A flurry of market activity and the announcement of the most anticipated IPOs of year - Airbnb & DoorDash has led us to publish this off-cycle edition of the InterPrime Newsletter. We wanted to take this opportunity to analyze the corporate cash portfolios of these iconic companies while the news was fresh off the press!

Airbnb, DoorDash and Zoom are very different companies, but you will see that a lot of the strategies they use to keep their corporate cash safe, liquid and earning a reasonable rate of return are quite similar.

Let’s start with Airbnb, who has been rumored to be one of the most sophisticated at managing their corporate portfolio. VentureBeat had an article on it a few years ago that you can read here. Their S-1 filing this week  gives us a more detailed picture of what they’re doing with their cash.

All of this data is from their most recent S-1 filing with the SEC and as of September 30, 2020.

For those of you interested in their historical positioning you can check out the details here.

Now let’s look at a breakdown of their cash equivalents and marketable securities.

You can see they are being very aggressive with their positioning in corporate debt rather than in U.S. Government securities. This is likely because they are carrying over $2B in operating cash in their various banking relationships across the world.

The highly transactional nature of their business means that they essentially run an internal payments company as well. However, they could probably tweak that and hold more cash in U.S. Treasury securities rather than in bank accounts.

In their marketable security portfolio you can see the aggressive bent as well, with only 40% of assets in government securities. The rest are in corporate bonds, with the most interesting being a nearly 10% position in mutual funds. One can only speculate as to which funds these are, but our guess is that these are closed end fixed income funds that give them a above market yield on their capital. 

Pre-IPO, DoorDash has a cash hoard of ~$1.6B, and it’s sure to swell after a successful offering in the near future. Let’s take a look at how the savviest food delivery business manages their corporate cash. 

All of this data is as of Sept 30, 2020 from their most recent S-1 filed with the SEC.

Now, let’s take a look at their marketable securities portfolio which accounts for about 1/3rd of their liquid assets. 

As we can see, DoorDash is following a very conservative strategy that gives them maximum safety and flexibility with their cash. They are not yet profitable (like Zoom) so they sensibly focus on liquidity of their capital rather than trying to maximize their interest income. 

We don’t know the internal day-to-day cash requirements of their business, but we would recommend that they keep a larger chunk of their cash in U.S. Treasury Bills rather than bank deposits to maximize safety.

Zoom IPO’d last year as one of the few “profitable” tech companies, and has seen incredible growth through COVID-19 as everyone has been forced to move online and into the virtual world.

Given this, let’s see what a fast growing company like Zoom does with their ~$1.5B cash on hand. 

All of this data is from their 2nd quarterly filing as of July 31, 2020 (source: 10-Q)

Now let’s deep dive into their portfolio of “marketable securities” which accounts for about 50% of their liquid funds that are held for working capital purposes.

Additionally, ~$400M of these securities have maturities of less than 1 year, and the remaining ~$332M have maturities of between 1 to 5 years. 

This type of strategy allows Zoom to be flexible with their cash. The short maturities help them stay liquid, and apportioning some cash to longer dated securities allows them to pick up additional yield on their capital. 

(source: https://zoom.us/pricing and 10-Q)

A key point to note is that they own these securities outright, and do not use funds, ETFs or other such synthetic instruments. Doing this allows them to control their capital, reduce risk & customize their investments to suit their specific needs.

By leveraging our services at InterPrime you too can take advantage of the capital markets with your cash, in the way Zoom does. We can help you create a system that works for your specific needs while keeping your cash safe, liquid and earning a reasonable return.

Reach out to learn more!