This week, we break down all the numbers from Warner Bros. Discovery's full year 2023 earnings, including DTC profitability in 2023, exclusive NBA negotiations, international expansion of Max, and their disciplined approach to investing in subscriber growth, mindful of lifetime value to subscriber acquisition cost ratios. We also highlight why Fubo is suing Disney, Fox, and Warner Bros. Discovery over their recently announced JV deal to offer a sports streaming service and the overlapping distinct authority that the FTC and DOJ have to challenge anti-competitive practices. Finally, we detail earnings from Vimeo, which projects only 4-8% of revenue growth in 2024 and Brightcove, whose projected 2024 revenue growth would be flat or slightly down over 2023.
Podcast produced by Security Halt Media
This week, we break down all the numbers from Warner Bros. Discovery's full year 2023 earnings, including DTC profitability in 2023, exclusive NBA negotiations, international expansion of Max, and their disciplined approach to investing in subscriber growth, mindful of lifetime value to subscriber acquisition cost ratios. We also highlight why Fubo is suing Disney, Fox, and Warner Bros. Discovery over their recently announced JV deal to offer a sports streaming service and the overlapping distinct authority that the FTC and DOJ have to challenge anti-competitive practices. Finally, we detail earnings from Vimeo, which projects only 4-8% of revenue growth in 2024 and Brightcove, whose projected 2024 revenue growth would be flat or slightly down over 2023.
Podcast produced by Security Halt Media
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:Welcome to the Dan Rayburn podcast. I'm Dan Rayburn, along with co-host Mark Donaghan for another week that we got through of news. The earnings gauntlet, what else? A long week for me with the NAB streaming summit placing a lot of speakers, which was awesome.
Speaker 2:I'm going to apologize in advance for my voice. I'm already starting to lose it here at the end of the week. But, mark, we have some interesting things to cover here, mostly from Warner Bros, discovery earnings and what they're talking about, max. But before we get to that, let's just jump into some quick little snippets here. First thing is that Paramount has decided not to put out viewership numbers for the Super Bowl.
Speaker 2:When it comes to streaming Interesting we're going to details there, but they will be the first broadcast network or I should say they are in 13 years of streaming the Super Bowl not to put those out. So I did publish a post saying that the Paramount Plus average-minute audience was $8.5 million. I'm Paramount Plus, that's my number. I'll leave it at that. However, somebody from Paramount did publish something on LinkedIn where, if you just do the math, you can see that between Paramount Plus and virtual MVPDs they totaled 11.7 AMA average-minute audience viewers. So that's combined. So that tells us that about 3.2 million people watched the Super Bowl across virtual MVPD releases, which is 11.7 million. We talked about that in last week's podcast.
Speaker 2:It's a much lower number than the 20 and 30 million people are reporting.
Speaker 3:Yeah, for sure. And yet I guess that feels about right across virtual, because if you add up so you've got Fubo would be in there, right? Fubo YouTube.
Speaker 2:TV, sling TV, Hulu Plus Live TV. So combined they all have about 16 million subscribers. Not all paid right Because YouTube doesn't break that out. So 16 million Out of that you would have about 3.2 million. So hopefully you're better at math than I am.
Speaker 3:It's like 20% roughly. I mean it's right at 20% and that feels kind of right about right.
Speaker 2:Well, as we mentioned in the last podcast, what I privately hear from certain companies? Is that 20? To 25% of their audience is watching the Super Bowl.
Speaker 2:So those are the numbers. People should run with them. I made a nice graphic which I published with the post, so hopefully people can circulate that Real detail breakdown to my blog post. For the other 12 years at, the broadcast networks did report numbers. I published all that directly from the press releases. So that's good.
Speaker 2:Let's talk a little bit, mark, about Apple introducing their Apple Sport app. So I thought this was interesting. I'm seeing a lot of comments online, so for those that don't know, apple has introduced a free sport app on iPhone only Interesting that gives you instant scores and stats across different sports leagues, and some of the sports leagues are missing Major League Baseball and whatnot right now, only because the season hasn't started, but they will be adding them, so we don't know if they plan to bring this to Android. They didn't say this also is not made for Mac or iPad. If you download it, you're going to get just a small screen size, just like it's on the iPhone. So I thought this is interesting, mark, because a lot of people seems online are making some pretty big claims of what this is going to turn into, which I think is kind of odd.
Speaker 2:This doesn't have videos included. This doesn't have highlights. This is really for getting scores, getting stats, and will also link to live sporting events available through other apps and platforms, which is cool. And it does have betting odds in the game listings by default from DraftKings, which you can turn off. But if you're really into sports betting and you're a fantasy better, you don't need another app. You're already using DraftKings or one of the others. And while some have said that this pulls in the stats and scores faster than, say, espn or MLBTV or whatnot, that's cool.
Speaker 2:But as a sports fan for baseball, I'm not looking for another app to pull in scores. Mlbtv works really well, interesting, so not really sure who this is targeting overall, I wonder if it's a.
Speaker 3:You remember back in the day, like 10 years ago, the rage was the second screen. Every video conference had whole session tracks on second screen experience. I wonder if there's something about the app being just another way to be able to push data, information, articles et cetera separate from the video screen. I wonder if that's the vision. I don't know.
