An update from Canalys

Dear all,

Like you, we start a new quarter facing extraordinary circumstances. Our offices in India, Singapore, the US and the UK are all temporarily closed. The good news is that after nearly a month at home, our Shanghai team is in the office again, and life has returned to near normal as they are commuting by train, visiting shops and enjoying the local cafes. Our first priority has been the health of our employees and their families and, so far, we have been fortunate. Two employees have been in enforced isolation, due to their known contact with COVID-19, while others have self-isolated as a matter of caution. So far none of our community have needed to go to hospital and we are grateful for that.

We have always believed in investing in technology and so the move to remote working has been smooth. We published a record number of reports during March, as demand for insight into the impact of COVID-19 has been enormous. We run the company on systems developed in-house, so managing content, and employee and customer requests is straightforward, and chat has been our primary method of internal communications for over a decade.

We have been in touch with many of you through podcasts, webcasts, video briefings and even the occasional phone call, and we are continuing to innovate. We have learned that virtual events need to be short, that sound quality trumps everything, while video helps if you can look people in the eye, and blurring your background adds style. Forecasting is a particular challenge but by sharing our assumptions we can add value.

I am personally in my third week at home. I miss meeting our customers and colleagues around the world and I will be booking my next trip as soon as we are told it is safe to do so. I have found some positives too, though, as I can sleep through the night without jetlag. My two teenage boys have discovered the kitchen and developed an interest in cooking. While I have been persevering with my online Spanish lessons and our Monday lunchtime fitness camp remains a highlight of the week, even in virtual form.

We are nervous about our business results, as I’m sure you are about yours. A global recession is a certainty for Q2. Those indebted companies without profits will fall first. The collapse of WeWork is a forgone conclusion, but other champions of the so-called sharing economy, such as Uber and Airbnb, will be fighting for survival.

There are also pockets of business success. The healthcare and grocery sectors are thriving, as is anybody developing remote learning. Home fitness, gaming, furniture and entertainment solutions are booming. Within the technology sector, sales of office equipment have ground to a halt, while consumer items, such as headphones, webcams, notebooks, printers and displays, are hot. Collaboration software, of course, has grabbed all the headlines, but the rush to home working has driven sales of security and remote desktop software too.

Canalys is unusual in that it is a small company with a global footprint. We run our own HR, legal, finance and IT across all the major territories, with an employee base of around 80. The company is 100% owned by its senior employees and has never had a day of debt. The fact that we sell annual research subscriptions, and that we have a strong cash position, means that we are better placed than most, especially as we enjoyed a record-breaking Q4 2019.

We are in the events business too, however, and we are anxious about how our three big Canalys Forums will perform in the second half of 2020. We recognize that now is a difficult time to sign off a sponsorship deal, so we have changed our T&Cs to significantly reduce the impact of cancellation, and we are grateful to those who have recently pushed through those deals. We expect the Forums to go ahead, while accepting that there is some risk that they may not. We have renegotiated with our suppliers so that we will not have to make a final go/no-go decision until July. We know that when recessions hit, marketing budgets shrink. So, if you want to support Canalys, then there is certainly one thing you can do. Please sign those contracts soon!

We are already making a dramatic saving on travel costs, which are usually our third biggest expense, and we will also benefit from a few of the government-backed schemes. Our goal is that, however bad the recession becomes, we will not make any staff redundant. We are also protecting the people behind the scenes who support our company, such as our cleaners. We believe we can achieve this goal as long as the recession does not continue beyond mid-2021. It can’t last that long, can it?

We know that it is stressful trying to balance urgent work priorities with a new environment at home. Our analysts have that challenge too. They are dealing with record numbers of engagement requests, while at the same time having to entertain young children or provide supplies to senior relatives. We hope that the spirit of partnership with our customers shines through, while being mindful that many of you are experiencing far greater difficulties than the relatively simple one of which number to present in a business plan.

Finally, thank you for your many wonderful messages of support. We are sharing these notes internally, and they are a fabulous morale boost.

We wish you and your families good health,

Steve Brazier, CEO and all at Canalys

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