Connect with us

Business

Netflix’s message to shareholders: Focus on revenue and profit, not subscriber adds

Published

 on

 

Getty Images News | Getty Images

Netflix has a message for investors: start focusing on revenue and profit, and stop obsessing about subscriber growth.

Netflix made its argument with several pointed comments in its quarterly shareholder letter. The world’s largest streamer said it will stop forecasting paid subscriber adds. The company’s rationale behind the change is to get investors focused on revenue instead of customer growth.

“We are increasingly focused on revenue as our primary top line metric,” Netflix wrote as it reported third quarter earnings Tuesday. “This will become particularly important heading into 2023 as we develop new revenue streams like advertising and paid sharing, where membership is just one component of our revenue growth.”

Genius Dog 336 x 280 - Animated

Netflix will continue to provide guidance for revenue, operating income, operating margin and net income — traditional metrics of profitability — and it will still report subscriber adds each quarter. It just won’t forecast what’s to come.

Part of the change is motivated by the increasingly wide array of revenue per user. A given subscriber could be paying $6.99 per month for Netflix’s new advertising tier, which debuts in the U.S. on November 3, or $19.99 per month for Netflix’s premium, no-ad service.

“Focusing on subscribers in our early days was helpful, but now that we have such a wide range of price points and different partnerships all over the world, the economic impact of any given subscriber can be quite different,” Spencer Wang, Netflix’s vice president of finance, said during the company’s earnings call Tuesday. “That’s particularly true if you’re trying to compare our business with our streaming services.”

Theoretically, Netflix’s advertising tier and coming crackdown on password sharing should reinvigorate subscriber growth. But Netflix, which gained 2.4 million subscribers in the third quarter on an “especially strong” content slate, led by “Stranger Things 4,” may see quarters with 10 million or more subscriber adds as a relic of the past.

Focusing on Netflix’s strengths

Instead of operating in a world filled with comparisons to a pandemic era fueled by surging growth, Netflix is attempting to steer investor focus to the fact that its streaming service actually makes money. Netflix directly addressed this point in the “Competition” section of its shareholder letter.

“It’s hard to build a large and profitable streaming business – our best estimate is that all of these competitors are losing money on streaming, with aggregate annual direct operating losses this year alone that could be well in excess of $10 billion, compared with our +$5-$6 billion of annual operating profit,” Netflix wrote.

In other words: Netflix is saying it has built a great streaming business, while Disney, Warner Bros. Discovery, Comcast‘s NBCUniversal, Paramount Global, and others want to build a great streaming business. Netflix acknowledged some of their competitors may get there, through consolidation and price hikes.

This is a clear competitive advantage for Netflix, unlike subscriber adds, where Disney — earlier in its growth cycle, having launched Disney+ in 2019 — has the upper hand. Disney added 14.4 million Disney+ customers last quarter while Netflix lost 970,000.

Netflix shares surged after hours, rising 14%. The company is once again adding subscribers after losing customers in the first and second quarters. Next quarter, Netflix said it will add 4.5 million more customers.

But Netflix says we’re not supposed to be focused on that anymore. The question is whether investors will listen.

Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.

Source link

Continue Reading

Business

Canada's jobs market ekes out another gain in November as wages rise – Yahoo Canada Finance

Published

 on


Workers inspect lumber at West Fraser Pacific Inland Resources sawmill in Smithers, British Columbia, Canada February 4, 2020. REUTERS/Jesse Winter

Statistics Canada reported the latest jobs report for November on Friday. REUTERS/Jesse Winter

Canada’s labour market added 10,000 jobs in November, building slightly on its massive 108,000 gain from the month prior, Statistics Canada reported on Friday.

The gain was driven by an increase in full-time positions. Employment rose in sectors such as finance, real estate and manufacturing but fell in construction and wholesale trade.

The unemployment rate ticked lower to 5.1 per cent as labour force participation edged down.

Genius Dog 336 x 280 - Animated

Average hourly wage growth across all industries remained unchanged in November at 5.6 per cent, while wages for permanent employees tapered gains to 5.4 per cent on an annualized basis.

It’s the sixth month in a row that wages have risen by more than five per cent and a key measure the Bank of Canada is watching as it tries to head off a wage-price spiral.

“A host of wage metrics suggest that Canadian wage growth is either stabilizing or decelerating,” Royce Mendes, managing director at head of macro strategy at Desjardins, said in a note.

“As a result of the only modest gain in headline employment and the absence of any signs of accelerating wage growth, we continue to expect the Bank of Canada to hike rates just 25bps next week.”

However, other economists are still betting on a half-point hike from the central bank.