Speaker 2:Yeah, I think so I think this is. It's not a widget right now on your home screen. I imagine at some point it will be, but I'm thinking of this as just like how in iOS, the iOS 17, say, right now, you automatically get the stocks app, you get the news app. I'm thinking in iOS 18.
Speaker 3:I think it's 18. Yeah, 18 will be the next.
Speaker 2:I'm guessing this just comes by default and it's like the stock app and if you want to create a widget, you're getting scores and stats and it's coming in real quickly. Hey, that's cool. It's better engagement on the iPhone.
Speaker 3:Yeah, exactly.
Speaker 2:But there's no actual video within this so it's not a place you're going to go for highlights.
Speaker 3:Well, that makes sense because, look, they've got, you know, they have an Apple TV and they have, you know, and there's other services that can run on the iPhone when you can watch videos.
Speaker 2:So I don't know, we'll see yeah, we'll see what it turns into. Let's go into this whole freebie sort of news this week and we'll just hit this real quick. There's been, frankly, I think, too much talk about it.
Speaker 2:So Adweek reported that Amazon was planning to shut down freebie. They reached out to Amazon, as did others, and they said they told me the report is, quote inaccurate and saying, quote there are no changes to freebie and that the service remains an important streaming offering for both prime and non-prime customers. And okay, that's great. Now they didn't say there's no changes coming to freebie, so we can play semantics here. Yeah, a little little hard to know. I thought the Adweek report was was a bit odd, maybe because it said it, amazon is planning to sunset it, but later in the story it said Amazon might delay closing it. And then again later in the story, the source that they talked to said if the question is whether or not Amazon will persist with two standalone streaming services, I'm certain the answer is no. Okay, but that's your opinion. Yeah, so it was a bit of an odd story how it was written.
Speaker 3:Yeah, I picked up on that as well and I actually wrote a comment, and I think I started by fake news to your post. Of course, I have no idea, but I will say that several weeks back I made a comment about really enjoying Bosch legacy and I thought the quality was good, et cetera. Well, interestingly enough, dan, senior executives at Amazon listened to the podcast. I shouldn't say interestingly enough, you know that, but I, literally days later, got a note and I know this person not real well I mean, we don't talk all the time, but we've known each other for years who's very senior in the organization, who send me a specific note to say, hey, I'm really happy to hear that she liked Bosch legacy and freebie, you know, and that was it. And I just replied with a simple you know, yeah, keep up the good work. And you know so. Did they give you a free code for Amazon Prime? Yeah, no.
Speaker 1:I should have hit them up for that.
Speaker 3:But I just found it interesting and again, I don't communicate enough with this person that you know, like it would have been normal to in their every other day correspondence with me, you know. So you know the fact that they reached out, acknowledged it and made a very positive, you know kind of appreciative positive, I sort of went, huh, if you're gonna kill the service, you probably, you know, like I would have had no idea, you know, he didn't have to send something. It means nothing but it could mean a clue, you know. And I just think that there's too much conjecture and connecting of dots. You know that, yeah, for this one.
Speaker 2:There was also.
Speaker 3:That's what I picked up on the person who wrote the Adweek story.
Speaker 2:They didn't say that their sources were any one at Amazon. They made it sound like these are third party sources that would just be in the know. So it sounded a bit of a guess. But let's break this down. More importantly, whether the news is right or not is you know, free V serves an important audience for Amazon in the market and I've seen a couple people write up well, amazon now with an eight, with inserting ads into Prime Video, it makes sense for them to kill Free V because it's really confusing having the two different services in the market and Amazon Prime Video. It's just you know it's a mess with all this confute. What is a mess about it? You have one service where you pay for it.
Speaker 3:You have one service, that's completely free and the name is great, by the way Free V. I mean, it's like great, it's two different players, Like hey.
Speaker 2:I don't see any confusion whatsoever. So some, it seemed, took it as an opportunity to knock Amazon for having a confusing setup where you can have something with ads that you pay, something without ads that you pay for, or something where you don't pay at all and get ads. Well, that's a really a three tier model, of which pretty much everybody else has a three tier model, so some have four. So I don't see the issue here at all. I think it's just kind of a lot of noise. Now does Free V get shut down? Sunset at some point.
Speaker 3:Well, and does it get rolled into prime? Ok, maybe, but that, but why? Prime costs money? Well, exactly, and then they would have to have another tier of service. And then that opens up, you know, sometimes additional confusion, as we've talked about, where you know, if you limit, like, oh, you only get up to 720p or 1080p or you don't get the full catalog, that creates problems, right, you know.
Speaker 2:So anyway, Well, I hope it says it is. To me it's very simple Two brands offering two different types of service.
Speaker 3:Time will tell.
Speaker 2:Let's jump into the next one here. So Fubo is suing Disney Fox and Warner Bros Discovery over their recently announced JV deal to offer this unknown, unnamed sports streaming service. So they filed their complaint in the US District Court, southern District of New York, and they're seeking to block the joint venture. So, interesting in terms of what the suit talks about, the real tactic Fubo is taking here is saying that because of the way these companies license content to Fubo and others, it's imposing what Fubo says as quote significantly above market licensing fees, so it inflates consumer pricing. They called these companies a cartel. I thought that was an interesting word.
