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Roku Q2 2021 earnings

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CEO of Roku, Anthony Wood speaks onstage at The Future of TV Streaming & Entertainment during Tribeca X – 2021 Tribeca Festival at Spring Studios on June 18, 2021 in New York City.

Arturo Holmes | Getty Images

Roku shares fell more than 8% in after-hours trading Wednesday after reporting second-quarter earnings that beat expectations but showed a slowdown in streaming TV viewing since last quarter and tight hardware margins.

Here’s how the company did compared to Refinitiv consensus estimates:

  • EPS: $0.52 per share vs. estimate of $0.13 per share
  • Revenue: $645 million vs. estimate of $618 million

The company said streaming hours decreased by 1 billion hours from the first quarter of 2021, totaling 17.4 billion in the second quarter. The company cited consumers seeking more out-of-home entertainment activities like dining and travel in the second quarter because of pent-up demand and the loosening of Covid-19 restrictions. But Roku’s streaming hours were still up 19% globally year-over-year, the company said.

In its shareholder letter, it also said “tight component supply conditions and shipping constraints” continued increasing costs faster than expected.

“In Q2, we insulated consumers from increased costs for Roku players, which resulted in Player gross margin turning negative in the quarter,” the letter says.

The company’s total net revenue grew 81% year-over-year in the quarter to $645 million. Meanwhile, it said its platform revenue exceeded half a billion dollars in the quarter for the first time in the segment’s history, reaching $532 million, driven by content distribution and advertising.

Roku also remarked on the advertising upfronts, where advertisers commit parts of their annual budget to TV advertising. The company said it earned double the dollar commitment compared to last year, and said 42% of all advertisers who committed to Roku during upfronts did not participate last year.

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JPMorgan to launch digital bank in the UK next week

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Signage outside a Chase bank branch in San Francisco, California, on Monday, July 12, 2021.

David Paul Morris | Bloomberg | Getty Images

LONDON — JPMorgan Chase is gearing up to debut its hotly anticipated digital bank in the U.K. next week.

The move will see the U.S. banking giant take on major British lenders including HSBC, Barclays, Lloyds and NatWest, as well as start-ups like Monzo and Starling.

JPMorgan will also step up its rivalry with Goldman Sachs, which launched its Marcus digital bank product in the U.K. in 2018.

New York-based JPMorgan first unveiled plans to launch its Chase brand in the U.K. earlier this year. Rather than establishing physical branches, JPMorgan will only offer its services through a mobile app.

It marks the first international expansion of JPMorgan’s consumer bank brand in its 222-year history.

The news was initially reported by the Financial Times and later confirmed by CNBC.

Sanoke Viswanathan, CEO of JPMorgan’s international consumer division, said the bank’s U.K. expansion was a “very big strategic commitment.”

“We will spend hundreds of millions before we get to break-even and get to a place where this is a sustainable business, and we’re not in a rush,” he told the FT.

Chase will initially offer checking accounts along with a rewards program. It also plans personal loans, investments and mortgages further down the line.

The U.K. is home to an increasingly crowded retail banking market. Fintech-friendly regulations have enabled challengers like Monzo, Revolut and Starling — which offer checking accounts and other services via smartphone — to flourish and become billion-dollar companies.

These digital banks have gained millions of customers between them, while some have even tried their luck at entering the U.S. market. Revolut, which now has over 15 million customers, was last valued at $33 billion, making it the U.K.’s most valuable tech start-up.

JPMorgan’s arrival in the U.K. will place further pressure on the country’s traditional lenders. State-backed lender NatWest notoriously tried and failed to take on fintech challengers with a competing digital bank called Bó.

Under CEO Jamie Dimon, JPMorgan has sought to combat the threat of fintech stars like PayPal and Square through a number of acquisitions.

As part of its effort to expand in the U.K., the bank agreed to acquire online wealth manager Nutmeg in June. Later that month, it announced a deal to buy OpenInvest, an ethically-minded investment platform based in San Francisco.

Earlier this month, JPMorgan said it plans to buy a majority stake in Volkswagen’s online payments unit.

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UAE real estate shows signs of recovery as Aldar predicts sales surge

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An Emirati woman paddles a canoe past skyscrapers in Abu Dhabi, United Arab Emirates, on Wednesday, Oct. 2, 2019.

Christopher Pike | Bloomberg | Getty Images

Abu Dhabi’s property market is showing signs of steady growth, as the oil rich capital of the United Arab Emirates recovers from the deep blows of the coronavirus pandemic.

