Global Soft Power Summit 2021

BRAND FINANCE – Global Soft Power Summit 2021

25 February 2021, 12:00–16:00

2020 was a year like no other, putting the nations of the world to the test – from the impact of COVID-19 on economic activity and immediate GDP forecasts, to diminished long-term prospects. A nation’s soft power is, arguably, more important than ever.

Global Soft Power Summit 2021

Global Soft Power Summit 2021

Join us at Brand Finance’s Global Soft Power Summit 2021, hosted as a fully virtual event from the renowned Queen Elizabeth II Centre in Westminster, London. Practitioners and researchers of soft power will come together to explore the impact COVID-19 has had on nations around the globe, and to discuss predictions for the future following the turbulence of the last twelve months.

Hosted in partnership with BBC Global News, the Summit will feature a presentation of the results of the Global Soft Power Index 2021 by Brand Finance – the world’s most comprehensive research study on perceptions of nation brands, surveying opinions of over 75,000 people in more than 100 countries.

Due to governmental restrictions regarding COVID-19, this year’s Global Soft Power Summit will be hosted online. Click the link to register for the event.

The inaugural Global Soft Power Index 2020 report and the findings of last year’s study are free to access online. Our interactive dashboard allows you to explore the results from the survey in maps and charts, rank nations by metrics and statements, and choose data sets to create your own graphs.

To request a preview of your nation’s Global Soft Power Index 2021 results or to enquire about using the data for academic research, please email softpower@brandfinance.com.

Where

Online Event

Book Now

Media partners
BBC Global News

Speakers

Zeinab Badawi
Journalist and Presenter
BBC World News
Professor Joseph Nye
Harvard University
Carl Bildt
Co-Chair, European Council on Foreign Relations and Former Prime Minister of Sweden
David L Heymann M.D.
Professor of Infectious Disease Epidemiology
London School of Hygiene and Tropical Medicine
Rebecca Smith
Director
New Zealand Story Group
His Excellency Mohammed Bin Abdullah Al Gergawi
Minister of Cabinet Affairs
Ministry of Cabinet Affairs of the United Arab Emirates
Tom Tugendhat
Chair of the Foreign Affairs Committee, UK Parliament
David Haigh
Founder and CEO
Brand Finance

Banks learn the lesson and work their brand and reputation to overcome Covid-19 according to Brand Finance

  • The brand value of 7 banks places Spain in the top 10 worldwide according to Brand Finance. Spain contributes 2% to the total brand value of the ranking.
  • Spanish banks lose 6.3 billion euros due to Covid-19.
  • Ibercaja joins the list of the most valuable Spanish banks in the world.
  • Bankia is the bank that best resists COVID-19, the only one that rises in brand value and position in the ranking.
  • BBVA is the strongest bank in Spain (BSI 85.2 out of 100) and the fifteenth in the world. In a year in which all Spanish brands increase their brand strength, Bankinter is the Spanish bank that does so the most (+6.1 points to 71.5 out of 100).
  • While the 500 bank brands in the 2021 ranking increase their Brand Strength by an average of 1%, the 7 Spanish banks lose -0.7 points on average in 2021. With 92 points out of 100, the Russian Sber Bank is the strongest bank in the world. world.

Access the Brand Finance Banking 500 2021 report here

In Madrid on February 1, 2021.- The strength of the most valuable banks in the world increases 2.2 points on average while brand value falls for the second consecutive year. In this context, seriously impacted by the pandemic, reputation is presented as the integral variable of the strength of the brand that could make them take flight according to the market study carried out for the new report that assesses the most valuable brands in the banking sector in the world. world, Brand Finance Banking 500 2021, the leading independent intangibles valuation consultancy whose rankings comply with ISO 10668 and ISO 20671 for brand valuation and evaluation respectively and which contributes with its brand value database to create one of the indicators of the Global Innovation Index (GII) of the UN.

The photo of the 9 Spanish banks that represent us in the ranking is not much more encouraging. They lose 6.3 billion among all compared to 2020 and the average brand strength also drops -0.7 points. Teresa de Lemus, Managing Director of Brand Finance Spain: “Banking brands have managed to get the positive out of Covid-19 and have wisely used it to improve their reputation, a decision that is undoubtedly correct for the future”

Abanca , which last year climbed 79 in the ranking, this year rises one position to 331 since its brand value drops -0.7%. However, its solidity is demonstrated by the 3.5 point rise in strength, which now stands at 66 points out of 100, the second largest rise behind Bankinter among Spanish companies.

Banks learn the lesson and work their brand and reputation to overcome Covid-19 ac

Bankinter has been the one that has given the starting gun presenting results on January 21. The entity led by María Dolores Dancausa has reduced its profit by 42.4% until September, to 317 million euros, after a provision of 242.5 million euros due to the pandemic. We will have to be attentive to the ‘roadmap’ for the landing on the market of its insurer, Línea Directa , which was postponed and is now scheduled for mid-2021.

It seems that CaixaBank also followed a procurement strategy. According to the results presented last Friday, it closed 2020 with a net profit of 1,381 million euros, a figure that represents a decrease of 19% compared to the previous year, due to the extraordinary provision amounting to 1,252 million that the entity has made for cope with the impact of Covid-19. Bankia, a brand that will disappear when the merger process scheduled for this first quarter of 2021 is completed, reduced its own by 57% in its last presentation of results, on January 27, the entity closed the year with 230 million euros, a 57.6% less. These will be the last results of both separately before the integration of the two banking giants. An announcement that was already taken into account in the analysis for this study and therefore is included in the brand value of this ranking.

Banco Sabadell expects that it will also show declining numbers in its next presentation of results. Chaired by Josep Oliu, it falls 18 places (position 175) in the ranking, experiencing the largest drop among Spanish banks. This is the result of the loss of brand value, -28% lower than in 2020, the biggest drop of the group of 9 national banks in the ranking.

Santander and BBV are our most international representation. Included among the 500 most valuable brands in the world in the Brand Finance Global 500 2021 ranking presented on January 26. The two largest in the sector share a loss of -23% of their brand values. However, in terms of brand strength, BBVA’s scenario is superior. Santander lost -0.5 points (74.6) and BBVA increased in strength 0.6 points to 85.2. It is the strongest Spanish bank.

We have a new member this year, Ibercaja , who with a brand strength of 57.7 is placed 424 in the ranking. The greatest decrease in this indicator is recorded by KutxaBank, which loses 3 points in strength and falls 14 places to 288.

The banking sector as a whole faces a difficult short-medium-term future.

In addition to starting from a difficult situation due to the low levels of profitability in the sector, banks are seeing increased pressure as governments and central banks around the world continue to try to stimulate economic growth: through large aid packages , the reduction of interest rates and the relaxation of regulation in the banking sector. And add to this the increasing probability of multiple credit defaults, companies and consumers struggling to get out of the pandemic.

Teresa de Lemus, Managing Director of Brand Finance Spain: “Unlike their roles as instigators in the past, banking brands could now become the saviors of the global economy helping to overcome the impact of the pandemic.”

This role change has led to a change in the perception of banking. Favorable opinions among consumers are on the rise, and industry brand reputation indicators rise significantly for the first time since the financial crisis

according to the Global Brand Equity Monitor study by Brand Finance.

This improvement in the perception of the banking sector is reflected in the Brand Strength indicator (BSI), which increases 2.2 points on average among the 67 Global 500 brands and 1 point in the current sector ranking (of the 66.5 out of 100 in 2020 to 66.4 out of 100 in 2021) among the 500 in this report despite the drop in brand value.

Banking and telecommunications brands have the lowest results in

reputation and trust in many markets, especially the latter. Although its demand increased, like other sectors during the pandemic, when connectivity became vital, mistrust has eroded considerably.

Effect of the pandemic on the banking sector

As governments struggle to stimulate economic growth in the face of the current global health crisis, profits and interest rates in the banking sector suffer. C Banks learn the lesson and work their brand and reputation to overcome Covid-19 almost two-thirds of the 500 most valuable banking brands in the world have registered losses in value d Banks learn the lesson and work their brand and reputation to overcome Covid- 19e mark, according to our latest report.

The industry has seen a dramatic recession in the last two years compared to the performance of previous years. The total value of the brands in the annual Brand Finance Banking 500 ranking increased by 10% in 2018 to 0.9 billion euros to 1 trillion euros and 15% in 2019 (1.12 billion euros), in 2020 It lost value falling to 0.8 trillion euros.

The economic impact of the COVID-19 pandemic is noticeable, and the forecast for global GDP is for a reduction of more than 4%, which would show the largest global recession since World War II.

According to our analysts, of the 100 brands that lost the most brand value during each recession, 74 were banks. On the other hand, there were also banks 30 of the 100 brands that have overcome a recession with the most success.

In addition to calculating brand equity, Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics that assess marketing investment, stakeholder equity, and business performance. Along with revenue forecasts, brand strength is a crucial driver of brand equity. Banks with a Brand Strength Index (BSI) below 60 points out of 100 experienced an average decrease in brand value of 20%, while banks with a BSI score above 70, the average drop in brand value was only 8%, which shows how important it is for banking brands to have stronger brands than their competitors during an economic downturn.

Teresa de Lemus, Managing Director of Brand Finance Spain : “Financial institutions were the main culprits in the latest financial collapse; This time they present themselves as agents capable of helping people overcome the repercussions of COVID-19. “

43 of the 67 Global 500 banking brands lose value

Of the 67 most valuable banking brands in the world included in the Brand Finance Global 500, 43 have declined in brand value year over year. The sum of the brand value of all of them decreased -68,000 million euros, from 818.4 billion in 2020 to 750.4 billion in 2021. This decrease in the brand value of the banking sector reflects the situation in the that many banks are found as a direct consequence of the COVID-19 pandemic.

In particular, Sber has increased its strength and is positioned as the strongest banking brand in the world, increasing its score in the Brand Strength Index (BSI) to 92.0 out of 100. However, Sber has recently announced a change in the form in which it is positioning its brand, seeking to use the trust and reputation that it has accumulated over so many years among Russian consumers, to move into lucrative new spaces such as TV broadcasting, self-driving cars and cloud services.

In the short term, organic brand value growth can be difficult to achieve. One way to see future growth in brand equity in the industry is through mergers and acquisitions.

Many of the large multinational banks have much stronger balance sheets than during the global financial crisis and may be trying to acquire smaller or struggling brands in their struggle to increase market share at a time of simplified banking environment. We have seen it recently in Spain, first with the acquisition of Popular by Banco Santander and more recently with the merger of CaixaBank and Bankia.

Chinese banks dominate the sector

Chinese banks maintain dominance in the Brand Finance Banking 500 2021 ranking, representing a third of the total brand value and seven of the ten that have grown the most in brand value. Chinese banks have been largely impervious to the problems plaguing their competitors in other parts of the world: while two-thirds of the brands in the ranking have experienced losses, Chinese banks recorded healthy growth in average brand value 3%. This is largely due to China’s timely and effective response to COVID-19, which included regulatory policy adjustments for asset management, wealth management and interbank, as well as increased investment in digitization.

