Speaker 1: 0:02

Welcome to this week's edition of the Dan Rayburn podcast, the show that curates the streaming media industry news that matters most, unvarnished, unscripted and providing you with the factual data you need to know, without any of the hype, the pulse of the streaming media industry.

Speaker 2: 0:20

Welcome to the Dan Rayburn podcast. I am Dan Rayburn, along with co-host Mark Donaghan for this week's podcast, where it is all earnings, earnings season, lots of earnings. This week we're actually going to cover two weeks of earnings in one podcast because we didn't do a podcast last week due to traveling. We have caught up on the podcast, which is great, drop three this previous week actually. Mark and I are recording this on Friday, august 4th. We're also going to talk about some of the stock prices as well, since the market has now closed just after 4 pm Eastern Interesting day in the market.

Speaker 2: 0:56

We've got some reports on job creation and whatnot. Some stocks up on the tech side, most of them down. We'll go into that, mark. Let's start with all the vendors in the market. Vendors I mean companies that are mostly selling B2B. Then we're going to go into the B2C customers on the ISP side court cutting, streaming services. We'll go through those seconds. Let's start with the vendors.

Speaker 2: 1:24

Let's start with Breikove. There's some things to break down here with Breikove. Breikove had revenue of $51 million in the quarter, which was down 6% over a year. They had a net loss of $6.2 million compared to a net loss of $1.6 million in year over year Free cash flow was $7.1 million and they had $19 million of cash and cash equivalents in the quarter. What is the key takeaway here? The key takeaway is that Breikove's business is not growing year over year. That's not really a new thing if you're following Breikove. Breikove gave out full year revenue guidance for this year to expect to do in the range of $201 to $203 million. Last year they did 211. As we've seen from Breikove, vimeo and some of the others the year over year comps on the COVID years, it's just not as good. It's just not as much revenue. So, no surprise, one of the themes marked that we're going to be talking about today when we talk about all these earnings is the amount of companies that are really focusing on positive free cash flow and cutting costs is every single company.

Speaker 3: 2:44

Every single company. Yeah, exactly, it's not a single one where dad's in. It's not the day that hasn't done that, yeah.

Speaker 2: 2:49

But they're starting to now show up in the numbers. Yeah, breikove is a good example. So estimating range of 201 to 203 million this year. But they're looking at a non-gap loss expected to be in the range of about $2.2 million to $0.2 million. So what they're saying is for the entire year, by the time they get to the end of Q4, they'll lose somewhere between $200,000 to $2.2 million. That's cut the burn rate down tremendously. So great to see.

Speaker 2: 3:21

Naturally, almost every single company has done this by laying people off, including Breikove. That's just the nature of the business. There are poo for what they call premium customers. They don't call it enterprise. Thank you, breikove for doing that. That's proper. Calling it premium customers was $94,800. That's for the year. Sorry, no, sorry, hold on. Set quarter of 2023. So they break out starter customers revenue of $3,900, arpu and then they talk about premium customers at $94,800. That did go down a bit. It was $98,000 last year. So just like we're seeing Mark in the consumer side with some ARPUs declining, we've also seen that with some of the vendors as well. So that's Breikove.

Speaker 2: 4:15

Now, as far as what that did to the stock, breikove stock has been pretty flat. They did announce a deal with the NHL and Yahoo and that gave the stock a little bit of a bump over the previous week. So over the last week, this entire week, they're up 7.9%. Year to date they're down 17%. All time they're down 70%. So Breikove we've talked about it before they're an interesting spot because the business is not growing year over year. They've got $19 million cash in the bank so they can't make any large acquisitions. They can't do anything transformative to their business from an acquisition standpoint to add top line revenue growth. So it'll be interesting to see what they're going to do strategically, because just changing the go-to-market strategy on some products and some partnerships and some white labeling it's not enough to drive top line revenue growth.

Speaker 3: 5:18

Yeah, it is interesting because I think previously and they probably still do have a sales focus into corporate America a lot of their messaging was around selling to marketing and HR and fortunes. But obviously Mark came in with a heavy media and entertainment focus and now there's maybe renewed focus around that and messaging Boy. It just seems like that market is also equally challenged, right.

Speaker 2: 6:00

So it is, margin's are slim. Yeah, a lot of competitors.

