Spotify Revenue Surges 16% in Q1 2020 to €2.1Billion

Esan Bolaji
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Spotify Revenue Surges 16% in Q1 2020 to €2.1Billion

Spotify Technology S.A. today reported financial results for the first fiscal quarter of 2021 ending March 31, 2021.

Spotify delivered subscriber growth and Gross Margin at the top end of our guidance range, a continued improvement in ARPU, and operating income better than plan. The business saw greater MAU variability this quarter, but results were within range of expectations given the outperformance in Q4 and the continued impact from COVID-19.

Revenue grew by 16% (22% excluding the impact of FX) and was at the upper end of our guidance range. Other highlights from the quarter include a successful launch in 86 new markets, a $1.5 billion Exchangeable Notes offering, and the acquisition of Betty Labs (Locker Room).

Spotify Revenue Surges 16% in Q1 2020 to €2.1Billion Brand spur nigeria
Photo by Cezar Sampaio

MONTHLY ACTIVE USERS (“MAUs”)

Total MAUs grew 24% Y/Y to 356 million in the quarter, finishing within our guidance range but modestly below our internal expectations. In Q1, we added 11 million MAUs, which drove healthy double-digit Y/Y growth across all regions. We saw meaningful contributions from markets such as the US, Mexico, Russia, and India. However, growth was lower than plan in Latin America and Europe. In aggregate, the performance of our newly launched markets was in line with our expectations.

Global consumption hours continued to grow meaningfully in Q1 on a Y/Y basis. Per-user consumption grew in developed regions such as North America and Europe while developing regions showed signs of improvement but remained below pre-COVID levels.

PREMIUM SUBSCRIBERS

Our Premium Subscribers grew 21% Y/Y to 158 million in the quarter, hitting the top end of our guidance range. In Q1, we added nearly 4 million subscribers, which drove healthy double-digit Y/Y growth across all regions and was strong relative to a tough promotional comparison from Q1 last year.

The subscriber outperformance was fairly broad-based and led by North America, where we saw stronger than expected performance of Trials & Campaigns and faster than anticipated growth in our Standard product. In Latin America, we saw outperformance driven by the continued success of our Family Plan product. We are pleased with the new market contributions, with South Korea being the biggest driver.

Our average monthly Premium churn rate for the quarter was down modestly Y/Y and flat Q/Q. The Y/Y improvement continues to be driven by the adoption of our higher retention offerings like Family Plan in addition to growth in high retention regions.

FINANCIAL METRICS

Revenue

Total revenue of €2,147 million grew 16% Y/Y in Q1 (22% Y/Y on a constant currency basis). Reported revenue was toward the top end of our guidance range due to subscriber outperformance, slightly lower headwinds from FX (600 bps impact vs. 770 bps incorporated into our plan), and advertising strength. The FX impact was primarily driven by the Y/Y US dollar weakness vs. the Euro. Premium revenue grew 14% Y/Y to €1,931 million (or 19% Y/Y in constant currency terms) while Ad-Supported revenue was particularly strong, growing 46% Y/Y to €216 million (or 57% Y/Y in constant currency terms).

Within Premium, average revenue per user (“ARPU”) of €4.12 in Q1 was down 7% Y/Y (but down only 1% Y/Y in constant currency terms vs. down 3% Y/Y in Q4). Excluding FX, the product mix accounted for the majority of the ARPU decline. To date, we have raised prices across a variety of our premium offerings in over 30 markets and early results have shown no material impacts on gross intake or cancellation rates.

On April 26th, we announced price increases for various subscription products in 12 additional markets, including the United States (Family Plan), United Kingdom (Student, Family, and Duo Plans), and Brazil (Full Portfolio).

Ad-Supported revenue outperformed our forecast with all regions growing double digits Y/Y excluding the impact of FX. The strength in Ad-Supported revenue was led by our Podcast and Programmatic channels, with the former benefiting from the acquisitions of Megaphone and The Ringer along with our exclusive licensing of the Joe Rogan Experience.

Spotify Ad Studio grew substantially Y/Y, and we continued to expand the self-serve offering to more markets (France, Germany, and Italy) and began beta testing podcast inventory ad buying on Spotify Ad Studio in the US. Additionally, in April, we expanded Streaming Ad Insertion (“SAI”) from the US, Canada, United Kingdom, and Germany to also include Australia and Sweden.

In February, we announced the Spotify Audience Network, a first-of-its-kind audio advertising marketplace that connects advertisers to listeners across Spotify Owned & Exclusive (“O&E”) podcasts, podcasts from enterprise publishers via Megaphone, podcasts from emerging creators via Anchor, and ad-supported music.

The Spotify Audience Network bundles multiple shows for advertisers to buy specific audiences using our proprietary SAI technology. We believe this shift will provide advertisers with much greater reach and efficiency while creators gain a much greater monetization opportunity.

Gross Margin

Gross Margin finished at 25.5% in Q1, at the top end of our guidance range and flat Y/Y. While we continue to see strong revenue growth in the podcast and non-music revenue, our non-music costs continue to grow at a slightly faster rate which is a modest drag on our Gross Margin. We did see improvements in Other Cost of Revenue (e.g. payment fees, streaming delivery costs) which offset the content spend increase.

