Bloomberg

(Bloomberg) — Sea Ltd.’s top management will forgo their salaries and tighten company expense policies, as the Singapore gaming and e-commerce giant tries to shield itself from the economic slowdown threatening tech companies.

“The leadership team has decided that we will not take any cash compensation until the company reaches self-sufficiency,” Chief Executive Officer Forrest Li said in an internal memo sent to staff Thursday, days after Sea shut down operations in some markets and trimmed staff across its divisions. “We can now see that this is not a quickly passing storm: these negative conditions will likely persist into the medium term.”

In his 1000-word missive, seen by Bloomberg News, the billionaire addressed head-on the struggle for Sea in an era of rising interest rates, accelerating inflation and a volatile market. The company has lost about $170 billion of market value since an October high on questions about its money-making prospects and a global decline in tech stocks.

“With investors fleeing for ‘safe haven’ investments, we do not anticipate being able to raise funds in the market,” Li said, reiterating that the company’s primary objective for the next 12 to 18 months is to achieve positive cash flow as soon as possible.

Shares of Sea declined 2.6% in trading before US markets opened. The stock is down 72% this year.

What Bloomberg Intelligence Says:

Sea’s commitment to cost-cutting, shown in the leadership team forgoing their compensation, confirms our belief that it’s on track for Ebitda breakeven in 2023, one year earlier than consensus expects. Our scenario projects revenue to grow 30% in 2022 and pick up to 60% in 2023 with a gaming recovery and Brazil e-commerce growth. If Sea can improve its operating-expense-to-revenue ratio from 58% now toward Amazon and Mercado Libre’s 30-40% levels, it might turn a profit in 2023.

–Nathan Naidu, analyst. Click here for research.

The company will cap business travel to economy class flight fares, with travel meal expenses limited to $30 a day. It will also curb spending on hotel stays for business trips to $150 a night, and cull reimbursement for meals and entertainment bills.

“The only way for us to free ourselves from relying on external capital is to become self-sufficient, generating enough cash for all our own needs and projects,” Li said.

Sea is facing increasing pressure to simultaneously grow and control costs. Consumers are pulling back on spending online as rising interest rates and prices weigh on the economy, while investors are becoming less willing to bankroll growth without profits. 

After grappling with a string of extraordinary setbacks this year — including India’s abrupt ban of its most popular mobile game — the company is looking to take significant steps to move from unbridled growth to profitability. 

The company has said it expects gaming arm Garena to post its first decline in bookings this year, and last month, it withdrew its 2022 e-commerce forecast.

(Updates with shares in fifth paragraph)

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) —

Hundreds of workers at an Amazon.com Inc. warehouse in Coventry, England have begun a formal strike ballot on Thursday, adding to a season of widespread industrial action in Britain.

The ballot begins Thursday and will run until Oct. 19, the GMB union said in an emailed statement. Any action to protest against the company’s pay packages would likely to take place in November, the union said, which could potentially disrupt distribution activity on Black Friday and Christmas.

An Amazon representative was not immediately available for comment.

Workers have been threatening strikes across the UK after a major rise in the cost of living. Two of Britain’s largest ports are bracing for overlapping dockworker walkouts in coming weeks, threatening more disruption to the nation’s trade flows in a dispute over pay.

Around 115,000 Royal Mail Plc staff are due to take two days of action from Sept. 30, according to plans previously announced by the Communication Workers Union.

Hundreds of workers stopped or slowed their work in warehouses across the UK in August. Staff on social media and in private messaging groups on WhatsApp and Telegram have been calling for further protests and work stoppages at multiple sites, and for their hourly wage to rise to £15, according to a report by Bloomberg.

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — Data security startup Fortanix Inc. raised $90 million from backers led by a Goldman Sachs Group Inc. fund, as cybersecurity companies attract investor interest despite a cooling venture financing market.

The Mountain View-based company’s Series C round was fronted by Goldman Sachs Growth Equity, with participation from Giantleap Capital and existing investors including Intel Capital, the startup said in a statement. Soumya Rajamani from the Goldman Sachs fund will join Fortanix’s board.