Despite a 15% drop in brand value to € 61.9 billion, ICBC remains the most valuable banking brand in the world. As the largest bank in China, ICBC continues to do well with consumers, regardless of the decline in the bank’s brand value due to the negative impact the pandemic has had on the performance of its investment portfolio. However, the brand maintains a healthy lead ahead of China Construction Bank (-10% and a value of 50.7 billion) and the Agricultural Bank of China (-8% less and a value of 45.2 billion), They occupy the second and third place in the ranking, respectively.

China Guangfa Bank is also a notable injection into the country’s portfolio, entering the Brand Finance Banking 500 2021 ranking for the first time at an impressive 84th position and valued at 2.8 billion euros. The Hong Kong Monetary Authority recently granted China Guangfa Bank a banking license, expanding its footprint outside of mainland China.

5 US banks in the top ten

US banks represent almost a quarter of the total brand value of the ranking: the sum of the brand value of the 74 banks in the country reached 233.9 billion euros. Five US brands are in the top 10: Bank of America (down -13% of the value of 27.9 billion), Citi (down -8% to 27.4 billion), Wells Fargo (down -27% and has a value of 27 billion), Chase (-13% less to 24.5 billion). Bank of America remains the most valuable banking brand in the United States and ranks fifth overall, and JP Morgan is the only brand in the top 10 that increases brand equity.

Wells Fargo currently has the lowest reputation rating score of any bank in the United States. It experienced the biggest drop in brand equity, down two spots to seventh, and third among US banks.

Citi , the third-largest U.S. bank by assets, has become the strongest retail bank in the United States with a Brand Strength Index score of 80.7 out of 100 and a AAA brand rating (versus AA + of 2020). Citi has also moved up one place in the rankings to sixth, following a rapid rebound in profits in the third quarter of last year.

Experts set their eyes on Vietnam

Vietnam’s banking sector has seen the highest growth in brand value of any nation in the ranking, with an increase of 659 million euros (from 4.1 billion in 2020 to 4.7 billion in 2021 ). Vietnam’s ability to effectively control and restrict the effects of COVID-19 has enabled it to counteract the industry trend of declining brand equity. Internal reforms have strengthened the accountability of the Vietnamese financial sector, which has had the indirect effect of increasing not only revenues, but also the reputation and trust of brands. The sum of the value of Vietnamese banks during the last 5 years shows a brand value growth of 753%, the second most important national growth in the ranking.

With an increase of 148%, Union Bank of India is the fastest growing banking brand.

The Union Bank of India experienced the largest growth of the year, growing 148% to 1,028 million euros while climbing 128 positions to 169.

The merger between Andhra Bank and Corporation Bank is primarily responsible for this growth, understood as part of a national effort to consolidate the banking space in India. This success is also reflected at the national level. Besides China, India was the only nation among the top 10 countries with the highest brand value in the ranking that has seen growth in its brand. Among all brands they are up 3% this year.

The banks that stand out

While some of the world’s largest banks have failed during the pandemic, 23 newcomers have joined the 2021 ranking, hailing from Europe, Asia, the United States and South America.

The one that joins in the highest position is Truist at position 36, with a brand value of 6.8 billion euros. Formed in 2019, as a result of the merger between BB&T and SunTrust , they were ranked 68th and 86th respectively in the 2019 rankings, with a combined brand value of € 5.9 billion ($ 7.2 billion). . Teresa de Lemus, Managing Director of Brand Finance Spain : “This merger is another example of the power of rebranding and a careful brand strategy, which shows that brands can be revitalized even in the face of a global crisis.”

Sber surpasses BCA and is crowned the strongest banking brand in the sector

Sber has grown its brand strength year over year to become the strongest brand in the Brand Finance Banking 500 2021 ranking and the third strongest brand in the world across all sectors in the Brand Finance Global 500 , with a Strength Index of Brand (BSI) of 92.0 out of 100 and a coveted AAA + rating.

As the largest bank in Russia, Sber has benefited from its brand stability and high levels of customer loyalty. Both driven by the recent brand change carried out with the aim of consolidating its melting pot of services, which includes the banking, health and logistics branches, among others. Sber is poised for further success as the company has announced that it will continue to invest in its brand in the coming year, which is likely to increase its strength score further.

In market research conducted by Brand Finance, Sber consistently outperforms its competitors in reputation and familiarity – it is widely known, always on top of mind, and well regarded. As a result, the recommendation is high. The bank offers, in the eyes of consumers, the best offer available physically and online, which are solid bases to increase the strength of the brand.

Despite this success, Sber is not exempt from the problems stemming from the COVID-19 pandemic. The decline in brand value in local currency terms has been exacerbated by increased risk in the Russian economy, following the mid-year collapse of the oil price and the subsequent weakening of the Russian ruble, which ended in a fall in the general sectoral ranking of -33% to the value of 7.9 billion euros.

As the second strongest brand in the ranking, Indonesia’s BCA has maintained its strength score of 91.6 out of 100 and is the only brand, other than Sber, that has received an elite brand strength rating of AAA +. It remains one of the largest banks in the ASEAN region and has the highest market capitalization value on the Indonesian Stock Exchange.

South Africa brings to the ranking the third strongest banking brand this year, Capitec Bank , which has maintained its BSI score of 89.2 out of 100 and AAA rating. Surpassing 15 million clients as of December 2020, Capitec has more clients than any other South African bank, thanks to its excellent customer service and personalized experience. The South African brand, First National Bank , in fourth place in the world strength ranking, is also the most valuable bank in all of Africa with a brand value of 1,136 million euros (brand value drops -22%).

Access the Brand Finance Banking 500 2021 report here

Every year, Brand Finance tests 5,000 of the largest brands, assessing their strength and quantifying their value, and publishes nearly 100 reports, ranking brands across sectors and countries. The world’s 500 most valuable banking brands are included in the Brand Finance Banking 500 2021 report .

The full Brand Finance Banking 500 2021 rankings, additional ideas, tables, graphs, more information on the methodology, as well as definitions of key terms can be found in the report.

Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand on the open market. Brand strength is the effectiveness of a brand’s performance on intangible measures relative to its competitors.

About Brand Finance

Brand Finance is the leading independent, international consulting firm in brand valuation and strategy, with offices in 20 countries. We create bridges between the areas of marketing and finance. We provide clarity to marketers, brand owners and investors when quantifying the financial value of a brand. For our experience in strategy; branding; market research; Visual identity; finance; Tax aspects and intellectual property, at Brand Finance we support the client to make the right decisions that optimize the value of a brand and the entire company by building bridges between marketing and finance.

Every year, the independent brand valuation consultancy Brand Finance values ​​the most important brands in the world. More details on the methodology and terminology, as well as the definitions of terms can be found on our Brand Finance website . Brand Finance collaborated in the development of the international standard on financial valuation of brands, ISO 10668, as well as in the recently approved standard on brand assessment, ISO 20671. Brand Finance is under the ICAEW regulations as a public accounting firm and is the first consulting firm in brand valuation to be part of the international committee on valuation standards, IVSC.

Methodology

Brand definition

The brand is defined as an intangible asset related to marketing that includes, among others, names, terms, signs, symbols, logos and designs, intended to identify goods, services or entities, creating images and distinctive associations in the minds of the parties interested. , thus generating economic benefits.

Brand value

Brand equity refers to the present value of earnings specifically related to brand reputation. Organizations own and control these profits by owning trademark rights.

All brand valuation methodologies are essentially trying to identify this, although the approach and assumptions differ. As a result, the published brand values ​​may be different.

These differences are similar to the way that equity analysts provide business valuations that are different from each other. The only way to discover “real” value is by looking at what people actually pay.

As a result, Brand Finance always incorporates a review of what brand users actually pay for brand use in the form of brand royalty agreements, which are found in more or less every sector of the world.

This is sometimes referred to as the “Royalty Relief” methodology and is by far the most widely used approach to brand valuations as it is grounded in reality.

It is the foundation of a public ranking, but we always augment it with a real understanding of people’s perceptions and their effects on demand, from our market research database on 3,000+ brands in 30+ markets.

Brand valuation methodology

For our ratings, Brand Finance uses the simplest and easiest-to-understand method possible to help readers understand, gain confidence, and actively use brand ratings.

Brand Finance calculates the values ​​of brands in their rankings using the Royalty Relief approach, a brand valuation method that meets the industry standards set out in ISO 10668.

Our evaluation of the Brand Strength Index or Brand Strength Index, a comprehensive scorecard of brand-related measures, also complies with ISO standards (ISO 20671) and works as a predictive tool for future changes in brand value. and a dashboard to help companies improve marketing.

We do this in the following four steps:

  • Brand impact. We review what brands already pay in royalty agreements. This is augmented by an analysis of how brands impact profitability in the sector versus generic brands. This results in a range of possible royalties that could be charged in the industry by brands (for example, a range of 0% to 2% of revenue)
  • Brand strength. We adjust the rate higher or lower for brands by analyzing Brand Strength. We analyze the strength of the brand by looking at three main pillars: “Income”, which are activities that support the future strength of the brand; “Fairness”, which are actual current insights from our market research and other data partners; “Product”, which are brand-related performance measures, such as market share. Each brand is assigned a Brand Strength Index (BSI) score of 100, which feeds into the calculation of brand equity. Based on the score, each brand is assigned a corresponding brand rating up to AAA + in a format similar to a credit rating.
  • Brand impact x Brand strength. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
  • Forecast of the calculation of the brand value. We determine brand-specific revenue as a proportion of parent company’s revenue attributable to the brand in question, and we forecast that revenue by analyzing historical revenue, capital analyst forecasts, and economic growth rates. We then apply the royalty rate to the expected revenue to derive the brand’s revenue and apply the relevant valuation assumptions to arrive at a discounted present value after tax that is equal to the brand’s value.

2020 sets the stage for a decade of unprecedented changes. 2020 has been a year that saw the speed of change increase by factors no one could have expected back in January. Businesses pivoted literally from one day to the next like never before. Organizations set aside hesitations and made bold decisions focusing on innovative technologies and strategies to respond to the crisis. Having done it all year to ensure survival, we expect to see businesses continue to move fast and implement decisions at lightning speed.

According to a research lead by Gartner showed that organizations are moving many IT automation technologies from evaluation to deployment as they prepare to respond to the rapid pace of digitalization. In 2020, 45% of all IT automation technologies are in deployment with the remaining 55% in pilot.

IDC’s research says 65% of global GDP will be digitalized by 2022, driving $6.8 trillion of IT  spending from 2020 to 2023.

So what will we see in 2021? Globant has created the report ‘Predictions 2021: An explosive mix of innovative technology and new business models’. In this report, Globant’s top executives weigh in with their predictions for the next 12 months and beyond, based on thousands of hours of work and constant discussions with our clients around the world.

These are:

  • There will be a surge in new, ingenious, and transformative business models.
  • Creating a high-performance work culture will require new skills and tools.
  • Powerful, holistic experiences will differentiate those businesses that survive and thrive, and those that die.
  • The rise of resilient, yet adaptive, organizations.
  • Businesses will shift to hyper automation and adopt tools to dramatically accelerate software development.

We hope these predictions will provide you with insights and ideas to build the foundation for long-term success.

Download the white paper to discover more about what’s in store for 2021.

