Pandora shares up 8% after surprise earnings beat

Pandora’s quarterly earnings report was music to investor’s ears.

The digital radio platform reported a better-than-expected first quarter report after the bell on Thursday, sending shares up 8% in after-hours trading.

Wall Street liked that the company showed a sizable increase in subscriber revenue, posting $104.7 million, a 63% increase from last year. Pandora has 5.63 million paid listeners, up 19% from the same timeframe in 2017.

By contrast, Apple Music says it has 40 million subscribers and Spotify has 75 million, so Pandora is a distant third in terms of paid users.

But the competition is already reflected in Pandora’s stock price. It closed Thursday at $5.75, which is up a buck for the past month. It’s also substantially beneath the $37 per share that the stock was trading at in 2014. Its market cap is currently $1.45 billion.

In addition to subscribers, Pandora makes money from its unpaid users via ads. The company had 72.3 million active listeners, bringing in $319.2 million in revenue. Analysts had expected $304.3 million.

Its adjusted loss per share was 27 cents, well above the negative 38 cents that Wall Street forecast.

“Pandora is exactly where we want to be: at the center of a growing market with huge potential,” said Roger Lynch, CEO of Pandora, in a statement.

 

 

 

Birchbox ownership changes hands after beauty business does recap

Beauty-in-a-box brand Birchbox has changed up its ownership structure.

The New York-based startup, which has raised almost $90 million in funding from noted venture firms like Accel Partners and First Round Capital, has a new majority owner in hedge fund Viking Global, sources confirm to TechCrunch.

First reported by Recode, Birchbox made some changes to its cap table after failing to find a suitable buyer. We are told that the details are still getting finalized, but that Viking is expected to take on a majority stake after investing about $15 million. Viking previously led Birchbox’s $60 million funding round in 2014.

Birchbox did not respond for comment. 

Birchbox has managed to become a household name amongst its targeted demographic of female millennials, but its business has faced challenges amidst growing competition. Ipsy, Glossybox, Sephora and Allure Magazine are amongst the many beauty sample box subscriptions that consumers can buy.

Its boxes retail for just $10 per month. And while they are able to find discounts and partnerships with beauty brands eager to partner with Birchbox, it can still be hard to keep distribution costs down, while also spending on sales and marketing to grow the business. Birchbox hopes that consumers will buy more full-sized products off of its website.

Recaps are not uncommon, but they are usually a sign that a startup is struggling. However, it is an opportunity for Birchbox to raise cash and remain in business while it figures out a longer-term plan.

Birchbox was founded in 2010 by Harvard Business alums Hayley Barna and Katia Beauchamp. Barna left Birchbox and is now an investor at First Round Capital. Beauchamp remains CEO.

 

DocuSign raises $629 million after pricing IPO

DocuSign priced its IPO Thursday evening at $29 per share, netting the company $629 million.

It was a better price than the e-signature company had been expecting. The initially proposed price range was $24 to $26 and then that was raised to $26 to $28.

The price gives the company a valuation of $4.4 billion on the eve of its public debut, above the $3 billion the company had raised for its last private round.

The IPO has been a long-time coming. Founded in 2003, DocuSign had raised over $500 million over the course of 15 years.

The company brought in $518.5 million in revenue for its fiscal year ending in 2018. This is up from $381.5 million last year and $250.5 million the year before. Losses for this year were $52.3 million, down from $115.4 million last year and, $122.6 million for 2016.

“We have a history of operating losses and may not achieve or sustain profitability in the future,” the company warned in the requisite “risk factors” section of the prospectus.

The filing reveals that Sigma Partners is the largest shareholder, owning 12.9% of the company. Ignition Partners owns 11.7% and Frazier Technology Ventures owns 7.2%.

DocuSign, competes HelloSign and Adobe Sign, among others, but has managed to sign up many of the largest enterprises. T-Mobile, Salesforce, Morgan Stanley and Bank of America are amongst its clients. It has a tiered business model, with companies paying more for added services.

HelloSign COO Whitney Bouck said that “this space is changing the way business is done at its foundation — we are finally realizing the future of digital business and exactly how much more profitable it can be by removing the friction caused by outdated technology and processes.” But she said that DocuSign should be wary of competitive “more nimble vendors that can provide more innovative, faster, and more user-friendly solutions at a cheaper price.”

