1 00:00:05,240 --> 00:00:06,640 Speaker 1: This is pot the Flux. 2 00:00:06,720 --> 00:00:09,720 Speaker 2: I'm Brett and I'm justin and it's Wednesday, thirtieth of April. 3 00:00:09,800 --> 00:00:12,200 Speaker 1: Does wait? We know that being on the plane was 4 00:00:12,240 --> 00:00:14,720 Speaker 1: the very last excuse for not being able to communicate 5 00:00:14,800 --> 00:00:17,320 Speaker 1: on the phone, But now not even the skies are 6 00:00:17,360 --> 00:00:20,480 Speaker 1: an excuse because Quantus has quietly switched on Wi Fi 7 00:00:20,760 --> 00:00:23,840 Speaker 1: on a number of international routes years after many of 8 00:00:23,880 --> 00:00:26,799 Speaker 1: its competitors, and that's probably the reason why it didn't 9 00:00:26,840 --> 00:00:28,440 Speaker 1: make such a big song and dance about this one. 10 00:00:28,680 --> 00:00:31,560 Speaker 1: Now there is no excuse not to answer that work 11 00:00:31,600 --> 00:00:33,280 Speaker 1: call on your way to Europe. 12 00:00:33,320 --> 00:00:35,839 Speaker 2: That's why everyone flu quintus right am. As we roll 13 00:00:35,880 --> 00:00:38,120 Speaker 2: on into a brand new month, it's when all of 14 00:00:38,120 --> 00:00:41,720 Speaker 2: your subscriptions start ticking over as well, your Netflix, you Stan, 15 00:00:41,960 --> 00:00:44,880 Speaker 2: your Disney Plus, your Gym subscription, and about a million 16 00:00:44,880 --> 00:00:46,959 Speaker 2: others as well. If you have no idea what you're 17 00:00:47,000 --> 00:00:48,839 Speaker 2: paying for and how to track it, we have it 18 00:00:48,920 --> 00:00:51,320 Speaker 2: all covered in the Flux Subscription track Up. It tracks 19 00:00:51,360 --> 00:00:54,040 Speaker 2: all your subscriptions in under thirty seconds and highlights how 20 00:00:54,120 --> 00:00:56,120 Speaker 2: much you're paying each and every month. So the best 21 00:00:56,120 --> 00:00:57,760 Speaker 2: thing you can do to start off the new month 22 00:00:57,880 --> 00:01:01,560 Speaker 2: is check out the flux subscription track up every educational stories. 23 00:01:01,600 --> 00:01:04,240 Speaker 1: Today, Juzzy Boy, Let's do it for our first. Flight 24 00:01:04,280 --> 00:01:07,240 Speaker 1: Center has cut its profit forecast by nearly one hundred 25 00:01:07,280 --> 00:01:10,720 Speaker 1: million bucks as many people start to fear about US travel. 26 00:01:10,760 --> 00:01:12,759 Speaker 2: This guy's are looking a little bumpy for Flight Center, 27 00:01:12,760 --> 00:01:14,800 Speaker 2: b man, get your seat belt on and tell me 28 00:01:14,840 --> 00:01:15,280 Speaker 2: all well. 29 00:01:15,280 --> 00:01:18,520 Speaker 1: Flight Center is Australia's biggest listed travel agency. It was 30 00:01:18,560 --> 00:01:21,680 Speaker 1: founded in nineteen eighty two. Without highly annoying, highly effective 31 00:01:21,760 --> 00:01:26,240 Speaker 1: jingle lotst airfares. Indeed, the juz Boy Lowest Airfares or not, 32 00:01:26,600 --> 00:01:29,280 Speaker 1: Flight Center has copped a heck of a beating yep. 33 00:01:29,120 --> 00:01:32,319 Speaker 2: It's officially ditched the profit guidance that it previously shared 34 00:01:32,360 --> 00:01:32,959 Speaker 2: with the market. 35 00:01:33,000 --> 00:01:36,000 Speaker 1: Previously, the profit was expected to be between three hundred 36 00:01:36,000 --> 00:01:39,160 Speaker 1: and sixty five and four hundred and five million bucks, 37 00:01:39,160 --> 00:01:39,800 Speaker 1: but now. 38 00:01:39,640 --> 00:01:41,720 Speaker 2: They're saying it could be up to one hundred million 39 00:01:41,760 --> 00:01:44,840 Speaker 2: dollars less than that And why the sudden one eighty 40 00:01:44,959 --> 00:01:46,520 Speaker 2: will be man A big part of this is because 41 00:01:46,560 --> 00:01:49,520 Speaker 2: travelers from Australia, the UK and Europe are getting real 42 00:01:49,680 --> 00:01:51,200 Speaker 2: spooked about traveling to the. 43 00:01:51,200 --> 00:01:54,440 Speaker 1: US and Juzzy Boy supposedly corporates are also rethinking where 44 00:01:54,560 --> 00:01:57,400 Speaker 1: to send employees to the US. In fact, March saw 45 00:01:57,400 --> 00:01:59,840 Speaker 1: a seven percent drop in Australian visitors to the US, 46 00:02:00,000 --> 00:02:01,919 Speaker 1: which is the worst since the pandemic. 