Netflix earnings: Huge lockdown subscriber bump

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  • Q1 revenue: $5.77B (+27.6% YoY, +5.5% QoQ, vs. $5.74B expected)
  • Q1 earnings: $709M (+106.1% YoY, +20.8% QoQ)
  • Q2 guidance: Netflix forecasts $6 billion revenue and $820 million earnings for Q2 of 2020.

The big number: Driven by stay-at-home orders around the world, Netflix saw its number of subscribers surge by 15.8 million, as opposed to the 7 million the company had forecast, to a total of 182.82 million. Most of those subscribers joined in March, meaning that the company won't fully see an impact on its revenue until Q2 of 2020.

People are talking: "It's a bunch of us feeling the wind." CEO Reed Hastings was frank during the company's Tuesday afternoon earnings call that any forecast on COVID-19's impact on the business is just guesswork at this point. "In a couple of months, we'll be able to grapple with the long-term implications," he said. For now, the company was just focused on keeping the service up and running. "Our small contribution to these difficult times is to make the home environment a little more bearable," Hastings said.

Opportunities: Netflix clearly benefited from people staying at home. As a result, Netflix had to tweak its streaming tech to save bandwidth in some markets and hire 2,000 additional customer service agents to deal with increased demand. However, executives cautioned that some of this growth may just be front-loaded, possibly resulting in softer growth numbers later this year. Or as the company put it in its letter to shareholders: "Intuitively, the person who didn't join Netflix during the entire confinement is not likely to join soon after the confinement."

Threats: Netflix's numbers were affected by a strengthening dollar, putting a ding on international revenue, which has been the company's biggest growth driver. Beyond that, the company is starting to see an impact of productions shutting down across the world. It still plans to go ahead with its release plans for Q2 and Q3, but had to stop dubbing content in Italian, and a closer look at the numbers reveals further trouble ahead: Netflix now expects to spend $1.5 billion less on content production this year than it had previously planned.

The power struggle: Asked about competitors, Hastings singled out Disney+ for a level of execution he hadn't seen from other competitors ever since Netflix's founding. "It's stunning," Hastings said. "My hat is off to them." At the same time, he reiterated a long-held belief that Netflix is competing not just against other subscription services, but also YouTube, gaming and more, and that this competition is not a zero-sum game. "No one is gonna get it all," he said. "It's working out very well for us."


Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

His decisions on major cryptocurrency cases have quoted "The Big Lebowski," "SNL," and "Dr. Strangelove." That’s because he wants you — yes, you — to read them.

The ways Zia Faruqui (right) has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster.

Photo: Carolyn Van Houten/The Washington Post via Getty Images

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

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Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

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The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.

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As AWS preps for its annual re:Invent conference, Adam Selipsky talks product strategy, support for hybrid environments, and the value of the cloud in uncertain economic times.

Photo: Noah Berger/Getty Images for Amazon Web Services

AWS is gearing up for re:Invent, its annual cloud computing conference where announcements this year are expected to focus on its end-to-end data strategy and delivering new industry-specific services.

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Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Image: Protocol

We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.

As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.

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Bennett Richardson

Bennett Richardson ( @bennettrich) is the president of Protocol. Prior to joining Protocol in 2019, Bennett was executive director of global strategic partnerships at POLITICO, where he led strategic growth efforts including POLITICO's European expansion in Brussels and POLITICO's creative agency POLITICO Focus during his six years with the company. Prior to POLITICO, Bennett was co-founder and CMO of Hinge, the mobile dating company recently acquired by Match Group. Bennett began his career in digital and social brand marketing working with major brands across tech, energy, and health care at leading marketing and communications agencies including Edelman and GMMB. Bennett is originally from Portland, Maine, and received his bachelor's degree from Colgate University.


Why large enterprises struggle to find suitable platforms for MLops

As companies expand their use of AI beyond running just a few machine learning models, and as larger enterprises go from deploying hundreds of models to thousands and even millions of models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

As companies expand their use of AI beyond running just a few machine learning models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

Photo: artpartner-images via Getty Images

On any given day, Lily AI runs hundreds of machine learning models using computer vision and natural language processing that are customized for its retail and ecommerce clients to make website product recommendations, forecast demand, and plan merchandising. But this spring when the company was in the market for a machine learning operations platform to manage its expanding model roster, it wasn’t easy to find a suitable off-the-shelf system that could handle such a large number of models in deployment while also meeting other criteria.

Some MLops platforms are not well-suited for maintaining even more than 10 machine learning models when it comes to keeping track of data, navigating their user interfaces, or reporting capabilities, Matthew Nokleby, machine learning manager for Lily AI’s product intelligence team, told Protocol earlier this year. “The duct tape starts to show,” he said.

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Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

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