Premium Gross Margin was 27.9% in Q1, down 42 bps Y/Y and Ad-Supported Gross Margin was 4.4% in Q1, up 1,100 bps Y/Y. As a reminder, all content costs related to podcast investment are included in the Ad-Supported business for the current and historical periods.

Operating Expenses / Income (Loss)

Operating Expenses totalled €534 million in Q1, an increase of 9% Y/Y and below our plan. Social Charges were approximately €35 million lower than forecast due to a decrease in our share price during the quarter, accounting for the majority of our Operating Expense variance.

Excluding the impact of our share price volatility, Operating Expenses grew less than forecast at 14% Y/Y. Certain marketing expenses came in lower than expected due to campaign timing shifts, which were partially offset by higher than expected personnel expenses.

As a reminder, Social Charges are payroll taxes associated with employee salaries and benefits, including share-based compensation. We are subject to social taxes in several countries in which we operate, although Sweden accounts for the bulk of the social costs. We don’t forecast stock price changes in our guidance so upward or downward movements will impact our reported operating expenses.

At the end of Q1, our workforce consisted of 6,794 FTEs globally.

Product and Platform

On March 29, 2021, we acquired Betty Labs, the creators of Locker Room, a live audio app that’s changing the way insiders and fans talk about sports. This acquisition builds on our work to create “future formats of audio” and will accelerate Spotify’s entry into the live audio space. We plan to evolve and expand Locker Room into an enhanced live audio experience for a wider range of creators and fans.

Through this new live experience, Spotify will offer a range of sports, music, and cultural programming, as well as a host of interactive features that will enable creators to connect with audiences in real-time. We intend to give professional athletes, writers, musicians, songwriters, podcasters, and other global voices opportunities to host real-time discussions, debates, ask me anything (AMA) sessions, and more.

During the quarter, Spotify launched multiple upgrades, including a new Desktop App and Web Player redesign that makes the user experience and navigation easier than ever by combining a modern scalable web player together with a cohesive Spotify design. Additionally, our web platform includes 36 new languages (62 in total), which also will be rolled out to the mobile app, allowing Spotify to reach more audiences.

We also began testing Podcast Topic Search in the US, which enables listeners to search for podcasts by theme and topic in an effort to make discovering new content easier than ever. In February, we announced a new partnership between Anchor and WordPress to generate opportunities for content creators to evolve their work and reach new audiences through the power of audio.

With this new tool, bloggers can publish their written content as a podcast with just a few clicks—and podcasters can create a website for their podcast just as easily. This offers a whole new group of creators—those who have historically focused on the written word—to access an entirely new audience via audio and share their voices on Spotify.

We remain focused on our ubiquity strategy and continue to expand support for Spotify across a variety of platforms and markets. With the expansion of our footprint into non-music content, we also have expanded support for video podcasts on AppleTV (including AirPlay2), LG, and Comcast.

At the end of Q1, users in 10 additional markets, including Sweden, Australia, and Chile, can now ask Alexa to play podcasts from Spotify. Additionally, PlayStation’s PS4 and PS5 consoles now support Spotify in 5 new markets, including Russia, Ukraine, Croatia, Slovenia, and Israel.

Post Q1, we announced a limited launch of Car Thing to eligible US users. Car Thing is a smart player that allows users to more seamlessly engage with Spotify music, news, entertainment, talk, and more in the car. We also launched a joint partnership with Facebook to create an integrated ecosystem with a mini player experience driven by the social discovery that allows listeners to enjoy audio from Spotify directly within Facebook, without switching between apps.

Additionally, we announced new ways for podcast creators to monetize their work with the rollout of Spotify’s Paid Subscriptions, the Spotify Open Access Platform, and utilization of the Spotify Audience Network for independent creators. These initiatives provide creators with different options to monetize their work, which allows them to continue to grow their audiences and create meaningful revenue streams.

Content

At the end of Q1, we had 2.6 million podcasts on the platform (up from more than 2.2 million podcasts by the end of Q4). The percentage of MAUs that engaged with podcast content on our platform was consistent with Q4 levels. From a consumption standpoint, we saw a strong increase in Q1 podcast consumption hours vs. Q4, with March activity driving an all-time high in terms of podcast share of overall platform consumption hours.

The Joe Rogan Experience performed above expectations with respect to new user additions and engagement. Notable Q1 content launches in the US included Renegades: Born in the USA (Higher Ground), Unlocking Us with Brene Brown (Parcast), Ringer Dish Feed – Taylor Swift (The Ringer), and Welcome To Your Fantasy (Gimlet).

Renegades: Born in the USA, featuring former President Barack Obama and Bruce Springsteen, was the second-largest podcast on Spotify in March (on an MAU basis) and has been our most international show to date, with listenership extending across more than 150 countries. Internationally, we released 55 new O&E podcasts.

Select launches included a Japanese original Juju Talk, which was a major driver of user acquisition in the country, as well as our first daily new original in Germany, FOMO – was hab ich heute verpasst (what did I miss today?). Additionally, we launched our first slate of 7 Spotify Originals in the Philippines, with topics ranging from gaming to well-being, featuring personalities like Pia Wurtzbach and Donnalyn Bartolome.

