The Dan Rayburn Podcast
The Dan Rayburn Podcast
Episode 113: Earnings Recap from Paramount, Tubi, Vizio, Vimeo, Brightcove, Akamai, Fastly, Cloudflare
This week, we detail all the important numbers from Q3 earnings tied to profitability, capex spending, MAUs and subscriber additions tied to streaming services from Paramount, Tubi, AMC Networks and Vizio, along with infrastructure players Vimeo, Brightcove, Akamai, Fastly and Cloudflare. We also discuss the latest content news from UFC, The Tennis Channel, Netflix, Sky and FOX and highlight CDN Medianova's round of funding. Finally, we break down the impact of the Fed's interest rates on your job and your employers' ability to borrow capital and expand their workforce, invest in R&D and launch new products and services versus not being able to afford interest payments and doing layoffs.
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 am Dan Rayburn, along with Mark Donegan, rock and rolling this week on Friday, november 8th, with a lot of details for you on earnings across quite a few companies Just over the last week and a half WBD, paramount, we've got Fox AMC, we've got some interesting things here from UFC, some comments from Netflix, we also have Altice, vizio, vimeo, breiko, vacami, fastly, cloudflare uh, quite a few here. So before we jump in all those, mark, you know I wanted to go through something real quickly here which I just posted to LinkedIn, and that is, as we've seen in our industry, a lot of people don't understand the business economics or what's going on really around the world that impacts all of our job and, in particular, how companies raise money or can't raise money in some cases, and so I wanted to go through just the Fed interest rate for a moment, because you know the Fed cut the interest rate this week by a quarter of a percent and I noticed nobody was talking about that really online in our industry, and so I put up a post on LinkedIn and I thought it's interesting. Just in the last three hours it's at about 9,000 impressions, so clearly people are starting to see it on a Friday at. It was probably about 2 pm. I posted it so you know.
Speaker 2:What I wanted to cover here is, for those that don't know, what the Fed does in terms of raising rates or cutting rates directly impacts your job and your employer. Understand that correlation it has in companies being able to grow and invest, which also includes not just investing in R&D and new products and services, but also hiring more employees, growing headcount versus having to cut back and do layoffs, so from a high level. For those that don't know, during the pandemic, interest rates on money loaned by financial institutions were so low interest rates on money loaned by financial institutions were so low In many cases, it was 1% that businesses often called it free money, because taking the money was almost literally free. And in March of 2020, the Fed cut the interest rates to zero and he held them steady there for two years. Yeah, it was incredible. So, as a result, what did we see during the pandemic? We saw people hiring, investing in R&D, launching new products and services, pushing to new territories.
Speaker 2:But once the Fed started raising the interest rate and for those that don't know what the interest rate is, it's the short-term rate that banks use to borrow money from each other it's banks to banks. Once that started happening, many companies could no longer afford to take on capital and they had to do more with less, and that led to layoffs as well. So one of the things that I posted in the post on LinkedIn was I have been tracking since the beginning of the year all the different raises in our space from pay TV providers, telcos, carriers, ad platforms, streaming companies in terms of what they're paying on their money, and the rate used to be again. Years ago it was around 1% on average. Amc Networks raised money in April of 2024 at a rate of 10.25% on the money. Fubo now some of this isn't raising new money, it's swapping out debt.
Speaker 3:But you can think of it as-, but still there's a cost associated, correct?
Speaker 2:So Fubo, depending on how the money's paid back, the interest is anywhere between 7.5% to 10%. Televisa Univision did some secure senior notes at 8.5%, charter Communications 6.1%. Neptune Bidco, which is an affiliate of Nielsen, did a private add-on offering principal amount of 9.29% senior notes. So the numbers are anywhere between a low of about 5.5% from what I've seen all the Fed doing. Another rate cut quarter of a percent. We're hoping over time that that really brings the cost to get capital in every business world out there, not just, obviously, streaming and video. Hopefully that comes down but it's not guaranteed. But a lot of this is tied to the stability of your job. But a lot of this is tied to the stability of your job. So it's important that you really track this because of the direct impact that it has and also you know for those that don't know just the impact the Fed has on us the Federal Reserve it's the most powerful economic institution in the United States. Uh, also because we're going to have a new president next year. We also have to think about just what the impact could be there, because when it comes to tariffs and how you do trade with other countries and whatnot, even though the fed is an independent body. It raises rates and cuts rates uh, based on their decision. It's not it it's. They can't be forced to, in other words, by a president. Uh. However, things that any president does based on economic conditions can impact the fed.
Speaker 2:So I bring this up because, as companies over the last two years, as we all know, have been cutting back, doing more with less, being very wise in how they spend their dollars, if we start to see additional rate cuts over a period of time what's called over the next year, two years we could get down to where we could get rates down again, to where they're low enough, to where a lot of companies could go out and once again try and grow by adding new products and services, doing R&D, looking at new technology, and for the vast majority of our companies out there, they need that. Now, of course, we're not talking about the Amazons and the Googles and the Metas. These guys can invest, they have the money, they have the free cash flow. So just a little bit of information there. If you want to learn more about it, go see my LinkedIn post.
Speaker 2:I actually gave out examples of what the interest rates are, that I mentioned how they're swapping out debt, pushing debt into the future to get to profitability. But it's really, really important you understand this, because the most valuable currency in the business world is information. Yeah, so you have to stay educated, and I shouldn't just say information, accurate information but the digital currency in the business world, any vertical you're in, is information. So you have to understand this.
Speaker 3:Yeah, yeah, and I'll just, you know, elaborate just a little bit more on what you're saying, Dan. With so many vendors in our space being wholly owned or largely owned by private equity, there's also a very, very close correlation because, look, these are companies, private equity firms that go out and get money. Now, a lot of times you know they have their investors or they have money that they're managing, et cetera. But the ability to be able to invest, either to then expand that business they bought, or to maybe merge it, or to, you know, do something else so that you know the value can be increased, that's really tough when money's expensive or simply just not available. And so I think I'm thinking of a few companies where, just sort of knowing roughly their situations, I'm going hmm, if this trend continues, rates do get back to probably not zero, but drop. It could be that suddenly some M&A gets unlocked or just some expansion gets unlocked.