Speaker 3: 6:03

Yeah. So even though they've got an incredible pedigree there, and I would have argued and I think even a while back we had a conversation where we said brightco should probably get back a little bit to the roots, zen, coder and all that, but that business is just so commoditized. I think they're really squeezed.

Speaker 2: 6:26

They need to be part of a larger platform. Yeah, that's the bottom line. You have to buy a larger stack of some kind and with it you're getting functionality that Brightco offers. The issue is we haven't seen any cloud providers or others that want to get into that stack, outside of Amazon, which obviously got into it when they bought it. They already have it. They already have it. Cdns don't want to get into it. Now, if it's live, it's different. Ego has uplink and they specialize in live.

Speaker 2: 6:52

So you have a couple others out there that are part of a larger platform and ecosystem, but for the most part, you haven't seen that. Adobe doesn't have this functionality, nor do they want it in their cloud service. Google doesn't want to offer this and they bought a Vonto which they're keeping in-house. Oracle's not getting into this business. They don't want that, at least not now. So they're in a hard spot because, to your point, they have good brand recognition. They have some good customers. No doubt they can get their balance sheet to where they're free. Cash flow positive multiple quarters in a row, that's great, but when your revenue is declining year over year, that's a problem. In $19 million cash in the bank, it doesn't leave you a lot of options, so interesting to see just what they might try and do strategically next year. There are a bunch of PE firms that have been looking at them for quite some time, but my guess is what PE companies are valuing Vendors at these days? That nobody on the break-off board has a need to probably sell right now, being that the company's not losing too much in the way of cash. The multiples I'm hearing are certainly not what break-offs can want, I would think.

Speaker 2: 8:09

Then let's jump in here into Caltora, a little bit of a similar business. Some overlap on the media side. Caltora does go after some segments of the market that break-off doesn't. So Caltora had revenues in Q2 of $43.9 million. The revenue was up 5% year over year. Now their gap net loss was $10.8 million. So they're still losing money, but that was their lowest adjusted EBITDA loss in the past eight quarters.

Speaker 2: 8:36

So again, another company doing a really good job of just cutting the loss, and they had to lay people off as well. They did come out and say they expect 2023 revenue total revenue to grow by 1% to 2%. So hey, folks, that's the reality of the market right now for a lot of vendors. So if you think there's a huge amount of growth coming. Don't debate that. Go right to what these public vendors are saying as far as revenue growth this year, and they expect total revenue to be $170 to $173 this year and adjusted EBITDA will be negative in the range of $4.5 to $5.5 million. So another company doing a great job of cutting out costs but also just not seeing a lot of revenue growth. Their stock did see a little bit of a bump after earnings. The hard part here, mark, is when we're looking at their stock is up 7.5% for the week. The problem is we're talking pennies now, so 7.5% sounds big but it's really not A year. To date, for instance, they're up 19%, which sounds huge, but it's a total of $0.34.

Speaker 3: 9:52

But I do have to point out something that's interesting. They're reporting guidance roughly about $30 million for the year, less than Breitkow, and yet their market cap is $100 million more than Breitkow. So again, if you think about acquisition targets, kaltura would actually be harder to take out at this point than Breitkow. Simply, the market cap of Kaltura is nearly $300 million, almost 2X a little shy of 2X on revenues whereas Breitkow is less than 1X.

Speaker 2: 10:36

True, but the problem here, Mark, as we know, is it's all about not what you're worth, what someone's willing to pay for you. 100%, yeah, right, but the public company, the cash, is quite different.

Speaker 3: 10:47

The public companies, though investors are generally going to look at the valuation and then base accordingly on what they're willing to sell for.

Speaker 2: 10:59

They want five times their revenue, project their revenue, which is not going to happen. They'd be lucky to get three times. But you also have to look at the cash. Kaltura has just over $40 million in cash, exactly Exactly. Breitkow is $19 million. Cash plays a part to a degree, but that's not, frankly, that much cash either one. That's right. That's just the reality of what we're seeing in the market. Let's move on to another vendor Fastly, fastly stock was up a lot.