The capital will help Fortanix expand its product suite used by more than 125 customers from Google and PayPal Inc. to government agencies including the US Department of Justice. Its business has grown more than 500% over the past three years on demand from customers in Europe, Asia and the US, the company said.

The startup was established in 2016 by Ambuj Kumar and Anand Kashyap, both alums of Indian Institute of Technology Kanpur. The firm launched its first product three years later, taking on established rivals with a solution that keeps data encrypted at all times, whether in storage, transfer or being processed. Its products help customers comply with various privacy laws and regulatory requirements across the globe.

“Cybersecurity is a $200 billion market and while most other services will get consolidated when they move to the cloud, security and privacy will remain separate,” Kumar, the company’s chief executive officer, said on a video call from the San Francisco Bay area. The startup has over 225 employees, a third of them in Bangalore.

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

• Listen to Bloomberg Crypto on the iHeartRadio App
• Listen to Bloomberg Crypto on Apple Podcasts
• Listen to Bloomberg Crypto on Spotify  

(Bloomberg) — You might not have heard of Twitch, but it’s one of the most popular places on the internet. Millions of people every day use the app to do everything from watch their favorite live streams to play videogames to solve math problems in real time.

Video games are still the biggest category of live streams people tune into on Twitch, and the biggest games — like Grand Theft Auto and Fortnite — still dominate time spent on the platform. Recently however, there’s been a new addition to the top 10: gambling. It’s now the seventh most-popular content category on Twitch. And it’s not just any gambling. It’s crypto gambling. Many streamers are paid handsomely by casinos to take part in this activity. But what about those who actually pay to play? And where is all this coming from?

Bloomberg video game reporter Cecilia D’Anstasio joins this episode to talk about the toll of this growing trend. 

Follow us on Twitter @crypto, and subscribe to the Bloomberg Crypto Newsletter at https://bloom.bg/cryptonewsletter

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — Technology giants including Microsoft Corp., Instagram and Facebook parent Meta Corp., Alphabet Inc.’s YouTube, and Amazon.com Inc.’s Twitch will announce new actions to combat hate crimes and racially-motivated violence at a summit hosted by President Joe Biden at the White House.

The companies’ new efforts will be unveiled alongside a package of federal initiatives designed to address hate-fueled violence in the wake of a wave of high-profile violent episodes singling out racial and ethnic minorities. 

The firms have come under increasing pressure to better police their platforms after repeated episodes in which violent criminals have been found to have used social media for harassment or bigoted speech. 

On Tuesday, California Governor Gavin Newsom signed into law legislation requiring social media companies to post their policies regarding hate speech, disinformation, and harassment. Former and current social media executives also testified Wednesday before the Senate Homeland Security & Governmental Affairs Committee about their efforts to rein in extremism and misinformation.

The White House, which previewed the announcements in a fact sheet released Thursday morning, did not detail the new steps the technology companies plan to take. But a senior administration official who spoke on the condition of anonymity told reporters the announcements would come alongside the additional steps by the Biden administration intended to address a rise in hate-inspired crime.

That includes funding from the Department of Health and Human Services and the Department of Education for state and local programs designed to strengthen initiatives to confront bullying and harassment. The administration will also provide grants to universities and colleges to help them recover from hate-fueled incidents — including a series of bomb threats made in recent months at historically Black colleges and universities. 

A bipartisan group of former White House aides are also starting a new group called Dignity.us that will attempt to combat violence that arises from hatred. The effort will be supported by the presidential centers or foundations of former Presidents Barack Obama, George W. Bush, Bill Clinton, and Gerald Ford.

The White House announced plans for the summit earlier this year in the aftermath of a mass shooting at a supermarket in Buffalo, New York. Ten Black people were killed, and the White teenager charged in the attack allegedly wrote a manifesto espousing white supremacist ideas.

Participants at the summit include a bipartisan panel of mayors, civil rights and law enforcement leaders, and a former white supremacist who will discuss his exit from an extremist group.

