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'm Dan Rayburn , along with co-host Mark Donegan . Back for another week of earnings . Mark , we've got Disney , fubo . We've got Vimeo , fastly , cloudflare , amazon , altice . Who did I miss ? Probably a couple others , but we have a lot today .

Speaker 3 0:40

Yes , we do .

Speaker 2 0:42

Which is good . We've got some good numbers . We've got some good things to debate here in terms of where we think some of these businesses are going .

Speaker 3 0:49

Yeah .

Speaker 2 0:50

Let's jump right in here with Disney . So , for those that don't know , we're recording this on Tuesday , may 7th , which is the day Disney put out earnings . Disney changed it up for this quarter . They actually released earnings before the market opened , so some of you woke up and wondered why Disney's earnings were already out . That's why I don't know why they did that , but they did it before the market opened instead of after . Yeah , that's interesting .

Speaker 2 1:14

Yeah , don't know why . I don't know if they're going to continue that going forward . We'll see . So this is Disney's fiscal year Q2 . So a couple key things that happened here with the numbers . So Disney's D2C direct-to-consumer streaming business actually had an operating profit of $47 million this quarter , q1 . But , very important , they're now calling their D2C streaming business Disney Plus , and Hulu Doesn't include ESPN Plus . Yeah , separately , espn Plus lost $65 million . So they've made a huge improvement in terms of the amount of money D2C was losing . Yeah , absolutely . So that is good .

Speaker 2 1:58

However , the stock is down , closed down today , almost 10% , and the primary reason there , mark , was that the way they got to lower losses is by cutting employees and raising pricing , and you can't do that every year . That's going to be a problem . Also , wall Street wants to see growth , not just . We've cut costs . Yeah , exactly so , excluding ESPN , linear TV operating income was down 22% . That's not good . Linear network revenue across Disney's portfolio again excluding ESPN , fell 8% . Wow , so the linear TV business did not do well in Q1 . They also said in Q2 , they expect the seasonal issues that some of these streamers have when it comes to growth . So projections in Q2 weren't great . So stock is down 10% . Closed down the day 10% . Which I think maybe surprised some people , mark , because we always heard people say that , oh , once these businesses get the profitability , wall Street's really going to love the stock . But this is one quarter . Disney needs to continue this for many quarters in a row .

Speaker 3 3:13

Yeah , string these quarters together .

Speaker 2 3:15

You have to show growth . That is key . Espn Plus still lost money , so you know that's not making money yet in terms of profitability . As far as sub ads , this was interesting . So Disney Plus Core subs grew 6.3 million that's what they added . So they ended the quarter with 117.6 million , but that excludes Disney Plus Core , excludes Disney Plus Hotstar . They actually lost 2.3 million subs , Not too surprising because of Cricket and they even brought that up .

Speaker 2 3:48

And then Hulu SVOD gained 700,000 subs . Now it's 45.8 million total . Hulu plus live TV lost 100,000 subs , Interesting To end with 4.5 million . So , Mark , you and I talk about this a lot . It's interesting how , on the live linear side , Hulu plus live TV just sort of goes up and down , up and down , up and down nonstop .

Speaker 3 4:13

Yeah , exactly , and you know I think this just represents a shift of I don't know , you know , I don't know , and I always hate being a case study of one . So I'll try to avoid saying how long it's been since I've really watched linear TV and had a subscription and all that . It's been a long time is the point , but people are just not consuming live TV .

Speaker 3 4:44

Unless it's sports , yeah , unless it's sports , exactly . But and so the whole thing that , oh , you know , cable is , and I'm just , you know , using cable cause they're an easy whipping horse , right , cable is dead . Nobody wants their cable subscription . Well , how much of it is ? People are just not watching live TV anymore , and they happen to be getting that on cable , so of course they cancel , you know and that's .

Speaker 2 5:06

That's definitely some of it now also just on these , these numbers . Let's go through this real quickly . So for those that don't know how this is trending in Q1 of 2021 , Hulu plus live TV had 4 million subs . Yeah , A year later , q1 of 2022 , it had 4.1 million . Q1 of 2023 , it had 4.5 , and then q1 of 2024 , it had 4.5 4.5 . So they actually haven't gained any subs above a hundred thousand in one quarter since q3 of 2022 . So what does that tell you about live linear ? Well ?

Speaker 2 5:49

it's it's damn expensive , to your point . Some people just aren't watching live , and also consumers turn it on and off based on what's taking place .

Speaker 3 6:00

Yeah , and that definitely is easier with the OTT packages than with cable . You know where you often got your broadband bundled and you know shoot . Some people even had , or maybe still have , their phone service . You know if they have a phone at home . But you know they've got all that bundled and it was just kind of harder . You know to turn it on or off , but with these packages you can easily do that .

Speaker 2 6:26

It's simple . And also they talk about how often . Not how often , but the fact that the consumers do that . So for all the talk of pay TV , it's interesting seeing their linear TV business decline and yet live streaming in a linear package is not absorbing all the losses we've seen in just that one quarter .

Speaker 1 6:45

We did last quarter Mark .