Speaker 2: 11:29

We'll talk to that. Their earnings were $122.8 million, which is up 20% year-over-year. Now, to put this in perspective, their gap net loss was $10.7 million. In Q1, it was 44.7. It was four times. So again, companies just cutting, cutting, cutting, cutting costs and unfortunately, a lot of times that's with HeadCal. But they're cutting marketing expenses. They're cutting a lot. Now their enterprise, arpu, was $818,000, which was up 3% quarter-to-quarter. So that's good. Now they gave out full year 2023 revenue guidance and they bumped it up just a little. So they're selling between $500 to $510 million. Previously they were at $495 to $505. So it's going up just a little tiny bit, but Fastly this year, based on their projections, is going to be a half a billion-dollar year company. Now their stock was doing pretty well as a result after earnings. If we look at the five-day, so they were at about $17 before earnings and then they jumped up to $19, at one point, hitting $20. And they closed the date $20.98. So they're up just over 17% in the last five days, which is good, and a year to date they're up 160%. So they're bouncing up and down. So year to date they're looking good. The problem is max all time. They're down 13%. But did a great job in terms of just cutting out more costs. The biggest thing that we're just seeing in the market now.

Speaker 2: 13:27

If we jump to Cloudflare a little bit some similarity obviously there to Fastly's business, though not everything. Their stock was up 8% at one point today they had a revenue of $308.5 million, so their revenue was up 32% Year over year. The key thing here is their free cash flow was $20 million. That's a big deal. They gave out fiscal year 2023 revenue, which at these numbers Mark is $1.28 billion. $1.28 billion to $1.28 billion. Call it $1.28 billion, which would be 32% year over year revenue growth. That's good. So keep in mind for listeners that don't know, the vast majority of that revenue for Cloudflare it's not coming for video delivery. They're not doing live events. It's a different business than a lot of the companies in the video space, but there's still some Some overlap.

Speaker 2: 14:29

Let's jump into Vimeo. So the first thing I'm gonna give Vimeo credit for is they're now providing a shit going to provide a shareholder letter each quarter. That's good of them. More companies should do that instead of just putting out a press release with a bunch of numbers. Explain what you're seeing in the market. So I like seeing that. That's good. They're their revenue, vimeo's earnings and Q2. Their revenue was down 8%. You over year, had a hundred and four million dollars. They project three Q3 revenue to be slightly above a hundred million. I thought that was an interesting Terminology is usually in Wall Street. You see numbers, you don't see words like slightly.

Speaker 3: 15:10

Doesn't have a definition.

Speaker 2: 15:12

It ends in L Y. What does that mean? It's undefined. So that's what? That was kind of odd Gap operating loss of eight million. So what they're projecting for Q3. So full year revenue guidance, they're looking at quote mid single digit percent decline in revenue. So if you didn't catch that, vimeo just told you that they expect their year over year guidance on revenue to decline. So that's important gap operating loss 14 to 19 million For the year is what they're projecting. Now they did end Q2 278.4 million in cash and cash equivalence, with plenty of Plenty of business headcount was down 14% over year.

Speaker 2: 15:59

So you want to talk about how are they saving money? Well, they called it right out. They said headcount was down 14%. You over year. Helping us drive efficiency improvements across expenses? Yeah, make sense. Self-service and add-on bookings were down 8%. Other bookings fell 29%. Enterprise revenue growth was 32%. Now there are poo for quote enterprise subscribers Is one thousand six hundred and thirty nine dollars a month, which was down seven percent year over year.

Speaker 2: 16:34

Yeah, now their stock, though, did Okay, right after earnings. It was actually was actually up, and I think just based on that, people liked that they. They cut costs, sure. So let's see their stock, was it? It went up here, so it was a four dollars and nine cents. It hit Four dollars and sixty eight cent, right. So the past five days it's up about five and a half percent, so they saw a little bit of bump. The last six months it's down six percent. Year to date, though, it's up 22%, but again, 22% is 77 cents. Yeah, and you don't want to know what it's down all time. Yeah, it's down 92%. Yeah, so Don't see anything else there really covering, as of now, apple nothing to cover an Apple mark, unless you saw something. They didn't talk about Anything Apple TV related, device related, apple TV plus related. Yeah, no, their stock did take a hit today, though. They were down a good Boy. What were they down? $9 and 18 cents at closing, I think they.

Speaker 3: 17:52

Just dipped under a three trillion market cap, so they're back to being a two trillion.

Speaker 2: 17:58

Yeah, 2.8, yeah, 2.8, yeah, 2.8.

Speaker 3: 18:02

6 trillion, yeah, oh poor, such a poor, poor performing company.