“Business in Abu Dhabi and the real estate sector is actually very buoyant,” Aldar Properties Chief Financial and Sustainability Officer Greg Fewer told CNBC’s “Capital Connection” on Wednesday. 

“We’ve just come off a strong second quarter where we announced growth across all our major business lines,” Fewer said. 

“We’re on pace to exceed 5 billion dirhams ($1.36 billion) in sales this year, driven by new launches that we’re going to be bringing in the third and fourth quarters.”

The latest comments signal a further improvement in the UAE’s economy and its often crisis fraught real estate sector. Pandemic related job losses forced nearly 10% of the UAE’s expat population to leave, hitting property prices and increasing vacancies last year.

But low lending rates and improving business conditions in the UAE have helped to stoke demand for Aldar’s major community and housing development projects in Abu Dhabi, where it is the developer of choice for the Abu Dhabi government.

Total sales topped 3.4 billion dirhams in the first half of the year, and the recovery has helped to push its shares up more than 100% in the past 12 months. Aldar Properties is now the largest listed developer in the United Arab Emirates with a market value of nearly $9 billion.

Residential sales prices in Abu Dhabi had fallen on average by 2% in 2020, while prices in Dubai, where a supply glut has weighed on prices for more than half a decade, fell by 7.1%, according to Knight Frank. Price falls were largely concentrated in the apartments segment of the market, but demand for larger villas in both cities held up.

But Dubai’s largest developer, Emaar Properties, saw its sales surge to a record $2.65 billion in the second quarter of this year, while Damac Properties saw losses narrow. Shares of both have risen 42% and 33%, respectively, in the past 12 months.

“Our customer bases are expanding,” Fewer said. “70% of our recent launches have gone to new customers and a lot of them are tenants who are converting the ownership,” he added, suggesting people were upgrading to bigger homes and villas to accommodate the rise in remote work and learning.

Expatriate homeowners and foreign investors made up more than 40% of Aldar’s buyers in the second quarter.

A high national vaccination rate, improving mobility trends and government reforms to company ownership rules, paired with more flexible residency visas have also helped to improve sentiment within the sector broadly.

 

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Skype, Wise, Bolt thrive in absence of tech giants

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Bolt CEO Markus Villig speaks on stage at the 2019 Web Summit technology conference in Lisbon, Portugal.

Horacio Villalobos | Corbis via Getty Images

Estonia’s tech companies have been able to thrive in the absence of large multinationals like Facebook and Microsoft, the country’s president told CNBC.

Home to just over a million people, Estonian founders have produced several tech firms with multibillion-dollar valuations. Skype, which was sold to eBay and then Microsoft, is the most well-known, while others include the recently listed currency exchange app Wise and mobility app Bolt, which is backed by Silicon Valley VC heavyweight Sequoia.

President Kersti Kaljulaid said multinationals have traditionally set up their overseas headquarters in countries with generous tax systems, adding that Estonia has never been a tax haven.

Facebook, Google and Apple all employ thousands of people at their European headquarters in Ireland, where corporation tax is 12.5%. In Estonia, it’s 20%. The tech giants also employ thousands of staff across other European countries including the U.K. and Switzerland, but they don’t have a significant presence in Estonia.

“Estonia is a country that has never offered special deals or special treatment to any kind of company,” Kaljulaid said in an exclusive interview last week. “When I was advising the prime minister 20 years ago, everybody always came and asked what are your special conditions? We said none and I think it has served us right.”

She added: “This probably, might be, one of the reasons why Estonia has so many homebred start-ups from which you now see unicorns coming out more often.”

Estonia has developed a reputation for being one of the most technology-friendly countries in the world, with the government moving many processes online well before other nations. It has embraced online voting and digital IDs, for example, and free wi-fi is widely found across the country.

Kaljulaid said the country’s leaders want to make sure Estonia’s legal space is safe but permissive for new technologies like the grocery delivery robots that have been built by Starship Technologies, which was set up by Skype co-founder Janus Friis.

Kaljulaid said the nation’s entrepreneurs and coders have been educating politicians on the technologies that are poised to change the world.

For example, Skype co-founder Jaan Tallinn has been teaching her and others all about artificial intelligence.

“In Estonia, he [Tallinn] is well known as somebody who warns us and informs us,” she said. “He’s worried, but not unnecessarily.”

Tallinn told CNBC that he has one major concern when it comes to AI.

“AI is still fairly domain specific and fragile,” he said. “The one big concern I have is that countries will start applying more AI to a military context.”

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