Speaker 2:I'm not going to bring up vendor names, but some vendor CEOs have specifically said to me listen, if rates get back down to 5%, we're going to take money. We're not now at 9 or 10 or 12. Yeah, exactly. And look, I think that's smart. Obviously we'd rather they're hiring more, but you have to be smart with your dollars. I'd rather you're not hired, not go out of business because you took money that you can't afford to pay an interest rate on?
Speaker 3:Yeah, you can't service.
Speaker 2:That's a good thing. So just a heads up, keep Good thing. So just a heads up, keep an eye on it. We'll be blogging more about it as things change. So let's jump into all of the. I'm going to split this up, mark today and do we'll do all the OTT numbers first and then we'll do the vendor earnings Sounds good. So let's start with WBD. So Warner Bros Discovery added 7.2 million direct consumer subs.
Speaker 2:This is their largest ever quarterly growth yeah it's good, which is their largest ever quarterly growth, which is pretty amazing. So they ended the quarter with 110.5 million global direct-to-consumer subs. Dtc ARPU was $7.84, which is flat. Direct-to-consumer revenue was up 8% year over year. The business had a positive $289 million. That's EBITDA, so that's great to. Also advertising revenue increased 51% year over year, so that was great. Interesting stat here is that the DTC business had a $41 million loss from the broadcast of the Olympics in Europe Interesting $41 million in the olympics in europe.
Speaker 3:But, dan, I thought sports was like the, you know the the golden uh well uh pot, it is to go but interesting that it was in just europe.
Speaker 2:Yeah, but we also have to remember that wbd also has been expanding in europe. That's the place they've been rolling out to, I think of what now 20 countries. It's also one of the reasons arpu was flat, even though they grew subs, because, yeah, the cost of the service outside the us is is cheaper. But interesting to see that uh now not surprising.
Speaker 2:Their distribution revenue decreased seven percent uh, nine because of a nine percent decrease in domestic domestic linear pay TV subscribers. So we know the story here. Anything involving pay TV, that revenue tends to be declining for companies because of what's going on, but they had a great quarter in terms of subs. You have a $289 million positive EBITDA for the quarter, so a really good quarter. For WBD. Yeah, that's great. Many seem surprised.
Speaker 2:Now what we didn't get from them is we didn't get what is the average engagement per user. Netflix recently told us it's just over two hours per user per day. Would love to know what WBD has from an engagement metric, but we didn't get anything on that. So let's jump into Paramount. Paramount had a growth this quarter, so they added 3.5 million Paramount plus subs. Last quarter they lost 2.8 million, so they ended the quarter with 72 million Paramount plus subs. So you have 110.5 million for Warner Bros Discovery, 72 million for Paramount plus, million for paramount plus paramount. D to c revenue was up 10 percent over a year and on adjusted obida, which is oibda right, which is different from how some of the others do it like we've talked about previously, but basically you can look at it on the balance sheet that paramount had a 49 million million profit from their direct consumer business.
Speaker 2:Advertising revenue made up 27%. Their total DTC revenue was just over half a billion dollars. So I thought that was really great to see how advertising revenue is growing. Dtc Total, though, company revenue was down 6% year over year. So, again, not surprising that we're seeing the legacy side still get hit quarter after quarter from these companies in terms of declining. The other thing that makes some of this a little tricky doing year on year is you obviously have potential additional advertising revenue because of the politics, the election. Some of these also have some additional because of the Olympics. So year over year is not necessarily an exact number but we can see year over years it's still trending down.
Speaker 2:Now an interesting filing, if people didn't see this earlier in the week, paramount filed with the SEC a document and it was talking about some of the conversations they had.
Speaker 2:So, mark, one of the things I've heard on Wall Street quite a bit, and I was talking about the uh, some of the conversations they had. So, mark, one of the things I've I've heard on wall street quite a bit, and you know I was on TV the other day doing some stuff with WBD's earnings and it's interesting how many wall street analysts, fund managers, you know, keep saying, well, disney's talked about, they're going to partner and WBD wants to partner, and Comcast wants to partner. And WBD did say in their earning call, well, we're looking to partnerships and everyone's talking about partnerships and Wall Street says, well, if they do that, then they'll have pricing power and all this stuff. And yet what partnerships have we really seen? We haven't. And to hit sort of home the point of how difficult these partnerships are, paramount's regulatory filing called out three things that were really interesting. So first, as they were talking about during their deal with Skydance, they were obviously looking at that other possible mergers, acquisitions that we well know but, here's some more details that they put out.
Speaker 2:So Paramount's board questioned the commitment of Apollo, and the reason is on March 31st, you know, apollo proposed an acquisition to Paramount of the entire company, but they didn't offer them a specific share price. So we'll buy your company, but we're not going to give you a price per share. Yeah, so that's not even a legitimate offer.
Speaker 3:Yeah.
Speaker 2:Which is ridiculous. Now we've also heard Byron Allen was involved, you know, and he was in the press actually making offers and throwing out these numbers. Yeah, that's right. But what we heard or read in the filing is that Paramount's law firm sent him a nondisclosure agreement that would allow him to access confidential data and documents and finances, but he never signed it. So how are you making a legitimate offer on a company when you haven't looked at its finances? You're not, yeah. And then the next one is comcast didn't want to buy the whole company, yeah, but wanted to do something in terms of licensing some paramount content. Then, after that, they wanted to explore a joint venture between their streaming services, maybe combining them, but Comcast wanted to have majority control of everything, so naturally that deal fell through. So the regulatory filing is pretty interesting because what it points out is how complicated these deals are, yeah, financially, and who's in control and who gets what.
Speaker 2:And then sometimes you have class of shares with shareholders and voting rights, and so this idea that you know, our industry keeps throwing out of like oh, just these two companies combined.
Speaker 3:Yeah, they need to just merge Right.
Speaker 2:Just merge. Yeah, it's not the way it works.
Speaker 3:It'd be so powerful.
Speaker 2:So if you want to read an interesting filing, definitely go read that one by Paramount. It was earlier in the week. Some really key points in there. Let's jump to Fox. Really hard to compare anything on Fox because you have the revenue from political advertising.
