Image: Original photograph by Huawei

Protocol Index: Huawei’s plummeting growth


Good morning, and welcome to Protocol Index, your daily pop-up report about the financial movements that matter to tech during the COVID-19 crisis. Want Index in your inbox each morning? Subscribe here.

Today: Coronavirus is worsening companies' existing problems, digital life insurance is having its moment, and Adam Neumann is planning to sue SoftBank. Oh, and with earnings seasons now entering full swing, be sure to check out our rolling analysis of what all the numbers mean for the wider tech industry.

What Matters Today

  • 1:30 p.m. PDT: Texas Instruments' earnings will set the tone for chipmakers. Investors expect it to hold up relatively well, but analysts anticipate revenue to be down 12% from a year earlier, according to Koyfin.
  • 2 p.m. PDT: Snap's earnings will offer our first insight into last quarter's ad slump. Wedbush expects average revenue per user of $1.98 — up from $1.68 in Q1 2019, but well below its previous estimate of $2.09. JPMorgan also expects some product discussion, particularly around Snap's developer tools.
  • 3 p.m. PDT: Netflix hosts its post-earnings conference call. All eyes will be on subscriber numbers: Has the company managed to boost growth on the back of quarantine measures? Also watch out for whether production halts are significantly affecting its content pipeline.

Layoff Watch

  • Kickstarter said layoffs are likely, telling employees that projects on the site are down around 35% year-on-year.

Today's News

As of 4 a.m. PDT: Nasdaq Futures: -0.65% | Euro 600: -2.06% | Nikkei: -1.97% | Hang Seng: -2.20%





Earnings: from bad to worse

Tech companies have started reporting earnings, and some trends are already becoming clear.

Coronavirus has exacerbated companies' problems. This morning, Huawei reported a 1.4% year-on-year revenue increase, a stunning drop from the 39% growth it posted this time last year. The U.S. blacklist is partly to blame, but coronavirus undoubtedly worsened an already bad situation.

  • IBM, meanwhile, reported revenue down 3.4% year-on-year. As Protocol's Tom Krazit notes, IBM's revenue has been declining for years, but March's drop in customer activity isn't helping matters.
  • Over in Europe, SAP confirmed its earnings pre-release: It expects a 1-6% drop in earnings for this year.

Some companies don't want to predict the future: Both IBM and Infosys withdrew their annual guidance due to the huge uncertainty surrounding how, and when, things go back to normal.

  • But it's not looking good. IBM CFO James Kavanaugh told analysts that IBM "saw a noticeable change in client priorities [last month] … there was effectively a pause."


  • SAP's dual-CEO arrangement "was driving people crazy." — An anonymous SAP employee told Bloomberg that the "chaotic" system may have contributed to Jennifer Morgan's surprise departure from the company.
  • "Another reason why renewables are better for our modern world is that in the case of a demand slump you can just turn it off with no systemic side effects. There is no long tail of physical fuel supply to be disrupted." — Yesterday's oil crash highlights another advantage of greentech, said Mobilize Climate Director Eytan Lenko.
  • "If overnight huge industries place huge orders, that certainly will take time to satisfy those orders." — Jim Cannon, CEO of thermal camera maker Flir, said the company was dealing with a huge increase in demand.


It might be boom time for digital life insurance

Locked in our homes amid a global pandemic, we're all thinking about our mortality. That's no bad thing if you're a life insurance startup like Ethos.

  • "We've roughly doubled over the last couple of months as far as inflow," CEO Peter Colis told me.
  • Most life insurers require medical examinations for the vast majority of their clients, and the industry largely still relies on in-person agents. With both of those on hold for now, traditional life insurers are struggling.
  • Ethos's tech has proved useful. Its algorithmic underwriting process means most customers can get insurance online without any exams — perfect for lockdown.
  • That's "waking up the industry a bit," Colis claims.

Ethos's success isn't totally guaranteed though, because of its position as a broker and underwriter, selling policies backed by the established insurer Banner Life.

  • The drop in interest rates means life insurers' investment income is way down, giving them even less money to invest in new tech — and Ethos more of a chance to capitalize on the situation.
  • But that could also mean Ethos has to pay more for the policies it sells to its customers. So it must decide whether to take a hit to its profit margins, or pass on the increase to consumers — neither of which is great in a downturn.

Still, Ethos "raised a ton of capital last year," Colis said, and still has "pretty much all of it, and so we'll be fine." But he plans to be prudent, saying he doesn't want to "be forced to raise money in a contracted environment."

  • When he does need to raise though, he thinks he'll be okay. Ethos has a bunch of celebrity investors, including Jay Z and Will Smith. They invest because they believe in the cause, Colis said.
  • "They're all so rich that this isn't going to stop them," he joked.

Closing Bell

Party in your bedroom

A couple weeks ago, the hot thing in music was Instagram Live. But artists couldn't monetize that, and they're in need of cash now more than ever. So, Bloomberg reports, they've moved on to Stageit, which charges fans an average of $15 for live streamed concerts.

This kind of thing could stick around: Why spend money exhausting yourself on world tours when you can reach the entire world from a single venue? Twitch, for one, thinks that's a real possibility: It's just appointed a former Spotify exec as its Head of Product and Engineering for Music.

Thoughts/feedback/tips? Email me — — or anonymously contact Protocol. And subscribe to get Index in your inbox each morning. Thanks for reading, see you tomorrow.

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