Speaker 2 6:46

It was four ISPs combined lost just over a million subs . Yeah yeah . Well , so did Hulu plus live TV in the same quarter .

Speaker 3 6:54

That's right . Yeah , that's right .

Speaker 2 6:56

The other thing to note is they did call out that the added 6.3 million Disney plus quarter subs . Part of that was thanks to the deal with Charter that they have the wholesale deal with Charter . That they have the wholesale deal with Charter . But if you also look at the ARPU mark , it was interesting that ARPU actually fell in the US by 20 cents .

Speaker 3 7:14

Well , because they've got to fracture those profits up . Wholesale they charge less and you have to give a discount .

Speaker 2 7:23

So on one hand they're saying to Wall Street hey , we grew nicely because of the charter deal , which is wholesale , but then it's like , okay , your ARPU went down , so you're actually your margins are taking a hit as a result . So Disney still has a lot of work to do here . Just having one better quarter in terms of where they didn't lose 547 million like they lost the quarter before in b2c , yeah , this is a big improvement , yeah , yeah , but still a lot of work to do . And then finally , mark , they did not mention at all on the earnings call anything regarding the jv service with fox and wbd there of any kind . Let's move on to Fubo . So Fubo ended Q1 with 1.5 million US subscribers . That was up 226,000 , which is up 18% year over year , so that was good . Domestic revenue was 394 million . That was up 24% year over year . Sopu for fubo is 84 dollars and 54 cents , which is up 10 percent . Wow , in rest of world , as they call it , they added 18 000 subscribers , so they ended with just under 400 000 subs there . So if you add rest of world us , they had 1.9 million subs . Now they really improved their net loss for the quarter , which is important for them . Their consolidated net loss was 56.6 million . That's down from 83.4 million year over year . They also achieved a 10% sorry , a 10 million improvement in free cashflow and they ended the quarter with $175 million in cash and cash equivalents also some restricted stock there . They did go on to say that they believe that they have sufficient liquidity to fund their operating plan as they go towards their stated profitability goals in 2025 . They ended the quarter with 165 free fast channels on its platform . With 165 free fast channels on its platform and they're giving guidance of between 1.67 million and 1.69 million subscribers . That's for the US . So if you look at the midpoint of that number , it would represent 4% growth year over year .

Speaker 2 9:39

Some additional things we found out . So , regarding their lawsuit that they filed against Disney , fox and WBD , they did say that the court has made a decision to grant limited discovery and they've set an August 7th hearing date for a preliminary injunction motion . Also , fubo says that the court has indicated that it intends to render a decision before the launch date of the JV . Now , we don't know the launch date . Yeah , maybe the court knows . All we've heard is rumors that it would be September , but we don't know as of yet .

Speaker 2 10:13

Now some other interesting pieces of information here . As of April 30th , warner Bros Discovery channels were no longer available on Fubo . Companies could not agree to new content licensing terms , so Discovery , hgtv , food Network , tlc I think there was almost 20 channels in total have all left . They also mentioned that they've been unable to reach a separate deal to bring sports from Turner , which is TNT , tbs and True TV , to its customers as well . So with everything they have going on , mark , I did a podcast last week actually the day of their earnings with co-founder and CEO David Gandler , and he nicely sat down and had a very in-depth discussion with me for the podcast about their lawsuit , industry challenges around content licensing , pricing and bundling , why he believes that JV is anti-competitive . We also talked about the fan experience , where it needs to go . One of the questions I also asked Mark was okay , all these content distributors are saying content licensing is so expensive . Okay , well , here's a whole bunch of channels that left your platform . Why didn't you lower your price ?

Speaker 3 11:29

Yeah .

Speaker 2 11:29

So so David talks about that as well . Yeah , um , I also asked questions around , thought it was fascinating . Just how does a company like Fubo well , how does Fubo themselves work with RSNs and how do they pick which ones to license ? So it was interesting how he talked about that because they have over 35 RSN deals in place , plus additional ones with leagues directly . So super appreciate David sitting down with me . We had a 40 minute conversation . For those that haven't heard that , you can go to danrayburnpodcastcom . You can see that dedicated session there . And then finally , we recapped what their earnings were and the recent reduction in their debt , which is important and their operating plan . But he went into David went into a lot of information that a lot of people don't know , not only about the lawsuit and how they think about that , but just where the business is right now and where they're looking to get it to over the next 12 months . So it was a good interview , a lot of details . Really appreciate him being on the line for that .

Speaker 2 12:35

Let's move on to Vimeo . Mark Vimeo had revenue of $105 million , so it was flat from Q4 , revenue of $106 million . Year over year the revenue up was 1% , not great . Net income in the quarter was 6 million . They expect Q2 revenue to be lower , about 100 million , which would be down 3% year over year . They are going back to , and they went back to this definition of enterprise as customers which , as you know , this has been such a moving target , we've covered this .

Speaker 3 13:07

I just do not agree at all .