Speaker 2:They didn't say monopoly, they said cartel. I was like wow, all right.
Speaker 3:The sports cartel.
Speaker 2:They're also talking about how they're forced to license a bundle of channels instead of individual channels. I don't disagree with Fubo in that regard, but you know what pay TV providers?
Speaker 3:have to do that too.
Speaker 2:Yes, exactly, or I shouldn't say pay TV providers, sorry, operators yeah operators yep, yep, can't just take ESPN, they have to take all of.
Speaker 3:Disney's channels. Go talk to the con cast people. They go through this all the time.
Speaker 2:I don't see how this is really any different than we've already seen in the market. Would it help Fubo's business if they could only license certain pieces of content or channels? It absolutely would. Would that be better for consumers? Only if pricing was then lower? Would pricing be lower for sure? I don't know. We don't know what it costs for Fubo or anyone else to license channels. I did have a chart on my blog, but I think it's now three years old, so it's a little hard to know.
Speaker 2:I think the key takeaway here is there's a couple things. One I don't see any legal standing. Fubo has to get an injunction here, because these companies are not breaking the law in any way by getting together to create a sports streaming service. If Fubo wants to complain and take him to court for having some sort of monopoly over how they're licensing content, that would have to be reviewed by the FTC and the DOJ. But note that what I'm thinking is going on here is, in order to get those agencies to look at it, fubo's filing a suit to get the ball rolling, so hopefully others get involved. Whether or not they do, I don't know. The other thing to note here for listeners, if you don't understand how this works government-wise, because if you don't really follow this or work on cases, it can be confirmed.
Speaker 2:It can be confusing, but the FTC and the DOJ have overlapping and distinct authority to challenge anti-competitive practices under federal law. So they each tend to look at something a little bit differently. But from what I've read online from legal experts, they don't see how this is considered a monopoly, because one company is not acquiring the other, which is the key here acquisition. However, they have blocked. They have blocked in the past bundles. So that's also what I'm wondering here. Because the FTC focuses on protecting the public from deceptive or unfair business practices and from what they call unfair methods of competition. The DOJ enforces things through antitrust division. Those are two very different things. So gonna be interesting to watch. I don't know if anything comes to that, but there's certainly a lot of people talking about it.
Speaker 3:Do you watch Billions or have you watched the show? No, I've not seen it. I've heard of it but not seen it. Chuck Rhodes is the attorney general for the state of New York and he loved these kind of cases.
Speaker 2:Good, let's get Chuck in the podcast. Exactly Whoever plays Chuck On the show. Yeah, he can play a legal expert on the podcast.
Speaker 3:Oh, that's funny.
Speaker 2:All right. So let's jump into the meat of today's podcast, which is Warner Bros Discovery. So they had Q4 and full year 2023 earnings. There's a lot to break down here because in their earnings call, their CEO was really open in terms of talking about the business going forward, which I think is really important. So let's just break down some high level numbers. They ended 2023 with 97.7 million direct to consumer subscribers. That's across all their streaming services. So they gained 500,000 DTC subs in Q4. Part of that was due to an acquisition of a little tiny OTT service. They ended 2023 with 103 million dollars in profit for their DTC business.
Speaker 2:Now, CNBC all day long today was talking about okay, they're the only broadcast operator, which isn't Netflix, to turn a profit for DTC, but you have to remember they spent less on content in 2023 due to the strikes more than a billion dollars less. So would they have turned a profit this year if they spent the same amount on content? Realistically, no. So is it good they got to where they are with the profit for the year? It absolutely is. And to put it in comparison for those that don't know, two years ago they lost $2.2 million dollars. Now they turned a profit of 103 million for the year. That's a big turnaround, Very big turnaround.
Speaker 2:Now that's due to cost cutting, laying off people, all kinds of different synergies in terms of that, but it's a big deal. Global DTC ARPU was $7.94. That's up 7% year over year, mostly because they raised rates. Now here's something we should break down. Mark, that's important. I hear a lot of people talk about and see them on TV and also just on LinkedIn talking about Warner Bros, discovery. Just from a financial standpoint, it's got a lot of problems. It's got a lot of debt. There's a lot of financial pressure. Let's actually make this really clear what it is. So at the end of 2023, they had $4.3 billion in cash on hand. They do have $44.2 billion of gross debt. There's no question. Nobody would argue they have a lot of gross debt and that's something that you always have to look at. But they paid down more than $12 billion in debt in the last two years alone.
Speaker 3:Why is nobody talking about that? I was going to point that out. At one point like $60 billion or maybe even slightly more in debt, I think at the peak it was over that, but I don't remember the exact number, yeah, so I mean that is a huge pay down in that period of time.
Speaker 2:It's a lot. Now here's the other thing that people have to understand $44 billion of debt is not due all at once Thank God, because they'd be out of business. So the average duration of the company's outstanding debt at the end of 2023 was 15 years, at an average cost of 4.6%. Because a lot of people wishing they could buy, they could get a mortgage at 4.6%.