“Over the past 6 months, the Canadian labour market has largely stood still, with average gains of just over 4K a month. However, given still strong wage growth, the composition of job gains in November (mainly private sector and full-time), and the low unemployment rate, this report supports our view that the Bank of Canada will increase rates by 50 bps next week, before pausing in 2023,” Karyne Charbonneau, the executive director of economics at CIBC Capital Markets, said in a note.

The small gain in employment comes as economic growth in the third quarter was stronger than expected.

GDP grew 2.9 per cent on an annualized basis in the three-month period. While it marked a slowdown compared to the previous quarter, the headline number was significantly stronger than the Bank of Canada’s forecast in its latest Monetary Policy Report, where it predicted growth to stall through the end of this year and into 2023.

Michelle Zadikian is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @m_zadikian.

Download the Yahoo Finance app, available for Apple and Android.

Adblock test (Why?)



Source link

Continue Reading

Business

Kelowna unemployment rate rises for third consecutive month – Kelowna News – Castanet.net

Published

 on


Central Okanagan’s unemployment rate jumped in November, marking the third consecutive month it has increased.

Statistics Canada on Friday reported Kelowna’s metropolitan area had a jobless rate of 4.9% last month, which was up from 4.3% in October and 4.1% in September. The region’s unemployment rate hit a nearly three-year low of 3.9% in August but is now on the way back up.

Genius Dog 336 x 280 - Animated

Kelowna’s labour force, which is all members of the population who are able to work, dropped by 1,200 people in November, but the number of those actually working fell by 1,900.

It was a different story in the Thompson Okanagan region as a whole, however, as the unemployment rate dipped to 4.5% from 4.9% last month.

The national jobless mark fell to 5.1% in November from 5.2% in October, and the country gained 10,000 jobs over the month’s 30 days. Canada added 108,000 jobs in October.

“The main overriding feature of today’s report was that you were continuing to gain jobs in Canada,” TD director of economics James Orlando said Friday. “If you add up just the number of jobs gained (in) November and October, it’s pretty substantial.”

Employment rose in several industries in November, including finance, insurance, real estate, rental and leasing, manufacturing and in information, culture and recreation, while it fell in construction as well as wholesale and retail trade.

Statistics Canada also noted in its report that the employment rate among core-aged women aged 25 to 54 hit 81.6% in November, a record high in comparable data going back to 1976.

Canada’s labour market has remained remarkably strong despite signs of an economic slowdown. The unemployment rate fell to a record-low of 4.9% in the summer and has edged up only slightly since then.

“The economy is clearly still doing very well,” Orlando said. “When you look at the labour market, you have not seen a slowdown.”

— with files from The Canadian Press

Adblock test (Why?)



Source link

Continue Reading

Business

Oil Analysts Are More Divided Than Ever – OilPrice.com

Published

 on



Oil Analysts Are More Divided Than Ever | OilPrice.com

Genius Dog 336 x 280 - Animated


Trending Discussions

Premium Content

Oil

1. Oil Analysts Diverge Ahead of OPEC Meeting

– OPEC+ will meet this Sunday to discuss its production targets for January 2023, amidst a widening discrepancy between oil market watchers as to what we should be expecting next year.

– As things stand currently, it is only the US Department of Energy’s EIA that sees OPEC+ pumping more oil in H1 2023, others indicate the oil group should either keep targets as they are or cut further.

– With outright prices bouncing back from the lowest levels seen this year and even WTI swinging back above $80 per barrel, the current consensus is that OPEC+ will roll over its targets.

– Confirming that forecasts have become inherently political, the IEA’s global oil demand growth for 2023 stands at a mere 1.7 million b/d whilst OPEC expects 2.55 million b/d.

2. Ukraine War to Shrink Russian Upstream Investment

– After Russian oil companies invested $45 billion into upstream projects across the country last year, this year is poised to see the lowest investment activity in years as companies postpone FIDs.

– Greenfield investments have tumbled 40% year-on-year to $8 billion, and even that is mostly coming from previous commitments such as gas production going into Power of Siberia-1 or Vostok Oil.

– Russia’s two largest energy companies, the oil giant Rosneft and the gas giant Gazprom, have seen marginal declines in capital spending this year, coming in at $12.9 billion…

1. Oil Analysts Diverge Ahead of OPEC Meeting

Oil

– OPEC+ will meet this Sunday to discuss its production targets for January 2023, amidst a widening discrepancy between oil market watchers as to what we should be expecting next year.

– As things stand currently, it is only the US Department of Energy’s EIA that sees OPEC+ pumping more oil in H1 2023, others indicate the oil group should either keep targets as they are or cut further.

