Raphael Stevens

Autonomous delivery drone startup Zipline has made 1 million deliveries to customers.
The company said its zero-emission autonomous drones have now flown more than 70 million commercial autonomous miles across four continents.
As the company continues to expand with its drone deliveries, it will bring on Panera Bread in Seattle, Memorial Hermann Health System in Houston, and Jet’s Pizza in Detroit.

A drone operator loads a Walmart package into Zipline’s P1 fixed-wing drone for delivery to a customer home in Pea Ridge, Arkansas, on March 30, 2023.
Bunee Tomlinson

Autonomous delivery drone startup Zipline said Friday that it hit its 1 millionth delivery to customers and that it’s eyeing restaurant partnerships in its next phase of growth.
The San Francisco-based startup designs, builds and operates autonomous delivery drones, working with clients that range from more than 4,700 hospitals, including the Cleveland Clinic, to major brands such as Walmart and GNC. It’s raised more than $500 million so far from investors including Sequoia Capital, a16z and Google Ventures. Zipline is also a CNBC Disruptor 50 company.

The company said its zero-emission drones have now flown more than 70 million autonomous commercial miles across four continents and delivered more than 10 million products.
The milestone 1 millionth delivery carried two bags of IV fluid from a Zipline distribution center in Ghana to a local health facility.
As the company continues to expand, it will bring on Panera Bread in Seattle, Memorial Hermann Health System in Houston, and Jet’s Pizza in Detroit.
Zipline CEO Keller Rinaudo Cliffton told CNBC that 70% of the company’s deliveries have happened in the past two years and, in the future, the goal is to do 1 million deliveries a day.
“The three areas where the incentive really makes the most sense today are health care, quick commerce and food, and those are the three main markets that we focus on,” Rinaudo Cliffton said. “Our goal is to work with really the best brands or the best institutions in each of those markets.”

The push into restaurant partnerships marks an “obvious transition” he said, due to the continuing growth in interest in instant food delivery. Zipline already delivers food from Walmart to customers.
“We need to start using vehicles that are light, fast, autonomous and zero-emission,” Rinaudo Cliffton said. “Delivering in this way is 10 times as fast, it’s less expensive … and relative to the traditional delivery apps that most restaurants will be working with, we triple the service radius, which means you actually [get] 10 times the number of customers who are reachable via instant delivery.”
Zipline deliveries for some Panera locations in Seattle are expected to begin next year, the Panera franchisee’s Chief Operating Officer Ron Bellamy told CNBC. Delivery continues to grow for its business, even in an inflationary environment, he said. Costs with Zipline are anticipated to be on par with what third-party delivery is now, he added, with the hope of that cost lowering over time. 
“I’m encouraged about it, not just even in terms of what I can do for the business, but as a consumer, I think at the end of the day, if it is economical, and it delivers a better overall experience, then the consumer will speak,” Bellamy said.

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The Federal Aviation Administration will require a minimum of 10 hours of rest between shifts, up from nine hours.
The changes come amid concerns about air traffic controller fatigue and air travel safety.
The FAA is trying to ramp up hiring of air traffic controllers but is still short-staffed.

An American Airlines Airbus A319 airplane takes off past the air traffic control tower at Ronald Reagan Washington National Airport in Arlington, Virginia, January 11, 2023
Saul Loeb | AFP | Getty Images

The head of the Federal Aviation Administration on Friday said the agency will increase the required amount of rest time for air traffic controllers in response to concerns over fatigue amid a staffing shortage.
The changes, which would take effect within 90 days, would require controllers to have at least 10 hours of rest between shifts, up from nine hours, and 12 hours of rest before an overnight shift.

“In my first few months at the helm of the FAA, I toured air traffic control facilities around the country — and heard concerns about schedules that do not always allow controllers to get enough rest,” FAA Administrator Mike Whitaker said in a statement. “With the safety of our controllers and national airspace always top of mind for FAA, I took this very seriously — and we’re taking action.”
The changes come as pressure on the FAA grows to improve air travel safety amid a spate of close calls at airports, as well as mechanical problems at some airlines and production problems at Boeing.
A shortfall of air traffic controllers, made worse by a pause in hiring during the Covid-19 pandemic, has led to forced overtime and packed schedules for staff at some facilities. The agency hired 1,500 controllers last year and plans to hire 1,800 this year. Air traffic controllers in the U.S. are required to retire at age 56.
The announcement came alongside an FAA-ordered report on air traffic controller fatigue, which recommended the new rest requirements.