On the music front, key Q1 releases included Olivia Rodrigo’s single, drivers license, which set the Spotify record for most streams in a day for a non-holiday song with over 15 million global streams on January 11. Additional releases include Arlo Parks’ album, Collapsed in Sunbeams, as well as Selena Gomez’s EP, Revelación. Daft Punk and Spotify partnered to celebrate the 20th anniversary of their highly acclaimed 2001 opus Discoverywith an enhanced playlist experience after the announcement of the duo splitting up. The playlist included exclusive Canvas and Storylines for every track on the album, and since the start of the campaign, Daft Punk has seen a double-digit increase in follows on-platform.

Two-Sided Marketplace

Sponsored Recommendations have shown strong growth and are becoming an essential part of new release marketing strategies for artists and labels. Q1 was the biggest quarter yet for Sponsored Recommendations, with an 11% increase over campaign volume from last quarter and a 10% increase in new customers vs. Q4.

In an effort to expand and evolve Sponsored Recommendations, we expanded into Australia and New Zealand and have now made this tool available for singles. Additionally, we began the rollout of a self-serve buying experience for Sponsored Recommendations to select artist and label teams in the US.

At our Stream On event, we announced that we’re testing a new commercial tool called Discovery Mode with a small group of labels that enables artists to better reach new audiences on Spotify.

To ensure the tool is accessible to artists at any stage of their careers, it will not require any upfront budget and instead, labels or rights holders agree to be paid a promotional recording royalty rate for streams in personalized listening sessions where we provided this service. Early results from the labels participating have been positive with participating labels seeing a 30% increase in streams for content opted in on average.

This quarter, we announced that all artists now have access to our popular feature, Canvas, through Spotify for Artists. The Canvas for Rodrigo’s drivers license was shared from Spotify to Instagram Stories over 243,000 times in its first week alone and was viewed more than 50 million times in its first three weeks. Artists at every stage of their career have used Canvas, and we now have over 1 million Canvases live on Spotify.

In Q1, we launched Notable — our new global home for songwriters, producers and publishers which is a central space to access all the resources we’ve made available to the songwriting and publishing community, including Spotify Publishing Analytics, SoundBetter, Songwriter Pages and Song Credits, the Songwriting Hub, and more.

Free Cash Flow

Free Cash Flow was €41 million in Q1, a €61 million increase Y/Y as the prior year included an unfavorable impact to working capital due to a shift in timing for select licensor payments as well as an increase in net income adjusted for non-cash items. These increases were partially offset by higher cash outflow for PP&E.

In addition to the positive Free Cash Flow dynamics, we maintain a strong liquidity position and are confident in the financial position of the business. During Q1, Spotify USA Inc. issued $1.5 billion in aggregate principal amount, zero-coupon Exchangeable Notes due 2026 with a 70% conversion premium. At the end of Q1, we had €3.1 billion in cash and cash equivalents, restricted cash, and short term investments.

Q2 & 2021 OUTLOOK

The following forward-looking statements reflect Spotify’s expectations as of April 28, 2021 and are subject to substantial uncertainty. The estimates below utilize the same methodology we’ve used in prior quarters with respect to our guidance and the potential range of outcomes. Given the extraordinary operating circumstances we currently face with respect to the impact of COVID-19, there is a greater likelihood of variances with respect to those ranges than typical quarters.

AfDB Debars Maxicare Company (Nigeria) Limited For 3 Years For Collusive And Fraudulent Practices

Esan Bolaji
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AfDB Debars Maxicare Company (Nigeria) Limited For 3 Years For Collusive And Fraudulent Practices

The African Development Bank Group (AfDB), on 28 April 2021, announces the 36-month debarment of Maxicare Company (Nigeria) Limited with effect from 23 February 2021. Maxicare Company (Nigeria) Limited is a limited liability company registered in the Federal Republic of Nigeria.

An investigation conducted by the Bank’s Office of Integrity and Anti-Corruption established that Maxicare Company (Nigeria) Limited engaged in collusive and fraudulent practices during a tender for the construction of weigh stations and supply of equipment under the Transport Facilitation Program for the Bamenda-Mamfe-Abakaliki-Enugu Road Corridor connecting Cameroon and Nigeria.

African Development Bank Group

The debarment renders Maxicare Company (Nigeria) Limited and its affiliates ineligible to participate in Bank Group-financed projects during the debarment period. Additionally, the debarment qualifies for cross-debarment by other multilateral development banks under the Agreement for Mutual Enforcement of Debarment Decisions, including the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank and the World Bank Group.

At the expiry of the debarment period, Maxicare Company (Nigeria) Limited will only be eligible to participate in Bank Group-financed projects on the condition that it implements an integrity compliance program consistent with the Bank’s guidelines.

The Transport Facilitation Program for the Bamenda-Mamfe-Abakaliki-Enugu Road Corridor is aimed at increasing trade and strengthening cooperation generally between the countries of the Economic Community of the Central African States and those of the Economic Community of West African States and between Cameroon and Nigeria in particular. It was co-financed by the African Development Fund, an entity of the African Development Bank Group.

Transcorp Hotels Announces Retirement of Two Directors

Esan Bolaji
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Transcorp Hotels Announces Retirement of Two Directors

Transcorp Hotels Plc hereby notifies the Exchange of the retirement of Mr. Valentine Ozigbo and Hajia Saratu Umar as Directors of the Company at its Annual General Meeting held on April 26, 2021.

