COVID-19 has created both winners and losers in the business world.
In Singapore, a recent casualty of the relentless pandemic is the grand dame of Singapore’s department stores, Robinsons.
After 162 years, the home-grown retailer is closing down its last two stores in Singapore.
On the other hand, retail businesses with a strong online presence have not only remained resilient but are thriving as they capitalize on the accelerated shift towards online shopping.
One example is Shopee, the e-commerce arm of Sea Limited (NYSE: SE).
In the recent second quarter, Shopee saw its adjusted revenue grow by an impressive 187.8% year on year to US$510.6 million.
This growth momentum is expected to continue as shoppers who have found value and convenience in online shopping persist with their online behaviour.
The online experience is also made more refreshing as retailers integrate both offline and online channels to provide an omni-channel experience.
Besides Shopee, there are other companies that have thrived in the face of the pandemic-fuelled digital onslaught.
These businesses are likely to continue doing well in the COVID-19 environment.
Let’s take a look at some of them today.
Zoom Video Communications (NASDAQ: ZM)
Zoom has been the poster child for stay-at-home stocks with people being forced to work and learn from home due to lockdowns and movement restrictions.
Revenue growth for the leader in video conferencing solutions has been explosive, and investors have rewarded its performance with an over 635% rise in share price year-to-date.
For its fiscal second-quarter which ended 31 July 2020, Zoom posted a 355% year on year increase in revenue, while net income grew more than 33-fold from US$5.5 million to US$185 million.
The number of large customers who contribute more than US$100,000 in trailing twelve-month revenue has also more than doubled over the same period
This shows that customers enjoy using the Zoom platform which has emerged as the videoconferencing tool of choice from among its competitors such as Cisco System’s (NASDAQ: CSCO) Webex and Microsoft’s (NASDAQ: MSFT) Team Meetings.
Questions remain over the long term prospects of Zoom.
Simply said, can the video conferencing service continue to grow, especially with the easing of movement restrictions around the world?
Management is confident that an emerging hybrid work environment where some employees work in the office while others work from home will help to sustain the company’s growth.
According to Zoom’s Head of International, Abe Smith, there is a “massive market” in connecting people who are returning to office with those who continue working remotely.
It is also encouraging to see that Zoom is generating new use cases through businesses that use Zoom to improve their service offerings.
One example is how HSBC (LON: HSBC) is providing mortgage advice and allowing home buyers to secure their loan application over the Zoom platform.
As compared to in-person mortgage appointments, the Zoom setup gives customers more flexibility with appointment time slots and allows the bank to provide mortgage advice to more customers more easily.
As Zoom value-adds to businesses by simplifying their workflows and enhancing their service offerings, it will become much more than just a tool that allows businesses to continue functioning during the pandemic.
Fiverr International (NYSE: FVRR)
Thanks to Covid, businesses have become more open to remote work and this trend has been extended to the engagement of freelance services.
One platform that makes it easier for freelancers to connect with employers (buyers) is Fiverr, one of the largest marketplaces in the world for freelance work.
Over the past one year, the Fiverr platform has connected more than three million buyers to skilled freelancers from over 160 countries who provide a wide range of digital services such as graphic design and programming.
As the company generates revenue through transaction fees and service fees, it augurs well for the business when it is able to attract more buyers to the platform.
To this end, the number of active buyers grew by 37% year on year to reach 3.1 million for the fiscal third quarter.
Fiverr is not only attracting more buyers to the platform but it is also making buyers spend more.
In fact, annual spending per buyer increased by 20% year on year to US$195.
Consequently, Fiverr experienced another record-setting growth with revenue soaring by 88% year on year to US$52.3 million.
This latest result represents an accelerated growth as compared to an 82% increase in the second quarter of 2020 and a 44% increase in the first quarter this year.
In order to continue driving revenue growth, Fiverr recently launched a new service to attract buyers with bigger budgets.
Launched in September, “Fiverr Business” is a subscription-based service that facilitates collaboration among project teams at larger companies and helps them manage their work with freelancers.
It also offers a full suite of project and budget management tools in order to truly integrate freelancers into the workflows of larger enterprises.
Management is confident that this strategy will succeed and expects fourth-quarter revenue to grow between 77% to 81% year on year.
Correspondingly, the company has raised its full-year revenue guidance again, from the previous US$178.5 million to US$186.5 million at the midpoint.
Fastly Inc. (NYSE: FSLY)
As more digital services are delivered over the internet, there is a greater need for businesses to speed up their internet traffic in a scalable and secure way.
This is where Fastly, cloud-based content delivery network (CDN) provider, plays a key role in improving online experiences by speeding up the delivery of web content and mobile applications through its network of “edge” servers that are located closer to users.
The continued demand for Fastly’s services is reflected in its strong performance for the fiscal third quarter.
The number of customers grew from 1,951 in the previous quarter to 2,047 while dollar-based net expansion rate (DBNER) increased from 137% to 147% over the same period.
At the same time, the average enterprise customer spending increased from US$716,000 to US$753,000.
The increase in customers and the associated spend helped to boost revenue to US$71 million, up 42% year on year.
When compared against the second quarter’s revenue of US$75 million however, it may seem as if growth is slowing down.
Further scrutiny will reveal that the decline in revenue was due to the reduction in usage by TikTok, Fastly’s largest customer that previously accounted for 10.8% of the company’s revenue through the first nine months of 2020.
But this is not a reflection of TikTok’s dissatisfaction with Fastly’s services.
Rather, TikTok’s parent company, ByteDance, has had to reduce its reliance on Fastly for content delivery and security because of a dispute with the Trump administration which had issued orders in early August to ban TikTok in the United States.
Fortunately, this is a one-off event that is unlikely to derail Fastly’ growth trajectory as reflected in management’s fourth-quarter revenue guidance of between US$80 million to US$84 million.
Considering that management had assumed no additional revenue from TikTok beyond October, this guidance is respectable since it is still a 15% increase from the third quarter.
It is also heartening to note that Fastly is on track to achieving profitability as it gains operating leverage.
In the third quarter, Fastly generated US$0.8 million of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) as compared to a negative EBITDA of US$5 million during the same period last year.
Fastly’s future growth potential is further strengthened by its recent acquisition of web applications security provider, Signal Sciences.
The acquisition has enabled Fastly to create a unified new product offering, “Secure@Edge”, which provides security at the edge of the network, thereby providing cross-selling and upselling opportunities to customers of both Fastly and Signal Sciences.
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Disclaimer: Charlotte owns shares in Sea, Zoom, Microsoft, Fiverr and Fastly.