Speaker 2:You had an additional NFL broadcast window. You also had broadcast the UEFA, which they didn't have last time, so hard to do year over year. But Fox's revenue was up 11% year over year. The other thing to look at here is that they continue to talk about higher costs at Tubi. Also, they commented in the quarter that there were higher news gathering costs. Well, not surprised. That relates to the presidential election cycle, sure.
Speaker 2:Also, they didn't have um fifa women's world cup this year which they had last year, so very hard because of that to really look at fox's numbers. And and they don't have a direct streaming service anyway outside of tubi. So let's just focus on tubi, because they did bring up some information we haven't gotten before. So on the earnings call, they said that at the current run rate, tubi will cross the $1 billion revenue mark in the current fiscal quarter. Now, keep in mind their current fiscal quarter is over the next nine months, so it doesn't mean by the end of the year. Now two other points. We'd had some numbers on revenue every once in a while, but we've never gotten these numbers.
Speaker 2:The following numbers from them they said that 95% of Tubi's library is revenue share, but only 65% of viewing is from revenue sharing content and previously, in the quarter before, they said that 90% of user time in Tubi comes from VOD content. Not their fast channels, not fast, so interesting you start putting these numbers together. We also know the business today is not profitable. Yeah, but you can see the growth. You can see where the viewership is coming from. We don't know what monthly after users are, since they don't provide a definition of that.
Speaker 3:Yeah, but a little little more details, well if it's not profitable and they are going to cross the 1 billion revenue number, that means they're spending more than a billion and I, and my guess is, is that the vast, vast majority of that is content licensing, you know, or these rev share payouts, but whether it's a license agreement or a rev share, it's content you're paying for.
Speaker 2:It's hard to know, though, because in their balance sheet, if you look at it, they don't break out licensing costs just for to be. It's just licensing costs overall.
Speaker 3:Yeah, that's right.
Speaker 2:So we don't know the licensing costs for Tubi, yes, okay. So I think, over time, what we're going to get is more details from them in terms of, as this business goes past the $1 billion mark because that's a threshold that Wall Street then wants some more additional details.
Speaker 3:Yeah, sure.
Speaker 2:And you'll notice every quarter. Now, over the last, call it four quarters. Fox is talking just a little bit more on the earnings call when they're asked a question and they're volunteering some additional data, but the actual content spend, uh, we just don't know yeah uh, we'll do amc networks next real quick. The end of the quarter with 11.8 million domestic streaming subs, that at 200 000. Here's another one. Affiliate revenues decreased 13 percent. Advertising revenues decreased 10 percent. Why? Due to pay tv subscriber yeah, no shocker um, next let's go to some content deals.
Speaker 2:So, uh, we had some interesting comments just in the last day or two from Endeavor and TKO Group president, mark Shapiro, and he said that the UFC's current deal with ESPN which historically has been the exclusive US home of the event since 2019, well, it's up for renewal at the end of 2025.
Speaker 2:Now he said that he anticipates that Netflix will quote be at the table for negotiations on the UFC's next US media rights deal, but Disney has an exclusive negotiating window between January and April of next year. Now I thought this was interesting, mark. He went on record and he said last month that UFC quote hoped to reach a deal with Disney, though he added that UFC has other suitors. But then he said quote, we see a long-term future with ESPN and the Walt Disney Company. We're not looking to leave, but it takes two and we have to make sure the deal is right. So interesting how he's saying we really want to stay with Disney, we still want to work with you, but we think Netflix will be at the bargaining table. His way of gently sort of telling Disney hey, you're not going to underpay for this, yeah, you have other options, you better be ready to step up.
Speaker 2:Now we'll see if that happens, because you could also play him off there.
Speaker 3:Yeah, Interesting Well and you know, and Netflix very well, might be sitting across the table, but that doesn't mean that they have their, their PO book out either.
Speaker 2:Right, Maybe not At the price point. Disney might yeah. Yeah, we'll watch that one Also. He did say that on CNBC that WWE has officially scrapped their plans to try and legalize betting on wwe matches. I thought that was interesting and he specifically talked to because the issue there is, since it's scripted, if somebody got a hold of the script beforehand, you could bet on who the winner is, because it's guaranteed for you to know.
Speaker 2:So they would have to go through all this legal ramifications of making sure the script was locked down, and yeah, that doesn't make any sense, yeah. Yeah, so I think that's a very smart move on their part.
Speaker 3:That's interesting, though, and I just haven't followed it. But what is Trump's view on gambling and betting? Do you know? I do not know I haven't really heard him. He has a lot of other issues and betting, do you know? Is he? I do not know, I haven't really heard him. Uh, you know he has a lot of other, uh, other issues and views, but anyway, yeah, I don't know Interesting.
Speaker 2:Given that he's our next president we're going to have to watch. Right there's FTC, ftc, stuff, all kinds of things I just thought of? Obviously it was. Does this bring TikTok back into the fold with him?
Speaker 3:Yeah, yeah, yeah, absolutely Certainly will of the fold with him. Yeah, yeah, yeah, absolutely certainly will. To what? Well, who knows? And you know we've got elon musk who, it's pretty clear, is gonna be taking on quite a active role, uh yeah, but that's that's just.
Speaker 2:Who knows, right, that's, that could be a lot well, no, he can't.
Speaker 3:Yeah, no, I'm not saying that in the reference of him owning x, but just you know, if trump's gonna talk to somebody, he's probably going to have some history in the tick tock we we know what it thinks. So, yeah, yeah, yeah, I think that's the next one to watch a quick shout out here for the tennis channel.
Speaker 2:They're launching their new DDC service. Uh, actually next week in November. It's $110 for the year, or save 10 bucks.
Speaker 2:It's $110 for the year, or save 10 bucks If you sorry, it's $10 a month, or you can save 10 bucks if you pay $110 for the year. Yeah, it's combining all the previous available content through Tennis Channel Plus. They're saying it's more than 10,000 hours of live and on-demand tennis. Now, if you already get the Tennis Channel a part of your linear pay TV bundle, you're good to go. You don't have to pay more, you'll just have to authenticate. There were some mentions there, mark, in the press release, of like hey, we're updating the player and this and that and that's all cool. The one thing they didn't mention was just video quality. So I'm assuming this is not 4K. Yeah, hd.