Speaker 2 13:09

Now it's interesting they call them enterprise customers , but they also call them subscribers . Subscribers , yeah , which is weird to me . They had a monthly ARPU of $1,766 , which is up $20 from Q4 . I don't know of any other company out in the market where their enterprise customers raise the amount of money that they spend with a vendor by $20 over one quarter . That's just not enterprise . I just really wish they'd go back to where they were no longer calling it enterprise revenue .

Speaker 2 13:43

They're keeping their previous 2024 revenue guidance of $385 to $400 million , with an operating loss of approximately $3 million . That's revenue guidance for the full year . So at the low and high end of the guidance their total revenue would be down 8% or down 4% year over year . They also ended Q1 with a headcount of $1,024 , which was down 8% year over year . They also ended Q1 with a headcount of 1,024 , which was down 8% year over year , and they did say a significant majority of the reduction came from sales and marketing . Not too surprising . They ended Q1 at 304 million in cash and cash equivalents . So when they're looking at an operating loss of 3 million this year and they've got 304 million in cash and cash equivalents , financially they're good . Vimeo's not running out of money . They're not going anywhere .

Speaker 3 14:32

They're not burning a lot , but the problem is they're not growing .

Speaker 2 14:35

They're not growing Exactly , and that's what Wall Street wants is growth . You can only cut costs so far . Now , great , you've cut costs , you've brought in expenses . Now tell me what your growth story is . And they , like some of the others that we're talking about , just so far don't have that growth story , and it's going to take time .

Speaker 3 15:09

I'm looking at their stock chart and February 21st yeah , february 21st they were slightly below . The stock price was at 368 . They were 392 . As we're recording $3.92 . So $3.68 . It ran up . It ran up significantly to $5 and 66 cents to March 21st . So well , it was exactly a month I don't know exactly 30 days , but anyway and then it just crashed , yeah .

Speaker 2 15:38

Four days later .

Speaker 3 15:39

Yeah , I wonder , do we know what , like what that run up was ? I'd have to look , I don't know , offhand it's fascinating because and then it basically the funny thing is it ran up and it pretty much crashed . It's trading a little bit lower , like in january . No , it's actually well the high today is , but it pretty much just went right back to the same level .

Speaker 2 16:04

So you know it's . It literally went up If I'm looking right here , 931 AM and then it dropped . Wow , it dropped really fast yeah . Yeah , even by 932 , what it dropped . So I don't know what that run up was . I didn't look at how many shares were traded that day . Also , maybe an analyst ?

Speaker 3 16:27

report come out that gave it an upgrade or positive news . Yeah , I don't know .

Speaker 2 16:29

Started running yeah , there was . There was a bit of a jump there , so march 21st and then by march 24th it was all the way back down . So over four days it dropped .

Speaker 3 16:42

Yeah , yeah , yeah , it's just yeah , it's . It's super fascinating . You know , we , we , uh , we're , we're talking maybe a little too much about Vimeo . Last year , uh , over over a period of time , we haven't talked about them much . But your , your comment is exactly right . I mean this this company , they're not going out of business . They've got cash there . You know their revenue is not . You know , it doesn't appear to be just falling off a cliff , in other words , but where do they go ? You know it's like there's a real strategic disconnect , it seems , you know .

Speaker 2 17:21

It is , but they're stuck . I hate to put it any other way than that , but they're still trying to be everything to everybody right . They still have customers paying a very small amount , and lots of them . They got out of the OTT business for a period of time , but now they've gotten back in it . Yes , and they talked about one one large OTT customer that helped in the quarter .

Speaker 2 17:43

But let's say they hit the low end range of their guidance mark . Year over year their revenue is going to be down , 8% Down . I mean , you're not even just keeping it flat , so your revenue is going to be down . That's a problem . So first thing , just in terms of being stuck as a company , is you've just got to really redo your go-to-market plan of your product suite . Who are you and what do you do and who are you offering it to ? Now they have a new CEO . Yes , it was interesting that they did talk , mark , in this quarter about how they spent a lot less money on marketing , but as a result , they said they did not see reduction in revenue even though they cut their marketing spend so much . That's good .

Speaker 3 18:24

Yeah , that's a good thing , yeah it means your customer acquisition cost is lower . Well , it , it , it also it . You know this is indicative if a company is stuck and you know marketing is the favorite whipping post of you know something's not going right in a company , it it's marketing's fault . But you know , let's face it , they are not representing properly to the market a story that the market's responding to .

Speaker 2 18:58

Well , it's hard to respond to a story when your platform Mark is hey we help independent content producers , yeah Right , and we know those people are paying 60 , 70 dollars a month .

Speaker 3 19:03

Exactly .

Speaker 2 19:04

But then you're also saying hey , wall Street , we're an enterprise , video player , we're an enterprise . Yeah , you can't be both . Yeah , you just can't . So that's part of the problem . The issue is , if they cut out those that are paying $50 , $60 a month , they lose a large chunk of revenue . Yeah , that's true . So now they're a much smaller company , and that's where I say they're stuck .

Speaker 3 19:24

Yeah .

