Insyte Weekly: Meta & Spotify Financial Results, Zambia's de-dollarization policy rumours, How companies are innovating with AI and More

This was an interesting week in the business world. We highlight Mark Zuckerberg’s future AI investment plans, how Tiger Brands is accelerating its township expansion efforts, and how companies are leveraging AI to grow their businesses. Here’s a breakdown of some of the week’s top stories.

Media & Entertainment

As cited in an article by We Rave You, Spotify reached a record high in premium subscribers, totalling 246 million in Q2, marking a 12% year-over-year increase and a net gain of 7 million from Q1 2024. This growth contributed to Spotify's highest quarterly profit, with total monthly active users rising 14% year-over-year to 626 million. Premium subscriber revenue increased by 22% to €3.351 billion, while ad-supported revenue grew by 12% to €456 million, resulting in a total quarterly revenue of €3.807 billion, a 21% year-over-year increase. CEO Daniel Ek emphasized Spotify's ongoing innovation and strong business performance, projecting an operating income of €405 million and total revenue of €4 billion for Q3 2024.

As cited by PYMNTS, Meta's Q2 earnings call focused heavily on the company's investments in artificial intelligence (AI) despite stellar financial results. Meta reported earnings per share (EPS) of $5.16 on revenue of $39.07 billion, significantly up from the previous year's EPS of $2.98 on $31.9 billion in revenue. The Family of Apps, including Facebook, Instagram, WhatsApp, and Messenger, contributed $38.72 billion to the revenue, surpassing estimates. Mark Zuckerberg emphasized AI's role in enhancing content recommendations and advertising, envisioning a unified recommendation system and AI-generated personalized ads. He highlighted the importance of Meta's open-source AI model, Llama 3.1, and announced plans for Llama 4, aiming to be industry-leading. Zuckerberg also noted AI's impact on Meta's metaverse ambitions, particularly in smart glasses and VR headsets. Future announcements are expected at Meta's Connect conference on September 25. CFO Susan Li noted that infrastructure costs will drive expense growth next year due to expanded infrastructure.

AI & Technology

Edtech startups are using AI for good. One such startup is Squirrel AI. David Elliot reported that in Baishaping Primary School, located in Baziyan Village, Hubei Province, students are receiving help from the startup due to a lack of quality teachers. The AI platform from Squirrel Ai Learning identifies students' knowledge gaps and provides personalized lessons, significantly improving their grades and confidence. Unlike ChatGPT, Squirrel Ai’s large adaptive model combines adaptive AI with education-specific multimodal models to process various inputs, offering personalized tutoring akin to having the best global teachers. Squirrel Ai operates over 2,000 learning centres with 24 million registered students and aims to make education equitable by providing 10 million free accounts to underprivileged families. As AI education booms globally, it presents opportunities to address global teacher shortages and enhance education quality, supporting the current teaching workforce without replacing human teachers.

As announced by Canva, the design startup has acquired the generative AI company Leonardo.Ai to enhance its suite of AI products. Leonardo.Ai, known for its advanced AI models and a team of 120 experts, will continue to develop its platform independently while benefiting from Canva’s resources. This acquisition follows Canva’s previous AI advancements, including tools like Background Remover, Text to Image, and Magic Studio. Leonardo.Ai’s technology will be integrated into Canva’s existing offerings, furthering innovation in AI-generated content. The partnership aims to democratize AI and elevate visual communication across various professions, from marketing to education.

Yum! Brands, Inc. announced the expansion of its Voice AI technology to hundreds of Taco Bell drive-thru locations across the U.S. by the end of 2024, with plans to eventually implement the technology globally. Currently deployed in over 100 Taco Bell drive-thrus in 13 states, the Voice AI aims to streamline operations, improve order accuracy, enhance customer experience, and reduce wait times, ultimately driving growth for Taco Bell and its franchisees. Lawrence Kim, Chief Innovation Officer, highlighted AI as central to the company’s strategy. Additionally, five KFC locations in Australia are testing the technology, with positive feedback from users. Yum! Brands has significantly scaled its digital ecosystem, achieving nearly $30 billion in digital sales in 2023, showcasing the success of its digital transformation.

Tourism

According to Dorine Reinstein, The Bank of Zambia has proposed a de-dollarization policy to reinforce the kwacha as the primary legal tender for all domestic transactions. This initiative aims to make the kwacha the exclusive currency for public and private dealings in Zambia, with violators potentially facing up to 10 years in prison or significant fines. Although these regulations are still in draft form and undergoing consultation, they have caused concern in the tourism sector. In response, the tourism organization Africa's Eden has released a document clarifying that the draft regulations include exemptions for tourism such as tourists being able to use foreign currency to buy services and businesses being able to receive foreign currency. This de-dollarization effort is part of a broader movement among African nations to bolster their local currencies and reduce dependence on the U.S. dollar.

Some major players in South Africa’s tourism industry are experiencing significant shifts within the industry. As reported by Jesse Lubitz Curiocity, a South African travel company, has seen a shift in its customer base post-Covid, with a significant increase in local, community-oriented tourism. Previously dominated by international visitors (90% of its customers were international tourists), Curiocity now has a balanced mix of domestic and international guests, including a growing number from Brazil and South Africa. This change reflects a broader interest in Afro-tourism and deep cultural engagement, with many Black American travellers reconnecting with their heritage. Curiocity has adapted by offering intentional tours that highlight local narratives and history, and by facilitating knowledge-sharing between business cohorts and local entrepreneurs, fostering meaningful connections and sustainable tourism practices.

Retail

The informal retail sector is attracting investment from larger retail brands in South Africa. Tiger Brands revealed it is expanding its presence in South African townships by branding spaza stores with bold murals. This initiative, which aims to brand 2,000 stores by 2029, is part of a larger strategy to increase visibility and consumer traffic in the informal trade sector. The first 50 stores, located in Soweto, Alexandra, and Tembisa, feature artwork created by local artists. Since accelerating this route-to-market strategy in mid-2023, Tiger Brands has increased its presence from 50,000 to over 71,000 stores, with a goal of reaching 90,000 by the end of 2024 and 130,000 by 2029. This expansion is in response to the significant role informal trade plays in the South African economy, contributing R184 billion annually to the FMCG sector. Tiger Brands is also creating 'Perfect Outlets' with enhanced point-of-sale marketing and branded coolers, and the initiative is expected to create over 500 local jobs, focusing on empowering women. This strategy not only boosts the local economy but also ensures wider access to affordable, quality products, reinforcing Tiger Brands' commitment to the township market.

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