– With outright prices bouncing back from the lowest levels seen this year and even WTI swinging back above $80 per barrel, the current consensus is that OPEC+ will roll over its targets.

– Confirming that forecasts have become inherently political, the IEA’s global oil demand growth for 2023 stands at a mere 1.7 million b/d whilst OPEC expects 2.55 million b/d.

2. Ukraine War to Shrink Russian Upstream Investment

Ukraine

– After Russian oil companies invested $45 billion into upstream projects across the country last year, this year is poised to see the lowest investment activity in years as companies postpone FIDs.

– Greenfield investments have tumbled 40% year-on-year to $8 billion, and even that is mostly coming from previous commitments such as gas production going into Power of Siberia-1 or Vostok Oil.

– Russia’s two largest energy companies, the oil giant Rosneft and the gas giant Gazprom, have seen marginal declines in capital spending this year, coming in at $12.9 billion and $10.4 billion, respectively.

– At the same time, future LNG projects such as Novatek’s Arctic LNG-2 might be delayed for five to six years longer than previously assumed due to a lack of liquefaction technologies.

3. Europe Confronts First Cold Spell

Europe

– Following an unseasonably warm autumn, Europe is now bracing for colder-than-average temperatures in December as a double-blocking pattern in the Arctic will bring weeks of chill.

– Scandinavia, Northern, and Western Europe will be the most impacted regions, marking the first real test of European gas inventories this winter, with stocks still around 94% full.

– Power prices in Scandinavian countries were the first to react, with the Nordic daily rate surging 8% in just one day to almost €375 per MWh, the highest since September.

– European spot gas prices have seen some strengthening earlier this week, although they remain on par with month-ago readings, trending around €140 per MWh.

4. Lack of Dual-Use Units Limits Gas Switching

Gas

– As the coming Arctic wave is pushing natural gas prices in Europe up again, the continent’s industry at large has hit the limits of gas-to-oil switching that could allow the generation of power from diesel or fuel oil.

According to the IEA, gas-to-oil switching in Europe might rise to 450,000 b/d in Q4 2022 and Q1 2023, double of what it used to be a year ago when gas prices were four times cheaper.

– The switching capacity of the European industry is assessed at a mere 2-3% of installed capacity or around 2 GW, with most of it located in Italy, Germany, and Spain.

– Fuel oil used to be a huge source of power generation in the early 2000s with some 1 million b/d of installed capacity, but now those volumes have shrunk sixfold to 150,000 b/d.

5. China’s Decarbonization Is Around the Corner

China

According to Rystad Energy, China is developing more renewable energy capacity than any other country in the world to fulfill its pledge of becoming carbon-neutral by 2060.

– China’s power generation is still dominated by coal, accounting for some 58% of all electricity and totaling 1,115 GW in capacity, but non-emitting energies have been making huge inroads.

– Current developments suggest China will ramp up its solar PV and wind capacity to almost 2,000 GW by 2030, tripling it over the course of the upcoming seven years as the LCOE of a solar plant dropped below $50 per MWh.

– China’s share in the manufacturing of solar panels stands around 85%, implying the sourcing of wafers and polysilicon will be domestic, buoying relevant industries as well.

6. Despite Headwinds, Saudi Arabia Is the Real Winner of 2022

Saudi Arabia

– Saudi Arabia is expected to post a budget surplus of $25 billion this year, the first in more than a decade, fuelled by a robust 8% increase in the Middle Eastern kingdom’s real GDP.

– Boosted by higher production from Saudi Aramco and elevated oil prices for most of this year, the ramp-up in fiscal spending now will push the budget breakeven lower next year, to $76 per barrel.

– Despite the bountiful windfall, Riyadh has many unforeseen issues it must settle, such as the country’s sudden bank liquidity issue as the interbank offered rate (Saibor) soared to 6% recently.

– This has prompted the Saudi central bank to intervene, seeking to cool down the aggressive loan expansion amidst the country’s rapid economic growth.

7. Copper Strength Is Back

Copper

– Amidst widespread Chinese protests and China’s purchasing managers index (PMI) coming in at the lowest reading since March 2022, copper prices continue their spectacular surge.

– The three-month LME copper contract moved to 8,220 per metric ton this week, setting it on track to soar 10% in November, the first monthly gain in eight months and the biggest since April 2021.

– Most of the positive momentum for copper has been coming from shifting expectations in Chinese growth, with the market seeing the protests as paving the way for further Covid easing.

– China is the largest consumer of copper globally and still relies on imports for 25% of its needs, prompting new calls from Chinese miners to launch new rounds of ore prospecting in the country.

<!–

Trending Discussions

–>



Related posts

Adblock test (Why?)



Source link

Continue Reading

Trending