Speaker 3:That'll be HD only Do you know what platform they built this on?
Speaker 2:Do you know? I don't remember. This is still run by Sinclair, right? Yeah, I think so I'd have to go. Look, I haven't looked at tennis stuff in quite some time. Yeah, let's go to Netflix. So Netflix announced they're going to delist all of their interactive shows and films as December 1st or almost all of them Almost yeah, yeah.
Speaker 2:So you know the way I compared this Mark was, you know, for a while, people in the industry talking about interactive streaming and you're going to pick your own route and you're going to decide how this thing ends and that sounds great, but consumers are the ones who decide here.
Speaker 2:They decided they don't want this, so I think of interactive streaming for that, the same of a 3d TV or a curve TV. Yeah, it was pushed on us. It's not what consumers wanted and it yeah, so does it make sense? Uh, also, here's a quote from Netflix and why they're doing this quote. The technology served its purpose, but it's now limiting as we focus on technology efforts in other areas.
Speaker 1:Yeah, makes sense.
Speaker 2:Now they were getting hit by a few people online. I'm like, oh, this was crazy. Like my kid likes it and that's great, but there's not enough kids out there.
Speaker 3:Unfortunately, your, your your kid's friends don't like it.
Speaker 2:So yeah, unless you've got some serious pull at Netflix. Yeah, so, but that was pretty funny.
Speaker 3:Also some other. Did you ever watch, by the way, dan? Did you ever watch any of those? You know? Interactive, you know I did early on.
Speaker 2:but this is like what 2018, 19? Something like that. Yeah, exactly yeah.
Speaker 3:Yeah, yeah, yeah, so yeah. So I think I only watched like, like, like one. I'm trying to remember it was the. It was the first one that came out, that was so. Uh, anyway, I am blanking out on the name, but that's how much we liked it Right, that's how much yeah exactly.
Speaker 3:But I I remember, like you know, when I finished it I went, well, that was cool, and then I went, actually that wasn't that cool because like I couldn't just sit back and just you know, sort of let it all play out for me, and you know, and then you've got that, oh, but maybe I should have picked this other path, or, you know, maybe I should have not selected that character, or you know. And so I don't know, I clearly was not. It's lean back.
Speaker 2:This idea that we're going to force consumers to consume content in a new way on a large screen. It's just not what consumers want. So I applaud Netflix. Hey, this isn't working. This isn't strategic to our business. Call it refocus efforts Good. That's what good companies do yeah, you know they're.
Speaker 3:And there's a. There's another piece of news that came out, um, this week, or maybe it was last week, but uh, their top uh, games, uh, cloud gaming executive is has has taken a new position. He's not leaving the company, uh, and they also, I think they divested or they just closed focus. Yeah, a studio, uh, a game, a gaming studio. So of course, everybody's jumping on oh, they failed in games. And you know, no, the game platform's still there and you know they're still. You know, at least they've not announced they're shutting down games. No, no, but but the you know is that it's also just super impressive. And this is, I think people now get this, but they didn't get it for a while. Why is Netflix so good at what they do? It's because they are always innovating, and I don't even want to use the word experimenting because it's far from experiments. But you know, and if they start building something, and you know evidence comes in that it's the wrong thing or consumers want something different, they change. Well, I'll make it even simpler.
Speaker 2:They're good at saying no, yeah, yeah, no this isn't a fit for our business.
Speaker 3:Yeah, it's not a fit, but they're also not afraid to start you know, and and so where's you know? We see too many companies where they're so afraid to even start because, oh, maybe this won't be a fit. Well, I don't know. You know, try it, let's try it. And if it, if it doesn't work, you know, then okay, we kill it and we or we adjust.
Speaker 2:And it's interesting you mentioned that, mark, because the two other points that you know I wanted to highlight on Netflix is you know one and this ties in to just what you said is you know, it's been two years since Ted at Netflix had that public sort of testy exchange with Daniel Craig at the Knives Out to premiere in Toronto. Oh, yeah, yeah, and. And what Daniel Craig was saying was because this film was doing well, clearly he's saying it was made for a large group audience and it should get a longer window in theaters. So here you have an actor saying like hey, netflix, you should keep this movie in theaters for a long period of time. And Ted made it clear that like hey, that's not our model, it is not a best fit for our business. And so again, it's Netflix knowing its business. And yet Daniel Craig was I can't say what he said here because he basically swore you know, and he was angry. And yet, by the way, he still made tens of millions of dollars from the Netflix.
Speaker 1:Exactly, by the way.
Speaker 2:Yes, but again very clear that Netflix knows its business. Hey, we put it in the movies it did well, but that doesn't mean we're going to leave it in the movies forever. So interesting, here you have a famous actor, tellingalyst I won't put his name out, but basically recently wrote a note that he says okay, well, netflix has made it clear, their executives have made it clear that they don't need bundles for now. They don't have to bundle with anybody else. But then he's saying, yeah, but if the rest of the industry gets its act together it could threaten Netflix. And at some point I'm going to quote him at some point rebundling could prove a path to real profitability of streamers not named netflix.
Speaker 2:Well, first of all, I don't know what real profitability is, either profitable or not, right, so that just kind of doesn't make it sense. But bundling a whole bunch of services together doesn't impact netflix profitability. Yeah, one has nothing to do with the other, because you're not saying here netflix is going to lose a whole bunch of subscribers if other companies do that. And we know how hard it is to bundle services together outside of what obviously Verizon has done with Plus Play and outside what Amazon is doing, where you can add channels. But interesting how everybody wants to tell Netflix like, hey, you should run your business this way, from a company that'll generate more than $6 billion of free cash flow this year Exactly.
Speaker 2:On top of $6.92 billion last year.
Speaker 3:Yeah, yeah. And then the last piece on Netflix $7.50, right and more than $7.50, right.
Speaker 2:Yeah, I mean it was close to $800 the other day. It's got to split soon.
Speaker 3:Yeah soon.