Management control, the key to business success
COURSE BONUSABLE BY THE FUNDAE

This introductory course will help financial professionals to take a first step towards the implementation of a Management Planning and Control structure in their company based on financial accounting and business information. From the identification of essential indicators to monitor the business, to the implementation of management accounting that allows obtaining a simple and effective scorecard.

Course duration
5-hour course from Monday to Thursday from 2:45 p.m. to 4:00 p.m. with 40% theory and 60% practical.
Dynamic learning
Students will be able to have the documentation and recording of the course as well as interact with the teacher
Program
1. How to implement a control structure in an SME

• Main challenges in SMEs to implement a control structure.
• How to orient the accounting information towards a management control tool.
• Differentiate the strategic plan from the operational plan.
• Know how to monitor the business with a long-term perspective.

2. Transform financial accounting into management accounting

• Differences between financial accounting and management accounting.
• Management control in times of crisis.
• Management accounting as an essential tool for control.
• How to apply management accounting to evaluate departments, products, profitability.
• The budgeting process of an SME.

3. The balanced scorecard

• The usefulness of having a simple and effective scorecard.
• How to build a scorecard: selection of financial and non-financial indicators.
• Examples applied to commercial and industrial SMEs.

LVMH completes the acquisition of Tiffany & Co

LVMH completes the acquisition of Tiffany & Co.

LVMH Moët Hennessy Louis Vuitton SE, the world’s leading luxury products group, announced today that it has completed the acquisition of Tiffany & Co. (NYSE: TIF), the global luxury jeweler. The acquisition of this iconic US jeweler will deeply transform LVMH’s Watches & Jewelry division and complement LVMH’s 75 distinguished Maisons.

Bernard Arnault, Chairman and Chief Executive Officer of LVMH, commented: “I am pleased to welcome Tiffany and all their talented employees in our Group. Tiffany is an iconic brand and a quintessential emblem of the global jewelry sector. We are committed to supporting Tiffany, a brand that is synonymous with love and whose Blue Box is revered around the world, with the same dedication and passion that we have applied to each of our prestigious Maisons over the years. We are optimistic about Tiffany’s ability to accelerate its growth, innovate and remain at the forefront of our discerning customers’ most cherished life achievements and memories. I would like to thank Alessandro Bogliolo and his team for their dedication to Tiffany and their work over the past three years, especially during this challenging period.”

Tiffany Executive Leadership

In conjunction with the closing of the transaction, LVMH has announced several leadership appointments at Tiffany:

  • Anthony Ledru, previously Executive Vice President, Global Commercial Activities at Louis Vuitton and formerly Senior Vice President of North America at Tiffany, becomes Chief Executive Officer of Tiffany, effective immediately.
  • Alexandre Arnault, previously Chief Executive Officer of high-quality luggage company RIMOWA, becomes Executive Vice President, Product and Communications of Tiffany, effective immediately.
  • Michael Burke, the Chairman and Chief Executive Officer of Louis Vuitton, will become Chairman of Tiffany Board of Directors.

Leadership Transitions

  • Alessandro Bogliolo, the current Chief Executive Officer of Tiffany, has agreed to remain with the company to facilitate the transition through January 22, 2021, after which time he will depart the company.
  • Reed Krakoff, Chief Artistic Director, and Daniella Vitale, Executive Vice President and Chief Brand Officer of Tiffany, will depart Tiffany after a short transition of responsibilities.

Anthony Ledru, Chief Executive Officer of Tiffany, said: “I am delighted to re-join Tiffany, the most iconic American luxury brand which I have long admired. The inclusiveness and optimism upon which Tiffany was founded resonate now more than ever. I also come back to a Maison that is at the forefront of the environmental and sourcing standards in its industry. Going forward, I have deep confidence in LVMH’s commitment to protect the brand, drive its growth strategy and apply the highest standards of retail excellence to Tiffany. The potential ahead is limitless, and I look forward to writing this next deeply promising chapter, along with the 14,000 Tiffany employees around the world.”

Alessandro Bogliolo, former Chief Executive Officer of Tiffany, commented: “I am honored to have led Tiffany as a public company and contributed with such a talented team to further strengthening Tiffany’s iconic standing. Thanks to the hard work and commitment of all our team members, Tiffany is ideally positioned to continue its growth. I would also like to take this moment to thank Reed and Daniella for having led the creative vision, digital and marketing direction for the company. We can all be proud of what we achieved together over the past three years and, I am convinced that Tiffany will thrive under LVMH leadership. I look forward to ensuring a smooth transition to Anthony and his team and wish him and all the Tiffany community continued success in the years to come.”

Leadership Biographies

  • Anthony Ledru has more than 20 years of experience in the luxury industry. He was the Executive Vice President of Global Commercial Activities at Louis Vuitton since 2017, which he joined three years before as President & Chief Executive Officer of Louis Vuitton Americas. Prior to that, he was Senior Vice President of North America at Tiffany & Co. between 2013 and 2014 and served as Global Vice President of Sales for Harry Winston International. He started his career in the luxury sector working for Cartier between 1999 and 2011, first in Latin America and then in the United States. where he was Vice President of Retail for the company’s North American business. Anthony Ledru holds a master’s degree from SKEMA Business School.
  • Alexandre Arnault has led RIMOWA since January 2017, after initiating and leading its acquisition by LVMH. His professional career began in the United States in strategic consulting, at McKinsey & Company, then in private equity at KKR in New York. He then joined LVMH and Groupe Arnault to focus on digital innovation. In this capacity, Alexandre Arnault participated in the definition and implementation of a strategy to address the challenges of the development of e-commerce in the high-quality products sector. Over the past four years, he has successfully repositioned RIMOWA and elevated its brand image. Alexandre Arnault graduated from École Telecom ParisTech and holds a master’s degree from École Polytechnique.

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SAN FRANCISCO–(BUSINESS WIRE)– Pinterest, Inc. (NYSE: PINS) today announced financial results for the quarter ended September 30, 2020.

  • Q3 revenue grew 58% year over year to $443 million.
  • Global Monthly Active Users (MAUs) grew 37% year over year to 442 million.
  • GAAP net loss was $(94) million for Q3. Adjusted EBITDA was $93 million.

“More than ever before, people are coming to Pinterest to get inspiration for their lives—everything from planning early for a socially distant Halloween to creating great home schools for their kids,” said Ben Silbermann, CEO and co-founder, Pinterest. “Our top priority is to continue making Pinterest home to the most inspiring and actionable content. This quarter we launched a set of tools to empower creators to show and share their ideas with people who are ready to act.”

“The strong momentum our business experienced in July continued throughout the rest of the third quarter. We’re extremely pleased with the broad based strength of our business, driven by recovering advertiser demand as well as positive returns from our investments in advertiser products and international expansion,” said Todd Morgenfeld, CFO and Head of Business Operations, Pinterest.

 

NY, USA – DECEMBER 26, 2019: Pinterest paper logo lies with envelope full of dollar bills and smartphone

Q3 2020 Financial Highlights

The following table summarizes our consolidated financial results (in thousands, except percentages, unaudited):

Three Months Ended September 30,

% Change

2020

2019

Revenue

$

442,616

$

279,703

58

%

Net loss

$

(94,220

)

$

(124,732

)

24

%

Non-GAAP net income*

$

87,164

$

5,960

1,362

%

Adjusted EBITDA*

$

93,042

$

3,871

2,304

%

Adjusted EBITDA margin*

21

%

1

%

For more information on these non-GAAP financial measures, please see “—About non-GAAP financial measures” and the tables under “—Reconciliation of GAAP to non-GAAP financial results” included at the end of this release.

Q3 2020 Other Highlights

The following table sets forth our revenue, MAUs and average revenue per user (“ARPU”) based on the geographic location of our users (in millions, except ARPU and percentages, unaudited):

Three Months Ended September 30,

% Change

2020

2019

Revenue – Global

$

443

$

280

58

%

Revenue – United States

$

374

$

251

49

%

Revenue – International

$

69

$

28

145

%

MAUs – Global

442

322

37

%

MAUs – United States

98

87

13

%

MAUs – International

343

235

46

%

ARPU – Global

$

1.03

$

0.90

15

%

ARPU – United States

$

3.85

$

2.93

31

%

ARPU – International

$

0.21

$

0.13

66

%

Outlook

Our current expectation is that Q4 revenue will grow around 60% year over year, a modest acceleration compared to our growth rate in Q320. We continue to navigate uncertainty given the ongoing COVID-19 pandemic and other factors.

We’re also operating in a more remote working environment while maintaining investments in the long-term strategic priorities of the company. We continue to evaluate our spending as the situation evolves.

We intend to provide further detail on our outlook during the conference call.

Webcast and conference call information

A live audio webcast of our third quarter 2020 earnings release call will be available at investor.pinterestinc.com. The call begins today at 1:30 PM (PT) / 4:30 PM (ET). We have also posted to our investor relations website a letter to shareholders. This press release, including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, letter to shareholders and slide presentation are also available. A recording of the webcast will be available at investor.pinterestinc.com for 90 days.

We have used, and intend to continue to use, our investor relations website at investor.pinterestinc.com as a means of disclosing material nonpublic information and for complying with our disclosure obligations under Regulation FD.

Forward-looking statements

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, about us and our industry that involve substantial risks and uncertainties, including, among other things, statements about our future operational and financial performance. Words such as “believe,” “project,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “plan” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors including: uncertainty regarding the duration and scope of the coronavirus referred to as COVID-19 pandemic; actions governments and businesses take in response to the pandemic, including actions that could affect levels of advertising activity; the impact of the pandemic and actions taken in response to the pandemic on global and regional economies and economic activity; the pace of recovery when the COVID-19 pandemic subsides; general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; the scope and impact of the recent outbreak of COVID-19 on our planned investments, operations, expenses, revenue, cash flow, liquidity and users; our ability to attract and retain Pinners and engagement levels; our ability to provide useful and relevant content; risks associated with new products and changes to existing products as well as other new business initiatives; our ability to maintain and enhance our brand and reputation; compromises in security; our financial performance and fluctuations in operating results; our dependency on internet search engines’ methodologies and policies; discontinuation, disruptions or outages in authentication by third-party login providers; changes by third-party login providers that restrict our access or ability to identify users; competition; our ability to scale our business and revenue model; our reliance on advertising revenue and our ability to attract and retain advertisers and effectively measure advertising campaigns; our ability to effectively manage growth and expand and monetize our platform internationally; our lack of operating history and ability to attain and sustain profitability; decisions that reduce short-term revenue or profitability or do not produce expected long-term benefits; risks associated with government actions, laws and regulations that could restrict access to our products or impair our business; litigation and government inquiries; privacy, data and other regulatory concerns; our ability to protect our intellectual property; real or perceived inaccuracies in metrics related to our business; disruption, degradation or interference with the hosting services we use and infrastructure; our ability to attract and retain personnel; and the dual class structure of our common stock and its effect of concentrating voting control with stockholders who held our capital stock prior to the completion of our initial public offering. These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, which is available on our investor relations website at investor.pinterestinc.com and on the SEC website at www.sec.gov. Additional information will be made available in our Quarterly Report on Form 10-Q and other future reports that we may file with the SEC from time to time, which could cause actual results to vary from expectations. All information provided in this release and in the earnings materials is as of October 28, 2020. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.