Speaker 2: 18:09

Older free cash flow 26 billion 20.

Speaker 3: 18:13

There you go six billion dollars of operating.

Speaker 2: 18:18

My countries. With that I mean it's just yeah, it's yeah.

Speaker 3: 18:22

You, you were talking about the mega millions Off-off air yeah, doesn't even point to something. Billion yeah, doesn't even compare to like what Apple? Apple's a war chest. That's amazing.

Speaker 2: 18:39

Amazon. Let's see here there's not too much actually to talk about with Amazon. Their. Their stock was up really well today. Investors loved the growth they saw. So Amazon was up eight and a half percent. So up to you know? Just let's see ten dollars and sixty-six cents at closing Mm-hmm. So AWS revenue what street cares about? Obviously a lot is the growth there. Aws revenue was 22.1 billion, which was up 12%. So think about that. Right, aws revenue alone was 22.1 to billion in 90 days. It's insane. Um projected Q3 revenue.

Speaker 2: 19:19

They did say they always throw some things in about prime like we've got a great new show or whatnot, but they did say I thought this sentence was interesting They've grown. Prime videos, international Slate of content, with now more than 40 new local Amazon originals and live sporting events outside the US. So I thought that was good to see them just talking more in terms of outside US as opposed to inside. Yeah, nothing else from Amazon, though, to cover there. I know additional details from them on anything streaming related. Let's jump to alphabet. It's just about a week ago, but Mark and I didn't cover this last week.

Speaker 2: 20:01

Youtube advertising revenue was 7.67 billion, so it was actually up 4%, made Wall Street happy. I believe that was the first time in three quarters that they saw growth year over year. Yeah, cloud revenue was 8.03 billion, so up 28%. But just to put that in perspective, aws was 22.1 billion. Yeah, google's at eight. Yeah, operating profit, though in the cloud business was 395 million versus a loss of 590 million year over year. So again, cutting out costs. Yeah, that's right. This is what everything is about. Google did not disclose anything around YouTube, youtube TV, nfl Sunday ticket. If you were hoping for any good information from them, that did not happen, which rarely happens. On their investment call, let's go into some court cutting no shocker here. Charter lost 189,000 residential pay TV subscribers, so they now have, at the end of the quarter, 14.07 million Residential because they do business as well residential pay TV subscribers.

Speaker 2: 21:21

Ceo also said in reference to zoom oh, quote it will be our platform of choice to deliver to our video subscriptions going forward and ultimately Sorry, let me reread that Zoom will be our platform of choice to deliver to our video subscriptions going forward and Ultimately, I expect us to provide that to some broadband customers over time as well. So what is he saying? He's saying that going forward selling pay TV, maybe not make may not make sense to new subscribers. So we're gonna sell, try and sell a zoom-o platform, yeah, but bottom line is they lost 189,000 pay TV subs. That takes us to Verizon. Verizon and Q2 lost 69,000 pay TV subs. Verizon now, at the end of Q2, has a total of 3.09 million subscribers for pay TV, which is down from 3.4 million year over year. Verizon is going to get to the point where they have less than 3 million paying TV subs. Pretty soon.

Speaker 3: 22:30

That means they're the size of sling TV. What's sling at 2.6 to 2.7?

Speaker 2: 22:36

million.

Speaker 3: 22:40

Yeah, somewhere in there.

Speaker 2: 22:43

Yeah, that's a good point. We're going to see dishes earnings. Looking at the calendar here Actually I don't have it in front of me, but we're going to see dishes earnings pretty soon, unless we already saw them. Nope, we didn't. That's going to be upcoming. Yeah, I mean, it's getting down to that level.

Speaker 2: 23:00

What I'm thinking, Mark, is at what point does a company like Verizon say let's just get out of the pay TV business? Yeah, what is the point? Right, the margins are so low, RSN fees continue to climb. Now, I don't know if they could do that contractually. I am a Verizon customer, so there's plenty of people like me who do want to keep the service. But at some point it has to be a decision. It doesn't make sense, Don't know? It's an interesting one to watch. Let's jump into, let's roll into some content ones here.

