Netflix picked up subscribers in Canada to add nearly 16 million global customers during the first three months of the year, helping cement its status as one of the world’s most essential services in times of isolation or crisis.
The quarter spanned the beginning of stay-at-home orders in the U.S., Canada and around the world, a response to the coronavirus pandemic that apparently led millions to latch onto Netflix for entertainment and comfort when most had nowhere to be but home.
Netflix more than doubled the quarterly growth it predicted in January, well before the COVID-19 outbreak began to shut down many major economies. It was the biggest three-month gain in the 13-year history of Netflix’s streaming service.
The numbers — released Tuesday as part of Netflix’s first-quarter earnings report — support a growing belief that video streaming is likely to thrive even as the overall U.S. economy sinks into its first recession in more than a decade.
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Over the past year, Netflix’s growth in the U.S. and Canada had slowed significantly. But the pandemic seems have to have reversed that trend for the moment. Netflix added 2.3 million subscribers in the U.S. and Canada in the first quarter, up from 1.9 million at the same time last year.
However, it’s unclear from the way Netflix discloses its numbers how many of the new subscribers are from Canada. The company briefly provided figures at the end of 2019 which shed light on its customer base across the country, but it now prefers to lump its operations into regions.
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The company has previously said Canada represents roughly 10 per cent of its North American subscriber base, which would suggest it grew its subscribers here by 230,000 in Canada during the quarter, which compares to 125,000 paid sign-ups during the fourth quarter that ended Dec. 31, 2019.
“We’re acutely aware that we are fortunate to have a service that is even more meaningful to people confined at home, and which we can operate remotely with minimal disruption,” Netflix said in a statement.
Investor optimism about Netflix’s prospects propelled the company’s stock to new highs recently, a sharp contrast with the decline in the broader market.
Netflix’s shares initially surged in after-hours trading after the first-quarter report came out, then drew back. The strengthening dollar will likely depress the company’s revenue from outside the U.S., including some of its fastest growing markets.
That’s one reason Netflix’s revenue only climbed 17 per cent from last year to US$5.8 billion, even though it ended March with nearly 183 million worldwide subscribers, a 23 per cent increase from the same time last year. Netflix earned US$709 million in the first quarter, nearly triple from last year.
Netflix shares edged up by less than one per cent in Tuesday’s extended trading to US$437.37, leaving them below last week’s record high of US$449.52.
Even though it faces plenty of competition, Netflix appears better positioned to take advantage of the surging demand for TV shows and movies largely because of its head start in video streaming.
Since beginning its foray into original programming seven years ago, Netflix has built up a deep catalogue that can feed viewer appetites even though the pandemic response has shut down production on many new shows.
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That stoppage could hurt Netflix as well, although analysts at Canaccord Genuity believe its video library will serve as a “content moat” that can keep most competitors at bay.
Ted Sarandos, chief content officer, reassured investors in a video interview that he doesn’t foresee troubles with Netflix’s future releases, because seasons of TV series are produced in full, long before they hit the service, unlike many traditional network TV programs.
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“Our 2020 slate of series and films are largely shot and are in post-production remotely in locations all over the world, and we’re actually pretty deep into our 2021 slate,” he said.
Sarandos pointed to production of “The Crown,” a dramatic series about the Royal Family, has already filmed and is “in finishing stages” for a release later this year.
But there will be a few smaller hurdles along the way as Netflix’s production gets accustomed to the impacts of COVID-19.
The company said that home isolation in countries across the world has made it impossible to produce dubbed versions of some of its original programs “in Italian and some other languages” because the voice talent can’t access the required equipment. Those affected titles would be released in April and May, but a representative was not certain which films or TV series would be impacted and couldn’t say whether the French-language translations were being produced.
Netflix said it hopes to get voice actors set up in their homes to record future dubs.
Among its biggest challengers in the market is Walt Disney Co., whose recently launched streaming service is also stocked with perennial classics, especially for children who have even more free time than usual.
That’s one of the big reasons Disney’s service has amassed 50 million subscribers and why Netflix is basking in another resurgence in popularity. Netflix predicted it will add 7.5 million subscribers from April through June. That’s nearly three times more than its average springtime gain of 2.7 million subscribers during the past seven years.
“Since we have a large library with thousands of titles for viewing and very strong recommendations, our member satisfaction may be less impacted than our peers,” Netflix boasted in its report.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