Transcorp Hotel Lists Additional Shares Arising from Rights Issue of 2.64bn Ordinary Shares

Transcorp Hotels Plc is the hospitality subsidiary of Transnational Corporation of Nigeria Plc. The Company owns and operates Transcorp Hilton Abuja, which provides luxury accommodation, excellent cuisine, conferencing and leisure facilities to business travelers and tourists from all over the world.

The Company also holds 100 percent interest in Transcorp Hotels Calabar Limited, which owns and operates the Transcorp Hotel in Calabar.

Cadbury Nigeria Q4 2020 Performance Dilutes Recovery Efforts

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Cadbury Nigeria Q4 2020 Performance Dilutes Recovery Efforts

Cadbury Nigeria reported a 10% YoY revenue decline in its FY 2020 earnings performance, attributed to the negative impact of the coronavirus pandemic in the Nigerian market, and across the global markets.

Operating profit dipped by 79% YoY from N1.36bn in FY 2019 to N282mn in FY 2020, on the back of higher operating costs. The combination of an exchange rate devaluation in 2020, and a rising inflationary trend, weighed negatively on margins.

Hence, as a result of lower revenue and higher operating cost margins, the Company’s profitability nosedived. Profit before tax declined by 73% YoY from N1.54bn in FY 2019 to N408mn in FY 2020. Meanwhile, a N524mn tax credit earned by the Company moderated the net income decline to 13% YoY from N1.07bn in FY 2019 to N932mn in FY 2020. The Company, nonetheless, declared an N0.18 dividend (FY 2019: N0.49).

Coronavirus Pandemic Induce Heavy Decline in Export Sales

On a segmental breakdown, the Refreshment Beverages, which accounts for about 60% of total revenue, declined by 7% YoY from N23.15bn in FY 2019 to N21.59bn in FY 2020. In our view, we link the revenue decline to the decline in economic activities for a significant part of the year (notably in Q2 2020) due to the lockdown and other forms of social distancing measures implemented by the national authorities, in efforts to flatten the COVID curve. In a similar trend, the Company’s Intermediate Products (consisting of the sale of cocoa powder, cocoa butter, cocoa liquor, and cocoa cake), recorded a 40% YoY decline from N4.68bn in FY 2020 to N2.83bn in FY 2021.

We attribute the revenue decline in this segment to the inability of the Company to export its products, owing to the closure of borders of other countries during the peak of the coronavirus pandemic. The decline in the Refreshment Beverages and Intermediate Products was responsible for the overall decline in total revenue in FY 2020.

Cadbury Nigeria: Exchange Rate Devaluation Pull Margins Downwards

On the back of an exchange rate devaluation by the monetary policy authorities during the financial period, the Company’s input costs rose, thus resulting in a 400 basis points increase in cost margin from 79% in FY 2019 to 83% in FY 2020. As a result, gross profit declined by 29% YoY from N8.33bn in FY 2019 to N5.89bn in FY 2020.

Gross margin lowered from 21% in FY 2019 to 17% in FY 2021. In our view, we believe that the macroeconomic challenges, relating to loss of jobs, shrinking household disposable income, and heightened competition made it an uphill task to raise prices during the financial year.

Cost Optimisation Partially Supports Shrinking Margins

Operating expense declined by 18% YoY from N7.03bn in FY 2019 to N5.74bn in FY 2020. The drivers of the operating expense decline were lower advertising and sales promotion expense (-41% YoY from N4.43bn to N2.62bn). We believe that the downturn in economic activities resulted in the decline on this line.

The Company also incurred 56% lesser expense on royalty, technical service, and management fee to Mondelez International AMEA PTE Limited and other related companies. We think that the decline recorded on the technical service, and management fee line was a one-off event.

Given the lower expenses incurred in FY 2020, operating expense lowered by 200 basis points from 18% in FY 2019 to 16% in FY 2020. Nevertheless, the Company’s bottomline declined, owing to the impact of a steeper decline in operating income.

Delayed Payment to Creditors Boost Cash Flows

Net operating cash flow increased by 80% YoY from N3.49bn in FY 2019 to N6.28bn in FY 2020, largely driven by a N1.80bn delayed payment to creditors during the period. In addition, the Company recorded an improved collection from its debtors, as reflected in the 15% YoY decline in trade and other receivables. The Company’s inventory levels also declined by 14% YoY. By implication, working capital improved during the period, and it factored in the form of higher cash flows generated from operations.

The Company obtained a N3.45bn loan during the period. The loan represented a US$22.20mn import finance facility with two banks to meet the importation needs of the Company. The debt-taking and the higher cash generated from operations drove the total increase in the Company’s cash levels from N4.43bn in FY 2019 to N11.12bn in FY 2020.

TAJBank Records Highest Industry EPS Growth Rate, Rakes in N845m Profit in First Year

Esan Bolaji
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TAJBank Records Highest Industry EPS Growth Rate, Rakes in N845m Profit in First Year

TAJBank, a non-interest banking services provider has recorded earnings per share (EPS) of N11.82 for the year ended December 31, 2020.