Speaker 2:Yeah, yeah, wall street thinks around 800 is when, when netflix would do it, and then the final pieces were exactly a week from today. Big fight. Recording the big fight paul tyson. Very interested to see just what the numbers are after that. I think they'll be bigger than people maybe think they will be. Uh, there's certainly been a lot of.
Speaker 3:I wonder if it likes to be a better fight than people think it will be. Yeah, I, I can't comment on that. I mean I'm, I'm not in into it. So you know, in the sport, so you know this isn't.
Speaker 2:this isn't a competition in the sense that nobody's getting a a belt after this Right. So I would imagine I have no insight say here but right, what does Netflix call things like this?
Speaker 3:Entertainment, Entertainment, entertainment events remember Events Correct.
Speaker 2:If one of them came in and knocked the other one out within three seconds, you know how many people would be upset that they have nothing to watch.
Speaker 1:Exactly.
Speaker 2:Wait what I missed it. And Netflix spent how much money. So I would not be surprised if it's hey, let's get a couple rounds in here and move around the ring right before anybody actually does anything. I don't know if that's the case, but there's a lot of money being spent on this.
Speaker 3:So Mike Tyson is 58 years old and Jake Paul is 27. So literally he could be fighting his dad.
Speaker 2:You know, mark, while I go into the next one, if you can't look up what the odds are in vegas.
Speaker 2:Yeah, yeah yeah, yeah, uh, I'll go. While you're doing that, I'll go into sky real quickly. So, uh, sky, which is obviously owned by comcast um, the story came out that they're facing a bill hundreds of millions of pounds after it accidentally underpaid its advertising partners since 2017. Ouch, so, uh, look, all credit to Sky. They realized that. They came out. They said, hey, we made a mistake, we owe money, we're going to pay you. Um, they've reimbursed the companies they've owed properly. Um, it is not yet been accounted for in public filings. Um, they also Sky said they made the necessary internal changes to prevent this from reoccurring. The independent disclosed that employees were fired as a result of this and didn't get into any other details on that. But, yeah, if you're not properly paying partners since 2017, that's yeah, that's a problem yeah, okay.
Speaker 3:So the odds, the odds on the jake paul versus mike mike tyson fight. This is fake yeah, this is fan duel okay, fine uh, you know so, yeah, um, so paul is the minus 280 favorite, so that means that you'd risk 280 to win 100. It's more even than I thought. Yeah, tyson is the plus 215 underdog. Let's see with the over-under. Yeah, it's not that big of a spread, no the over-under for total rounds of 5.5.
Speaker 3:So they think it's going to go five and a half rounds of 5.5. So they think it's going to go. Yeah, so I think it's. You know it's going to go five and a half rounds, yeah, the fight to go, the distance is plus 172. So but again, you know, that's probably because people realize like even if one of them has a chance to knock the other guy out, like I just can't see, like you say, I can't even see that, especially if it's early, I can't see they do it.
Speaker 2:You have to wonder how much of it is scripted.
Speaker 3:Is yeah, yeah, I mean yeah, outside of then just letting them lose Cause?
Speaker 2:no doubt, yeah, yeah, it's not exactly. I mean, yeah, you know, I mean look um at the same time, if I'm a 27 year old Jake Paul, how cool would that be to knock out Mike Tyson in the ring, because you're going to get your own shots back from?
Speaker 1:that guy who has the ability to damage your brain.
Speaker 2:That's true. Yeah, I don't want that, that's true, let's go to Altice real quick.
Speaker 2:They lost 77,000 pay TV subscribers. They're under 2 million now. Year to date they've lost 266,700 customers. They also lost almost 50,000 broadband customers. Interesting stat here Mark 28% of Altice's fiber broadband only customers use more than one terabit of data per month. So just quick little stat. Let's go to vizio. Vizio added 300 smartcast active accounts so they ended q3 with 19.1 million. It's a little up from q2 where they added 200 000. But their rate of growing their smartcast active accounts is really slowing now over the past couple quarters. That is a problem for them. Yeah, great arpu, though 37 on 17 cents. That's trailing 12 months, which was up 18 percent. Um, let's see flat q3. What was flat in q3 was the number of hours per month that the average household was streaming, which is 101 hours per month, and overall TV shipments were down 5 million to 1 million and a quarter. Note that ship not sold. Yeah, yeah, not in the house.
Speaker 3:Yeah, exactly, I mean they're sitting in Costco warehouses and you know targets and whatever Buy it doesn't mean you'll connect.
Speaker 2:Yeah, let's go into Vimeo. Vimeo had revenue of 105 million, so it was flat from Q2. It was flat year over year. Uh, net income was 9 million, so good for them on that. Uh, q4 revenue projection is lower than Q3 at it coming in they think a hundred million.
Speaker 3:They ended Q3 with 325 million cash cash equivalents now I gotta love vimeo, and they threw out these market dynamic numbers. Oh yeah, oh I I, I know, I know where you're going on this one. So listeners.
Speaker 2:Vimeo thinks that the demand for what they call ad-free, secure video the market they're represents a 76 billion dollar market by 2032. Just so, this is a company that's got 400 million dollars in revenue for the year, roughly right more than 400 million. Yeah, they're calling themselves one of the leaders, fine. However, you're measuring that, yeah, and your market's going to be 76 billion. This is the same mistake they did when they went pre-public and before they went public, and they're talking about oh, the market opportunity is 50 billion dollars or something insane.
Speaker 3:This, this is such so junior. This is such junior mba analysis. Uh, you know, trap of the market. But you see, the same thing, even like with Netflix, or not with Netflix, but in OTT, streaming premium services same thing. A vendor will say we're going after, and they'll add up the revenues of Netflix and Disney Plus and all the big players, right, and they represent and here they are an encoding vendor us and all the big players, right, and they represent, and here they are, an encoding vendor. You know we're in a market that's worth you know, 83 billion dollars. Yeah, well, what it's worth what?
Speaker 2:opportunity is yeah, obviously two different things. Now, wall street love their, their balance sheet right, they love that. So the stock as a result in the last five days is up 39. That's good, which is great for them. Now, keep them really good. We're still talking about a last five days. It's up 39%. That's good, which is great for them. Now, keep in mind, really good, we're still talking about a stock that I mean it closed today. It's $6.79.