The summit also comes as Biden has increasingly sought to frame the midterm elections as a “battle for the soul of the nation,” echoing the slogan of his presidential campaign. 

The president and his aides have heightened criticism of former President Donald Trump and his supporters regarding denial over the outcome of the 2020 election and restrictions on abortion rights, while Republican lawmakers have sought to focus the fight for control of Congress on the president’s economic record and an uptick in urban crime following the coronavirus pandemic.

White House officials insisted Thursday’s summit was intended as an apolitical effort to unite Americans of a variety of political beliefs, races, and religions behind the effort and said Biden did not intend to rehash his criticism of the former president.

“The summit will include a bipartisan group of federal, state, and local officials, civil rights groups, faith and community leaders, technology and business leaders, law enforcement officials, former members of violent hate groups who now work to prevent violence, gun violence prevention leaders, media representatives, and cultural figures,” White House press secretary Karine Jean-Pierre said in a statement. 

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — Ontario’s government is creating an economic advisory group with representatives from Stellantis NV and three indigenous groups to try to advance billions of dollars of investment in clean energy and infrastructure projects.

The governments of Canada and Ontario have provided financial support to a raft of electric vehicle initiatives to try to save auto-sector jobs as the industry transitions away from fossil fuels. That includes money for Stellantis to assemble electric vehicles in Windsor, Ontario, and to LG Energy Solution and Stellantis to build an EV battery plant nearby. 

Billions of dollars of investment will be needed, including spending on highways and energy infrastructure. The new group is meant to go beyond the government’s legal duty to consult with First Nations and ensure that indigenous people secure jobs and economic prosperity from any development near their communities, Greg Rickford, Ontario’s Minister of Indigenous Affairs, said in an interview. 

Read more: Stellantis to Spend $2.8 Billion on Canada Plants in EV Push 

The group was formed after indigenous leaders told the provincial government they wanted to be part of the opportunity created by the Stellantis plant, Rickford said. Currently, it doesn’t include corporate representatives from any other companies, but it lays the foundation for broader involvement, he said. 

“Our government has demonstrated a capacity to do these large-scale projects differently,” he said.

Asked if the indigenous members of the group would have veto power, should they object to a project, Rickford said he would not speculate but, so far, discussions have all been positive.

“We are going to stand shoulder-to-shoulder with our First Nations partners to advance critical infrastructure projects and ensure everyone benefits from the opportunities that Ontario holds,” Premier Doug Ford said in a statement. 

Windsor is in the southwest of Canada’s largest province, across the border from Detroit. 

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — Sony Pictures Entertainment will open a theme and water park based on popular characters from films produced by Columbia Pictures next month in Thailand as it seeks to cash in on a rebound in tourism.

The Columbia Pictures’ Aquaverse will open on Oct. 11 in partnership with local developer Amazon Falls Co., in Bangsaray, about 90 minutes from Bangkok, according to a joint statement on Thursday. Attractions will include characters from movies ranging from “Ghostbusters” to “Jumanji” to “Hotel Transylvania,” they said.

The opening of the park, initially scheduled to start operations in phases a year ago, coincides with a revival in global tourism and scrapping of most pandemic-era travel curbs. The Southeast Asian nation expects to attract as many as 10 million tourists this year and about 30 million visitors next year.

The licensing partnership is a low-risk way for Tokyo-based Sony Corp. to exploit popular characters from its library of movies and TV shows, which include megahits like “Jumanji” and “Men in Black.”

“The Columbia Pictures’ Aquaverse is the next step in Sony Pictures’ larger global strategy to grow and expand location-based entertainment by utilizing its globally known film and TV brands,” Jeffrey Godsick, an executive vice president at Sony Pictures, said in the statement.

The 14-acre (5.7-hectare) park, located in an area already home to five-star beach resorts and restaurants popular with tourists, will continue to open new attractions in the future, the companies said.

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — Indian education provider Byju’s finally released audited financial statements after months of delay, but the disclosures are unlikely to resolve the swirl of controversy around the country’s most valuable startup.