47 00:02:01,480 --> 00:02:03,960 Speaker 2: And they man Despite the grim update for US travel, 48 00:02:04,040 --> 00:02:07,440 Speaker 2: flight Center actually reckons that its total transaction volumes will 49 00:02:07,480 --> 00:02:09,640 Speaker 2: hit record highs this year and they're also. 50 00:02:09,480 --> 00:02:13,359 Speaker 1: Looking to offload some non core assets just to tidy 51 00:02:13,360 --> 00:02:14,040 Speaker 1: things up a bit. 52 00:02:14,480 --> 00:02:15,840 Speaker 2: So what is the key learning here? 53 00:02:15,880 --> 00:02:18,840 Speaker 1: When times get tough, companies turn to selling off non 54 00:02:18,880 --> 00:02:19,639 Speaker 1: core assets. 55 00:02:19,680 --> 00:02:21,560 Speaker 2: Non Core assets are parts of the company that are 56 00:02:21,600 --> 00:02:23,440 Speaker 2: not essential to its main mission. 57 00:02:23,520 --> 00:02:27,399 Speaker 1: It could be poorly performing business units or maybe even 58 00:02:27,480 --> 00:02:28,880 Speaker 1: office properties. 59 00:02:28,360 --> 00:02:31,120 Speaker 2: And sometimes even investments that no longer fit with the 60 00:02:31,120 --> 00:02:32,320 Speaker 2: biggest strategy anymore. 61 00:02:32,360 --> 00:02:35,040 Speaker 1: And selling non core assets helps companies to free up 62 00:02:35,040 --> 00:02:36,640 Speaker 1: some cash or pay down some debt, and. 63 00:02:36,639 --> 00:02:38,720 Speaker 2: It also sends a message they're going to focus their 64 00:02:38,800 --> 00:02:41,320 Speaker 2: energy on the most profitable areas of the business. 65 00:02:41,400 --> 00:02:44,359 Speaker 1: For flight Center, selling non core assets is a way 66 00:02:44,360 --> 00:02:47,080 Speaker 1: to manage the US travel slow down. And flight Center 67 00:02:47,120 --> 00:02:49,280 Speaker 1: isn't the first travel business to do a cheeky cash 68 00:02:49,320 --> 00:02:50,680 Speaker 1: grab during tough times. 69 00:02:50,760 --> 00:02:54,160 Speaker 2: Nope. Remember during COVID when Quantus sold land near Sydney 70 00:02:54,160 --> 00:02:54,720 Speaker 2: airport yep. 71 00:02:54,720 --> 00:02:57,720 Speaker 1: They wanted cash in their coffers while flights were grounded, 72 00:02:57,840 --> 00:03:00,520 Speaker 1: so they pocketed over eight hundred million bars. 73 00:03:00,200 --> 00:03:02,799 Speaker 2: And be man Despite this disappointing news for flight Center, 74 00:03:02,919 --> 00:03:05,320 Speaker 2: the cost cutting and the selloff of non core assets 75 00:03:05,400 --> 00:03:07,560 Speaker 2: actually saw flight cent to share price jump. 76 00:03:07,720 --> 00:03:11,280 Speaker 1: For our second story, Australians are feeling the pinch with 77 00:03:11,360 --> 00:03:15,320 Speaker 1: their streaming subscriptions, but rather than cancel, they're just downgrading 78 00:03:15,440 --> 00:03:16,000 Speaker 1: to ads. 79 00:03:16,360 --> 00:03:18,400 Speaker 2: The fear of missing the next season of White lotus 80 00:03:18,520 --> 00:03:21,200 Speaker 2: more terrifying than sitting through a few shampoo hads be manned. 81 00:03:21,240 --> 00:03:23,280 Speaker 1: So don't we more well, Josie boy. As we know, 82 00:03:23,480 --> 00:03:26,120 Speaker 1: when Netflix and Disney Plus and pretty much every other 83 00:03:26,160 --> 00:03:28,040 Speaker 1: stream platform launched, the deal was pretty simple. 84 00:03:28,080 --> 00:03:30,160 Speaker 2: We pay you a monthly fee and you give us 85 00:03:30,280 --> 00:03:31,480 Speaker 2: endless binge material. 