Speaker 2 19:24

So interesting , you know , with a new CEO . Let's see what they decide to do from a product marketing standpoint in terms of how do they price , package , market , productize and sell their service . But keep in mind too , part of this revenue we're talking about Mark comes from them reselling bandwidth , hmm , and the margins in that are not , do you ?

Speaker 3 19:48

know how much of their earnings comes from that .

Speaker 2 19:52

I don't think I should say that number . Oh okay , yeah , but let's just say , if you look at one of their regulatory filings , they do talk about how much they're spending on cloud and content delivery services . But you could come up with a very close to accurate number if you look at how many customers they have , if you look at how they bundle bandwidth now , because they completely changed it . But my point is it's it's a much smaller company than even the numbers lead you to believe when it comes to actual platform revenue yes , platform revenue that doesn't bundle in bandwidth yeah so we'll see .

Speaker 2 20:30

You know , they're just , they're not going anywhere at the same time they're not going anywhere .

Speaker 3 20:33

No , At the same time they're not growing , and that's a problem for Wall Street it is .

Speaker 2 20:37

Let's go to Fastly , all right , ooh , fastly man . Their stock was down 27% after hours . Q1 earnings revenue of $133.5 million . That was down about just over $2 million from Q4 . They had a net loss of $43.4 million . They expect revenue to decline in Q2 with guidance of $130 . They also lowered full-year revenue guidance from their previous $580 to $590 . They lowered it all the way down to $555 .

Speaker 2 21:10

Now huge big takeaway here for those that track infrastructure space this is the first time ever Fastly has broken out their revenue based on buckets , basically services , types of services . So what they call network services revenue was 106 million . Security revenue was 24.6 million . Security revenue was 24.6 million . Then they have a other category in terms of how they break down revenue and I want to get that right . I want to read that here . So they call it , quote other , and the way they define other is emerging products offering , which includes compute and observability products . So other accounted for 2.7% of total revenue and then on the call they were talking about just a little breakdown of that . So edge compute is 1% of Fastly's revenue in Q1 of this year 1% and yet how much do all these companies keep talking about Edge Compute , talk about Edge Compute . Yeah , now we have the number . Yeah , the industry doesn't need to sort of guess where Fastly's revenue is coming from . I also give them credit . They define network services . They say solutions designed to improve the performance of websites , apps , apis and digital media . So they define the buckets very clearly . So it's similar to how Akamai does their bucketing because they do security and then Akamai does they call it what edge delivery . So here Fastly is calling it network services . Okay , a little bit different , but now we actually have numbers from them .

Speaker 2 22:59

Now , on the earnings call Mark , I was man , I was super disappointed with Fastly's earnings call because every single question they were asked , the way they answered it , just there was no confidence in their answer . There was a lot of well , maybe we think , probably likely , you know , maybe we have a better insight . But a couple of things that they said was they were really surprised , um , with pricing pressure and I I wasn't sure why . They were really shocked by that and that really surprised me . So they said when it came to the largest accounts , they quote , saw more pricing pressure than they were used to . That doesn't seem quite right . Like , why are you not used to that ? Yeah , they also said this quote , which is interesting . We also will not benefit in 2024 from the favorable impact of the CDN consolidation that occurred in early 2023 . That drove favorable sequential growth in the period year same period . Now I don't know what consolidation they're talking about in early 2023 .

Speaker 3 24:10

I thought they were talking about this , but that was September .

Speaker 2 24:14

So I'm not sure where that comes from . And yet it shows just how little on Wall Street understand this market . So Piper Sandler upgraded Fastly stock three weeks before earning , setting multiple upside levers across the CDM business . The analyst said that Fastly could benefit from new business strength and a quote favorable competitive landscape . Noting the exit of some competitors could help drive opportunities and favorable pricing for Fastly . Well , fastly just told you that pricing wasn't great and they're not going to benefit from competitors exiting the market . It wasn't great and they're not going to benefit from competitors exiting the market . So Wall Street really doesn't understand what's going on with CDN . And then the final thing that they said here , mark , was quote we saw a slight uptick from the typical level of re-rates with our largest customers , but we have not yet seen the commensatory traffic expansion usually associated with this motion . So , in other words , what they're saying is we gave a pricing discount , but we didn't get additional volume with that . As of yet , that's not ideal either .

Speaker 3 25:27

Sounds like some of their deals need to be well renegotiated . But why would someone renegotiate to pay more ?

Speaker 2 25:35

Well , why would you give lower pricing if you're not getting more traffic ?

Speaker 3 25:38

Yeah , exactly it sounds like there's some poor deals that were struck . Yeah , I don't know , but you know .

Speaker 2 25:45

I will also point out they have no chief revenue officer .

Speaker 1 25:48

So it's been five months .

Speaker 2 25:49

They did announce that they're on . You know they have some people on the short list . They hope to make an announcement soon , but they have no CRO , so that's also not great . The other thing is Wall Street kept asking the same questions on the earnings call of listen . You guys talked about pricing just a quarter before and you said you didn't see a change . Yeah , you said there wasn't more pricing pressure . So how did all of a sudden overnight pricing pressure come without you seeing it Less than three months .