About non-GAAP financial measures

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we use the following non-GAAP financial measures: Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP costs and expenses (including non-GAAP cost of revenue, research and development, sales and marketing, and general and administrative), non-GAAP income (loss) from operations, non-GAAP net income (loss) and non-GAAP net income (loss) per share. The presentation of these financial measures is not intended to be considered in isolation, as a substitute for or superior to the financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparative purposes. We compensate for these limitations by providing specific information regarding GAAP amounts excluded from these non-GAAP financial measures.

We define Adjusted EBITDA as net loss adjusted to exclude depreciation and amortization expense, share-based compensation expense, interest income, interest expense and other income (expense), net, provision for (benefit from) income taxes and, for the third quarter of 2020, a one-time payment for the termination of a future lease contract. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenue. Non-GAAP costs and expenses (including non-GAAP cost of revenue, research and development, sales and marketing, and general and administrative) and non-GAAP net income (loss) exclude amortization of acquired intangible assets, share-based compensation expense and, for the third quarter of 2020, a one-time payment for the termination of a future lease contract. Non-GAAP income (loss) from operations is calculated by subtracting non-GAAP costs and expenses from revenue. Non-GAAP net income per share is calculated by dividing non-GAAP net income by diluted weighted-average shares outstanding. We use Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP costs and expenses, non-GAAP income (loss) from operations, non-GAAP net income and non-GAAP net income per share to evaluate our operating results and for financial and operational decision-making purposes. We believe these non-GAAP financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the income and expenses they exclude. We also believe these non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to key metrics we use for financial and operational decision-making. We present these non-GAAP financial measures to assist potential investors in seeing our operating results through the eyes of management and because we believe these measures provide an additional tool for investors to use in comparing our operating results over multiple periods with other companies in our industry. There are a number of limitations related to the use of Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP costs and expenses, non-GAAP income (loss) from operations, non-GAAP net income and non-GAAP net income per share rather than net loss, net margin, total costs and expenses, loss from operations, net loss and net loss per share, respectively, the nearest GAAP equivalents. For example, Adjusted EBITDA excludes certain recurring, non-cash charges such as depreciation of fixed assets and amortization of acquired intangible assets, although these assets may have to be replaced in the future, and share-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense and an important part of our compensation strategy.

For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the tables under “—Reconciliation of GAAP to non-GAAP financial results” included at the end of this release.

Limitation of key metrics and other data

The numbers for our key metrics, which include our MAUs and ARPU, are calculated using internal company data based on the activity of user accounts. We define a monthly active user as an authenticated Pinterest user who visits our website, opens our mobile application or interacts with Pinterest through one of our browser or site extensions, such as the Save button, at least once during the 30-day period ending on the date of measurement. We present MAUs based on the number of MAUs measured on the last day of the current period. We define ARPU as our total revenue in a given geography during a period divided by the average of the number of MAUs in that geography during the period. We calculate average MAUs based on the average between the number of MAUs measured on the last day of the current period and the last day prior to the beginning of the current period. We calculate ARPU by geography based on our estimate of the geography in which revenue-generating activities occur. We use these metrics to assess the growth and health of the overall business and believe that MAUs and ARPU best reflect our ability to attract, retain, engage and monetize our users, and thereby drive revenue. While these numbers are based on what we believe to be reasonable estimates of our user base for the applicable period of measurement, there are inherent challenges in measuring usage of our products across large online and mobile populations around the world. In addition, we are continually seeking to improve our estimates of our user base, and such estimates may change due to improvements or changes in technology or our methodology.

PINTEREST, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

(unaudited)

September 30,

December 31,

2020

2019

ASSETS

Current assets:

Cash and cash equivalents

$

652,723

$

649,666

Marketable securities

996,392

1,063,679

Accounts receivable, net of allowances of $5,670 and $2,851 as of September 30, 2020 and December 31, 2019, respectively

339,274

316,367

Prepaid expenses and other current assets

44,537

37,522

Total current assets

2,032,926

2,067,234

Property and equipment, net

76,294

91,992

Operating lease right-of-use assets

164,803

188,251

Goodwill and intangible assets, net

13,814

14,576

Restricted cash

9,221

25,339

Other assets

3,980

5,925

Total assets

$

2,301,038

$

2,393,317

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

41,703

$

34,334

Accrued expenses and other current liabilities

147,946

141,823

Total current liabilities

189,649

176,157

Operating lease liabilities

150,162

173,392

Other liabilities

26,623

20,063

Total liabilities

366,434

369,612

Commitments and contingencies

Stockholders’ equity:

Class A common stock, $0.00001 par value, 6,666,667 shares authorized, 507,248 and 360,850 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively; Class B common stock, $0.00001 par value, 1,333,333 shares authorized, 107,995 and 209,054 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively

6

6

Additional paid-in capital

4,475,425

4,229,778

Accumulated other comprehensive income

2,063

647

Accumulated deficit

(2,542,890

)

(2,206,726

)

Total stockholders’ equity

1,934,604

2,023,705

Total liabilities and stockholders’ equity

$

2,301,038

$

2,393,317

PINTEREST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

Three Months Ended September 30,

2020

2019

Revenue

$

442,616

$

279,703

Costs and expenses:

Cost of revenue

112,844

83,520

Research and development

160,187

167,703

Sales and marketing

118,531

110,740

General and administrative

148,087

51,450

Total costs and expenses

539,649

413,413

Loss from operations

(97,033

)

(133,710

)

Interest income

2,896

9,837

Interest expense and other income (expense), net

(51

)

(1,056

)

Loss before provision for (benefit from) income taxes

(94,188

)

(124,929

)

Provision for (benefit from) income taxes

32

(197

)

Net loss

$

(94,220

)

$

(124,732

)

Net loss per share attributable to common stockholders, basic and diluted

$

(0.16

)

$

(0.23

)

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted

603,490

546,126

PINTEREST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Nine Months Ended September 30,

2020

2019

Operating activities
Net loss $

(336,164

)

$

(1,325,653

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization

29,174

19,496

Share-based compensation

234,801

1,265,581

Other

7,268

(3,296

)

Changes in assets and liabilities:
Accounts receivable

(25,667

)

12,331

Prepaid expenses and other assets

(6,184

)

(1,502

)

Operating lease right-of-use assets

31,835

21,746

Accounts payable

7,689

8,897

Accrued expenses and other liabilities

20,391

13,133

Operating lease liabilities

(35,013

)

(19,634

)

Net cash used in operating activities

(71,870

)

(8,901

)

Investing activities
Purchases of property and equipment and intangible assets

(14,032

)

(20,433

)

Purchases of marketable securities

(808,180

)

(527,899

)

Sales of marketable securities

174,042

93,389

Maturities of marketable securities

699,133

252,164

Other investing activities

316

Net cash provided by (used in) investing activities

51,279

(202,779

)

Financing activities
Proceeds from initial public offering, net of underwriters’ discounts and commissions

1,573,200

Proceeds from exercise of stock options, net

64,992

744

Shares repurchased for tax withholdings on release of restricted stock units

(56,894

)

(424,965

)

Payment of deferred offering costs and other financing activities

(1,750

)

(11,305

)

Net cash provided by financing activities

6,348

1,137,674

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(86

)

(182

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

(14,329

)

925,812

Cash, cash equivalents, and restricted cash, beginning of period

677,743

135,290

Cash, cash equivalents, and restricted cash, end of period $

663,414

$

1,061,102

Supplemental cash flow information
Accrued property and equipment $

3,952

$

7,174

Operating lease right-of-use assets obtained in exchange for operating lease liabilities $

14,030

$

41,399

Reconciliation of cash, cash equivalents and restricted cash to condensed consolidated balance sheets
Cash and cash equivalents $

652,723

$

1,033,871

Restricted cash included in prepaid expenses and other current assets

1,470

2,409

Restricted cash

9,221

24,822

Total cash, cash equivalents, and restricted cash $

663,414

$

1,061,102

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(in thousands, except per share amounts)

(unaudited)

Three Months Ended September 30,

2020

2019

Share-based compensation by function:

Cost of revenue

$

2,298

$

1,568

Research and development

61,357

83,539

Sales and marketing

11,958

21,243

General and administrative

16,019

23,938

Total share-based compensation

$

91,632

$

130,288

Amortization of acquired intangible assets by function:

Cost of revenue

$

94

$

94

General and administrative

158

310

Total amortization of acquired intangible assets

$

252

$

404

Reconciliation of total costs and expenses to non-GAAP costs and expenses:

Total costs and expenses

$

539,649

$

413,413

Share-based compensation

(91,632

)

(130,288

)

Amortization of acquired intangible assets

(252

)

(404

)

Termination of future lease contract

(89,500

)

Total Non-GAAP costs and expenses

$

358,265

$

282,721

Reconciliation of net loss to non-GAAP net income:

Net loss

$

(94,220

)

$

(124,732

)

Share-based compensation

91,632

130,288

Amortization of acquired intangible assets

252

404

Termination of future lease contract

89,500

Non-GAAP net income

$

87,164

$

5,960

Weighted-average shares outstanding for net loss per share, basic and diluted

603,491

546,126

Weighted-average dilutive securities(1)

72,803

104,594

Diluted weighted-average shares outstanding for Non-GAAP net income per share

676,294

650,720

Net loss per share

$

(0.16

)

$

(0.23

)

Non-GAAP net income per share

$

0.13

$

0.01

___________

(1)

Gives effect to potential common stock instruments such as stock options, unvested restricted stock units and unvested restricted stock awards.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(in thousands, except per share amounts)

(unaudited)

Three Months Ended September 30,

2020

2019

Reconciliation of net loss to Adjusted EBITDA:

Net Loss

$

(94,220

)

$

(124,732

)

Depreciation and amortization

8,943

7,293

Share-based compensation

91,632

130,288

Interest income

(2,896

)

(9,837

)

Interest expense and other (income) expense, net

51

1,056

Provision for (benefit from) income taxes

32

(197

)

Termination of future lease contract

89,500

Adjusted EBITDA

$

93,042

$

3,871

Investor relations:
Doug Clark
ir@pinterest.com

Microsoft Cloud Strength Fuels First Quarter Results

REDMOND, Wash. — October 27, 2020 — Microsoft Corp. today announced the following results for the quarter ended September 30, 2020, as compared to the corresponding period of last fiscal year:

  • Revenue was $37.2 billion and increased 12%
  • Operating income was $15.9 billion and increased 25%
  • Net income was $13.9 billion and increased 30%
  • Diluted earnings per share was $1.82 and increased 32%

“The next decade of economic performance for every business will be defined by the speed of their digital transformation,” said Satya Nadella, chief executive officer of Microsoft. “We are innovating across our full modern tech stack to help our customers in every industry improve time to value, increase agility, and reduce costs.”

 

“Demand for our cloud offerings drove a strong start to the fiscal year with our commercial cloud revenue generating $15.2 billion, up 31% year over year,” said Amy Hood, executive vice president and chief financial officer of Microsoft. “We continue to invest against the significant opportunity ahead of us to drive long-term growth.”