86 00:03:31,600 --> 00:03:34,040 Speaker 1: But then Netflix had a cheeky little idea in late 87 00:03:34,040 --> 00:03:34,880 Speaker 1: twenty twenty. 88 00:03:34,600 --> 00:03:37,240 Speaker 2: Two, what if we made a cheaper version but sprinkled 89 00:03:37,240 --> 00:03:39,400 Speaker 2: in a few ads right in the middle of the 90 00:03:39,400 --> 00:03:40,840 Speaker 2: big plot twists. 91 00:03:40,480 --> 00:03:43,840 Speaker 1: The next minute. Disney Plus, HBO, Max, Paramount Plus and 92 00:03:43,920 --> 00:03:46,480 Speaker 1: Hulu all have their own AD supported tears as well, 93 00:03:46,520 --> 00:03:47,280 Speaker 1: but now be manned. 94 00:03:47,320 --> 00:03:49,400 Speaker 2: A new report from Canta has shown that the latest 95 00:03:49,400 --> 00:03:51,360 Speaker 2: consumption habits of Ossie's. 96 00:03:51,000 --> 00:03:54,000 Speaker 1: YEP twelve months ago AD supported streaming services, we're in 97 00:03:54,080 --> 00:03:56,120 Speaker 1: around twelve and a half percent of all households. 98 00:03:56,120 --> 00:03:59,640 Speaker 2: Now AD supported streaming services are in thirty percent of households. 99 00:04:00,040 --> 00:04:02,680 Speaker 1: Act Netflix Australia now has more than sixty percent of 100 00:04:02,720 --> 00:04:05,640 Speaker 1: all new subscribers join its AD supported. 101 00:04:05,160 --> 00:04:07,080 Speaker 2: Tier, and b man wle that sounds like a lot. 102 00:04:07,200 --> 00:04:10,160 Speaker 2: Netflix is not complaining one little iota. 103 00:04:10,320 --> 00:04:13,240 Speaker 1: That is because the unit economics from the AD model 104 00:04:13,320 --> 00:04:17,160 Speaker 1: supposedly are even better than the typical revenue from subscriptions. 105 00:04:17,200 --> 00:04:18,560 Speaker 2: So what is the key learning here? 106 00:04:18,760 --> 00:04:21,880 Speaker 1: Unit economics is the revenue and the cost tied to 107 00:04:21,920 --> 00:04:24,680 Speaker 1: serving one individual user or customer. 108 00:04:24,279 --> 00:04:27,400 Speaker 2: And this measure is crucial for overall profitability in the 109 00:04:27,440 --> 00:04:28,039 Speaker 2: tech industry. 110 00:04:28,160 --> 00:04:30,680 Speaker 1: Get this one, jazz boy in the US, Netflix generated 111 00:04:30,760 --> 00:04:34,800 Speaker 1: more than seventy US dollars per AD supported viewer just 112 00:04:34,880 --> 00:04:37,680 Speaker 1: last year, and that's not even including the monthly subscription 113 00:04:37,800 --> 00:04:39,960 Speaker 1: that they're paying all the fact that AD rates are 114 00:04:40,000 --> 00:04:42,960 Speaker 1: planning to increase next year. In BEMAN for streaming services, 115 00:04:43,000 --> 00:04:46,120 Speaker 1: AD supported tiers offer a dual revenue stream. They get 116 00:04:46,160 --> 00:04:50,080 Speaker 1: a smaller subscription fee plus sweet sweet advertising dollars, and 117 00:04:50,120 --> 00:04:51,080 Speaker 1: on the flip side. 118 00:04:50,880 --> 00:04:53,360 Speaker 2: The price barrier is lower too, which is why sixty 119 00:04:53,400 --> 00:04:55,279 Speaker 2: percent of new sign apps are choosing this plan. 120 00:04:55,400 --> 00:04:58,080 Speaker 1: Lower price means lower barrier to entry for the customer. 121 00:04:58,120 --> 00:05:00,280 Speaker 2: Lower barrier to entry for the customer means cheap a 122 00:05:00,320 --> 00:05:01,160 Speaker 2: customer acquisition. 123 00:05:01,240 --> 00:05:04,480 Speaker 1: So streaming services believe that by generating two revenue streams 124 00:05:04,520 --> 00:05:07,440 Speaker 1: means they can actually achieve better unit economics. For our 125 00:05:07,520 --> 00:05:10,839 Speaker 1: third and final story, Facebook's Australian revenue has jumped to 126 00:05:10,880 --> 00:05:13,880 Speaker 1: nearly one point five billion dollars, but the Australian tax 127 00:05:13,920 --> 00:05:17,000 Speaker 1: offers will likely see very little of this another year. 128 00:05:17,040 --> 00:05:19,720 Speaker 1: Another tax loophole for the meta crew. Juzzy Boy, so 129 00:05:19,800 --> 00:05:20,240 Speaker 1: tell me more. 130 00:05:20,240 --> 00:05:23,120 Speaker 2: Okay, So, meta platforms is the og social media giant 131 00:05:23,160 --> 00:05:25,600 Speaker 2: that still dominates our screens here in Australia. 