Speaker 2 26:17

Yeah , and what they said was that their internal data and the projections they were making were quote aggressive , In other words , not accurate . But I don't understand why the company didn't see these data points early in the market and failed to understand what's driving lower pricing with less traffic commits . I know multiple customers where they started talking about this in January , so they're only just starting to see this and notice this in April . It's not good . It's not good , yeah . So Wall Street really hammered them on the Q and a portion of the call and just even though they answered the question , the next person asked the same question of well , wait a minute , your data has been wrong . Why should we lead to believe you that your data is going to be any better in Q2 ? Cause you're saying it's going to get better .

Speaker 3 27:10

Yeah .

Speaker 2 27:11

So this is one we're going to have to watch . I've also gotten questions nonstop Mark of , if edge compute revenue is only 1% of revenue and cloud security revenue is a small portion of the overall revenue , why did Fastly put these numbers out ? Why tell that to Wall Street ? And I have no idea . I don't know what the rationale was . I like it .

Speaker 3 27:37

Yeah .

Speaker 2 27:38

As an analyst , I want these numbers . I want to see what's actually happening , but why they did that . I don't have any information on that .

Speaker 3 27:48

Has there been is Fastly an engineering-driven company .

Speaker 2 27:52

Define engineering-driven has there been is .

Speaker 3 27:52

Fastly an engineering driven company , like , define engineering driven . Well , so the things , the things that you're saying , would seem to indicate that , um , you , at the executive level that there may be and I'm just you know , this is just wondering . I guess I have no way to know , but maybe they're not correctly communicating and in a business context that is is going to give someone a measure of confidence , show that you're not , um , you know so much of it . Words really matter , right , that's really what . What I'm saying and , and you know , sometimes , like you know , someone or a culture is more engineering driven . It's kind of like it's , you know , they almost feel like , well , we're , we're , we're giving the truth right . Well , obviously , your public company . You know they almost feel like , well , we're giving the truth right . Well , obviously , you're a public company . You have to give the truth .

Speaker 3 28:53

But there are certain ways to present things . There is a way to exude a measure of confidence that you know you may be delivering what anybody who's intelligent could see as bad news , but yet they can say , okay , we get it , it's , you know , this isn't great , is bad news . But yet they can say , okay , we get it , it's , you know , this isn't great , but you know . And then someone else comes along and goes yeah , it's 1% . Oh yeah , we're totally shocked by a pricing pressure oh , where I'm not saying they said it this way , I'm just you know . And then people are like spooked .

Speaker 2 29:20

Well . So here's the thing . It's a fair question to ask more . I'm going to put put it a little bit differently in terms of answer . They've had a huge chain over in terms of executive management . So you have a new c just in the last 12 months . You have a new ceo yeah . You have a new cmo yeah . You have a new cso yeah . You have a , a person who's been promoted to general counsel . You lost your cro yeah like that's just the executives and there's others I know who are gone at a vp level .

Speaker 1 29:47

So there's been a huge amount of turnover .

Speaker 2 29:49

Now you ask the question are they engineering driven ? What I will say is they're developer driven Way fast he got into the market was they started working with developers very early ?

Speaker 3 29:59

on when .

Speaker 2 29:59

Akamai wasn't strong with developers .

Speaker 3 30:03

Those were developing applications . It was at the time . Yeah , it was really disruptive what they were doing when they first started , if you were developing applications .

Speaker 2 30:08

you weren't thinking about going to Akamai , because it was this black box , closed network . We don't tell you how it works . Sure , and we want it that way .

Speaker 3 30:15

Yeah .

Speaker 2 30:16

Now they're not like that , but Fastly was very different at the time . So I would say they're definitely developer driven . I think , they would confirm that no-transcript didn't come .

Speaker 3 30:54

our estimates were too high the markets they used the word volatile , yeah , a couple times on the call , and so you can't do that to wall street time and again yeah , well , I mean , first of all , you're an investor like oh , I'm super excited about putting , you know , more money into your company that's volatile , into the market .

Speaker 2 31:13

That's yeah , it's just I , I , I thought the call should have been very different . Let me just put it that way interesting .

Speaker 3 31:21

I did not listen to it , but uh , just based on what your characterization is , it sounds like uh , there could have been some .

Speaker 2 31:29

You got to at least be confident . You have to say , well , this is what we see in the market now , these are the numbers we have and this is what we're going to prove out in the market . It can't be wishy-washy . Yeah , that's just not great . Let's jump into Cloudflare . So this is an interesting one , mark . So Cloudflare's Q1 revenue their revenue is $378.6 million . Are you ready for this ? Their revenue was up 30% year over year . Okay , and their stock fell 12% after hours .

Speaker 3 31:55

Go figure .

Speaker 2 32:02

Because , even though their net loss was only $35 million , they kept 2024 total revenue guidance the same at $1.64 to $1.65 billion . No , no , no , they're not going to be flat . No , they're going to be up a lot over over last year . But Wall Street was expecting them to raise guidance . They want to grow , oh , I see , I see , I see , but to hammer their stock 12% when they grew revenue 30% year over year . It shows you how wild the market is right now .