Business Highlights

Revenue in Productivity and Business Processes was $12.3 billion and increased 11%, with the following business highlights:

  • Office Commercial products and cloud services revenue increased 9% driven by Office 365 Commercial revenue growth of 21% (up 20% in constant currency)
  • Office Consumer products and cloud services revenue increased 13% and Microsoft 365 Consumer subscribers increased to 45.3 million
  • LinkedIn revenue increased 16%
  • Dynamics products and cloud services revenue increased 19% (up 18% in constant currency) driven by Dynamics 365 revenue growth of 38% (up 37% in constant currency)

Revenue in Intelligent Cloud was $13.0 billion and increased 20% (up 19% in constant currency), with the following business highlights:

  • Server products and cloud services revenue increased 22% (up 21% in constant currency) driven by Azure revenue growth of 48% (up 47% in constant currency)

Revenue in More Personal Computing was $11.8 billion and increased 6%, with the following business highlights:

  • Windows OEM revenue declined 5%
  • Windows Commercial products and cloud services revenue increased 13% (up 12% in constant currency)
  • Xbox content and services revenue increased 30%
  • Surface revenue increased 37% (up 36%in constant currency)
  • Search advertising revenue excluding traffic acquisition costs decreased 10% (down 11% in constant currency)

Microsoft returned $9.5 billion to shareholders in the form of share repurchases and dividends in the first quarter of fiscal year 2021, an increase of 21% compared to the first quarter of fiscal year 2020.

Business Outlook

Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Quarterly Highlights, Product Releases, and Enhancements 

Every quarter Microsoft delivers hundreds of products, either as new releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge.

Here are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities.

Responding to COVID-19

At Microsoft, our focus remains on ensuring the safety of our employees, striving to protect the health and well-being of the communities in which we operate, and providing technology and resources to our customers and partners to help them do their best work while remote. Additional information about Microsoft’s COVID-19 response can be found here.

Environmental, Social, and Governance (ESG)

To better execute on Microsoft’s mission, we focus our Environmental, Social, and Governance (ESG) efforts where we can have the most positive impact. To learn more about our latest initiatives and priorities, please visit our investor relations ESG website.

Webcast Details

Satya Nadella, chief executive officer, Amy Hood, executive vice president and chief financial officer, Alice Jolla, chief accounting officer, Keith Dolliver, deputy general counsel, and Michael Spencer, general manager of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. The webcast will be available for replay through the close of business on October 27, 2021.

 

 

Constant Currency

Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

Financial Performance Constant Currency Reconciliation

  Three Months Ended September 30,
 ($ in millions, except per share amounts) Revenue Operating Income Net Income Diluted Earnings per Share
2019 As Reported $33,055 $12,686 $10,678 $1.38
2020 As Reported $37,154 $15,876 $13,893 $1.82
Percentage Change Y/Y 12% 25% 30% 32%
Constant Currency Impact $108 $71 $231 $0.03
Percentage Change Y/Y Constant Currency 12% 25% 28% 30%

Segment Revenue Constant Currency Reconciliation

  Three Months Ended September 30,
 ($ in millions) Productivity and Business Processes Intelligent Cloud More Personal Computing
2019 As Reported $11,077 $10,845 $11,133
2020 As Reported $12,319 $12,986 $11,849
Percentage Change Y/Y 11% 20% 6%
Constant Currency Impact $32 $42 $34
Percentage Change Y/Y Constant Currency 11% 19% 6%

Selected Product and Service Revenue Constant Currency Reconciliation           

  Three Months Ended September 30, 2020
Percentage Change Y/Y (GAAP) Constant Currency Impact Percentage Change Y/Y Constant Currency
Office Commercial products and cloud services 9% 0% 9%
Office 365 Commercial 21% (1)% 20%
Office Consumer products and cloud services 13% 0% 13%
LinkedIn 16% 0% 16%
Dynamics products and cloud services 19% (1)% 18%
Dynamics 365 38% (1)% 37%
Server products and cloud services 22% (1)% 21%
Azure 48% (1)% 47%
Windows OEM (5)% 0% (5)%
Windows Commercial products and cloud services 13% (1)% 12%
Xbox content and services 30% 0% 30%
Surface 37% (1)% 36%
Search advertising excluding traffic acquisition costs (10)% (1)% (11)%

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

 

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

  • intense competition in all of our markets that may lead to lower revenue or operating margins;
  • increasing focus on cloud-based services presenting execution and competitive risks;
  • significant investments in products and services that may not achieve expected returns;
  • acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;
  • impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;
  • cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;
  • disclosure and misuse of personal data that could cause liability and harm to our reputation;
  • the possibility that we may not be able to protect information stored in our products and services from use by others;
  • abuse of our advertising or social platforms that may harm our reputation or user engagement;
  • the development of the internet of things presenting security, privacy, and execution risks;
  • issues about the use of artificial intelligence in our offerings that may result in competitive harm, legal liability, or reputational harm;
  • excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;
  • quality or supply problems;
  • the possibility that we may fail to protect our source code;
  • legal changes, our evolving business model, piracy, and other factors may decrease the value of our intellectual property;
  • claims that Microsoft has infringed the intellectual property rights of others;
  • claims against us that may result in adverse outcomes in legal disputes;
  • government litigation and regulatory activity relating to competition rules that may limit how we design and market our products;
  • potential liability under trade protection, anti-corruption, and other laws resulting from our global operations;
  • laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage;
  • additional tax liabilities;
  • damage to our reputation or our brands that may harm our business and operating results;
  • exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange;
  • uncertainties relating to our business with government customers;
  • adverse economic or market conditions that may harm our business;
  • catastrophic events or geo-political conditions, such as the COVID-19 pandemic, that may disrupt our business; and
  • the dependence of our business on our ability to attract and retain talented employees.

For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/en-us/investor.

All information in this release is as of September 30, 2020. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777,rrt@we-worldwide.com

For more information, financial analysts and investors only:

Michael Spencer, General Manager, Investor Relations, (425) 706-4400

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. Pacific time conference call with investors and analysts, is available at http://www.microsoft.com/en-us/investor.



MICROSOFT CORPORATION

INCOME STATEMENTS

(In millions, except per share amounts) (Unaudited)

Three Months Ended

September 30,

  2020   2019
Revenue:
   Product  $15,803  $15,768
   Service and other 21,351 17,287
      Total revenue 37,154 33,055
Cost of revenue:
   Product 3,597 3,305
   Service and other 7,405 7,101
      Total cost of revenue 11,002 10,406
      Gross margin 26,152 22,649
Research and development 4,926 4,565
Sales and marketing 4,231 4,337
General and administrative 1,119 1,061
Operating income 15,876 12,686
Other income, net 248 0
Income before income taxes 16,124 12,686
Provision for income taxes 2,231 2,008
Net income  $13,893  $10,678
Earnings per share:
   Basic  $1.84  $1.40
   Diluted  $1.82  $1.38
Weighted average shares outstanding:
   Basic 7,566 7,634
   Diluted 7,637   7,710

 

 

COMPREHENSIVE INCOME STATEMENTS

(In millions) (Unaudited)

Three Months Ended

September 30,

  2020   2019
Net income  $13,893  $10,678
Other comprehensive income (loss), net of tax:
  Net change related to derivatives 4 (2)
  Net change related to investments (201) 577
  Translation adjustments and other 111 (296)
    Other comprehensive income (loss) (86) 279
Comprehensive income  $13,807  $10,957

 

 

BALANCE SHEETS
(In millions) (Unaudited)
  September 30,

2020

  June 30,

2020

Assets
Current assets:
   Cash and cash equivalents  $17,205  $13,576
   Short-term investments 120,772 122,951
      Total cash, cash equivalents, and short-term investments 137,977 136,527
   Accounts receivable, net of allowance for doubtful
accounts of $610 and $788
22,851 32,011
   Inventories 2,705 1,895
   Other current assets 13,544 11,482
      Total current assets 177,077 181,915
Property and equipment, net of accumulated
depreciation of $45,417 and $43,197
47,927 44,151
Operating lease right-of-use assets 9,047 8,753
Equity investments 3,103 2,965
Goodwill 43,890 43,351
Intangible assets, net 6,923 7,038
Other long-term assets 13,034 13,138
            Total assets  $301,001  $301,311
Liabilities and stockholders’ equity
Current liabilities:
   Accounts payable  $12,509  $12,530
   Current portion of long-term debt 6,497 3,749
   Accrued compensation 5,714 7,874
   Short-term income taxes 2,384 2,130
   Short-term unearned revenue 33,476 36,000
   Other current liabilities 9,476 10,027
      Total current liabilities 70,056 72,310
Long-term debt 57,055 59,578
Long-term income taxes 28,204 29,432
Long-term unearned revenue 2,829 3,180
Deferred income taxes 187 204
Operating lease liabilities 7,753 7,671
Other long-term liabilities 11,525 10,632
         Total liabilities 177,609 183,007
Commitments and contingencies
Stockholders’ equity:
   Common stock and paid-in capital – shares
authorized 24,000; outstanding 7,564 and 7,571
81,089 80,552
   Retained earnings 39,193 34,566
   Accumulated other comprehensive income 3,110 3,186
         Total stockholders’ equity 123,392 118,304
            Total liabilities and stockholders’ equity  $301,001  $301,311

 

CASH FLOWS STATEMENTS
(In millions) (Unaudited)
Three Months Ended

September 30,

  2020   2019
Operations
Net income  $13,893  $10,678
Adjustments to reconcile net income to net cash from operations:
  Depreciation, amortization, and other 2,645 2,971
  Stock-based compensation expense 1,456 1,262
  Net recognized losses (gains) on investments and derivatives (128) 11
  Deferred income taxes (11) (177)
  Changes in operating assets and liabilities:
    Accounts receivable 8,843 10,090
    Inventories (808) (561)
    Other current assets (54) (438)
    Other long-term assets (62) (333)
    Accounts payable 315 (547)
    Unearned revenue (3,064) (2,892)
    Income taxes (983) (3,336)
    Other current liabilities (2,951) (3,320)
    Other long-term liabilities 244 410
        Net cash from operations 19,335 13,818
Financing
Repayments of debt 0 (2,500)
Common stock issued 545 427
Common stock repurchased (6,743) (4,912)
Common stock cash dividends paid (3,856) (3,510)
Other, net (235) 286
        Net cash used in financing (10,289) (10,209)
Investing
Additions to property and equipment (4,907) (3,385)
Acquisition of companies, net of cash acquired,
and purchases of intangible and other assets
(481) (462)
Purchases of investments (14,580) (23,390)
Maturities of investments 14,266 19,082
Sales of investments 2,414 6,379
Other, net (2,083) 0
        Net cash used in investing (5,371) (1,776)
Effect of foreign exchange rates on cash and cash equivalents (46) (72)
Net change in cash and cash equivalents 3,629 1,761
Cash and cash equivalents, beginning of period 13,576 11,356
Cash and cash equivalents, end of period  $17,205  $13,117
SEGMENT REVENUE AND OPERATING INCOME
(In millions) (Unaudited)
       
  Three Months Ended

September 30,

 
  2020   2019
Revenue      
Productivity and Business Processes  $12,319    $11,077
Intelligent Cloud 12,986   10,845
More Personal Computing 11,849   11,133
  Total  $37,154    $33,055
Operating Income      
Productivity and Business Processes  $5,706    $4,782
Intelligent Cloud 5,422   3,889
More Personal Computing 4,748   4,015
  Total  $15,876    $12,686

 

Coca-Cola Reports Third Quarter 2020 Results, Provides Update on Strategic Actions to Emerge Stronger from the Pandemic

Global Unit Case Volume Declined 4%

Net Revenues Declined 9%;
Organic Revenues (Non-GAAP) Declined 6%

Operating Income Declined 8%; Comparable Currency
Neutral Operating Income (Non-GAAP) Grew 7%

Operating Margin Was 26.6% Versus 26.3% in the Prior Year;
Comparable Operating Margin (Non-GAAP) Was 30.4% Versus 28.1% in the Prior Year

EPS Declined 33% to $0.40; Comparable EPS (Non-GAAP) Declined 2% to $0.55

ATLANTA- The Coca-Cola Company today reported third quarter 2020 results and updated its progress on several strategic initiatives that are designed to accelerate a return to growth. The Coca-Cola system continues to focus on emerging stronger from the pandemic with a portfolio of the right brands, high-impact marketing, effective innovation and a highly networked organizational structure.