Speaker 3:That's exactly my point.
Speaker 2:So they're not in bad shape as everybody talks about Now over the next three years. Here's their debt load In 2024, they owe $1.8 billion. In 2025, they owe $3.1 billion. And in 2026, they owe $2.3 billion. It's not as if, all of a sudden, they have a $10 billion payment coming, so they're not having a problem with the balance sheet right now. They've cut expenses drastically, which is good, so this isn't an issue in terms of their balance sheet currently. Yes, it's a lot of debt, but they're paying it down. I think the bigger thing to look at here is the business. In Q4, advertising revenue decreased 14%. Social revenue was down 18%. Content revenue was down 20%. Network revenue was down 8%. Distribution revenue was down 3%. The only thing that increased revenue was their DTC business. That was it.
Speaker 1:Yeah, and the stock.
Speaker 3:Now their stock is getting hammered.
Speaker 2:Initially. Now it's not down much, actually, mark. Maybe you can look it up, because the bell has closed. This is Friday, february 23rd. We're recording While you're doing that after earning stock was down about 15%. Part of that, too, though, is from the analyst notes I saw put out on Wall Street is that they did not give out any full year 2024 guidance, and that's something they've historically done, so that always scares the street a little, but what did they close?
Speaker 3:down. Let's see. So yesterday they closed at 9.53.
Speaker 2:Yeah, so today they closed at 8.61, so they were down just under 10% or so Exactly.
Speaker 3:They opened at 8.43, so they dropped a dollar. Then they went down a little bit more, and then they've crawled back up.
Speaker 2:Yeah, so you're. To date they're down 26%, not really surprising. So the last year they're down 44%. We know this. They've had to cut costs and definitely improve their balance sheet, but the fact that this company paid down $12 million in debt less than two years, that's a big deal. So I don't think they're in the position that some are suggesting.
Speaker 2:Here's some other interesting portions of their business Mark that I don't think are being highlighted. This is really important in terms of growing their business. Finally, max is only available in less than half the addressable households and markets as compared to their larger peers like Netflix. So they still have a huge opportunity for growth internationally and they will be rolling out internationally, starting next week with Latin America, then in Europe, apac. In the following year there'll be a new markets in France, belgium, which are going to coincide with the Paris Olympics this summer. So they still have a lot of places to roll into the UK, germany, italy, australia, japan. They also mentioned on the earnings call that they have a lot of local content and sports in those regions as well.
Speaker 2:Some other key points they gave out from the earnings call. They didn't give us a number, but they said in Q4, they had quote the lowest churn rates in HBO Max and Max's history Interesting. Here's a little update on the NBA. They said, in terms of their NBA rights, they are now fully engaged quote, fully engaged in renewal discussions and they are constructive and productive. They also have the exclusive rights to negotiate. So I don't have an insight here, but I guarantee you they're getting keeping NBA content.
Speaker 2:If not getting more, it's going to happen. It's going to happen. This was really interesting, mark. They said quote engagement in terms of time spent proactive accounts has continued to increase. Okay, engagement is increasing, but here's the key part Most of that increase has been driven by the inclusion of the legacy discovery content. Very interesting.
Speaker 2:When it comes to the business and what they're looking at, they said we are not going back to subsid all costs. Not surprising. What they're saying is they have to be very smart about how they grow this business. Later on, they said quote we will continue to take a disciplined approach to investing in subscriber growth, mindful of lifetime value to subscriber acquisition cost ratios as we proceed into this next phase. So that whole Amazon model that we saw in the COVID days of get big fast at all costs, it's a long gone. Stop all their interesting things. By the end of this year 2024, they will be available on over 40 markets globally with max. So it's a big, big rollout.
Speaker 2:They also said we will continue to be very, very focused on capital efficiency. Not surprising they also said quote we already have a very significantly changed sorry, we have already very significantly changed the approach to our investment decision making across the entire company. So this is all about how they spend cash, where they spend it operational efficiency, arpu, profitability, productivity that's the focus Now, while they didn't give out full year guidance mark for the company this is very important they did give out full year DTC profitability and they said they expect the DTC segment to be profitable for the year and they have a one billion DTC segment EBITDA target in 2025. Wow, it's big deals.
Speaker 2:If they get to that, they also have a good amount of sports on the platform as well, with the Bleacher Report Edition, so I think that's interesting. Now they did talk a little bit about the JV service not a ton, but a couple interesting things here. This CEO said it's too long to read, but basically what he said is, when people are thinking what channel to watch, you'll be able to go with this new JV sports app and you'll be able to watch everything there, instead of having to go to Google and search where something playing. However, that's not accurate, and what he actually said was he said if you love the baseball playoffs, you can watch all of them there. If you want to watch all the hockey playoffs or basketball playoffs, you can watch it there. So this idea we're going to be able to watch baseball, basketball, football, whatever it may be, all in one place.