Speaker 3 32:27

Yeah , Well , maybe volatile is the right word . Well , it is .

Speaker 2 32:32

There's no doubt the market is . Wall Street is still extremely finicky .

Speaker 3 32:37

Yeah .

Speaker 2 32:41

But 30% growth , how many companies would take that ? We're talking about Vimeo having 4% to 8% decline .

Speaker 2 32:47

Cloudflare is 30% growth in one quarter year over year . It's incredible . Moving on to Amazon , let's talk more infrastructure . So AWS had revenue of $25 billion , up 17% year over year . The number you need to know as a listener is AWS's growth rate now puts it on a $100 billion annual revenue run rate . Crazy $100 billion for AWS . No one even comes close . Wow , advertising revenue is $11.8 billion , which is up 24% year over year Mark . There were a lot of people writing stories about oh well , it's up so much because of the Prime Video , adding ads into all the streaming and like they're making so much money . Like , okay , listen , they , they just did that . Yeah , all right , relax . I watched a whole bunch of prime stuff lately and I've gotten like two commercials total .

Speaker 3 33:39

Yeah , exactly . So that's still a slow load is yeah , the ad load is not that great which is nice right , but still .

Speaker 2 33:48

So , yes , great ad revenue up 24% year over year , but it's not driven by Prime as of yet . Now , interesting , amazon talked about CapEx . They expect overall CapEx to quote meaningfully increase this year , driven by higher infrastructure costs to support growth in AWS , including generative AI . So what we're hearing from some of the other large cloud providers hyperscalers right , they're spending money to put more hardware and resources in place for AI services . Capex in Q1 for AWS was $14 billion billion .

Speaker 2 34:31

Um Amazon CEO said AI will , quote , drive tens of billions of dollars of revenue in the next several years . Interesting , he put a number behind it . Hmm , a couple other things here . Um , this news came out I think it was yesterday . So before um Amazon does its presentation to ad buyers , you know , this week we've got all of the stuff in New York , mostly New York City taking place in May , amazon ads is rolling out three new streaming video ad formats . So shoppable carousel ads Interesting Interactive pause ads and brand trivia ads . Okay , honestly , I don't get it . If I'm watching something on Prime and I see a commercial , I don't want to then want to take a survey with my remote . Like that's just weird to me .

Speaker 3 35:15

Yeah .

Speaker 2 35:15

But you know , I don't know , maybe it'll work yeah that's right . Brands can basically present a sliding lineup of their products and customers can explore that and add it to their cart using just your remote . The ad also automatically pauses when viewers browse or resume playing when the ad interaction has stopped . So there's been some noise . Mark definitely around shoppable .

Speaker 3 35:40

Yeah , for sure .

Speaker 2 35:42

I don't see anything coming out , numbers wise , from any of the companies who are actually doing this stuff . So to me it's hyped right now . And also , I'll just remind listeners , roku teamed with Walmart to do shoppable ads almost two years ago to the month in a pilot phase . They then rolled it out to a larger segment of the population customers . But two years later we've gotten no details from Roku or Walmart about it .

Speaker 3 36:06

Yeah .

Speaker 2 36:07

None . So I get some people are really excited about shoppable . Yeah , I get it , but right now we have no data of any kind to show that this is something consumers want , will interact with , will buy products from there's no details .

Speaker 3 36:25

Have you ever gotten a demo of , like , some of these shoppables experiences ? Yeah , so , you know , my , my view is this I mean , the demos are usually always anywhere from good to like pretty awesome , you know . So you get this demo and you see this experience and you know , of course , you have a great story to go along with it and at least , least I'm speaking for myself , you know it's like , yeah , wow , this would be really great . Oh , I can , consumers would love this . But you know , I think we underestimate how much consumers also like to just sit back on the couch and not think do anything and just you know , like , like , why do I want to have to expend mental energy to go ?

Speaker 3 37:11

you know , go through it and uh , and I'm sure that some of these formats , you know , will um , become interactive in a , in a , in a more entertaining fun , you know less uh , uh , I don't know . You know you don't have to do work , you know to interact with them . So I'm sure some , you know there's going to be a format that's . But that's my experience . Whenever I've seen , seen the demos I'm , I usually walk away like , oh , wow , that's really cool . At least that's my feeling when I'm standing there and they're telling the story and they're showing the experience .

Speaker 2 37:41

But you know , I just think of my own behavior . I am way more cynical than you are Mark Okay . Because you know me , I question everything , everything . So when I get demos , even if it's working , I just always ask so okay , great , the tech works , but who's using this ?

Speaker 1 37:59

Well , we don't really know yet who's the demographic . Well , we can't really say Well , how many ?

Speaker 2 38:01

products are they buying ? Well , we don't give out the information . We don't really know Well , how many products are they buying ? Well , we don't give out the information .

Speaker 3 38:05

We don't really know .

Speaker 2 38:06

And the example that Roku and Walmart talked about was hey , during the show you could pause and you could buy paper towels if you needed them . Who is in the middle of a movie and is like man , I can't wait to buy paper towels .