DocuSign has gone through several management changes over the years.  Dan Springer took over as CEO in early 2017, after running Responsys, which went public and then was later bought by Oracle for $1.5 billion. Chairman Keith Krach had been running the company since 2011. He was previously CEO of Ariba, which was acquired by SAP for $4.3 billion.

Rocketrip raises $15 million to reward cost-saving employees

If your company lets you expense the nicest hotel when you travel, why wouldn’t you?

But what if you got to split the savings with your employer by selecting a less expensive hotel?

A New York-based startup called Rocketrip believes most employees will opt to save companies money if they are incentivized to do so. It’s built an enterprise platform that rewards employees with gift cards if they go under budget on travel and transportation.

After five years of signing up business clients like Twitter and Pandora, Rocketrip is raising $15 million in Series C funding led by GV (Google Ventures) to keep expanding. Existing investors Bessemer Venture Partners and Canaan Partners are also in the round.

Inspired by Google’s internal travel system, Rocketrip CEO Dan Ruch calls his solution a “behavioral change platform.” Employees “always optimize for self-preservation, self-interest,” and are likely to book a cheaper flight if it means a gift card at a place like Amazon, Bloomingdale’s or Home Depot, Ruch claims. He said that the average business trip booked by Rocketrip saves companies $208.

Ruch believes that Rocketrip has built a currency that motivates teams. He says some employees even gift Rocketrip points to congratulate colleagues on birthdays and promotions.

When it comes to enterprise platforms, Rocketrip is “one of those unique situations where everyone is really excited to use it,” said Canaan Partners’ Michael Gilroy, who holds a board seat.

Yet Rocketrip is not the only startup looking to help employees make money by cutting on costs. TripActions and TravelBank have also created similar businesses. 

Gilroy insists that “Rocketrip was first” and that he views the others a “validation of the model.”

Rocketrip hopes to someday expand beyond travel to incentivize healthcare choices, like quitting smoking. It also thinks companies will use Rocketrip points to reward employees for community service. “Any time we can motivate an employee,” there’s an opportunity for Rocketrip, Ruch believes.

Pivotal Software closed up 5% following IPO, raised $555 million

Stock market investors showed lukewarm enthusiasm for Pivotal Software’s debut on Friday. After pricing the IPO at $15, the company closed the day at $15.73.

Although it didn’t “pop” for new investors, pricing at the midpoint of its proposed range allowed Pivotal to raise $555 million. Its public company market cap exceeded $3 billion.

The enterprise cloud computing company has been majority-owned by Dell, which came about after its merger with EMC in 2016. It was spun off from Dell, EMC and VMware in April 2013.

After that, it raised $1.7 billion in funding from Microsoft, Ford and General Electric.

Here’s how it describes its business in the S-1 filing:

Pivotal looks to “provide a leading cloud-native platform that makes software development and IT operations a strategic advantage for our customers. Our cloud-native platform, Pivotal  Cloud Foundry (‘PCF’), accelerates and streamlines software development by reducing the complexity of building, deploying and operating new cloud-native applications and modernizing legacy applications.”

According to the filing, Pivotal brought in $509.4 million in revenue for its fiscal year ending in February. This is up from $416.3 million in revenue for 2017 and $280.9 million in revenue the year before.

The company is still losing a lot of money, however. Losses for fiscal 2018 stood at $163.5 million, improved from the than the negative $232.5 million seen in 2017 and $282.5 million in 2016.

“We have incurred substantial losses and may not be able to generate sufficient revenue to achieve and sustain profitability,” the company warned in the requisite “risk factors” section of its IPO filing.

Pivotal also acknowledged that it faces competition from “legacy application infrastructure and middleware form vendors” like IBM and Oracle. The company says it additionally competes with “open-source based offerings supported by vendors” like RedHat. Pivotal also faces challenges from SAP Cloud Platform, Amazon Web Services and Microsoft Azure.

The company says it believes it will stand out from the pack because of its strong security and easy-to-use platform. Pivotal also claims to have strong brand awareness and a good reputation. It has 118 U.S. patents and 73 pending and is betting that it will remain innovative.

Morgan Stanley and Goldman Sachs served as lead underwriters. Davis Polk and Fenwick & West worked as counsel.

The company listed on the New York Stock Exchange under the ticker “PVTL.”

It has been an active spring for tech IPOs, after a slow winter. Dropbox, Spotify and Zuora are amongst the companies that have gone public in recent weeks. DocuSign, Smartsheet, Carbon Black and Pluralsight are all expected to debut within the next month.