“Throughout this year’s crisis, our system has remained focused on its beverages for life strategy. We are accelerating our transformation that was already underway, shaping our company to recover faster than the broader economic recovery,” said James Quincey, chairman and CEO of The Coca-Cola Company. “While many challenges still lie ahead, our progress in the quarter gives me confidence we are on the right path.”

Highlights

Quarterly Performance

  • Revenues: Net revenues declined 9% to $8.7 billion. Organic revenues (non-GAAP) declined 6%. Revenue performance included a 4% decline in concentrate sales and a 3% decline in price/mix. The company reported improvement in trends versus the prior quarter, with revenue declines versus the prior year driven by ongoing pressure in away-from-home channels partially offset by sustained growth in at-home channels.
  • Margin: Operating margin, which included items impacting comparability, was 26.6% versus 26.3% in the prior year, while comparable operating margin (non-GAAP) was 30.4% versus 28.1% in the prior year. Operating margin expansion was primarily driven by effective cost management, partially offset by top-line pressure and currency headwinds.
  • Earnings per share: EPS declined 33% to $0.40, and comparable EPS (non-GAAP) declined 2% to $0.55.
  • Market share: The company lost value share in total nonalcoholic ready-to-drink (NARTD) beverages as an underlying share gain was more than offset by negative channel mix due to continued pressure in away-from-home channels, where the company has a strong share position.
  • Cash flow: Year-to-date cash from operations was $6.2 billion, down 20%. Free cash flow (non-GAAP) was $5.5 billion, down 17%.

Business Environment and Strategic Actions Update

Since the company’s last earnings update in July, global unit case volume trends have continued to improve. The pace in the third quarter was more gradual than the second quarter, and the percentage decline in global unit case volume for October month-to-date was low single digits. The company is seeing an elevated level of sales in at-home channels being more than offset by ongoing pressure in away-from-home channels, which are affected by the level of lockdown in a particular market.

While the company is pleased with the sequential improvement, given the uncertainty remaining surrounding the coronavirus pandemic including a resurgence in various markets, the ultimate impact on its near-term results is unknown. Importantly, the company’s balance sheet remains strong, and the company is confident in its liquidity position as it continues to navigate through the crisis.

The recent strategic actions of portfolio optimization, disciplined innovation, increased marketing effectiveness and efficiency, enhanced system collaboration and evolving the organizational structure have given the company increased confidence in emerging stronger.

Company Updates

  • Building a networked organization designed for growth: The company is establishing a networked structure that is comprised of operating units, category teams, Platform Services and the center. Operating units will be highly interconnected and will sit under the four existing geographic segments, with a focus on local execution. Category teams will drive innovation, marketing efficiency and effectiveness in partnership with operating units. Platform Services will focus on world-class services and capabilities globally to the system, while the center will provide strategy, governance and scale for global initiatives. The company’s new, networked organization will combine the power of scale with local execution. The changes to the company’s structure will result in a reallocation of some associates along with a reduction in the number of associates, which is underway through a combination of voluntary separation programs and involuntary reductions.
  • Shaping a winning growth portfolio: The company continues to pursue its beverages for life ambition by calibrating a portfolio with an optimal set of global, regional and local brands with the strongest potential to grow their consumer bases, increase frequency and drive system margins. The company expects to offer a portfolio of approximately 200 master brands, an approximate 50% reduction from the current number, and phase out some products, such as ZICO® and TaB®.
  • Expanding consumer-centric innovation: The company is committed to exploring new products in dynamic beverage categories. In the third quarter, the company launched Topo Chico™ Hard Seltzer, which blends purified sparkling water, a gluten-free alcohol base and natural flavors, with minerals added for taste. Topo Chico™ Hard Seltzer is inspired by Topo Chico® sparkling mineral water, a 125-year-old brand with a rich heritage. The new product is currently available in select cities in Latin America. In the United States, the company entered into an agreement with Molson Coors Beverage Company to manufacture, market and distribute the product. This relationship will allow Topo Chico™ Hard Seltzer to launch with scale in the U.S., which we anticipate will occur in the first half of 2021. 

Operating Review – Three Months Ended September 25, 2020

Revenues and Volume

Percent Change

Concentrate
Sales1

Price/Mix

Currency
Impact

Acquisitions,
Divestitures
and Structural
Changes, Net

Reported
Net
Revenues

Organic
Revenues2

Unit Case
Volume

Consolidated

(4)

(3)

(3)

0

(9)

(6)

(4)

Europe, Middle East & Africa

0

(6)

(1)

0

(7)

(6)

(3)

Latin America

(2)

(1)

(19)

0

(23)

(4)

(4)

North America

(7)

4

0

1

(2)

(3)

(6)

Asia Pacific

(4)

(4)

(1)

0

(9)

(8)

(4)

Global Ventures3

(14)

(7)

2

0

(19)

(20)

(11)

Bottling Investments

(9)

2

(5)

(1)

(12)

(6)

(10)

Operating Income and EPS

Percent Change

Reported
Operating
Income

Items
Impacting
Comparability

Currency
Impact

Comparable
Currency
Neutral2

Consolidated

(8)

(7)

(8)

7

Europe, Middle East & Africa

2

(4)

(3)

9

Latin America

(20)

(4)

(28)

12

North America

14

(5)

0

18

Asia Pacific

(5)

1

(2)

(4)

Global Ventures

4

Bottling Investments

662

617

(25)

69

Percent Change

Reported
EPS

Items
Impacting
Comparability

Currency

Impact

Comparable

Currency

Neutral2

Consolidated EPS

(33)

(31)

(7)

5

Note: Certain rows may not add due to rounding.

1

For Bottling Investments, this represents the percent change in net revenues attributable to the increase (decrease) in unit case volume computed based on total sales (rather than average daily sales) in each of the corresponding periods after considering the impact of structural changes.

2

Organic revenues, comparable currency neutral operating income and comparable currency neutral EPS are non-GAAP financial measures. Refer to the Reconciliation of GAAP and Non-GAAP Financial Measures section.

3

Due to the combination of multiple business models in the Global Ventures segment, the composition of concentrate sales and price/mix may fluctuate materially on a periodic basis. Therefore, the company places greater focus on revenue growth as the best indicator of underlying performance of the segment.

4

Reported operating loss for Global Ventures for the three months ended September 25, 2020 was $31 million. Reported operating income for Global Ventures for the three months ended September 27, 2019 was $77 million. Therefore, the percent change is not meaningful.

In addition to the data in the preceding tables, third quarter operating results included the following:

Consolidated

  • Price/mix declined 3% for the quarter driven by negative channel and package mix due to the impact of the coronavirus pandemic. Price/mix was also impacted by negative segment mix from Global Ventures and Bottling Investments. Concentrate sales were in line with unit case volume. Year-to-date concentrate sales were 2 points behind unit case volume, impacted by one less day and cycling the timing of certain shipments from the prior year related to the Brexit bottler inventory build.
  • Unit case volume declined 4%, as continued strength in at-home channels was more than offset by coronavirus-related pressure in away-from-home channels. Category cluster performance was as follows:
    • Sparkling soft drinks declined 1%, led by a decline in the fountain business in North America and in Mexico due to pressure in away-from-home channels. Trademark Coca-Cola grew 1%. Coca-Cola® Zero Sugar grew 7% in the quarter and 4% year-to-date.
    • Juice, dairy and plant-based beverages declined 6% as solid performance by Simply® and fairlife® in North America was more than offset by pressure in the Asia Pacific and Latin America operating groups.
    • Water, enhanced water and sports drinks declined 11%, led by a broad-based decline across operating groups, primarily due to a decline in lower-margin water brands.
    • Tea and coffee declined 15%, primarily driven by coronavirus-related pressure on Costa® retail stores, along with some pressure on the doğadan® tea business in Turkey.
  • Operating income declined 8%, which included a headwind from items impacting comparability in addition to a currency headwind. Comparable currency neutral operating income (non-GAAP) grew 7%, driven by effective cost management across operating groups, partially offset by top-line pressure due to the coronavirus.

Europe, Middle East & Africa

  • Price/mix declined 6% for the quarter, driven by negative channel and package mix in Europe. Price/mix was also impacted by negative geographic mix due to better performance in emerging and developing markets versus developed markets. Concentrate sales ran 3 points ahead of unit case volume, largely due to the timing of shipments in the Middle East, North Africa and Turkey.
  • Unit case volume declined 3%, primarily related to coronavirus-related pressure in away-from-home channels in Western Europe and South Africa, partially offset by growth in Western Africa.
  • Operating income grew 2%, impacted by a headwind from comparability items and a 3-point currency headwind. Comparable currency neutral operating income (non-GAAP) grew 9% driven by effective cost management.
  • The company gained value share in total NARTD beverages, driven by a share gain in sparkling soft drinks.

Latin America

  • Price/mix declined 1% as pricing in the market was more than offset by the timing of deductions from revenue. Concentrate sales ran 2 points ahead of unit case volume, largely due to cycling the timing of shipments from the prior year in Brazil.
  • Unit case volume declined 4%, led by declines in Mexico and Argentina primarily due to the impact of the coronavirus, partially offset by solid performance in Brazil.
  • Operating income declined 20%, which included a headwind from items impacting comparability and a 28-point currency headwind. Comparable currency neutral operating income (non-GAAP) grew 12%, primarily due to effective cost management across all business units.
  • The company gained value share in total NARTD beverages, driven by share gains in sparkling soft drinks and the water, enhanced water and sports drinks category cluster.

North America

  • Price/mix grew 4% for the quarter, as solid growth in premium offerings and pricing in the marketplace was partially offset by pressure in the fountain business and away-from-home channels.
  • Unit case volume declined 6%, as strong growth in sparkling soft drinks in at-home channels along with continued strength in AHA®, fairlife® and Topo Chico® was more than offset by pressure in the fountain business.
  • Operating income grew 14%, which included a headwind from items impacting comparability. Comparable currency neutral operating income (non-GAAP) grew 18%, driven by pricing and effective cost management.
  • The company lost value share in total NARTD beverages due to coronavirus-related restrictions in away-from-home channels, where the company has a strong share position.