Speaker 3 38:18

I need toilet paper and , by the way , I want to buy it through my TV ?

Speaker 2 38:21

Yeah , exactly , and then you got to get out the remote . So I view things , mark , as in our industry for a long time , is it has to solve a problem we have . Now I don't know of anybody struggling to buy a product and it's like I need to buy that product within a video . Yeah , as if somehow that makes the experience better . Yeah , now , different when you look at what they're doing in APAC and others , where they're doing the live stream and they're selling a product right there and they're selling it out . Okay , that's a limited product , they're only selling it there , it's in that live stream . That's done really well . But there's been some companies that have brought that to the US who've now gone out of business . Another one I forget the name of it shut down because it just didn't work . And what did Facebook do ?

Speaker 3 39:08

Well , that didn't really work here . It didn't really , yeah , it didn't really work , yeah . And that's also fascinating because you know I've been involved , you know , just helping and giving some advice over the last couple of years with some companies that were really thinking about going after this video selling experiences , thinking about going after this video , selling experiences . And everybody would look at what's happening in China and other parts of Asia . But you know China and just oh , this is just going to be huge . These influencers are going to unpack all this revenue and let me tell you , every single attempt that I've been exposed to and it's more than one , and some of them had some big partners involved ultimately just failed . It failed to literally get off the ground . I mean like nope , just nobody wanted it .

Speaker 2 39:57

And , mark , this is what bothers me is , you know , to secure the future , you have to look at the past . Yeah , and we have these examples , and the one I'm going to bring up is mobile mobile video . 15 years ago , if you were in this industry , mobile video was it that was going to revolutionize everything in the US ? Because , in APAC , look at how they interact with their phones , look how much video they're consuming , look at how they're using their phones to pay for products . And what happened with mobile video here ? It never took off , like people say .

Speaker 2 40:26

And let me give you an example , mark , I went to the movies the other day . Now I actually got a barcode sent to my phone . Okay , cool , I go to the movie , right ? I show the barcode , the guy says , oh no , you can't actually use that . What ? What do you mean ? I can't use the barcode ? He said you need to go over there and you actually need to scan that underneath the reader and it'll print out a ticket that you then hand to me . We're in 2024 . Like what ? And this is ? This is a large movie chain .

Speaker 3 40:57

OK , let me guess the Ministry of Ungentlemanly Warfare . What Is that ? What you saw ? Oh , is that a movie ? Oh , it's a .

Speaker 2 41:05

Oh , I thought you were talking about a movie theater chain . I'm like what is that ?

Speaker 3 41:08

Oh , no , no , no , no , no , I'm just jumping straight to the movie you saw .

Speaker 2 41:13

I don't even remember .

Speaker 3 41:15

By the way , it's a great movie .

Speaker 2 41:18

You got to go see it , it was like a month ago I forget the name of it but I was just like , wow , we're in 2024 and that's even how you're doing with barcodes . Yeah Well , barcode . And yet you think consumers wanted mobile video . Everyone was going to consume everything on mobile for two , three hours at a time .

Speaker 1 41:36

Remember Quibi and many of those guys .

Speaker 2 41:38

And now it's the same with shoppable . So just that's the reality . I'd love to be proven wrong in that , but a couple of years from now , it's still going to be the same thing . A couple of things . Mark real quick Crunchyroll . For the first time is increasing pricing . First price increase for them since 2019 . Yeah , imagine that no price increase in five years from an OTT service . So it's going up by $2 a month in a lot of countries , not all of them . So the Mega Fan .

Speaker 2 42:18

Tier is $12, . Ultimate Fan Tier is $16 , but the existing Fan Tier , the lowest base they have , is still just $8 , so that's good , altice . We covered some other cord-cutting numbers last week , but Altice's numbers just recently came out .

Speaker 2 42:27

They lost 392,000 tv customers so they ended q1 with 13.1 million residential . That's key residential . They did say that they began deploying zumo stream boxes , but they didn't provide an update on the number of boxes deployed , so don't have an update on that one . I'm not going to go into the Paramount stuff because that seems to be changing every other day , but apparently Apollo and Sony Pictures have made an official letter , sent a letter to the board , offering $26 billion in cash . The regulatory hurdles for that would be difficult , especially because Sony's foreign company can't own the broadcast network .

Speaker 2 43:08

So the latest thing we're hearing , just with the news coming out every day , is that Paramount may do nothing and go it alone and just restructure and not deal with Skydance or Apollo or Sony which totally could happen for sure .

Speaker 2 43:25

I thought it was very interesting Some of the analysts on CNBC the last two days talking about how Paramount needs to get out of the streaming business , which I thought was really funny . And when they were asked why they're like , well , you know , it's just competing against Netflix is not great . And it's like , okay , you don't even realize they have sports . You don't understand they have live . You really don't get what they're doing and how it's different . You really don't get what they're doing and how it's different . Yeah , but we don't have anything new on the Paramount side that is confirmed as of yet , but we're going to have to have something pretty soon , I think probably this month . And then finally , mark , let's talk about some money being raised , which is a bit rare these days . Yeah , so those friendly Canadians Netskirt have raised about $7.2 million .

