Tech and media companies are ditching user totals from their growth reports. Why now?
Tech and media companies are ditching user totals from their growth reports. Why now?
You may remember hearing back in April that Netflix announced it’ll no longer be reporting its quarterly memberships numbers starting in 2025. Well, they’re not the only big name in tech and media to ditch user counts from their growth reports. There’s a trend happening across the industry where companies, including Meta and Alphabet, have stopped reporting their topline user totals.
John Herrman, tech columnist at New York Magazine’s Intelligencer, wrote about why companies might be doing this. Herrman joined “Marketplace” host Kai Ryssdal to discuss his piece. Below is an edited transcript of their conversation.
Kai Ryssdal: Why have these companies started not reporting their user numbers?
John Herrman: Well, I think there are two answers to that question. One is that a lot of them for a few years now have had some other great numbers to share, high revenue figures, they’ve become very profitable. But at the same time, they’ve kind of saturated the market. If you wonder how many people use YouTube, you can sort of plausibly say basically everyone, but that also means that that number, that top line number, probably isn’t going up very much. And in some cases, might be falling. Facebook famously had a few quarters where it seemed like Facebook itself was actually shrinking. They would much rather emphasize the fact that Meta, the parent company, is making huge amounts of money, and each Facebook user is worth more to them than then they had been before.
Ryssdal: Yeah, it’s a little bit live by the sword die by the sword, right? Live by the numbers and die the numbers?
Herrman: Yeah. For years, you had internet companies that were defined by fast and enormous growth. Companies that went from one million to 10 million to 100 million to a billion users in really staggeringly short periods of time. But for a lot of that time, they were losing money. This is sort of something that tech investors are used to. They will tolerate years of rapid growth with the promise of future profits. Now, instead of fighting with the perception of slowed growth, they can instead emphasize like, “look, we’re getting more money out of each of our customers than we were before. And that should be enough, right?”
Ryssdal: And it ought to be pointed out that early stage and even mid-stage tech investors aren’t Wall Street, right? Wall Street, right, is a whole different animal.
Herman: Yeah, I mean, that’s part of the benefit of being a privately held startup is you can tell different stories to different sorts of investors. Now, many of these companies are in fact public. And they have to report important figures. And, you know, those investors are not especially forgiving. So, you get a little bit of this fudging. You get family active daily people, you get Netflix making the case that well, we should focus on these financial representations of our business rather than the ones that we’ve been leaning on for years.
Ryssdal: Let me back you up for a second. I was going to ask what number should we be paying attention to? I don’t know what a family active daily people is. So first of all, what is it and why does it matter?
Herrman: Well, Meta I think has taken a slightly unusual approach here. It’s a company that has multiple products with more than a billion users, but it also has products that are monetized in really different ways. So, what Meta did was say, “okay, we have some products that are growing really, really quickly. Some products that might be shrinking, for example, Facebook. Maybe it would simplify our story a little bit to talk about the family of apps and talk about how many people use one of these many apps in a given day or in a given month.” And that allows them to tell a story of both growth and of increasing revenue per user that’s, from their perspective, great and uncomplicated.
Ryssdal: For the astute observer of these things, not the Wall Street analysts, but the astute layperson who wants to know how given company is doing, what do we look at?
Herrman: Well, I mean, their financial filings as public companies are useful. I don’t mean to say that these companies are deliberately and profoundly misleading people, but they are emphasizing the numbers they’re most comfortable with. And I think it is fair to ask for these top line numbers because they do mean something. If Facebook starts losing users or Instagram starts losing users, they actually risk a death spiral. It’s something that’s actually fairly fragile, even when your user base contains most people on the internet.
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