Speaker 3:Yeah.
Speaker 2:So it's gotten back up from where it was down in the $3 range. It's a 52-week range. It's $3.43 low, $7.18 high. So it is getting back to near its 52-week high. So keep an eye on it. A couple of other things here to note is they call enterprise revenue, still defined as you just talk to a salesperson, the ARPU and revenue customer is $1,916 a month. So very different than, say, if you look at enterprise cloud or security, you have ARPUs on that over $100,000. Self-serve and add-on revenue declined 6%. Their other revenue declined 11%.
Speaker 2:what they classify as other because, they were getting rid of some certain products. Now, interesting too, here, mark, that they're improving their balance sheet. One of the ways they did that is their advertising spend fell almost 50% year over year, so they're just spending less money to advertise their platform. And then finally, here in their 10Q again, if you want the good stuff, you got to read the 10Q filings. They said, quote we do not have automated cross-vendor redundancy for either Google or AWS. I still find it strange that a company as large as Vimeo still has no cloud redundancy. It's just so odd to me At a time when multi-cloud is just so common. Yeah, but no redundancy there. So you better hope they don't have any major outage.
Speaker 2:Let's jump to Brightco. Brightco's revenue is just under $50 million, flat from Q2 and down 2% year over year. Their net loss was 3 million. They expect Q4 revenue to be in the range of 48 to 49 million, so just a little bit lower than Q2. They did slightly raise their 2024 revenue guidance to between 197.7 and 198.7 million, with a gap net loss of $100,000 to 1.1 million. So that's good. They ended the quarter with 27 million in cash and cash equivalents. That continues to go up slowly, so Brightcove is doing a great job in their balance sheet in terms of how they're spending every dollar.
Speaker 2:The issue that you know that's a problem here is, if they come at the high range of guidance of 198.7 million, 2023 revenue is 201,. 2022 revenue is 211. So Brightcove's revenue, for the third year in a row, will decline year over year over year. And they're not the only one, right. We've seen other vendors where this is happening. So, going back to what we were talking about in the beginning, the Fed interest rate, you know this is part of the reason companies are being so strict with their capital. Brayco is a great example. You have 27 million in cash and cash equivalents. Your non-gap loss from operations this year will, at the worst, be a million dollars. Great, that is good. You're not burning much money if anything.
Speaker 2:But you have 27 million in cash cash equivalent. So if you really want to grow the business, make some strategic acquisition, you're going to have to go out and take money. So they're the type of vendor where, if they can just continue to operate the way they are, rates get lower for money, gets easier to take money over a long period of time. I can see Brightcove as a type of company who who would really benefit from that. Yeah, so that's, that's Brightcove right now. Uh, now Wall Street. That's another one where Wall Street really liked their stock. Uh, Brightcove was up. Well, actually, let's see what they closed today, Cause they were kind of up and down a bit there after earnings. So they closed at $2.75. So they're at their 52-week high. Their 52-week high was $2.88. 52-week low $1.55. So in the last five days, which includes earnings, they're up almost 32%. So 32% sounds like a really big number, but we're talking about 66 cents.
Speaker 2:Yeah, that's what it represents, but it's still good for them yeah absolutely.
Speaker 3:And like you, point out, they are increasing cash on the balance sheet. Yes, which?
Speaker 2:is important.
Speaker 3:Slowly, but hey, every quarter.
Speaker 2:Yeah, a couple million dollars helps, yeah, yeah, all right, let's go to Akamai. That is a stock that Wall Street is not liking, oh yeah. So there's a bit to unpack here in Akamai. So first thing is they're going to reduce their workforce by about two and a half percent, so about 250 people they're going to cut. Now two reasons for this. Part of that is due to the recent acquisitions, so they've made some acquisitions. Okay, now there's a bit of an overlap, not surprising, but also just internally redeploying resources to focus more on compute. So to me, this isn't a negative. This is like what we were talking about with netflix. You understand your business. You know where you have to make cuts also, also, at the end of Q3, akamai had 10,947 employees, so cutting 250, okay, I'm sorry for those 250 people, but they're not cutting them because there's a problem with the business.
Speaker 2:Total revenue was just over a billion dollars, which is up 4% year over year. But the key takeaway here is Akamai hit the $1 billion quarterly revenue threshold for the first time Billion dollars. They did slightly lower full year 2024 revenue guidance. I thought it was interesting just how some notes from Wall Street really didn't like the guy down on revenue. But here's the details On the high point of revenue guidance it's $3.99 billion. The previous revenue guidance was $4.01 billion. Such a slight difference. Security revenue was up 14% year over year. Compute revenue was up 28% year over year. Year over year Compute revenue was up 160, up 28% year over year. Delivery revenue was down 16% year over year. Not surprised. We'll get that back to that in a minute. Gap net income was 58 million but that was down 64% year over year.
Speaker 2:Akamai is another one who's investing in compute. So CapEx is going up. Security product portfolio now comprises more than 50% of Akamai's revenue. So if you strip out everything that is not delivery related, that's now 70% of Akamai's revenue. And keep in mind they don't break out CDN revenue. They break out delivery revenue. But you know Akamai still continues to do a great job of diversifying away from lower margin delivery business investing in higher margin security compute. That's where the business is and the fact that you now have 70% of your revenue coming from those higher margin services, that certainly helps.
Speaker 2:A couple new numbers we got here, not tied to streaming, but this is important. Api security offering is now on track to achieve $50 million in annualized revenue run rate. Their zero trust offering is 180 million. That's important. And now here's the big number because we hear about compute, compute, compute all day long. Their enterprise compute revenue will hit 100 million, plus annualized revenue run rate, by the end of this year. So that's important because we hear about compute in the industry and we don't see a lot of adoption yet. But now the fact that Akamai is talking about more than $100 million in revenue. We're starting to see this flywheel, so have to keep an eye on that.
Speaker 2:Akamai ended Q3 with almost $2 billion in cash and cash equivalents. Now their stock was hammered down 12% after earnings. I think it's down even more at the end of the day. So it closed the day down 14.4%. So they definitely took a hit there.