The company reported a 13-fold widening in losses in the year through March 2021, with net losses swelling to 45.7 billion rupees ($575 million) as it boosted spending to bolster growth. Sales were little changed from the previous 12 months however, at 24.3 billion rupees.

Byju’s blamed the performance on changes in accounting practices that led it to defer revenue to subsequent years. It also released unaudited numbers for the year through March 2022 and the following four months showing significant sales growth.

The ballooning losses alarmed investors who in the past two years watched Byju’s acquire a plethora of businesses — perhaps too many. The startup needs to shed non-core assets to streamline the number of its consumer-facing services as well as hold costs in check without resorting to layoffs, said Saurabh Daga, an analyst with London-based consultancy GlobalData Plc.

Byju’s should weather the downturn fine if it takes those steps, given its leadership position and the longer-term potential of online education in a geographically fragmented country, he said.

“Byju’s will likely have to undergo a massive rejig of its business,” Daga said. It “will have to initiate strong measures related with streamlining its product offerings, shedding off the businesses or apps which do not align with its core offerings, as well as overhauling its current business development and sales processes.”

Byju’s has been under regulatory pressure to report financial statements after missing a deadline for doing so by several months. The company has also faced delays with securing more funding and completing a planned merger with a blank-check company in the US after a global technology rout hit valuations.

“The audit delays were initially on account of multiple acquisitions; later, the auditors changed the revenue recognition model so that meant re-working the revenues,” founder Byju Raveendran said in an interview. “Lastly, because of the attention our audit got in the last three months, Deloitte went deeper into the numbers. The numbers have been passed without conditions.”

The startup’s funding hurdles have triggered renewed concerns about India’s consumer technology industry, where public valuations on major players from Zomato Ltd. to Paytm have plummeted this year. Raveendran injected $400 million into his company this year as he sought to convince other backers of its growth potential.

The accounting changes mean Byju’s now recognizes revenue when subscribers actually submit their recurring payments, rather than upfront, Raveendran said. Based on unaudited numbers, sales in the year ending March 2022 increased fourfold to almost 100 billion rupees. In the following four months, revenue reached 45 billion rupees and sales are set to grow at a more than 50% clip this year, Raveendran said.

The company’s plan to list in a US stock market through a merger with a special purpose acquisition company is “on complete pause” following a slump in technology valuations, he said.

“We will observe how things will change over the next 6-12 months,” he said. “Conversations are at a standstill because the IPO market is shut.”

The company has struggled to complete a planned funding round of $800 million — committed capital of nearly $300 million from investors Sumeru Equity Partners and Oxshott Capital Partners hasn’t come in, Raveendran said, adding he didn’t know if the funds would arrive. Byju’s was most recently valued at $22 billion, according to market researcher CB Insights.

Backed by Bond Capital, Silver Lake Management, Naspers Ltd. and Tiger Global Management, Byju’s has sought to expand abroad through big acquisitions. It offered more than $1 billion to buy US-listed edtech company 2U Inc., even as it initially pushed back payments to take over test-preparation provider Aakash Educational Services, Bloomberg News has reported.

After spending more than $2 billion on acquisitions since the start of the pandemic, Byju’s will now take “a measured approach” toward takeovers, Raveendran said. Still, he said potential targets are set to become more attractive in the next 12 months. About 25% of Byju’s revenue comes from outside India, he said.

Raveendran, the son of educators, founded his eponymous startup in 2015. Byju’s, whose parent company is formally known as Think & Learn Pvt, is the largest of a crop of startups that over the past decade have thrived on India’s growing mobile connections and investment from abroad.

The company benefited from the pandemic as students stayed home and people sought to upgrade their skills. Even as schools have reopened, Raveendran is predicting further growth for online education as customers have gotten accustomed to remote studying.

“Learning at home is seeing strong growth even after schools have gone back to in-classroom learning,” he said. “Many higher education startups are scaling extremely well.”