Asia Pacific

  • Price/mix declined 4%, due to negative channel mix in key markets, partially offset by positive geographic mix. Concentrate sales were in line with unit case volume.
  • Unit case volume declined 4%, primarily due to coronavirus-related restrictions in India and Japan. The unit case volume performance included solid growth in sparkling soft drinks in China.
  • Operating income declined 5%, which included a tailwind from items impacting comparability and a 2-point currency headwind. Comparable currency neutral operating income (non-GAAP) declined 4%, driven by top-line pressure due to the coronavirus across most markets, partially offset by effective cost management.
  • The company lost value share in total NARTD beverages, primarily driven by a share loss in sparkling soft drinks.

Global Ventures

  • Net revenues declined 19%, which included a 2-point currency tailwind. Organic revenues (non-GAAP) declined 20%. The revenue declines were primarily driven by the coronavirus-related pressure on the Costa® retail stores, partially offset by strong performance in Costa® Express machines in the United Kingdom.
  • The operating loss was primarily driven by the coronavirus-related pressure on the Costa® retail stores.

Bottling Investments

  • Price/mix grew 2% in the quarter due to trade promotion optimization in most markets.
  • Unit case volume declined 10%, driven by India and South Africa due to the impact of the coronavirus.
  • Operating income growth included a tailwind from items impacting comparability and a headwind from currency. Comparable currency neutral operating income (non-GAAP) grew 69%, driven by effective operating expense management.

Operating Review  Nine Months Ended September 25, 2020

Revenues and Volume

Percent Change

Concentrate
Sales1

Price/Mix

Currency
Impact

Acquisitions,
Divestitures
and Structural
Changes, Net

Reported
Net
Revenues

Organic
Revenues2

Unit Case
Volume

Consolidated

(9)

(2)

(3)

0

(13)

(11)

(7)

Europe, Middle East & Africa

(10)

(5)

(2)

0

(16)

(15)

(7)

Latin America

(6)

4

(13)

0

(15)

(2)

(4)

North America

(8)

2

0

2

(4)

(6)

(7)

Asia Pacific

(10)

(3)

(1)

1

(13)

(13)

(10)

Global Ventures3

(17)

(8)

0

0

(25)

(25)

(15)

Bottling Investments

(16)

1

(4)

(2)

(20)

(15)

(19)

Operating Income and EPS

Percent Change

Reported
Operating
Income

Items
Impacting
Comparability

Currency
Impact

Comparable
Currency
Neutral2

Consolidated

(16)

(7)

(5)

(4)

Europe, Middle East & Africa

(11)

(1)

(3)

(7)

Latin America

(10)

(2)

(20)

12

North America

(17)

(17)

0

0

Asia Pacific

(7)

0

(1)

(6)

Global Ventures

4

Bottling Investments

(43)

(42)

15

(16)

Percent Change

Reported
EPS

Items
Impacting
Comparability

Currency
Impact

Comparable
Currency
Neutral2

Consolidated EPS

(9)

2

(5)

(6)

Note: Certain rows may not add due to rounding.

1

For Bottling Investments, this represents the percent change in net revenues attributable to the increase (decrease) in unit case volume computed based on total sales (rather than average daily sales) in each of the corresponding periods after considering the impact of structural changes.

2

Organic revenues, comparable currency neutral operating income and comparable currency neutral EPS are non-GAAP financial measures. Refer to the Reconciliation of GAAP and Non-GAAP Financial Measures section.

3

Due to the combination of multiple business models in the Global Ventures segment, the composition of concentrate sales and price/mix may fluctuate materially on a periodic basis. Therefore, the company places greater focus on revenue growth as the best indicator of underlying performance of the segment.

4

Reported operating loss for Global Ventures for the nine months ended September 25, 2020 was $114 million. Reported operating income for Global Ventures for the nine months ended September 27, 2019 was $216 million. Therefore, the percent change is not meaningful.

Outlook

Full Year 2020 Considerations

As the coronavirus pandemic continues to evolve, there is uncertainty around its ultimate impact; therefore, the company’s full year financial and operating results cannot be reasonably estimated at this time.

For comparable net revenues (non-GAAP), the company expects an approximate 3% currency headwind based on the current rates and including the impact of hedged positions.

For comparable operating income (non-GAAP), the company expects an approximate 6% currency headwind based on the current rates and including the impact of hedged positions.

The company’s underlying effective tax rate (non-GAAP) is estimated to be 19.5%.

Fourth Quarter 2020 Considerations

Comparable net revenues (non-GAAP) are expected to include an approximate 3% currency headwind based on the current rates and including the impact of hedged positions.

Comparable operating income (non-GAAP) is expected to include an approximate 9% currency headwind based on the current rates and including the impact of hedged positions.

Full Year 2021 Considerations

For comparable net revenues (non-GAAP) and comparable operating income (non-GAAP), the company expects minimal currency impact based on the current rates and including the impact of hedged positions.

Notes

  • All references to growth rate percentages and share compare the results of the period to those of the prior year comparable period.
  • All references to volume and volume percentage changes indicate unit case volume, unless otherwise noted. All volume percentage changes are computed based on average daily sales, unless otherwise noted. “Unit case” means a unit of measurement equal to 192 U.S. fluid ounces of finished beverage (24 eight-ounce servings), with the exception of unit case equivalents for Costa® non-ready-to-drink beverage products which are primarily measured in number of transactions. “Unit case volume” means the number of unit cases (or unit case equivalents) of company beverages directly or indirectly sold by the company and its bottling partners to customers or consumers.
  • “Concentrate sales” represents the amount of concentrates, syrups, beverage bases, source waters and powders/minerals (in all instances expressed in equivalent unit cases) sold by, or used in finished beverages sold by, the company to its bottling partners or other customers. For Costa® non-ready-to-drink beverage products, “concentrate sales” represents the amount of coffee beans and finished beverages (in all instances expressed in equivalent unit cases) sold by the company to customers or consumers. In the reconciliation of reported net revenues, “concentrate sales” represents the percent change in net revenues attributable to the increase (decrease) in concentrate sales volume for the geographic operating segments and the Global Ventures operating segment after considering the impact of structural changes. For the Bottling Investments operating segment, this represents the percent change in net revenues attributable to the increase (decrease) in unit case volume computed based on total sales (rather than average daily sales) in each of the corresponding periods after considering the impact of structural changes. The Bottling Investments operating segment reflects unit case volume growth for consolidated bottlers only.
  • “Price/mix” represents the change in net operating revenues caused by factors such as price changes, the mix of products and packages sold, and the mix of channels and geographic territories where the sales occurred.
  • First quarter 2020 financial results were impacted by one less day as compared to the same period in 2019, and fourth quarter 2020 financial results will be impacted by two additional days as compared to the same period in 2019. Unit case volume results for the quarters are not impacted by the variances in days due to the average daily sales computation referenced above.

Conference Call

 

The company is hosting a conference call with investors and analysts to discuss third quarter 2020 operating results today, October 22, 2020, at 8:30 a.m. ET. The company invites participants to listen to a live webcast of the conference call on the company’s website, http://www.coca-colacompany.com, in the “Investors” section. An audio replay in downloadable digital format and a transcript of the call will be available on the website within 24 hours following the call. Further, the “Investors” section of the website includes certain supplemental information and a reconciliation of non-GAAP financial measures to the company’s results as reported under GAAP, which may be used during the call when discussing financial results.

eBay Inc. To Report Classifieds Business as Discontinued Operations and Releases Updated Historical Financials

During the third quarter of 2020, eBay Inc. announced that it had entered into a definitive agreement to transfer its Classifieds business to Adevinta and determined that it met the criteria for the classification of held-for-sale accounting and discontinued operations.

SAN JOSE, Calif., Oct. 1, 2020 — During the third quarter of 2020, eBay Inc. (Nasdaq: EBAY) announced that it had entered into a definitive agreement to transfer its Classifieds business to Adevinta and determined that it met the criteria for the classification of held-for-sale accounting and discontinued operations. Accordingly, Classifieds’ financial results will be reflected in eBay’s condensed consolidated financial statements as discontinued operations beginning in the third quarter of 2020. Please refer to the 8-K filed today for a restatement of historical financial results.

Cautions Regarding Forward Looking Statements

Certain statements herein are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. Such forward-looking statements are often identified by words such as “anticipate,” “approximate,” “believe,” “commit,” “continue,” “could,” “estimate,” “expect,” “hope,” “intend,” “may,” “outlook,” “plan,” “project,” “potential,” “should,” “would,” “will” and other similar words or expressions. Such forward-looking statements reflect eBay’s current expectations or beliefs concerning future events and actual events may differ materially from historical results or current expectations. The reader is cautioned not to place undue reliance on these forward-looking statements, which are not a guarantee of future performance and are subject to a number of uncertainties, risks, assumptions and other factors, many of which are outside the control of eBay. The forward-looking statements in this document address a variety of subjects including, for example, the closing of the transaction pursuant to which eBay will transfer certain subsidiaries which operate its Classifieds business (the “Transaction”) and the potential benefits of the Transaction. The following factors, among others, could cause actual results to differ materially from those described in these forward-looking statements: the possibility that regulatory and other approvals and conditions to the Transaction are not received or satisfied on a timely basis or at all; the possibility that eBay may not fully realize the projected benefits of the Transaction; changes in the anticipated timing for closing the Transaction; business disruption during the pendency of or following the Transaction; diversion of management time on Transaction-related issues; the reaction of customers and other persons to the Transaction; and other events that could adversely impact the completion of the Transaction, including the ongoing COVID-19 pandemic and other industry or economic conditions outside of our control. In addition, actual results are subject to other risks and uncertainties that relate more broadly to eBay’s overall business, including those more fully described in eBay’s filings with the Securities and Exchange Commission (“SEC”), including its annual report on Form 10-K for the fiscal year ended December 31, 2019 and subsequent quarterly reports on Form 10-Q. The forward-looking statements in this document speak only as of this date. We undertake no obligation to revise or update publicly any forward-looking statement, except as required by law.

UN lists brand equity in Global Innovation Index for the first time

Using data from Brand Finance, the indicator now recognizes the contribution of brands as intangible assets to innovation in an economy.

  • The 2020 update of the Global Innovation Index (IIG) includes a brand equity metric for the first time in the study’s 13-year history.
  • The Brand Finance database that has the ISO certification with history of more than 5,000 most important brands in the world that it values ​​annually has been used to create the new measure.
  • Collaboration between UN WIPO and Brand Finance demonstrates international recognition of the importance of brands for value creation.
  • Hong Kong SAR has become the world’s leading economy in the new brand value metric, as well as the leading region in the entire country, with the highest global brand value scaled by GDP (in PPP $ ).
  • With a score of 33.29 out of 100 in the IIG’s global brand value indicator, Spain is among the countries whose brand value / GDP ratio is lower than expected for the size of the economy.