Speaker 2:We know that's not the case. They do say they're targeting the younger generation as not subscribing to pay TV. They think they're missing those subscribers as well as the cable industry is missing them. The other thing they talked about here is they think that there is a market of 16 million individuals they can go after. I don't really know how they come up with that number, because I think what they're looking at is how many households are there? I see there's about 125 million households in America and 60 million of them are down in the traditional bundled cable ecosystem. But that's someone like my mom, so she's not going to get this service. So I don't think your market opportunity is really 60 million. We don't quite know what the size is. And then the final point here CEO said quote I've seen a number of the prototypes. We're pretty far along. We're going to follow pretty quickly with our plans. That's very interesting.
Speaker 2:So it sounds like they've got way more than a proof of concept going here. However, it's end of February. They need to roll this out by the time of NFL. That gives them six months, and they don't yet have an announced CEO management team. There's a lot to do in six months, so one wonders can they really get all that done, or do they have to put the app out with limited functionality? Do they give it out and give it away for free for the first month or two and call it a beta?
Speaker 2:so they can test it. Don't know, but we're going to hear more about it. So the key takeaway here is yes, warner Bros, discovery has debt. Their balance sheet is not as bad as some make it out to be. Their cash flow is fairly good. They've paid down a lot of debt. They continue to. They definitely seem, especially from two years ago, firing at all cylinders here, streamlined and ready to expand internationally.
Speaker 3:So we'll keep an eye on that. Yeah, I agree, Dan. I think this is a great story and I mean we wish everyone the best, but it would be really great to see them come a little bit from behind and really succeed, yeah, and if they grow internationally.
Speaker 2:I think that's the key, because what does scare me about this, mark? Okay, so that's the positive. Let's talk about what scares me negatively. What scares me here is if they can't continue to grow max subs internationally at a high enough rate, with a high enough R-Poo, and the ad business doesn't continue to grow. They did have some numbers in here that were very big about percentage of how quickly the ad business is growing, but you only recently rolled out an Avod option.
Speaker 3:Yeah, you know that's so we can't really look at that. That's interesting, dan, because I'm thinking about Netflix when they were really scaling internationally. And you know we'd have to go back and take the time to look at all the quarterly earnings reports and see where Reed Hastings was spending his time. But I seem to recall that, like most, all the data was about how they were doing in the countries that they were targeting or had targeted for that quarter, or you know that they'd said they were going after right, I mean, it was heavily focused on international, international expansion, and a lot of so are the growths, a lot of news and updates. Because you know, netflix, of course, ran into you know, a little bit of hurdles where some countries you know said oh, you know, you have to have content only sourced and are, you know, made by our filmmakers, et cetera. And you know, I know, that was a little bit of a hurdle initially, but now that's, you know all well.
Speaker 2:Well, we also know with Netflix internationally. The point is, we knew that, whereas the growth was coming from, because the US market yeah, exactly, exactly.
Speaker 3:And Max has at least saturated the US market to a fair degree with their product, but the 60 million that's the US market, that they say they still Correct.
Speaker 2:So well, yeah, but that's just for the JV service.
Speaker 3:The JV service. That's right. That's not Max yeah.
Speaker 2:Right, yeah, that's not Max, that's true, okay. So we'll see. It sounds like we're going to get more information on the JV service, so let's wrap up with two other things here. Mark Two earnings Vimeo and.
Speaker 1:Braco, let's do.
Speaker 2:Vimeo first. So Vimeo had revenue of Q4 revenue of 106 million, which was flat year over year. They had full year 2023 revenue of 417.2 million, which was down from 433 million in 2022. Now the 2024 revenue guidance is between 385 to 400 million, which would be down 8% to 4% year over year. So that's a business that's going to have declined in revenue growth for three years straight.
Speaker 2:And just remember what that stock was. At one point, vimeo was supposed to be the next best thing ever in the video world and at one point, their stock was $57. Today, their stock closed under $4 and it's still down 93%. So I don't see how they get out of that hole from a stock standpoint. Frankly, they would do better if they were just taken out from a PE standpoint, but those are the numbers. They had an operating loss of approximately $5 million. Oh sorry, they expect an operating loss for 2024, approximately $5 million.
Speaker 2:So they've done a great job in the last 12 to 14 months of managing expenses in cash flow, like every other company. But keep in mind, how did they do this? They did this through two big layoffs. Now, when you read through some of their documents, they also mentioned that they quote, did a recent execution of a small head count reduction on February 1st to further right size their costs. So they did another round of layoffs Don't know how big I didn't hear a number but that's three sets of layoffs in a short period of time and, as we've talked about, it's easy for companies to show progress in their balance sheet in cutting costs when you do layoffs.
Speaker 2:But the concern here with Vimeo and others is you've already told Wall Street that you didn't grow as quickly in 2023 as 2022, and you're not going to grow as quickly in 2024. So where's the growth of the business coming from? That's a problem. They ended 2023 with their head count down 13% year over year. They also said that they quote we think we will continue to see some near term top line headwinds in 2024 that will cause overall bookings revenue to be down year over year. So what they're saying is we're going to struggle to grow our business. They also said quote we still have work to do to optimize our sale effort, particularly with small, medium businesses, where our pipeline has been relatively weaker.