(Updates with comments from analyst starting in fourth paragraph)

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — THG Plc warned that sales will miss guidance this year as consumer appetite drops on the higher cost of living in the UK. The shares dropped. 

The embattled British online shopping emporium said Thursday that adjusted earnings before interest, taxes, depreciation and amortization will fall below 2021 levels to £100 million ($115 million) to £130 million with revenue growth of 10% to 15% in fiscal 2022. That’s compared with previous guidance of flat earnings this year and sales growth of 22% to 25%. 

THG’s shares have slumped this year as investors question the company’s business model and governance controls. Steep hikes in raw material costs, including whey for the retailer’s protein shakes, are also weighing on THG. Another blow came in July when key investor SoftBank Group Corp. ended a deal with the retailer that gave it the option to buy a 20% stake in THG’s Ingenuity business. 

Read More: THG Shares Dip After SoftBank Investment Option Is Ditched

The company said that the outlook for consumers through 2023 remains “challenging” though it believes it can continue to grow sales by about 20% to 25% in the medium-term. 

THG fell 11% to 43.50 pence at 8:12 a.m. in London trading on Thursday after earlier dropping as much as 15%. That was the shares’ lowest level since the company’s initial public offering two years ago.

Separately, the company said that Zillah Byng-Thorne and Andreas Hansson would step down from the board. Damian Sanders was named interim senior independent director. THG is overhauling its leadership structure to “ensure it is best-placed to generate long-term value creation for shareholders.” 

It named former Microsoft Corp. executive Gillian Kent and Dean Moore, a former chief financial officer of Cineworld Group Plc, as non-executive directors effective on Thursday. 

Two separate takeover approaches for Manchester-based THG ended without a deal earlier this year after the company was said to have not engaged or eased concerns over the amount of debt in the proposals. Entrepreneur Nick Candy and a consortium of Belerion Capital and hedge fund King Street Capital Management walked away in June.

Read More: Nick Candy and Belerion Capital Drop Pursuit of Retailer THG 

Founded in 2004 by Matthew Moulding and John Gallemore, THG, formerly known as The Hut Group, started out selling CDs but today operates hundreds of websites offering beauty, skincare and health-food products as well as helping rivals sell online via Ingenuity.

Moulding has kept a tight grip on THG as a major shareholder, landlord and chief executive and only relinquished the role of chairman in March. He has pledged to give up his golden share, which allows him to veto a takeover, smoothing the way for THG to move its listing to the premium segment of London’s Stock Exchange.

(Updates share price in fifth paragraph)

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) —

John Lewis Partnership Plc blamed the UK’s “unprecedented cost-of-living crisis” as it posted a loss of £99 million ($114 million) in the first half of the year.

The pretax loss widened from £29 million a year earlier, with the company — which is owned by its employees — saying it had chosen to protect both customers and staff from soaring inflation.

“We are forgoing profit by making choices based on the sort of business we are,” Chairman Sharon White said, “by helping our partners, customers, communities and suppliers.”

Tthe outlook is uniquely uncertain,” White said, due to the war in Ukraine and high global energy costs.

Excluding exceptional items, John Lewis lost £92 million, compared with a profit of £69 million a year earlier.

Waitrose, its high-end grocery business, suffered a 5% drop in like-for-like sales.

John Lewis is under pressure from consumers cutting back on non-essential spending as they prioritize cash for energy bills and other crucial costs. 

“We have seen customers move their discretionary spending from high margin, big-ticket household items to restaurants and holidays,” White said. “From dining room furniture to dining out.”

Waitrose has lost ground to cheaper competitors with shoppers changing their habits to visit discount supermarkets Aldi and Lidl. The partnership has been shutting stores and cutting costs under the leadership of White, a former telecommunications regulator who joined the employee-owned company in 2020.

In a push for Christmas sales, John Lewis is hiring 10,000 temporary staff in the UK to meet demand, 3,000 more than the chain hired for the same period last year. But with rising energy bills and the threat of a recession on the horizon, consumers are unlikely to splash out.

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.