UN lists brand equity in Global Innovation Index for the first time

Access the IIG 2020 report here

Madrid, September 3, 2020.- For the first time in its 13-year history, the renowned Global Innovation Index (IIG) includes the value of the brand as one of its main indicators. The study uses findings from the ISO-certified database of the world’s 5,000 top brands analyzed annually by Brand Finance , the leading independent intangibles valuation consultancy whose rankings comply with ISO 10668 and ISO 20671 for brand valuation and evaluation. respectively.

Published by the World Intellectual Property Organization (WIPO), a specialized agency of the United Nations (UN), the IIG provides detailed metrics on the innovation performance of 131 countries and economies around the world. Its 80 indicators explore a broad view of innovation, including the political environment, knowledge and technology, infrastructure, business sophistication, and now brand equity as well.

The results of Brand Finance’s public study of the 5,000 most valuable and strongest brands in the world have been used to create a new GII indicator in 2020. The values ​​of the top brands in each economy are added and scaled by gross domestic product (GDP ). The indicator includes the contribution of brands as intangible assets to innovation in an economy. It is carried out between the metrics that collect the creative results of an economy and adds a new dimension to the evaluation of the world’s most innovative economies included in the IIG.

The Hong Kong Special Administrative Region (SAR) has become the world’s leading economy in the new brand equity metric, as well as the leading region across the country, with the highest global brand equity scaled by the GDP (in PPP $). Relative to the size of its economy, Hong Kong SAR is the most successful region in developing valuable brands, and this is a clear indicator of what is likely to happen in mainland China, which is currently ranked 17th in the same. metrics.

Experts predict that China’s GDP will exceed that of the United States by 2030. Teresa de Lemus, Managing Director of Brand Finance Spain, commented: “A nation’s brands are crucial drivers of both economic growth and economic development. Taking China as an example, we are witnessing the nation make significant progress in developing local brands, such as TikTok and Huawei , and the number of leading brands will undoubtedly continue to grow. If this accelerates, we at Brand Finance have predicted that China is likely to overtake the United States as the world’s leading economy by brand value by 2025. ”

Spain in the UN Global Innovation Index

Spain is among the economies in which the brand value / GDP ratio is lower than expected for the size of the economy. Like Spain, the large and fast-growing BRIC nations fall below the line (Graph 1 in Notes to the Editor), suggesting that their range in global brand value relative to the size of their economies leaves a significant potential for the growth of local brands. Economies that are above the trend line are the most successful in developing brands in proportion to their size.

Countries such as Central China, Italy, Australia, India, Mexico, Thailand, Russia, Belgium, Brazil or Indonesia are in a similar situation to Spain in the IIG. China and India especially, have been encouraging brand development in their homeland, in recent years, a trend that has been increased by COVID-19. As demand for these brands increases, nations will need to ensure that they are equipped to facilitate effective and efficient innovation to ultimately support the development of successful global brands.

In 2019, before including the brand value, Spain ranked 29th in the global ranking with a score of 47.85 out of 100. In 2020 Spain has decreased 2.25 points compared to the previous year to 45.60 / 100 and 30th but remains in the range of countries that are in line with expectations for level of development. This first year that the ranking includes brand equity, Spain scores 92.7 (33.29 / 100), ranking 21st for said intangible asset.

Teresa de Lemus, Managing Director of Brand Finance Spain: “With the inclusion of brand equity in the Global Innovation Index, the world’s economies have another important indicator of comparison of their intangible assets. Spain, in position 21 in the brand value ranking, already has another benchmark to be measured with the rest of the economies in addition to the Soft Power ranking where, in position 16 with a score of 47.6 / 100, our country stood out for being the nation with the funniest and friendliest inhabitants in the world. Two key references to improve not only our country brand but our global positioning ”.

See page 324 of the report.

A leading benchmark for measuring the innovation performance of an economy

The IIG ranking has become the global benchmark for government and business leaders, facilitating public-private dialogue and helping professionals and experts to credibly assess the annual progress of innovation around the world. The inclusion of brand equity among the IIG indicators demonstrates international recognition of the importance of brands for value creation, especially in supporting economic recovery, and the growing consensus on the need for a reliable and independent intangible valuation of assets.

Teresa de Lemus, Managing Director of Brand Finance Spain: “After 25 years of pioneering the discipline of brand valuation, Brand Finance is proud to partner with WIPO to create this important new measure of innovation. Brands create value and will help lift the global economy out of the recession caused by COVID-19. There has never been a more important time to recognize the role of brands. “

Sacha Wunsch-Vincent, co  editor and head of IIG, Department of Economics and Data Analysis, noted: “Innovation and branding go hand in hand; Brands are, in fact, a key way for companies to get returns on their R&D investments. We are pleased that IIG 2020 now includes branding, this important dimension of intangible assets. ”

After the launch of the IIG, David Haigh, CEO of Brand Finance will participate in the next 45th World Congress of the International Advertising Association (AIP) to discuss the new report “Why Brands Matter” by Brand Finance as a launch of the campaign of the AIP demonstrating the role of brands as an engine of post-COVID-19 recovery.

Analysis of the new brand equity metric

The Hong Kong Special Administrative Region (SAR) has become the world’s leading economy in the new brand equity metric, as well as the leading region across the country, with the highest global brand equity scaled by the GDP (in PPP $). Relative to the size of its economy, Hong Kong SAR is the most successful in developing valuable brands, and this is a clear indicator of what is likely to happen in mainland China, which currently ranks 17th on the same metric. .

With world-renowned sweets, watchmakers and financial services, Swiss brands have become world leaders in quality and excellence. The Swiss giant Nestlé , for example, has produced several brands that are now household names. Switzerland has one of the best global regimes for the protection of intellectual property, a key factor in promoting innovation and building successful brands. Furthermore, the strong controls on the use of the ‘Swiss made’ brand have also allowed qualified Swiss brands to differentiate themselves and leverage their nation’s reputation effectively.

Several successful small economies such as Sweden, the Netherlands and Malaysia emerge among the top spots for the economies that produce the most valuable brands.

Brand Finance analysis in Figure 1. illustrates how economies stack up in terms of their rank based solely on brand equity, compared to brand equity relative to GDP.

Economies that are above the trend line are the most successful in developing brands in proportion to their size. The economies that fall below the trend line, including Spain, are those in which the brand value / GDP ratio is lower than expected for the size of the economy. For example, large, fast-growing BRIC nations fall below the line, suggesting that their range in global brand value relative to the size of their economies leaves significant potential for local brand growth.. China and India especially, have been encouraging brand development in their homeland, in recent years, a trend more advanced by COVID-19. As demand for these brands increases, nations will need to ensure that they are equipped to facilitate effective and efficient innovation to ultimately support the development of successful global brands.

Complete Ranking – Global Brand Value

Ranking Economy Punctuation
1 Hong Kong SAR        100.0
2 Switzerland          84.2
3 Sweden          76.8
4 United States of America          73.0
5 France          63.9
6 UK          60.0
7 Malaysia          57.0
8 Republic of Korea          56.3
9 Netherlands          55.1
10 Japan          52.5
eleven Germany        51.48
12 Canada        47.81
13 Singapore        47.51
14 Denmark        47.07
fifteen Luxembourg        46.64
16 United Arab Emirates        46.27
17 Mainland China        42.47
18 Saudi Arabia        40.15
19 Viet nam        36.20
twenty Jamaica        34.11
twenty-one Spain        33.29
22 South Africa        31.42
2. 3 Italy        31.33
24 Taste        29.49
25 Finland        29.37
26 Australia        28.64
27 Ireland        25.12
28 Norway        23.41
29 Thailand        22.94
30 Mexico        22.20
31 India        22.09
32 Belgium        21.15
33 Philippines        20.92
3. 4 Austria        18.35
35 Russian Federation        17.80
36 Kuwait        17.64
37 Chile        15.66
38 Portugal        15.63
39 Poland        13.79
40 Colombia        13.59
41 Czech Republic        12.95
42 Indonesia        12.87
43 Brazil        12.13
44 Turkey        10.90
Four. Five Togo        10.16
46 Israel          7.60
47 Romania          7.22
48 New Zealand          6.75
49 Morocco          6.27
fifty Senegal          5.67
51 Burma          5.49
52 Panama          4.86
53 Bahrain          4.79
54 Kenya          4.69
55 Sri Lanka          4.60
56 Zimbabwe          4.38
57 Argentina          4.19
58 Lao People’s Democratic Republic          3.82
59 Hungary          3.78
60 Oman          3.47
61 Lebanon          3.44
62 Georgia          3.26
63 Jordan          2.79
64 Peru          2.46
65 Slovenia          2.31
66 Nigeria          2.27
67 Cyprus          2.24
68 Ivory Coast          1.99
69 Pakistan          1.59
70 Ethiopia          1.50
71 Egypt          1.50
72 Kazagistan          1.28
73 Greece          1.19
74 Slovakia          1.14
75 Costa Rica          0.95
76 Bangladesh          0.89
77 Dominican Republic          0.84
78 Iran          0.69
79 Ukraine          0.46
80 Estonia              –  
80 Latvia              –  
80 Lithuania              –  
80 Serbia              –  
80 North macedonia              –  
80 Mongolia              –  
80 Moldova              –  
80 Armenia              –  
80 Belorussia              –  
80 Uruguay              –  
80 Bosnia and Herzegovina              –  
80 Albania              –  
80 Botswana              –  
80 Rwanda              –  
80 Kyrgyzstan              –  
80 Nepal              –  
80 Paraguay              –  
80 Trinidad and Tobago              –  
80 Ecuador              –  
80 Honduras              –  
80 Namibia              –  
80 Bolivia              –  
80 Tajikistan              –  
80 Cambodia              –  
80 Uganda              –  
80 Burkina faso              –  
80 Cameroon              –  
80 Algeria              –  
80 Zambia              –  
80 Mali              –  
80 Mozambique              –  
80 Benin              –  
80 Yemen              –  

 

About Brand Finance

Brand Finance is the leading independent, international consulting firm in brand valuation and strategy, with offices in 20 countries. We create bridges between the areas of marketing and finance. We provide clarity to marketers, brand owners and investors, when quantifying the financial value of a brand. For our experience in strategy; branding; market research; Visual identity; finance; tax aspects and intellectual property, at Brand Finance we support the client to make the right decisions that optimize the value of a brand and of the entire company by building bridges between marketing and finance.

Every year, the independent brand valuation consultancy Brand Finance values ​​the most important brands in the world.

The brand value equivalent to the net economic benefit the owner of a brand get from llegarla to license on the open market. On the other hand, brand strength refers to how the brand performs on intangible measures compared to its competition. More details on the methodology and terminology, as well as the definitions of terms can be found on our Brand Finance website .

Brand Finance collaborated in the development of the international standard on financial valuation of brands, ISO 10668, as well as in the recently approved standard on brand assessment, ISO 20671. Brand Finance is under the ICAEW regulations as a public accounting firm and is the first consulting firm in brand valuation to be part of the international committee on valuation standards, IVSC.

The Brand Finance methodology used in the preparation of the annual rankings of the most valuable and strongest brands in the world, is certified by the North American Council, Marketing Accountability Standards Board (MASB) and complies with the Marketing Metric Audit Protocol ( MMAP) of the organization.