The business world did not expect the way 2022 shaped up and resultantly, developments such as Russia-Ukraine war, recession fears, and macro-economic challenges weighed heavily on the discussions by companies in their filings. Against this backdrop, ‘Cost’, ‘Inflation’, ‘Russia-Ukraine war’, ‘Layoffs’ and ‘Hiring freeze’ emerged as some of the prominent points of discussions, according to GlobalData.
Misa Singh, Business Fundamentals Analyst at GlobalData, comments: “The discussions seem to be driven by the spill over effect of uncertain economic conditions. The Russia-Ukraine conflict led to rising commodity prices and energy costs, and this coupled with supply chain disruptions led to inflation. Moreover, companies are also under pressure to improve margins by undertaking cost-cutting measures such as layoffs and hiring freeze.”
The discussions around inflation were driven by fuel prices and rising energy costs. NVIDIA mentions that its gross margin has been affected by rising costs for wafers, logistics, and other supply chain charges because of inflation. The American tech giant also said that inflation can cause volatility in the financial market and increase infrastructure costs.
Along with cost, companies also have discussed ‘cost cutting’, ‘cost structure’, ‘cost inflation’, ‘cost savings’, ‘cost revenue’, ‘cost benefits’, ‘cost of borrowing’, and ‘reducing cost’. Alibaba Group believes that it was able to maintain a consistent cost-of-revenue ratio primarily by optimizing traffic, acquisition, and subsidy efficiency.
Swiss retail and food service company Valora Holding discussed a combination of layoffs and natural attrition, which will result in yearly savings of about €12 million ($1,30,36,620.00). While layoffs have been dominating headlines in 2022, companies like Wag Group took part in Work Share (Shared Work) programs to avoid layoffs.
Other key areas of discussions by companies were around the ‘Metaverse’, ‘Cryptocurrency’, ‘Carbon transition’, and ‘NFT’. Companies are aiming to expand the usage of AI-driven digital twin technologies which will enable the industrial metaverse, a network of durable real-time virtual world. Technology companies such as Meta and Lenovo are some of the prominent businesses which will continue to invest in the metaverse. Microsoft acquired Activision Blizzard in January 2022 to accelerate its gaming business. Since gaming and the metaverse are interlinked, gaming will undoubtedly play a significant role in future.
Singh concludes: “As the world is moving towards digitalization the discussions around digital assets, NFT and cryptocurrency have also increased in 2022. NFTs and cryptocurrencies are built on blockchain technology. However, NFTs contain distinctive identifying codes and frequently reference content in contrast to fungible cryptocurrency units. Content distribution platform Zedge says the crypto winter that is currently threatening the NFT industry has not had as much of an impact as it concentrates on making NFTs accessible and inexpensive for regular users.”