Speaker 2:Now on the delivery side, mark, let's talk about that for a minute. Not surprising that the delivery revenue continues to decline. They specifically called out less traffic when it came to streaming and gaming. That's the other thing to note. It was streaming and gaming, and I'm going to read exactly what they said here word for word. So quote and in terms of traffic growth, it is growing very slowly, at rates that we haven't seen in the 25 plus years we've been in this business. So it's growing very, very slowly. Now that is specific to delivery revenue, that is, not total bits delivered across our network for all their services.
Speaker 2:At the same time, I want to be very clear. The CDM business is not falling off a cliff. It's not a terrible business to be in if you're optimizing the business right for scale. It's not a terrible business to be in if you're optimizing the business right for scale. Akamai also talked about how, even with the business declining in terms of revenue growth quarter over quarter, year over year, it is still a profitable business for them. So if you can do CDM properly, you can still have a profitable business, even though it is not the piece of your portfolio from a product standpoint, that is going to be the one that's growing. Nothing wrong with it. Let's go more into infrastructure here.
Speaker 2:Fastly, their revenue was up 7% year over year and their gap net loss was 38 million. Their network services revenue was up 5% year over year. Cdn falls under that. Security revenue is up 12%. Full year revenue guidance of 539 to 543. Just a slight raise from Q2.
Speaker 2:An interesting stat here was that Fastly's top 10 customers accounted for 33% of revenue in Q3 compared to 40% year over year. Awesome. We're talking about the largest customers for media. That's always some of them. Yeah, fastly specifically talked here about revenue from their top 10 customers. It declined 11% year over year compared to revenue growth of 20% year over year from customers outside the top. Not surprising If you're following the CDdn space. This is what you know. Uh, the next one to go into cloud flare another infrastructure revenues up 28 percent year-over-year gap. Net loss 15.3 million. Uh, they gave out a q4 revenue range which would be 25 percent year-over-year growth. At the midpoint they raised their full year guidance, which is going to come in at about 1.66 billion.
Speaker 2:But cloudflare also got hammered in their stock, not as bad as akamai, but in the last five days actually, just let's look. Today it was down not too bad, just uh, 4.6 percent initially. After earnings it was down more. So in the last five days they're actually up almost five percent. So so that's good to see. Uh, it was a bit worse there for them. Uh, their ceo was on cnbc today at 4 pm. I didn't get to see it. Um, if you look at fastly, they were down 6.1 percent. Uh, today, in the last five days fastly's up actually just a little over 7%. Next let's go to another CDN news. So congrats to the guys over at Media Nova.
Speaker 1:So if you don't know who.
Speaker 2:Media Nova is they're super focused CDN headquartered in Turkey. They've been bootstrapped from day one, just funded from the co-founder, and they did announce that they've officially taken their first large round of funding. They didn't disclose how much and they didn't want to talk about it. I have the number and I already put up on LinkedIn, so they can draw on up to $25 million. That's the investment credit that they have here. I don't know how much of that they're going to draw on. They did say they're going to use the funds to grow at CDN Footprint, invest in more cybersecurity and AI portfolio products Also very important. They have a core focus in Turkey, the Middle East, Eastern Europe, and they plan to stay focused in that geographic area. So they're not taking the money.
Speaker 2:So it's like, hey, let's build a network in all these other countries.
Speaker 3:So again let's go to the U? S because it's such a big market.
Speaker 2:So you can be successful in the CDM business. If you're focused, you know what you're doing. Cdn 77 is another great example. I was thinking of them to see, especially in a market when it's really hard to get money for infrastructure tied to anything CDN related. If it's AI, it's a whole different story. That's what we're going to go into next. So this is insanity. Think about this number. I'm about to tell you so. Morgan Stanley analyst says he expects 2025 CapEx for the hyperscalers that's amazon, google, right the big guys to reach over 300 billion next year. Now that would be up 25 from this year and almost double of 2023. 300 billion in capex. That's unheard of now, how big of a deal is this? Well, Amazon CEO said during their earnings that generative I can never say the word generative generative AI might be a quote once in a lifetime type of opportunity and that their AI business is growing more than three times faster at this stage of its evolution, as AW itself grew and we like and we felt like AWS grew pretty quickly.
Speaker 3:That's what he said we felt like it grew pretty quickly. Yeah, that's kind of an understatement $100 billion run rate yeah.
Speaker 2:Yeah, over $100 billion, yeah yeah. So just incredible to see how much money is being spent. But also these companies Amazon, google and others are telling us listen, we're not throwing this money out here on CapEx for something we think might come. We see it coming. The flywheel is starting. We now have a number from Akamai at least on the edge, you know, compute side $100 million. You know, by the end of this year we're starting to see some uptick here. Hundred million dollars, you know, by the end of this year we're starting to see some uptick here. So super interesting to look at what's going on here with the hyperscalers and their capex spend pretty, pretty amazing, uh.
Speaker 2:And then final piece here, mark, uh, let's go to nielsen, um. So mrc, the media rating council, um, has granted accreditation accreditation to nielsen's approach for integrating their first party live streaming data. So they're going to integrate that into their national television painting rental service. So this is the stuff that they've been doing for Amazon for Thursday night football, but it wasn't credited by MRC. So one thing just to clarify here, because I saw some people writing about this incorrectly Accreditation by the media rating council does not signify that the ratings are accurate. There's no way to determine that. It simply means that Nielsen has been audited and is doing what it says it's doing while meeting certain research standards. That's all MRC means. That's what accreditation means. Standards that's all MRC means. That's what accreditation means. So this is what Nielsen has already been doing for Amazon Prime's first party data to track the NFL's Thursday night football. So, even without the MRC stamp of approval, that's what Nielsen has been doing with.
Speaker 1:Amazon.
Speaker 2:Now that it has a stamp of approval, will other companies like Amazon follow suit? Don't know, but it's really important. Listeners and people in the space understand it's not saying nielsen has better data or more accurate data than competitors. It's simply saying that it's, um, accredited, based on mrc's methodology of how to collect and data. That's really it. So it's important because there's just so much silliness going on out there in terms of how we're measuring everything.