Speaker 2: 23:35

So, Warner Bros Discovery they lost 1.8 million subs. Now this is across all direct to consumer. So this isn't just one particular service, All direct to consumer, multiple services. So they now have a total of 95.8 million global DTC subs. Global DTC ARPU was $7.71, which was up 2%. The business had a loss of $3 million, which is incredible. Last quarter they had a $50 million positive free cash flow. This quarter they lost 3 million. But for those that remember, just a couple quarters ago, these guys were losing $600, $700 million a quarter. So when these companies and these Warner Bros, Discovery, Disney and others said, hey, Wall Street, we're now going to focus on profitability, they're not kidding. They told Wall Street they're going to do this. They better execute.

Speaker 3: 24:37

Well, your next bullet point here reinforces that, because this is amazing in 90 days. They're debt repayment, the free cash flow, well, and their debt, which, of course, directly translates to their debt repayment.

Speaker 2: 24:52

Yeah, so they repaid $1.6 billion of debt during Q2. They ended the quarter with $3.1 billion of cash on hand, but they have 47.8 billion of gross debt.

Speaker 3: 25:10

They need a couple Apple quarters to wipe that out.

Speaker 2: 25:14

Yeah, there you go.

Speaker 3: 25:14

Well, two Apple quarters. Yeah, that's what I said. A couple Apple quarters.

Speaker 2: 25:19

It's great you're paying down debt, even if you pay down debt at $1.6 billion a quarter. I can't do the math on that one, but it's going to take a while to get there. It's the point. Yeah, that's a lot of years. Yeah, it's amazing. Yeah, dtc advertising revenue increased 25%. So some people are probably thinking wait a minute, things haven't picked back up in the ad market. How did it increase 25%? Well, because they rolled it out in a lot of other international countries. So total advertising revenue for Warner Bros Discoveries direct-to-consumer streaming services was $121 million. Domestic subs is $54 million. International subs is $41.8.

Speaker 3: 26:02

So there's something that's interesting in this story here about DTC advertising. We talk about FAST a lot. We talk about how FAST is overrated in terms of what returns it can provide. Think about this number. They're direct-to-consumer. This is premium content. If somebody is going to earn CPMs, it's going to be Warner Bros, discovery, netflix, et cetera. They were able to earn $121 million in a quarter $120 million ad revenue, ad revenue. But what is FAST based on Ad revenue?

Speaker 2: 26:46

Well, they are launching FAST channels at the end of the year.

Speaker 3: 26:51

Yeah, exactly, I think sometimes it's just really important to look at the real numbers, look past the hype and the hand-waving and the hyperbole which you and I, of course. That's what this whole podcast is about, dan, you do a great job of keeping us centered there, but it's $121 million, it's not $1.2 billion, it's not $12 billion a quarter, $121 million. Now, that doesn't mean there isn't a way to make money. I get it, people, but it's $121 million that they generate. Keep it in perspective. Yeah, to put it in perspective. Then you look at subscription revenues and it just absolutely dwarfs the over $2 billion. Exactly, everyone is chasing FAST and saying that that's the savior. If you don't have that, you're going out of business.

Speaker 2: 27:48

I don't know. Yeah, I'm interested if, when they roll out FAST channels, if they're going to break out revenue yeah, exactly From that, or if they're just going to lump that in, since it's advertising-related to their advertising.

Speaker 3: 28:03

And also, in all fairness, I didn't look into more details and I don't even know if they reported or if the information is readily available, but it could be that they're not monetizing that aggressively right now in their D to C. So it might be that there's just not a lot of ad placements, a lot of evails, as they call it. So that could be. But again the point is, it's not like it's a 10X or a 20X, right, even if it's a 2X or 3X, okay, that's better, but that's still a quarter of a billion. It's not 2 billion. It's a long way off. Yeah, so I don't know that really stuck in.

Speaker 2: 28:42

And that'll improve. Yeah, I mean it's a low number and that's with 25% growth. Yes, yes, exactly. So it wasn't even $100 million or more previously. Yeah, let's go to FUBU. So revenue of 305 million in North America, revenue of 8.2 million in the rest of the world. So you know, let's call that 315. Some on now subs 1.16 million North America, rest of the world 394,000. So there are about 3.5 million subs. That's sorry, 3.5 million, 1.5 million Now. Net loss of 54.2 million dollars, which is down tremendously from what FUBU was losing. But you lost 54 million.