Speaker 2:I thought that was interesting, simply because that's what their core business is, is SMBs, it's not enterprise. So they do use this term, enterprise mark which we should go through. Enterprise R-Pool in Q4 was $1,746 a month, so they define an enterprise customer as a customer that small. Now to put it in perspective from Q3 of last year to Q4, enterprise customers spent an additional $9 a month. I don't know how that's classified as enterprise $9?.
Speaker 3:Yeah, yeah.
Speaker 2:It just doesn't make sense to me. So to me that shouldn't be classified as enterprise. And remember listeners may not know when they first came to the market, when, public, they gave out revenue based on enterprise. After a couple quarters, when Wall Street was kind of like, hey, this doesn't really seem like enterprise business, they stopped reporting their business as enterprise and they called it quote sales assisted, because that's how they define it. Then, a couple quarters later and it changes CEOs, they're now calling it enterprise again, but the business hasn't changed. So to me that's kind of strange. They did end Q4 with $301 million in cash and cash equivalent. So the takeaway here is vimeos in fine financial shape. They're not burning through a lot of money right now. Okay, revenue is not growing year-over-year, but they're not burning through a lot of money.
Speaker 3:They've got a lot of cash in the bank.
Speaker 2:They think they're gonna have an operating loss of approximately five million for all of 2024. The numbers are great from a from a profit and loss standpoint. The problem is you're not growing your business. So what do you do? What do you think you need?
Speaker 3:to be part of a larger. Yeah, what do you? What do you think, Dan? I mean, is there a product that they could bring to market that would Allow them to crossover, you know? Are they crossover to what? To? To at least growth in the stock price.
Speaker 2:Well, there's, those are okay. Mark, that's a tricky question because you're really talking.
Speaker 3:Tricky because you just got a fundamentally like the business is not. You know, if you and I own this and it was completely a private Enterprise and we're taking some nice cash out every year, we might say what's wrong with our business.
Speaker 2:You know, like this is pretty good, but yeah, and I would say nothing at that point. But keep in mind their stocks under $5 and institutional investors don't really look at stocks under exactly that's why I said raise our stock price.
Speaker 2:Well, the only thing you can do to raise your stock price and and I don't mean by doing some sort of you know split with shares the only thing you can really do is you can show Wall Street that you're gonna grow, that you're gonna cut costs and you're gonna be profitable. Now They've already cut costs.
Speaker 2:They're close to what they say will be what looks like free cash flow positive in 2024, but your business is gonna decline anywhere from a high of 8% To 4%. It's gonna decline, and that's after it already declined the previous year.
Speaker 3:Wise Wall Street, yeah, yeah no, it's just that we know that they they have for years. They've been squeezed between YouTube and Like Bright Cove Caltura. You know they're like squeezed in the middle right and it. I just don't. This isn't about, you know, like bringing an incremental Improvement or an incremental I don't know. You know some. You know like, for example, oh, we have a better virtual meetings platform, which, by the way, you know actually one. You know One of the companies I work with, you know we use that their virtual meeting platform works perfectly fine, works quite well, actually. So, but that's not enough, you know. So where do they?
Speaker 2:go? No, where do they go? Well, so you know, here's. Here's the thing I look at with them is they're still providing a lot of services to Individuals who are paying $10 a month. Why be in that business? They're just. What is the point? Remember when break off got report break of express $100 a month? Because they kept saying just there's not enough customers that convert up to a larger size customer. So If they did that they will cut out a huge amount of costs.
Speaker 3:But the problem is it's a large percentage of their revenue, the revenue that's, and now wall streets?
Speaker 2:really not excited because your revenue drops by a huge amount. Yeah, even though that's what would be best for Going back to you and I own this, and it was a totally private.
Speaker 3:That's what we would do, right? We'd be like, well, oh, you'd cut that you cut that much keep. It's not the top line. You know top line doesn't matter.
Speaker 2:It's how much to keep at the end of the month, a year, the quarter you know and here's the contrast, mark the the letter that they have that they now put out. Vimeo now does a shareholder letter. I thought it was really interesting. They're talking about the strength of their enterprise business and then they go on to congratulate a Director who, I guess, won an award for some sort of independent film who happens to use Vimeo. Okay, and it's such a contradiction of who you say you are, because an independent filmmaker using Vimeo is not an enterprise customer, that's not an enterprise use case. It just and to me that's odd because it's it's the approach of well, let's try and be everything to everybody when that's not what the markets want. Nor is that what companies do very well. They also made an interesting comment where they're working on some OTT things and they see some, maybe Advancements there, something the effect that they're excited, and yet their OTT product line is something that they pretty much sunset Previously from acquisition. So are they now trying to get back into the OTT space?
Speaker 2:I'm not really sure. So I just think focus is key. I like companies that focus. I think Wall Street understands companies that focus. I think that's what they need to do. So let's do one more here bright cove. Also one other thing, mark, you mentioned you have a customer uses Vimeo. I think it's great that Vimeo uses their own technology to do what they call an interactive shareholder letter. But here's the problem the features didn't work for me, the functionality it worked. So the woman from the finance department I don't think it was the CFO was saying if you want to see her shareholder letter, click here. And she puts her finger up in this circle appears, but you can't click on it and when you click on it it just pauses the video.