The EPS, which represented an appreciation of 1,182 per cent on every N1 investment by shareholders, was said to be the highest in the banking industry.

TAJBank emerges Best Islamic Bank for Marketing & Growth Strategy in the Global Islamic Finance Awards (GIFA) 2020
TAJBank | www.wordpress-1516176-5827464.cloudwaysapps.com

In all, the lender reported N845 million profit after tax (PAT) in its first year of operations, just as its other performance indices recorded an upswing. This, it explained demonstrated the management’s superior financial competencies to create sustainable value for its various stakeholders.

Tajbank’s scorecard was achieved during the financial year amid the devastating impact of the COVID-19 pandemic on the global, and particularly Nigeria’s economic landscape.

In addition, TAJBank grew its total assets from N9.2 billion in 2019 to N50 billion in 2020, representing a 443 per cent increase and a remarkable growth. The bank also grew its agency banking network (TAJExpress), to over 3,000 agents within its first year of operations.

TAJBank Brandspurng Opens New Footprints in Sokoto State (Photos)1
L-R: Chief Operating Officer: Mr Hamid Joda, Chairman TAJBank: Alhaji Tanko Isiaku Gwamna, Chief Marketing Officer: Mr Sherif Idi at the new TAJBank branch in Sokoto | www.wordpress-1516176-5827464.cloudwaysapps.com

Commenting on the bank’s impressive performance in its maiden year and capacity to break even within nine months of operation, the Founder and Chief Operating Officer, TAJBank, Mr. Hamid Joda, said the feat was indicative of the massive amount of support and encouragement from various bodies and individuals within a period of nine years of operations.

“Breaking even in nine months of operation is a laudable feat and we are appreciative of the enormous support and encouragement that we have received so far.

“We assure our customers that we will continue to ts explore the business landscape with a view to consistently deliver on our mission to provide the very best of products and services to our customers,” Joda said.

Also speaking, the Co-founder and Chief Marketing Officer of the bank, Mr. Sherif Idi, said:

“In our business environment, creating products and services that fully resonate with our customers while addressing their needs is a priority.

“We are delighted with the satisfaction rate and feedback we have received so far on TAJBank, a thought leader in the increasingly dynamic non-interest banking sub-segment of the banking industry, and its numerous value-adding services to customers.”

Sanofi continued its growth trajectory. Strong increase in Q1 2021 business EPS(1) at CER

Esan Bolaji
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Sanofi continued its growth trajectory. Strong increase in Q1 2021 business EPS(1) at CER

Sanofi has announced a Q1 2021 sales increase of 2.4% at CER driven by growth drivers Dupixent® and Vaccines. In the first quarter of 2021, Sanofi sales were €8,591 million, down 4.3% on a reported basis.

Exchange rate movements had a negative effect of 6.7 percentage points, mainly driven by the decrease of the U.S. dollar, Brazilian real, Russian ruble, Turkish lira, and Argentine peso and Japanese yen. At CER, Sanofi sales increased 2.4%.

  • Specialty Care sales grew 15.3%, due to strong Dupixent® performance (+45.6% to €1,047 million) and oncology launches
  • Vaccines up 5.3%, driven by PPH franchise and demand for influenza vaccines in the southern hemisphere
  • General Medicines core assets grew 4.4%, while GBU sales were down 3.8%
  • CHC decreased 7.3% due to COVID related stocking in Q1 2020 and low demand for cough and cold brands in Europe

Q1 2021 business EPS growth at CER driven by efficiency and sales performance, supported by a one-time payment

  • Business EPS was €1.61 up 5.2% on a reported basis and up 15.0% at CER
  • Business EPS includes an incremental 8 cents due to a payment related to the termination of collaboration in Japan
  • IFRS EPS was €1.25
Sanofi offers to acquire Kiadis, a clinical-stage company developing cell-based immunotherapy products
Sanofi seen in Cambridge, Massachusetts, on Oct. 5, 2018. (Ruby Wallau for STAT)

Progress on implementation of the Corporate Social Responsibility strategy

  • Sanofi has become a member of the top five companies of the 2021 Access to Medicine index
  • Sanofi announced Sanofi Global Health, a newly formed non-profit unit within the company, a new cornerstone of its CSR strategy

Full-year 2021 business EPS guidance affirmed

  • Sanofi expects 2021 business EPS(1) to grow high single digit at CER, barring unforeseen major adverse events. Applying average April 2021 exchange rates, the currency impact on 2021 business EPS is estimated to be between -4% to -5%.

Sanofi Chief Executive Officer, Paul Hudson, commented:

“Our strong first-quarter performance is the result of the continued execution of our Play to Win strategy to drive growth and bring innovative medicines to patients. Dupixent® continues its outstanding performance with impressive growth in the U.S. and strong uptake in global markets, including China.

Vaccines delivered growth in its core segments. We initiated and completed enrollment of our Phase 2 study for our recombinant COVID-19 vaccine candidate in the first quarter and results are expected next month. Following the communication of our ESG strategy at the end of 2020 and embedding it into our business priorities, we have recently created the Sanofi Global Health Unit, dedicated to increasing access to 30 medicines considered essential by the WHO.

Sanofi is uniquely positioned to make this difference to society, which can be scaled and sustained over time, given our portfolio of essential medicines and broad geographic presence.”