Zillow surprises investors by buying up homes

Real estate platform Zillow changed up its business model this week, announcing that it plans to purchase and sell homes in Las Vegas and Phoenix.

Zillow will be working with Berkshire Hathaway and Coldwell Banker to make offers on homes before it finds a buyer. Zillow will pay commissions and also “make necessary repairs and updates and list the home as quickly as possible.”

Calling it “Instant Offers,” Zillow says,

“the program gives real estate agents the opportunity to acquire new listings by connecting them with motivated sellers who have taken a direct action to sell their home. Across all testing, Zillow found the vast majority of sellers who requested an Instant Offer ended up selling their home with an agent, making Instant Offers an excellent source of seller leads for Premier Agents and brokerage partners.”

Shares fell 7% on Friday, following the revelation.

This is a marked business change for the website, which is mainly a hub of information about real estate properties. Buying up homes will provide added costs and risks, so some investors didn’t like it.

Yet Zillow says it has been testing out this program for about a year and that it is optimistic about its future success.

In an interview with CNBC, CEO Spencer Rascoff said, “we’re ready to be an investor in our own marketplace.” He believes Zillow has “huge advantages because we have access to this huge audience of sellers and huge audience of buyers.”

Rascoff acknowledged that Zillow will be taking on debt to execute on its new mission.

This will also put it in competition with Opendoor. CEO Eric Wu provided us the following statement.

“We are genuinely excited, having invented this new category in 2014, and it’s invigorating to see a host of others in the industry recognize the importance of removing hassle and time from the transaction.  We are proud to have served over 15,000 customers, to be expanding to dozens of markets, and to be reaching market share numbers that demonstrate the significant demand and love for our experience and product.  We continue to be focused on building technology to remove friction from the transaction through a world-class pricing model, a suite of vertically integrated applications, All-Day Open Houses, our Buyer Guarantee, and a few new products we will be launching shortly.  Most importantly, we are here to service our customers, buyers and sellers who crave and deserve a best-in-class experience as they transition from one home to their next.”

Game on.

Ad king Sir Martin Sorrell steps down from WPP following misconduct investigation

There’s big news in the world of advertising. Sir Martin Sorrell has stepped down from WPP, the world’s largest ad business.

Sorrell had been in the midst of an unspecified investigation about “personal misconduct and misuse of company assets.” He has denied the allegations.

WPP provided us with the following statement.

“Sir Martin Sorrell has stepped down as Chief Executive Officer of WPP with immediate effect. Robert Quarta, Chairman of WPP, becomes Executive Chairman until the appointment of a new Chief Executive Officer…Sir Martin will be available to assist with the transition. The previously announced investigation into an allegation of misconduct against Sir Martin Sorrell has concluded. The allegation did not involve amounts that are material…Sir Martin will be treated as having retired…

The $20.8 billion British company owns big brands in the marketing and communications world, including Olgivy & Mather, Young & Rubicam and 400 others. The company has over 200,000 employees.

73-year-old Sorrell was largely responsible for growing WPP into the advertising empire, having founded the business in 1985. He remained at the helm for decades. Some of its biggest clients include Unilever and Procter & Gamble.

A spokesperson for WPP provided a statement, attributed to Sorrell. “Obviously I am sad to leave WPP after 33 years. It has been a passion, focus and source of energy for so long. However, I believe it is in the best interests of the business if I step down now.”

The ad business has changed a lot since Sorrell launched WPP. The biggest budgets have been overhauled, gradually shifting portfolios to include more online advertising.

WPP’s stock has fallen 22% in the past year amid sluggish growth. Competitors like Omnicom and Publicis have struggled similarly.

As of last year, Sorrell was said to have a net worth of 495 million pounds, or over $700 million. His compensation exceeded $100 million in some years.

Elon Musk says ‘humans are underrated,’ calls Tesla’s ‘excessive automation’ a ‘mistake’

In a rare mea culpa for the mercurial billionaire, Tesla CEO Elon Musk acknowledged that the company has been too reliant on robots for production.

“Excessive automation at Tesla was a mistake,” Musk wrote, responding to a Wall Street Journal reporter’s tweet. “Humans are underrated.” He also talked about this with CBS News’ Gayle King, adding  “we had this crazy, complex network of conveyor belts….And it was not working, so we got rid of that whole thing.”

Tesla has faced mounting public pressure, amid a production slowdown for its Model 3, its lower-priced car. The company recently revealed that it missed its target to produce 2500 cars a week, disappointing investors.