Speaker 3:That's not good.
Speaker 2:It doesn't. So three or four times it was you know if you want to do this and a black box, solid black box, popped up in the lower left hand corner with no text in it, where they're supposed to text, and when you clicked on that it didn't hot spot to anything on their website. So if you're gonna showcase your technology to investors, it has to work a hundred percent of the time. And I'm sure somebody would say, well, maybe didn't like your version of Safari. Yeah, cool, I get it, but the problem is investors don't care about that, yeah it's supposed to work.
Speaker 2:So don't use that functionality because you can't guarantee that a hundred percent of the time. So finally, here break over. Break over had Q4 and full year 2023 earnings as well. So break over had Q4 revenue of fifty point two million, which is up two percent you over year. The revenue for the full year was just over two hundred one million, which is down four point seven percent. They had a net loss of twenty two point nine million. So break over ended twenty twenty three with eighteen point six million in cash and cash equivalents.
Speaker 2:Here's another one mark where they gave out twenty twenty four revenue guidance and is expected to be in the range of a hundred ninety five million to a hundred ninety eight million. So break over, like Vimeo's, revenue will decline for three years in a row, if these projections are accurate. Now, the difference here with break over is they're expecting a loss from operations in twenty twenty four, non-gap loss from operations To be only in the range of one to three million dollars. That's it. Yeah, so one to three million loss for them. Vimeo thinks they could have a loss of around five million. These companies have done a great job of cutting costs.
Speaker 2:Yeah and and it's needed. You know, break-off doesn't have 300 million dollars cash.
Speaker 3:I was just gonna say but Bracov has to Live within their means.
Speaker 2:You know they do now, if they burn three million dollars this year at their current run rate and they can still last six years, right? So I'm not concerned with that. What I'm concerned with, though, mark, is and I don't know how this is structured of break-off, is you can, companies can also get to a point where they get to a certain number of of their cash reserves, where it triggers other things in the business talked about that and and those can be detrimental.
Speaker 2:Others get ownership or others get certain class of voting shares or board seats, or so I have no idea how Bracova structured in that way. But you know, here's another vendor in the market and it's not just break over to Vimeo. We've highlighted a couple of them who Are not growing revenue. So at some point these companies really need to figure out long term, when your revenues growing, your rate of revenues declining three years in a row, how do you jumpstart this business? And it can't be a.
Speaker 2:We're gonna spend a whole bunch of money and invest you can't afford to afford to yeah, wall Street wants you to keep your costs low, so how do you really grow your business?
Speaker 3:again. Well, there's something else, and we've pointed this out before, I think with bright cove, because they report. They call it the premium customer and and you know in my mind I don't recall the exact definition they give for what a premium, who a premium customer is, but it's enterprise. Well, that customer is worth 96,000, 96,200 dollars annual, you know.
Speaker 2:So that's their Nine yeah, they define it based on size of revenue.
Speaker 3:Yeah, exactly 96,000, and you know. Then you go back to again Vimeo and they're, you know, again, not exact corollary, but their premium is a little over 20,000, you know, call it 1800 times 12, you know. So, right, right. So like three and a half, almost four x difference, you know, between bright coves, enterprise or premium, and Vimeo's. And you know, granted, it's the question that I pose to you in terms of Vimeo strategy, like how do they? You know, because it's also slightly unfair, because I don't even know how you could spend that much on Vimeo.
Speaker 3:You know, today, like 96,000, I, I, I bandwidth maybe professional services, I don't know but you know, and they probably have a handful of customers who are spending that much, but you know, that's. It's a different, different way to look at it.
Speaker 2:Well, age Interesting. You mentioned that, though, mark, because in my RSS feed, where I'm tracking all these companies, vimeo recently put up just in the last week, maybe 10 days. It popped up in my feed. Here we go. Vimeo verse break hope. Which video platform should you use? Vimeo verse cal Torah which video hosting site should you use? Well, cal Torah is not a hosting site, then it's Vimeo verse Wista. Which hosting site should you use? So the reason they're doing blog posts about their competitors now is, to your point. They're getting so many questions from potential customers and customers like well, what is the difference between you and the others? Like, what do you do better than them? What's the strengths, weaknesses of all these parts?
Speaker 3:It's also probably an SEO strategy Dan.
Speaker 3:I mean you know, but I'm not saying that people aren't actually asking the questions, or you know, but it's probably SEO, because it's amazing how Google loves, like if you have two kind of you know, well established products in the market, first of all, people often are searching you know this compared to that you know, or this versus and they're looking for you know some sort of like a review. Right, but Google indexes. That stuff was really really highly and and Google clearly is indexing Cal Torah and bright cove and Vimeo, and so you know from a marketing perspective I can.
Speaker 2:It's a great. It's a great point. You know what? Let's use the numbers. When you put in break over, so Vimeo look at Vimeo's blog post comes up number three. When you put in Vimeo versus break hope, their blog post comes up number. Interesting, yeah, so they're yeah, and this their blog post, just so you know. It was only two days, yeah, well so they have a good and it's coming up, I see oh agency working, working for him and yet Odd, because then some of the others that they have and Vimeo come up really far down the list.