Speaker 3 44:08

Yeah , Series A .

Speaker 2 44:10

Series A and , for those that don't know them , they're focused on delivering video to remote and rural communities and also very specific applications . So across rail operators right , you're taking the train airlines so they've been deploying caches into transportation environments . But also they're seeing a request to create a CDN footprint to help smaller ISPs manage live traffic , in particular remote rural areas that are underserved . Many times those isps are too far away from the out the source video source or cdn nodes . The company is a total of 3.5 terabits deployed across 50 isps in 31 states and they plan to add another 15 terabits to its us footprint and then expand the footprint to include include brazil , the ukK and Italy . So I had a briefing from them a couple months ago . The other stuff they're talking about I'm keeping under rapture now in terms of some additional deployment . Some of the customers actually talked about some customers by name with me , which was interesting Smaller ISPs , one actually in the state of New York that I knew , so that was good use case , but small but interesting , right they're .

Speaker 3 45:28

They're looking to solve a problem that's more difficult for specific applications yeah , yeah , the uh rail application , you know , I think in the us I mean . I mean , how many times ? Well , actually , on the east coast , I guess you know trains a little more common , but , um , you know , when I'm in europe , I commonly end up taking a train to . You know trains a little more common , but , um , you know , when I'm in Europe I commonly end up taking a train to , you know , go somewhere , and it's always a disaster . And the thing is is like um , you know , I can have three bars , four bars , but you know , when you're crossing it's like you get coverage for 10 minutes and then it drops and then it . It's just , it's a real , it's hard right .

Speaker 2 46:09

You right , you know when , when you're moving , it's still better than the us mark . And don't get me started on amtrak .

Speaker 3 46:14

Okay , we're gonna be in this podcast a long time I have taken amtrak , but uh , I could walk to the server faster than amtrak .

Speaker 2 46:21

I mean , it's just you can't even do basic email and Wi-Fi .

Speaker 1 46:25

Oh , that's terrible . It's brutal .

Speaker 2 46:27

Eurostar way better , yeah , yeah . But I like the idea . To your point like , hey , I'm on a train , especially if it's a long trip . Yeah , it's a great problem to solve .

Speaker 3 46:37

Yeah , exactly , I mean you got power , you got a nice comfortable seat , you got a view you . You know , like I , I actually enjoy working on my computer on on trains , but anyway , most of the time I don't have coverage .

Speaker 2 46:49

So yeah , it's , it's still an issue . Um , I I also just the way they laid out what they were doing , where they were targeting , how they're charging for it . I thought was was really clear . They understand the market they're , they're going after they're not trying to be everything to everybody , like most CDNs right , so I love focus by vendors in the market .

Speaker 2 47:07

There's nothing wrong with staying small and growing organically , so congrats to them . That's a good raise for sure , and I don't remember the last raise we talked about , mark outside of Allure Security or different market . Video Lamp . To me that was such a big raise it kind of didn't count . But a nice series a . I think it's the right size , too right , it's not 15 million .

Speaker 3 47:30

Exactly . That was something else that I thought about too , and that's Canadian , by the way .

Speaker 2 47:37

10 million . 10 million Canadian , so 7.2 million US .

Speaker 3 47:39

Yeah about , you know 7.2 US dollars . So yeah , because that's the other problem , Some of these emerging startups , if you raise a 25 million series , A wow , talk about getting stuck . You better show growth yeah exactly .

Speaker 2 48:04

Growth is the name of the game on Wall Street . What else we got here , mark ? Let's see , I went through that . We'll leave that alone for next one . All right , I think we're good . We're out of time . Uh , anyone's any questions ? Let us know . Everything's up on linkedin , mark . We're over 40 000 downloads now for the podcast , so amazing . Thank you to all the listeners .

Speaker 1 48:17

We'll keep pushing stuff out .

Speaker 2 48:19

Uh , I don't know , this is like our 94th or 95th if I throw on the executive interviews I've done , I think probably at 105 , 106 podcasts already which is incredible .

Speaker 2 48:31

It just keeps going . The other thing , mark , is I keep mentioning that you know we're going to open up sponsorships for companies at some point , but I'm definitely going to do that in the next month or two . I want to get people , companies , exposure . We're going to keep it like a couple hundred dollars , like literally . Maybe it'll actually pay to cover the cost of the podcast , like that's great , sure , right .

Speaker 2 48:53

That's all I care about , but it's time to use the platform to get some companies some exposure , some news out there . So it's something we're going to do . If a company's interested , reach out to me . But , mark and I appreciate you listening you have any questions at any time , reach out to us . We'll be back next week with more earnings , mark , because we're in earnings seasons here , so we're going to have Brayco , fox , kaltura , vizio , akamai , warner Bros , discovery and AMC Networks all next week , and then we got the upfronts after so the next two weeks are busy , that's right , but any questions let us know .

Speaker 2 49:26

Have a good rest of your week , stay safe , and Mark and I will talk to you again soon . Thanks very much .

Speaker 1 49:31

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 streamingmediablogcom .