Earnings

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."

Janko Roettgers

Janko Roettgers (Twitter, Mastodon) used to be a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety's first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.

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

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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

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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.

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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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Farewell from Protocol

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.

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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.

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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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