BIC Q1 2021 Results: Net Sales More Than Doubled In Nigeria

Esan Bolaji
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BIC Q1 2021 Results: Net Sales More Than Doubled In Nigeria

BIC, a world leader in stationery, lighters and shavers has announced robust results driven by the exceptional growth of U.S. Lighters in Q1, propelled by a shift in market dynamics and trading environment in both Pocket and Utility lighters in Q1’21 Result.

In South Africa, while the overall market was also challenging, declining 9.8%, we grew share by 1.6 points in value in Coloring.

In Nigeria, Net Sales more than doubled, underpinning the continued positive momentum in the BIC’s acquisition of Lucky Stationery and BIC’s efficient route-to-market strategy in the region.

  • Challenging underlying market trends in core Writing Instruments, worsened by the pandemic in developing countries
  • Solid performance of Rocketbook in Digital Writing
  • Continued growth in e-commerce, driven by all channels of trade, and share gains in key markets
  • Improved manufacturing costs are driven by procurement efficiencies
  • Sustained Free Cash Flow and solid Net Cash Position

Gonzalve Bich, Chief Executive Officer commented

“Our first-quarter performance was positively impacted by exceptional results in our U.S. Lighter business. Rocketbook, our digital writing business, doubled its sales vs the same period last year, with strong results across all online channels.

In Shavers, we were able to grow in added-value products and in e-commerce amidst underlying weak market trends. While we continue to effectively navigate through a challenging trading environment, we remain cautious for the balance of the year due to uncertainties related to the pandemic, particularly in Latin America and India.

With our Horizon plan serving as our North Star, I am encouraged by the direction that we are taking and the capabilities we are building throughout our organization that will drive accelerated profitable growth.”

The Stationery category continued to be strongly affected by ongoing school and office closures and evolving consumer shopping habits. Latin America, Africa and India, with traditional trade highly impacted by the pandemic remained the hardest hit.

In Europe and North America, sell-out was negatively impacted by the decline in core Writing Instruments segments, such as Ball Pens, at the expense of more positive trends in Coloring.

In Europe, while we lost share in value due to headwinds in core segments, we gained a 0.5-point market share in France10 and 2.1 points in the U.K in Coloring. Sell-in performance was driven by a rebound in demand from Office suppliers in France and Italy and robust e-commerce growth.

In North America, after a weak start to the year, the market rebounded in March and reached 6.2% growth in Q112, driven by Gel and Coloring. We lost 1.1 points market share in value in total Stationery, though we continued to gain share in both Coloring Markers and Coloring Pencils.

In line with our Horizon strategy, we continued to pave our way in the Digital Writing segment with Rocketbook’s integration well underway and outstanding performance, as sales more than doubled versus the same period last year.

Back-to-School seasons in the Southern Hemisphere were heavily disrupted in most countries.

In Latin America, Brazils’ market was down 49.3% in value due to the lockdown measures13. Yet, we gained 2.3 points value share, thanks to gains in both Ball Pens and Coloring markers13.

BIC Joins more than 1,500 CEOs Pledging to Advance Diversity and Inclusion in the Workplace

In India, Cello Net Sales grew double-digit thanks to improving domestic market conditions in Q1 and positive momentum in e-commerce.

Q1 2021 Human Expression division adjusted EBIT margin was 2.6% compared to 0.7% in 2020. This increase was driven by higher Net Sales (including Rocketbook’s), lower Brand Support investments and manufacturing costs savings linked to Procurement efficiencies, which more than offset unfavourable Forex (from Latin American currencies versus USD).

2021 Outlook (based on current market assumptions)

Despite a better-than-expected start of the year and an exceptional performance in Lighters, our Full-Year Net Sales outlook remains unchanged, although we now expect to be at the high end of our +5% to +7% growth objective at constant currencies.

The trading environment remains volatile in Latin America, Africa and India, and the visibility of the upcoming Back-To-School is reduced due to evolving consumer shopping habits. The Group will provide an update on overall business trends alongside its half-year results in July.

The full Year 2021 operating margins should improve thanks to tight management of input costs and further manufacturing efficiencies. The Full Year 2021 Free Cash Flow is expected to be above 200 million euros, driven by strict control of CAPEX and Working Capital.

First Quarter 2021 Net Sales increased 25.6% at constant currencies. The unfavourable impact of currency fluctuations (–9.5 points) was mainly due to the decrease of the U.S. dollar and BRL against the euro4. Excluding the impact of acquisitions and divestitures, growth on a comparative basis was 20.9%.

Growth was driven by the Flame For Life division, with a favourable comparison base, and U.S Lighters contributing approximately 13.5 points to the Group’s Net Sales growth on a comparative basis. This exceptional performance was driven by a shift in market trends (U.S Lighter market grew 11.1% in value YTD March) and customers calibrating Q1 orders to meet unexpected consumers’ demand.

BIC’s overall performance was also boosted by increased pricing vs. Q1 2020, additional distribution, and some customers’ pre-buys ahead of the May 2021 price increase. Our new E.Z. Reach Utility Pocket Lighter continues to be a success, reaching 3.2% of the total Pocket Lighter market at the end of March.