The uncertainty has resulted in a volatile stock. A month ago shares were trading at $340 and then slid to $252. Things have started to recover now that Musk says the company will be profitable and cash flow positive in the third quarter.

This was also revealed in a tweet that Musk wrote to The Economist on Friday.

There’s “no need to raise money,” he added. Shares closed Friday at $300.34.

The company has a market cap of $50.7 billion. By comparison, Ford Motors has a market cap of $45 billion.

Subscription biller Zuora soars 43% following IPO

Subscription biller Zuora was well-received by stock market investors on Thursday, following its public debut. After pricing its IPO at $14 and raising $154 million, the company closed at $20, valuing the company around $2 billion.

It was also much higher than expected. The company said in its filings that it planned to price its shares between $9 and $11, before it raised that range to $11 to $13.

Founder and CEO Tien Tzuo told TechCrunch that he believes “a bet on us is really a bet on an entire shift to a new business model, to a subscription economy.” He is optimistic that subscriptions are the “business model of the future.”

Zuora sees itself as an early pioneer in a growing category. The company believes that more businesses will shift their business models to subscriptions, across sectors like media and entertainment, transportation, publishing, industrial goods and retail.

It helps its 950 customers manage subscriptions, including billing and revenue recognition. Zuora touts that it has 15 of the Fortune 100 businesses as clients.

Zuora’s revenue for its fiscal 2018 year was $167.9 million. This was up from $113 million in 2017 and $92.2 million the year before. Losses remained constant in this time frame, from $48.2 million in 2016 to $47.2 million in 2018.

“We have a history of net losses, anticipate increasing our operating expenses in the future, and may not achieve or sustain profitability,” warned the requisite risk factors section of the filing.

It also acknowledged a competitive landscape. Oracle and SAP are amongst the companies offering software in the ERP (enterprise resource planning) category. It also competes with other startups like Chargebee and Chargify.

The largest shareholders are Benchmark, which owned 11.1 percent prior to the IPO. Founder and CEO Tien Tzuo owned 10.2 percent. Others with a significant stake included Wellington Management, Shasta Ventures, Tenaya Capital and Redpoint.

The San Mateo, Calif.-based company previously raised more than $240 million, dating back to 2007.

Zuora listed on the New York Stock Exchange, under the ticker “ZUO.” Goldman Sachs and Morgan Stanley worked as lead underwriters on the deal. Fenwick & West and Wilson Sonsini served as counsel.

After a slow start to the year for tech IPOs, there has been a flurry of activity in recent weeks. Dropbox and Spotify were amongst the recent public debuts. We also have DocuSign, Pivotal and Smartsheet on the horizon.

JUMP Bikes weighing Uber $100m+ acquisition, investment offers

JUMP Bikes, the on-demand biking service that integrates with Uber, has been weighing both acquisition and investment offers.

A decision has not yet been reached, but right now possible options include a sale to Uber at a price that exceeds $100 million, or a venture investment round, multiple sources tell TechCrunch. One of the possible investor names that has been floated is Mike Moritz of Sequoia Capital, but we are told that JUMP has several options.

We are also told that various parties have been upping their offers over the past week, as they fiercely compete to get ownership of JUMP.

“E-bikes” are expected to become more popular, where users are able to find and rent bikes quickly via apps. They are part regular bike and part electric, which makes it easier to go up hills.

JUMP launched as Social Bicycles nearly a decade ago, but the startup recently rebranded as JUMP when it announced its $10 million Series A investment round a few months back. Menlo Ventures and Sinewave Ventures invested.

Since then, JUMP has launched a partnership with Uber, available in select cities like San Francisco and Washington, D.C. Users are able to identify a nearby bike via the Uber app and are given a PIN to unlock it. They do not require bike docks, meaning they can be picked up and dropped off everywhere. It costs $2 for every 30 minutes.

JUMP also has its own separate app.

We’ve reached out to JUMP and Sequoia for comment. Uber declined to comment.

TechCrunch’s Megan Rose Dickey recently wrote about JUMP’s expansion:

It “plans to launch in Sacramento and Providence, Rhode Island later this year. Through its software and hardware offerings, it operates via third-parties, like cities, campuses and corporations, in 40 markets including Portland, New Orleans and Atlanta.”

The company also competes with GoBike and Spin. On-demand scooters like Bird and Limebike are also emerging businesses in the urban transportation space.