The Internet sector is on the verge of unprecedented growth. With more smart and connected devices the consumption of data is rapidly growing. The value at stake for the ‘Internet of Everything’ (IoE) is an estimated US$14.4 trillion. The value from the IoE comes from multiple areas. First, it will improve the utilization of things and make the world more efficient; this is valued at US$2.5 trillion. Lowering expenses by improving employee productivity makes up US$2.5 trillion. Supply chain and logistics improvements that will reduce the cost of producing and delivering goods and services is worth US$2.7 trillion. Cross-selling opportunities that will deliver better customer experiences via IoE represents US$3.7 trillion. Unlocking new innovation potential through research and development as well as new models for competition is worth another US$3 trillion.1
In the IPO market, the Software and Internet sectors have been the greatest area of convergence as boundaries blur between technology and other sectors. It’s therefore no surprise that Internet Software & Services led the way in Q1 with the highest number of deals—11 or 42% of total deals—and raised the second highest proceeds (US$1.8bn).
On the flip side, desktop search in the US is poised for significant decline this year as paid clicks on Google shift toward mobile devices. US mobile search ad spending grew 120.8% in 2013, contributing to an overall gain of 122.0% for all mobile ads. Meanwhile, overall desktop ad spending increased just 2.3% last year.2
Amazon’s sales increased 23% YoY in Q1’14. Changes in currency exchange rates impacted net sales by US$10mn and US$(302) million for Q1’14 and Q1’13 respectively. North American sales increased 26% in Q1’14, YoY. The sales growth primarily reflects increased unit sales, including sales by marketplace sellers, and AWS. International sales increased 18% in Q1’14. Sequentially revenues were down 22.8%, adversely impacted by a normally down first quarter (seasonal impact). The gross margins also improved in Q1’14 YoY, primarily due to services sales increasing as a percentage of total sales.
eBay Inc. reported that YoY revenue for Q1’14 increased 14% to US$4.3bn. The Q1’14 GAAP loss was (US$2.3bn) or (US$1.82) per diluted share. This was due to a discrete tax charge of approximately US$3.0bn. The total company-enabled commerce volume (ECV) increased 24% in Q1’14 to US$58 bn. Mobile ECV advanced 70% to US$11bn representing 19% of volume. Cross-border trade grew 24%, representing US$13bn, or 22%, of total company ECV. A recent global PwC survey of online shoppers indicates that 29% of US consumers shop online through mobile phones, clearly validating the increase in revenue.
Yahoo Inc.’s GAAP revenue was US$1,133mn for Q1’14, a 1% decrease from Q1’13. Revenue excluding traffic acquisition costs was US$1,087mn for Q1’14, a 1% increase YoY. Adjusted EBITDA for Q1’14 was US$306mn, a 21% decrease YoY. This was impacted by the drop in search revenues from desktop machines.