Speaker 2: 29:36

They have $300 million in cash and cash equivalents and restricted cash. So even if they were to continue that burn rate which they're not going to do you're talking they still have three years of cash. They expect to end the year for North America with a total of 1.56 to 1.58 paid subs and their stock saw a good bump initially after earnings. So they were at $3.35. Oh, they only hit $3.84. I keep forgetting 10 or 12% on a stock that is so low. We're talking pennies here. So in the last five days they're up almost 11%, which is 30 cents. Year to date they're up 88%. But the problem is when we go to max. Well, I don't know if the yahu tigger here is right, but they're saying max all time is down 100%, which can't be possible. Let's look at the five years down 77%. So a little bit of growth, but not a ton.

Speaker 2: 31:01

Let's jump into Roku and we've only got one or two more here. So Roku added 1.9 million net new active accounts. They know 73.5 million. Their ARPU is down 7%. Their total revenue is up 11% 847 million. Streaming hours were 25.1 billion, which is pretty incredible. It was up 4.4 billion hours. So in 90 days 4.4 billion additional hours were. That's pretty incredible. Their ad business flat. No surprise whatsoever, they said. The macroeconomic environment continued to create uncertainty, with the total US advertising market flat year over year, so not surprising at all. To put the hours in perspective, you're talking about 3.8 streaming hours per active account per day. Wow, platform revenue was up, obviously what they're doing with the TVs and whatnot. That was up 11% year over year, so that's good.

Speaker 2: 32:16

For Q3, they expect total net revenue of roughly 815 million and for this quarter they had revenue of 847 million. So revenue will actually go down. Adjusted EBIT of negative 50 million. But overall Wall Street liked what they were seeing. Stock was up 9% that day for the entire week, though, because then they went down again for the entire week. They're down about 6%, but they did see a bump there initially from earnings. Year to date they're actually doing pretty well though. Year to date they're up 112%. So they're up $45.79 since January. So the stock is starting to climb again. In the past year, past 12 months sorry, I should say they're up only 5%. Year to date they're up 46%, and then still all time, even with what they used to be Mark remember it was like 40, 450. Even dropping down from there all time, they're still up 225%. So I think, just give Roku time. Once the ad market comes back, they're going to have some better options to grow revenue faster.

Speaker 3: 33:36

Yeah, I agree, and look pretty much quarter on quarter, they expand average viewing time per user. I think that's what's so. I was talking to somebody this week about it in the industry and on one hand, there's all this incredible pressure, especially on the vendor side, but consumers are still watching video and it's not like we're in a space where people are just completely they've decided yeah, I don't care about short-form, long-form content, I'm just going to watch TikTok videos all day. No, they're watching content, they're watching video. So I think that's a good amount. Yeah, I mean, I think that's good for Roku and, like you say, the ad market and advertisers confidence. However that gets exhibited as an advertiser, which ultimately is you're going to spend more. That's got to flow to Roku.

Speaker 2: 34:39

Yeah, I would think so over time. You know, mark, I forgot one there which was just AMC networks. So AMC lost subs as well. Yeah, they lost 300,000 subscribers across all their streaming services in Q1. Ad sales were down 17%, so that's another one there that they saw. So let's see, they were down to 11. Oh, I'm sorry, I'm talking Q1 here. Let's go to Q2. So Q1, they declined 300,000 subscribers to end with 11.5 million. Q2, it continued with subs down to 11 million. So lost a lot of subs there. Also.

Speaker 2: 35:30

What's confusing here is when I was comparing some of this is in their press release they stated that they updated their subscriber definition to no longer include estimated subscriber conversions and, as a result, they had to remove 300,000 subscribers from their quarter end subscriber account. Okay, which? When I saw that, I was like wait, so you're including estimated subscriber conversions already in your subscription numbers. You're giving to Wall Street. Yeah, that seems. I mean, I don't know if it's legal or not Obviously they're getting away with it, but why would you do that? That just doesn't make any sense to me. They do expect by the end of this year they'll make it halfway to their larger goal of having 20 to 25 million subs by 2025. At the rate they're going, I don't see how they make that. That doesn't make any sense to me with declining subs and you're not even at your halfway mark and you want to be twice what you are now. By the end of what is that? Another two and a half years? That doesn't seem realistic. That's right. So there weren't anything good about the numbers there.