In Human Expression, Rocketbook more than doubled its Net Sales compared to Q1 2020, growing in all online channels, and propelled by efficient promotional activities on Amazon. Nevertheless, the overall Stationery category remains highly challenging, and BIC’s core Writing Instrument business continues to be hit hard by home-schooling and consumers’ evolving shopping habits.

The Blade Excellence division performance was driven by our added-value 5 blades and Hybrid Flex ranges. While the underlying Shaver markets remained weak in the U.S., we held in-store market share globally and outpaced the online market, gaining +2.2 points market share year-to-date March.

E-commerce (excluding Rocketbook) delivered a solid +42% growth compared to the same period last year, propelled by a continued outstanding performance in Pure Players channels (+82% year-on-year) and the rebound of Omniretailers (+20%). Sales grew in most regions, and we continued to gain or hold market share in key markets, supported by increased digital brand support.

In line with the “Invent the Future” roadmap, we achieved a 7.0 million euros incremental benefit in Q1, of which 2.3 million euros in direct and indirect procurement. We continued to adapt our organization by further streamlining our Stationery manufacturing footprint in India from five to four factories.

The impacts from Raw Materials price increases were negligible in Q1 (-0.1 pts on Gross Profit). However, despite improved procurement efficiencies and active mitigation plans, including alternative material sourcing and the use of recycled materials, we expect the current challenging feedstock market conditions to persist in Q2 and weigh on Full Year 2021 Gross Profit margin.

Q1 2021 Free Cash Flow before acquisitions and disposals totalled 36.0 million euros, including 15.9 million euros of CAPEX. Net Cash Position was 393.6 million euros, positively impacted by 173.9 million euros of proceeds from our headquarters’ sale.

The Q1 Gross Profit margin improvement was driven by the strong increase in North America Lighter sales, a decrease in Brand Support above Net Sales and savings linked to manufacturing efficiencies. This was partly offset by adverse forex from Latin American currencies against the U.S. dollar. The strong increase in Net Sales positively impacted Q1 2021 Adjusted EBIT.

Q1 2021 non-recurring items included 167.7 million euros from Clichy Headquarters sale gain, 3.0 million euros from Pimaco divestiture gain, and 3.9 million euros of restructuring costs related to the transformation plan.

Q1 2021 finance revenue decrease is due to 2020’s strong favourable impact of the fair value adjustments to financial assets denominated in USD (versus BRL and MXN).

Q1 2021 effective tax rate was 29.2%, whereas Q1 2020 effective tax rate, excluding Cello impairment, was 31.2%. The decline is primarily due to the decrease in the statutory French tax rate in 20218.

India Smartphone Shipments Soar 26% YoY to 39 Million in Q1 2021

Esan Bolaji
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India Smartphone Shipments Soar 26% YoY to 39 Million in Q1 2021

According to the latest research from Strategy Analytics, India smartphone shipments soared 26% YoY to 39 million units in Q1 2021. This was India’s highest growth rate for six years. Xiaomi, Samsung and Vivo are the top three vendors, capturing 27%, 19% and 18% market share in the quarter.

Rajeev Nair, the Senior Analyst at Strategy Analytics, said,

“India smartphone shipments soared 26% YoY from 30.7 million units in Q1 2020 to a first-quarter record of 38.8 million in Q1 2021. Indian lockdown restrictions were eased temporarily during the first quarter of this year and demand surged for new 4G smartphones.”

India Smartphone Shipments Soar 26% YoY to 39 Million in Q1 2021 Brand spur nigeria
Exhibit 1: India Smartphone Shipments & Marketshare by Top Five Vendors (Graphic: Business Wire)

Abhilash Kumar, Analyst at Strategy Analytics, added,

“Xiaomi captured 27% smartphone market share in India during Q1 2021, tumbling from its all-time peak of 32% in Q1 2020. Xiaomi is facing much tougher competition this year from a resurgent Samsung and hungry Vivo. Samsung grabbed 19% market share in Q1 2021, up sharply from 16% a year ago.

Samsung’s Galaxy M, A and F Series models are finding traction with Indian consumers seeking a solid device from a famous brand at an affordable price. Vivo held third place with an 18% market share in Q1 2021, leaping from 16% in Q1 2020.

Vivo is now just a whisker behind Samsung and challenging the Korean brand for the second position in India. Vivo’s recent return as the main IPL cricket sponsor is a major boost for the brand and strengthens its pursuit of the second position for the rest of 2021.”

India Smartphone Shipments Soar 26% YoY to 39 Million in Q1 2021
Photo by Rishikesh Patil

Woody Oh, Director at Strategy Analytics, added,

“OPPO was flat and held the fourth position with 12% market share in Q1 2021. Like Samsung, OPPO is facing intense competition from Vivo. OPPO needs to strengthen its online channel engagement and launch more smartphone models to take on the rising challenge of Vivo and others.

Realme captured an 11% smartphone market share for a fifth-place during Q1 2021, slumping from a 15% share a year ago. Realme has extensive online distribution, but its offline retail presence is lagging major rivals such as Samsung.”

Rajeev Nair, the Senior Analyst at Strategy Analytics, added,

“While India saw huge smartphone growth due to the easing of lockdown in the first quarter of 2021, we expect a significant pullback in shipments for Q2 as lockdown restrictions are re-tightened to stem the country’s recent spike in Covid cases. The Indian smartphone market remains highly volatile at the moment.”

