2) Affected by the sharp rise in the exchange rate of the US dollar, international income is lower than previously forecast;
3) Due to production shutdowns, content expenditures have been delayed, and free cash flow will be improved in 2020.
The second point involves international exchange rates, which I am not very familiar with. But the other two aspects are too necessary to develop.
Talk about the third point first. Netflix originally predicted that the negative free cash flow in 2020 will be 2.5 billion US dollars. However, affected by the epidemic, the studios have stopped working (almost all of the world has stopped, only a few countries such as South Korea and Iceland compare head-to-head), and content expenditures will be greatly reduced in 2020 and free cash flow will be significantly improved. But this is only a first-order result.
The second order result is that content spending is delayed, meaning that free cash flow in 2021 will theoretically be worse than previously predicted.
Regarding the first point, does Netflix 2020Q1 subscriber growth grow more than “faster”? In this quarter, 15.77 million new users were added, which is almost abnormal.
What is this concept? Post historical data to feel:
In the past four years, the data in the first quarter has been basically the best in that year. But this time it was close to 16 million, almost double the previous period.
What is the second-order effect of this? We can naturally think that Netflix ’s membership growth will slow significantly after the second quarter of 2020.
The growth of the number of members has slowed down. Can Netflix ’s annual revenue growth rate of more than 30% be maintained? too difficult. There are two reasons:
1) Netflix confirms that there is no idea of price increases in the future. Over the past few years, the strategy of “price increase and growth protection” has been disgusting. Native American users not only complained, but even appearedtrong> Excellent destination for entertainment and content consumption (total dimensions of content viewing time, number of performances, volume of new content categories, etc.)
3) Continue to invest in cameras and AR platforms (user usage ratio, number of generated content and other dimensions)
4) Strengthen the advertising platform function to improve the effectiveness of advertisers ’advertising (large increase in advertising prepayments, large increase in the proportion of revenue from new advertising categories, and the introduction of an ad serving ROI calculation function In order to facilitate customer bidding and introduce new functions to facilitate advertisers’ material production)
5) Further open the platform, Serve the general community and third parties (Start App Stories to assign Stories functionality to third-party applications, and develop new games with partners and the number of Set a new record and integrate Snap Kit development tools to more third parties)
6) Some public welfare work was done during the epidemic
In fact, 1, 2, 3 are all measures to consolidate their young people ’s social dominance, and 4, 5 are powerful weapons against the FB Corps and Twitter. 6 is timely. So my impression is almost a perfect answer.
Of course, it is also necessary to point out that although the epidemic has a positive impact on the activity of entertainment and social applications, it is greatly negative for their gold owners (advertisers). Therefore, Snap said that future business is uncertain and canceled the revenue guidance for the next quarter.
I currently see a fairer statement that it is expected that Snap ’s revenue growth rate will not exceed 15% year-on-year in the second quarter of 2020.
The following focuses on the analysis of Snapchat ’s reliance on advertising, and I think there are no frank indications in the financial report, but we can speculate on some second-order conclusions.
Snap and Netflix have strong seasonal revenues. Netflix is strong at the beginning of the year and Snap is strong at the end of the year. A recent personal experience found that the ad load of the interface has reached a stable 1/4, which may also be a bad signal.