Speaker 2: 36:55

And finally, mark, let's just go to an acquisition here. Sorry, I should say an announcement of an agreed upon acquisition. Let's get that right. New relic has entered into an agreement to be acquired by financial folks called Francisco Partners and TPG for $6.5 billion. Now, I don't know what some of these folks are thinking. Frankly, I don't know the people who are buying them. But if you strip out the cash New Relic has, new Relic is getting a five times valuation on projected 2023 revenue. That doesn't seem like the right multiple. I mean great for New Relic, right, good for you guys, you got it.

Speaker 2: 37:40

But they announced at the same time of the deal they announced their Q1 revenue. Their Q1 revenue was $242.6 million. Their loss of operations was $33 million in the quarter. Now they do have $457 million in cash short-term investments, but again, if you strip that out, they're getting five times projected sales on a business. That's not even positive free cash flow, which I think the revenue multiples too high. Frankly, I just don't know why somebody would pay that much for it.

Speaker 2: 38:18

As part of the deal, new Relic does have a 45-day period shop to company, so it is allowed to entertain offers from other bidders or other qualified bidders. I should say that was key. But to get that much of a valuation on a business that's losing money and, frankly, is that a run rate to do a billion dollars this year, that's just not a lot of revenue when you're paying $6.5 billion for it. So TPG they're an asset management company. Francisco Partners they're a global investment firm. They invested over. Last I looked it was over 400 technology companies. They've been around forever. But I think the valuations too high, frankly. And now I've already heard from people when that happened other people tied to the business that New Relic is in I was like oh, man we're worth a lot.

Speaker 2: 39:21

Well, maybe you are. Maybe you are, but you have to look at what someone's willing to pay. So not that New Relic really directly ties into our space. If you don't know what to do, they're this observability platform to see what you're doing in your cloud deployment. That's the easiest, I think, highest level to put it. But a lot of media companies TMT, Tech, Media, Telecom and our space obviously use it for all kinds of different deployments in the cloud. So I thought the valuation was interesting and we'll have to see what that does for some of the other vendors in their space. So, Mark, with that, I think we're good. We covered a lot there pretty quickly, which was great. We covered a lot. Yeah, Every single thing we talked about today. It's already up on LinkedIn. Oh, sorry, one more, Mark, I forgot Peacock.

Speaker 3: 40:17

You did Comcast. I was just reading the quarterly report here.

Speaker 2: 40:25

So Comcast, let's go through this real quick. Peacock gained 2 million subs, the now 24 million total. Peacock had 820 million revenue, but here's their loss number 551 million. Sure, now no one should be surprised. Comcast has already came out earlier in the year and so they expect Peacock to lose about $2 billion this year before they turn that around and it's works towards profitability. On the pay TV side, comcast lost 543,000 pay TV customers and they dropped below 15 million at $14.98.

Speaker 2: 41:06

This president says working with Disney and taking a stake in ESPN would quote be very improbable. So all this talk about everyone investing in ESPN, we'll see what happens. I did hear some couple people say Mark, well, on paper, I keep hearing that Disney will give Comcast ESPN and in exchange Comcast will give back to shares they own in Hulu. I thought, yeah, that sounds real easy on paper, but the transaction like that would not be easy to do if you think about just all of the deals Disney has from ESPN with carriers, with the cable operators and whatnot. So hey, I guess it's possible to get anything done. But interesting, we'll see what happens with ESPN and ABC and the linear TV channels. But that's Comcast. So Comcast, so Peacock is the number of members. They now have 24 million subs at the end of Q2. So with that, mark, we're good.

Speaker 2: 42:10

We're out of time here. Nice, about 38 minutes, perfect. Next week, we'll have a couple other earnings to do as well. We've got Disney, we've got Paramount, we've got Fox, we've got Vizio. So we only have a couple more left. One more week of earnings and we'll be back to covering some other things in the industry. Also, I want to thank listeners now. We're now over 25,000 downloads. That's amazing, yeah, across all the podcasts. So it keeps growing, which is great. So you have any questions, reach out to Mark and I and LinkedIn. We'll be back next week. We're on a pretty regular schedule. We'll take one week off at the end of the month when I'm traveling, but then we're pretty much dropping everything every week. So have any questions, need help with anything? Reach out Mark and I at any time. As always, we appreciate you guys listening. We'll talk to you next week. Thanks very much.

Speaker 1: 43:00

If you enjoyed the show, send it to a friend. Have questions for Dan or Mark? Ask them on LinkedIn at any time, and be sure to check out Dan's blog at streamingmediablogcom.