to demonstrate the gains from investment in AI. OpenAI plans to roll out the customization capability, known generally in the AI industry as fine-tuning, on Tuesday. Fine-tuning allows existing AI models to be trained on additional information about a particular sort of task or subject area. For example, a company that makes skateboards might fine-tune an AI model so that it could be used as a customer-service chatbot able to address questions about wheels and the specifics of caring for a board. https://archive.ph/HHG0Z
Waymo says it has doubled its weekly paid robotaxi trips to 100,000 since May.
Waymo is now providing more than 100,000 paid robotaxi rides per week in the U.S., according to a LinkedIn announcement by co-CEO Tekedra Mawakana. That’s double the 50,000 weekly paid trips the company reported in May. A spokesperson for the Alphabet-owned driverless vehicle venture told CNBC on Tuesday that San Francisco now “serves the most trips” among the cities where Waymo operates its commercial service: San Francisco, Phoenix, Austin and Los Angeles. Last month, Alphabet announced that it was investing an additional $5 billion into Waymo, which started as a self-driving project at the company in 2009. On Monday, Waymo revealed details about its new, “generation 6” self-driving system, which should enable the company to offer driverless services in a wider array of weather conditions and without requiring as many costly cameras and sensors in its vehicles. Waymo, which boasts around 700 vehicles in its fleet today, operates the only commercial robotaxi service in the U.S., Waymo One. https://tinyurl.com/yryakyh2
Uber teams up with Cruise to deliver more autonomous rides next year.
Uber has signed up another robotaxi company to offer driverless rides inside its app. Starting sometime next year, for “qualifying” rides, Uber will give you the option to take the trip in one of Cruise’s autonomous vehicles. The two companies announced a “multiyear strategic partnership” on Thursday. Uber already partnered with Waymo on autonomous rides and announced a long-term deal with driverless truck company Aurora earlier this year. It also offered driverless rides with Motional before Motional paused its robotaxi deployments in May. https://tinyurl.com/4psmhcwy
Media, Streaming, Gaming & Sports Betting
Chick-fil-A is reportedly launching a streaming service for some reason.
The streaming space has become so crowded that it’s hard to imagine why any company would want to break in now, but that is apparently what Chick-fil-A (yes, the fast food chain) is planning to do. Deadline reports that Chick-fil-A is working with a number of production companies and traditional studios to create multiple original shows for a streaming platform debuting sometime later this year. Initially, the restaurant is said to be focused on family-friendly unscripted programming. https://tinyurl.com/44tnhb6d
Adtech, Privacy & Regulatory
U.K. authority closes competition probes into Google, Apple App Stores.
The U.K.’s antitrust authority closed investigations into Google’s Play Store and Apple’s App Store as it prepares for the rollout of new rules that give the watchdog greater powers to boost competition in digital markets. The Competition and Markets Authority said Wednesday that it expects to consider competition concerns regarding the U.S. tech giants’ app stores under a new regulatory regime after the U.K.’s Digital Markets, Competition and Consumers Act was passed in May. The legislation gives the CMA new powers to promote competition and introduce requirements on companies deemed to have strategic market status for digital activity, similar to the European Union’s Digital Markets Act that took effect earlier this year. https://archive.ph/WkSGS
eCommerce
Walmart+ stalled at 8 million members last year.
Walmart+, the retail giant’s subscription that aims to compete with Amazon Prime and other store membership programs, saw its member numbers plateau around eight million people early last year, The Wall Street Journal reported. That figure included roughly one million Walmart employees who were offered a free membership as a perk of their employment, the report said. Both Walmart and Amazon, which tend to keep exact membership numbers under wraps, have said the programs are important for increasing customer loyalty and getting higher-income shoppers to make more purchases. By comparison, Amazon has said it has more than 200 million Prime members, but hasn’t disclosed more detailed figures. One reason that Walmart+ membership growth slowed was that some members didn’t pay to keep the subscription after their free trials ended, the WSJ reported. In response, Walmart has reworked the membership’s benefits and marketing to increase retention. Those efforts appear to be gaining traction—Walmart+ membership income has grown by 10% or more in each of the last three quarters, executives have said. https://tinyurl.com/en8jsd2y
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