Strategy Analytics is a global, independent research and consulting firm. The company is headquartered in Boston, USA, with offices in the UK, France, Germany, Japan, South Korea, Taiwan, India, and China.

United Bank For Africa – Digital Banking Drives Growth In Q1 2021

WSTC Research
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United Bank For Africa – Digital Banking Drives Growth In Q1 2021

United Bank for Africa Plc (UBA), in its recently released Q1 2021 earnings result, reported a 6% YoY gross earnings growth.

Interest income in Q1 2021 was unchanged, relative to Q1 2020 figures, while non-interest income grew by 23% YoY from N38.06bn in Q1 2020 to N46.86bn in Q1 2021.

Operating income grew by 15% YoY from N91.30bn in Q1 2020 to N104.62bn in Q1 2021. Operating expense also grew by 10% YoY from N58.66bn in Q1 2020 to N64.45bn in Q1 2021.

However, United Bank for Africa’s cost-to-income ratio reduced by 200 basis points from 64% in Q1 2020 to 62% in Q1 2021. Hence, profit before tax grew by 24% YoY from N32.73bn in Q1 2020 to N40.58bn in Q1 2021.

Profit after tax also grew Profit after tax grew by 27% YoY from N30.10bn in Q1 2020 to N38.16bn in Q1 2021.

Year-on-Year Solid Asset Growth Supports Earnings Capacity

The Group’s total interest-bearing assets grew by 31% YoY from an average of N5.63trn in Q1 2020 to N7.37trn in Q1 2021, largely on account of significant increases in loan and advances to customers (+22% YoY from N2.16trn to N2.64trn), and investment securities (+54% YoY from N1.69trn to N2.62trn).

Meanwhile, the low-yield environment limited upside gains, as interest income remained flat from N106.46bn in Q1 2020 to N108.48bn in Q1 2021. Based on our estimates, the Group’s asset yield declined from 7.57% in Q1 2020 to 5.89% in Q1 2021.

Cheap Funding Base Boosts Net Interest Margins

Interest expense declined by 22% YoY from N43.69bn in Q1 2020 to N34.21bn in Q1 2021, occasioned by the material increase in the Group’s current and savings deposit accounts (CASA). CASA ratio increased from 73% in Q1 2020 to 82% in Q1 2021. This implies that the proportion of low-cost funds increased on a year-on-year basis. As a result of the decline in interest expense, the Group’s net interest income grew by 14% YoY from N65.42bn in Q1 2020 to N74.38bn in Q1 2021.

 

Global Esports Audience To Grow By 20% And Hit 577M Viewers By 2024

Brand Spur
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Global Esports Audience To Grow By 20% And Hit 577M Viewers By 2024

Even before the pandemic, the global Esports audience has been rising steadily, with more and more viewers tuning in to watch some of the best gamers in the world.

However, the COVID-19 has fuelled the entire market’s growth, as millions of people turned to eSports and video games amid the lockdown.

According to data presented by Safe Betting Sites, the global eSports audience is set to reach 474 million viewers in 2021, almost a 20% increase since the COVID-19 struck. The increasing trend is set to continue in the following years, with the number of eSports viewers growing by another 20% and reaching 577 million by 2024.

Number Of Esports Enthusiasts To Jump By 45% In Five Years

After the pandemic hit, eSports and gaming became one of the most popular in-door and online activities for millions of people isolated in their homes. In fact, the Newzoo data revealed more than 38 million people started watching eSports in 2020 only, with the total number of viewers reaching 435.9 million last year. The year 2021 is expected to witness the same growth rate, with the global eSports audience rising to 474 million people.

Almost half of eSport’s current audience, or 234 million people, consider themselves eSports enthusiasts. However, this figure is set to grow even more in the next few years. Statistics show the number of eSports enthusiasts worldwide is forecast to jump to 285.7 million by 2024, a 45% increase in five years.

The Newzoo predicts the number of occasional eSports viewers to rise to 240 million in 2021, a 40 million increase in two years. By 2024, this figure is expected to jump to over 291 million, or 45% more than before the pandemic struck.

Revenues To Grow By 50% And Hit $1.6B By 2024

Although the COVID-19 fuelled the growth of the global eSports audience, the cancellations and postponement of events amid the lockdowns caused eSports revenues to drop by 0.8% YoY to $950.3 million in 2020. However, this figure is expected to recover and hit over $1bn in 2021.

As the largest revenue stream, Esports sponsorships are forecast to hit $641 million in 2021, up from $584.1 million a year ago. Media rights are forecast to jump by almost 18% YoY to $192.6 million in 2021, compared to $163.3 million in 2020. Publisher fees are set to grow by 16% YoY to $126.6 million in 2021. Merchandise and ticket revenues are forecast to hit $66.6 million, 26.8% more than a year ago.

However, digital revenues are set to witness the most impressive growth in 2021, rising by CARG of 50% to $32.3 million. Streaming revenues follow with a 26% jump to $25.1 million, up from $19.9 million in 2020. By 2024, global eSports revenues are forecast to jump by another 50% and hit over $1.6bn value.

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