Speaker 2:Yeah, got it, uh, so that's what we got this week mark got through a lot of good stuff here. Um, we're pretty much through earnings. We only have two more left. One of them's really big, disney, so well, maybe we'll get something good out of that. But you know who knows, disney's always hit or miss, uh. So next year we've got uh, echo star, so we'll get the uh sling tv numbers, uh. And then, uh, disney plus or disney. And then we'll get plus hulu, espn plus. Uh, in the last quarterly earnings they gave us disney, gave us as less information they've ever given us before around espn plus. So we'll see if they cut back on that even further. And then the other piece of you know big news next week will just be the netflix boxing fight that's right.
Speaker 2:I think we're going to get numbers after that that are pretty detailed from netflix. I think we're going to get, not, you know, concurrent bit rates and whatnot, uh, which we can just see from streaming and if we want to, but I think we're going to get some good just viewer, viewer usage, maybe some engagement. Netflix knows how much advertisers and others are really watching this, so I think we'll get some good public information and also, this is just a really good test for Netflix leading up to NFL on Christmas, which is really going to be just, you know, incredible to watch Mark. Last night I was in the city, hosted a private dinner with a great group of folks from YouTube Fox Peacock, netskirt, fox Peacock, netskirt and we were talking about just some of the things going on in the space as far as delivery. Rockstar Games as well was there. So executives from all those companies, private Dinner and one of the things we were all taking sort of bets on and I'm going to give out a prize based on whoever wins. It is, uh, what the average minute audience is going to be for NFL on Netflix on Christmas.
Speaker 2:Christmas, yeah, because we don't really have anything to compare that to now the one o'clock game. One o'clock Eastern is the chiefs game, which is, of the two games, more of what people are going to compare? Uh, care for the chiefs are undefeated right now. Uh, so that's, that's the one. But you know, the Peacock game, wildcard okay, a different type of game, uh, and, and it was only us, obviously, whereas Netflix has global. But then everybody was like, okay, well, wait a minute, it's one o'clock East coast. Okay, so it's. You know, 10 and 10 AM West coast, where you really trying to watch football at that time. Then someone at the table looked up and was like you know, every year for Christmas, 18% of people travel outside the U? S. Oh, interesting, so how many Americans are outside the U? S that want to watch the games on Christmas? But also, if you have a 1 PM start time in Europe and a lot of places now 6 PM pm it's exactly, so you can watch that game.
Speaker 2:So maybe not the second game, so interesting to see what happens. But if people want to know, I'm not going to give out people's names who are at the dinner and what they what they picked, but the uh, the numbers were uh. We had a low of 12.5 AMA million and we had a high of I think it was 38 million.
Speaker 3:So that's the spread. Yeah, okay, these are executives running the business.
Speaker 2:Yeah, yeah.
Speaker 1:So that's the spread.
Speaker 2:I'm not guessing at all. I'm not. I'm not going to put a number out there. I will have a post next week talking a little bit more about what we should expect, though, for the game and what really to look at. And also I'm going to be providing pay pay TV numbers on Christmas the NFL so that we can look a little bit of what the audience has been. You know it's it's hard. We don't have an exact methodology to copy here, but we do have some data points we can look at. So I'm going to break that down a blog post, cause I did not realize how big NFL is on Christmas. It's gigantic. The NFL is on Christmas, it's gigantic the number.
Speaker 2:Yeah, really large, yeah, so that's what we got next week Mark and I are going to take. Let's see right, we taking next week off, mark, I forgot.
Speaker 1:Yeah, we are.
Speaker 3:Yeah, we are.
Speaker 2:So we'll. We'll have something the week after. We're going to take a week off, so I travel, but if anyone has any questions, reach out to us. We've got everything up on LinkedIn. Yes, I finished today putting everything up on LinkedIn. So if you really want a detailed breakdown, go check out all the posts. And also, mark, just you know, you and I talk sort of many times back and forth privately just on LinkedIn engagement and whatnot, and I see people posting things like oh, I'm trying to get my views up and this and that. And you know things like, oh, I'm trying to get my views up and this and that Many it's like oh, I'm struggling, I can't figure out content Just from the stuff I put up this week regarding featuring earnings from companies, and I forget how many posts it is. Before we got on this call, I took a look it's about 140,000 engagements across all the posts in five days.
Speaker 1:Right. What does that tell you, If you're listening people want information, they want facts they want numbers.
Speaker 2:Yeah, they don't want it skewed. They want to know what is the actual information so that you can base the best decision that you feel off those numbers that you need to do for your business. So just for those listening, those creating content, this is not rocket science. Stick to the facts.
Speaker 3:Yeah, exactly, and people don't need more opinions. It's perfectly okay to have a point of view In fact, it's actually important to have a point of view but just an opinion, yeah, that doesn't do well.
Speaker 2:Those tend to not to, unless you talk about here's potentially what could happen to another company competitive landscape but, but, but that if done right, that's more like analysis, correct?
Speaker 3:yeah, you know, in my view I mean I'm talking about you know what I mean when I say opinions. You know the yeah, random stuff.
Speaker 2:It's not substantiated, it's kind of like okay, after the election, how much are we going to see of that on LinkedIn? And the next day we saw a lot. I saw a lot just of like people's opinions on political things, but fortunately it didn't last too long.
Speaker 3:Yeah, exactly, I was happy to see that too too.
Speaker 2:A lot of them then were focusing on it was more policy. People like, okay, well, what is this impact with ftc? Yeah, right. Or taxes on streaming services? Okay, great, take it there, because linkedin just continues to be. I just I understand you're excited your child graduated fifth grade. I've never heard of a fifth grader left back ever, like I just haven. So doesn't everyone's child graduate from fifth grade? That's something you're putting up on LinkedIn. I still don't get it, yeah, but uh, the political stuff? Fortunately I didn't. I didn't see too much, so I thought that was really good. So check out my LinkedIn. I got all the numbers up. You have any questions? Reach out to Mark and I were always. We appreciate everyone's support and listening.
Speaker 2:We'll be back in two weeks or about 10 days. Stay safe. Any questions, let us know. 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 streamingmediablogcom.