132 00:05:25,640 --> 00:05:28,279 Speaker 1: We're talking Insta, WhatsApp, Facebook, and be Man. 133 00:05:28,400 --> 00:05:31,560 Speaker 2: Despite the fact that Facebook is pretty much used exclusively 134 00:05:31,680 --> 00:05:35,120 Speaker 2: for birthday reminders and marketplace, it still reaches seventy eight 135 00:05:35,120 --> 00:05:36,800 Speaker 2: percent of ozsi's age shover sixty. 136 00:05:36,960 --> 00:05:40,080 Speaker 1: Interestingly, Dozzie Boy, well, WhatsApp and Instagram don't lodge financial 137 00:05:40,080 --> 00:05:42,520 Speaker 1: accounts in Australia. For some reason, Facebook does. 138 00:05:42,320 --> 00:05:44,760 Speaker 2: And now be Man at Facebook's Australian revenue has jumped 139 00:05:44,760 --> 00:05:46,960 Speaker 2: by one hundred and ten million bucks in twenty twenty 140 00:05:46,960 --> 00:05:49,360 Speaker 2: four to one point four to six billion dollars. 141 00:05:49,400 --> 00:05:52,159 Speaker 1: But surprise, surprise, most of this revenue that was earned 142 00:05:52,160 --> 00:05:55,520 Speaker 1: in Australia was not recognized in Australia. In fact, Metas 143 00:05:55,520 --> 00:05:58,680 Speaker 1: sent one point twenty five billion of its Australian revenue 144 00:05:58,680 --> 00:06:02,400 Speaker 1: to other Meta subsidiary. Good old fashioned transfer pricing. 145 00:06:02,839 --> 00:06:04,160 Speaker 2: So what is the key learning here? 146 00:06:04,240 --> 00:06:07,400 Speaker 1: Transfer pricing is a technique used by big global companies 147 00:06:07,480 --> 00:06:10,599 Speaker 1: to shift profits from higher tax countries to lower tax countries. 148 00:06:10,640 --> 00:06:13,000 Speaker 2: Global companies like Meta they set up subsidiaries in the 149 00:06:13,080 --> 00:06:15,760 Speaker 2: low tax countries like Ireland, where the corporate tax rate 150 00:06:15,839 --> 00:06:16,719 Speaker 2: is twelve and a half percent. 151 00:06:16,839 --> 00:06:20,839 Speaker 1: Compare that to Australia's thirty percent tax for large corporates. 152 00:06:20,400 --> 00:06:23,000 Speaker 2: And that means when Facebook Book's revenue in high tax 153 00:06:23,040 --> 00:06:27,080 Speaker 2: countries like Australia, they're often shifted offshore super. 154 00:06:26,720 --> 00:06:29,719 Speaker 1: Fast, meaning the remaining revenue and profit in the local 155 00:06:29,720 --> 00:06:31,560 Speaker 1: country is minimal, if anything at all. 156 00:06:31,600 --> 00:06:34,240 Speaker 2: In fact, be Man Meta pages forty four million bucks 157 00:06:34,279 --> 00:06:36,600 Speaker 2: in income tax in Australia on its one point four 158 00:06:36,600 --> 00:06:38,600 Speaker 2: to six billion dollars of revenue. 159 00:06:38,320 --> 00:06:40,920 Speaker 1: And we've seen a whole host of other multinationals used 160 00:06:40,960 --> 00:06:42,000 Speaker 1: transfer pricing. 161 00:06:41,720 --> 00:06:44,880 Speaker 2: From Netflix to Spotify and Amazon as well. Fluxam. If 162 00:06:44,920 --> 00:06:46,640 Speaker 2: you want to be able to track all your subscriptions 163 00:06:46,680 --> 00:06:48,520 Speaker 2: in the one place and see how much you're spending 164 00:06:48,560 --> 00:06:50,280 Speaker 2: each month so you can cancel the ones you're not 165 00:06:50,360 --> 00:06:52,560 Speaker 2: using anymore, you've got a head to the Fluck subscription 166 00:06:52,640 --> 00:06:53,680 Speaker 2: tracker in the blucks out. 167 00:06:53,680 --> 00:06:56,360 Speaker 1: Thanks for listening, and we'll see you on Friday.