Speaker 2:But yeah, seo, now you know what?
Speaker 3:though I haven't read the article, but then where they probably completely fall down is the article is probably like meaningless. It's probably just a whole bunch of you know stuff that you know.
Speaker 2:I thought that when I saw the title because I thought okay. It's gonna well. I don't know that it's good because it's done at a very high level and again you have to compare functionality. But there are definitely some places where they say, here's where Cal Torah is better, where break was better, but in most cases they're highlighting that they're better. Well, and they have a lot more functionality for a customer who wants to spend lots of money. So they always tie the functionality to you got to spend lots of money.
Speaker 3:Interesting.
Speaker 2:Yeah, actually I'm high level.
Speaker 3:Yeah, I had not clicked through. I'm giving a quick yeah. I mean, what I meant was a little more. You know, some these articles like they don't really it just pitches, pitches product if you're actually a buyer. It doesn't really answer the question of, like you know, you know, why should I use you?
Speaker 2:And correct and these don't really, but it gives enough high-level actually, you're right here You're.
Speaker 3:You're right, we should give Vimeo credit, you know? And and, by the way, for any marketers listening, this tactic is actually a really good one, and here's a case study of a company executing. You know, don't be afraid to even compare yourself to your competitor. Be honest, you don't have to like, you know.
Speaker 2:I think that depends on the product, on mark, right, because try comparing ack minus. Well, what service are you taking? Well, you know what region with what coe right, so it has to be a product that is packaged.
Speaker 3:It needs at least be. You're comparing yourself to another fruit and not a vegetable. Yes, correct, yes, so all right, so we're out of time, you're more.
Speaker 2:Yeah, let's just let them know. The next week we've got Visio Paramounts and Claire and Fubo earnings. We're not gonna be recording next week. I need a week break to do some traveling, that's perfect. So oh, you're traveling anyway good, so we'll be back to week after. I think the Paramount one is gonna be most interesting Visio. No, they're not gonna say much about Wall Street because it's not a done deal. I mean, I'm sorry, Walmart but but more news is I mean it seems like this might be real, though, right.
Speaker 2:Well, we know it's real at this point.
Speaker 3:Yeah, the deal is done, oh yeah the very first time we talked about it, we were both sort of like you know.
Speaker 2:Maybe this is just we didn't know, it was a rumor. So Paramount and Fubo Next week are the ones that are really interesting, and then we actually have no earnings. After that, earnings are done.
Speaker 3:Finally we're just gonna be within weeks of my NAB, though.
Speaker 2:Now come on, mark, don't stress me out like that. Not weeks.
Speaker 3:Hey, I got a little more time in. At least you're not doing the demo zone, that's right. No, I know six I'll have.
Speaker 2:I'll have seven weeks, so more than a few, but things are coming along really well. I put up almost the entire program for all the roundtable sessions as well. Mark last night. So the easy way to get to the mall is just NAB show comm slash streaming. There's a lot of sessions up now. I have two more to put up tonight. The most the roundtables are done. Two of the three keynotes are up. You know we mentioned them all. I'm waiting for some information. There's more case studies coming in, which are, which are really great. But Interesting mark that I've had this is of this show. This is the year where I've had more content Online earlier than ever at any other show and we've sold more tickets In advance at this time right now than in any other show. So I hope those are, all you know, good signs of just what's expected.
Speaker 3:I think so. Um, I know that I already have meetings booked for NAB. Um, oh, people start those well. Yes, but in like last year, you know, even two or three weeks before, people were kind of like ah, I'm not sure if I'm going. I'm, you know they were sort of non-committal People and plans change, you know. So you know some will you end up bailing, you're right.
Speaker 2:You know last year was only what year two after covid, I think. Last year's number was 65,000 that the NAB put out total attendees I think. I think they're aiming or expecting that the range could be 85,000 or more. Wow, which would, to your point, show you that a lot of people Previously covid thinking about like, okay, now I'm definitely coming. Pre covid it was. I think the peak was 105,000.
Speaker 3:So it's, it's getting back up there again. Yeah.
Speaker 2:Yeah, but that's all we've got this week. Uh, have any questions? Reach out to mark and I. Everything we put on we talked about today is on linkedin. I pushed up everything on wbd Earlier today, so that's all in line. Check that out. Have any questions? When I asked mark and I Definitely try and bother mark knees- on vacation next week?
Speaker 3:No, I'm at mobile world congress and oh, oh don't bother mark, oh yeah. And then I am taking a couple days, or my wife and I was gonna go to paris and good, relax a bit.
Speaker 2:I haven't been to mobile world congress in a long time.
Speaker 3:It's a yeah, it's brutal.
Speaker 2:Yeah, especially where it is. Yeah, it's a hard show, but we appreciate everyone listening. You have any questions, reach out to us. We'll talk to you when we're back. Everyone have a great week. Thanks very much.
Speaker 1:If you enjoyed the show, send it to a friend, have questions for dan or mark, connect with them on linkedin at any time and be sure to check out dan's blog at streaming media blogcom.