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Procter & Gamble reported quarterly earnings that beat Wall Street’s estimates, but its sales disappointed.
The company also raised its fiscal 2024 forecast for earnings per share growth.
The company’s quarterly volume was flat for the second consecutive quarter.

In this photo illustration, Pantene and Head & Shoulders hair products are displayed on July 28, 2023 in San Anselmo, California. 
Justin Sullivan | Getty Images

Procter & Gamble on Friday reported mixed quarterly results as it struggles to bring back shoppers after two years of hiking prices across its portfolio, from Tide detergent to Charmin toilet paper.
The company’s prices were up 3% compared with the year-ago period, although CFO Andre Schulten said on a media call that P&G didn’t institute any nationwide price hikes during the quarter.

Despite its disappointing sales, the consumer giant raised its full-year outlook for earnings growth.
Shares of the company fell more than 2% in premarket trading.
Here’s what P&G reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

Earnings per share: $1.52 vs. $1.41 expected
Revenue: $20.2 billion vs. $20.41 billion expected

P&G reported fiscal third-quarter net income attributable to the company of $3.75 billion, or $1.52 per share, up from $3.4 billion, or $1.37 per share, a year earlier.
Net sales rose 1% to $20.2 billion. Organic sales, which strip out acquisitions, divestitures and foreign currency, increased 3% in the quarter.

But the company’s quarterly volume was flat for the second consecutive quarter. In October, executives said they anticipated returning to volume growth in fiscal 2024. Three quarters in, the company hasn’t yet lured back many of the customers it scared away with its price hikes over the last two years.
However, three of P&G’s divisions reported volume growth for the quarter. Its beauty segment, which includes Olay and Pantene, saw volume rise 1%, fueled by innovation in personal care. The company’s grooming business, home to its Gillette and Venus razors, reported volume growth of 2%. And fabric and home care, which includes Febreze and Swiffer, saw 1% volume growth.
But P&G’s health care and baby, feminine and family care divisions saw volume drop further. The company blamed its higher prices and a weaker cold and flu season for the declines.
Geography also played a role in the company’s lackluster sales. China, the company’s second-largest market, is still seeing softer demand for products like its pricey SK-II skincare. Schulten also said that some markets, particularly in the Middle East, have seen retailers pull back on promotions amid geopolitical tensions tied to the war in Gaza.
“The impact is visible but limited, and we expect it to lessen, obviously, hopefully as these tensions ease over time,” he said.
In the U.S., P&G’s largest market, the company’s volume grew 3%. Schulten said that the U.S. consumer isn’t trading down or changing shopping behavior.
“Consumers don’t want to take a gamble when it comes to the type of performance … they know ultimately the price for trading down,” he said.
For the full year, P&G is now expecting core net earnings per share growth of 10% to 11%, up from its prior range of 8% to 9%. The company also raised its projection for unadjusted earnings growth to a range of 1% to 2%, up from its previous forecast of down 1% to flat. P&G maintained its outlook of 2% to 4% sales growth in 2024.
P&G also now expects a $900 million benefit from favorable commodity costs, up from its previous outlook of $800 million. That’s a reversal from the last two fiscal years, when commodity costs weighed on the company, leading to price hikes. More

Netflix said in its first-quarter shareholder letter that it will stop reporting quarterly subscriber gains.
The move suggests Netflix’s second wave of subscriber growth from its crackdown on password sharing could slow down next year.
It’s also a sign the company wants to be judged by mature metrics such as revenue, earnings and free cash flow.

The Netflix logo on a laptop arranged in Hastings-on-Hudson, New York, July 16, 2023.
Tiffany Hagler-Geard | Bloomberg | Getty Images

The best way to get investors to stop focusing on something is to stop telling them at all.
Netflix said Thursday it will no longer report quarterly membership numbers and average revenue per membership starting in the first quarter of 2025.

This is a significant change for the company and for the so-called “streaming wars,” which have largely been defined by a race for customers. Netflix wants investors to judge the company by the same metrics executives view as “our best proxy for customer satisfaction,” the company said in its quarterly shareholder letter.
Namely: revenue, operating margin, free cash flow — and the amount of time spent on Netflix.
It’s also a signal Netflix’s second wave of subscriber growth may be ending. The company announced it added 9.3 million subscribers in its first quarter as its global password-sharing crackdown and introduction of a less expensive advertising tier took hold. (The ad tier costs $6.99 per month in the U.S. as opposed to its $15.49 standard plan).
Subscriber growth in the second quarter will be lower than in the first quarter due to “seasonality,” the company said in the letter. That may be the start of a longer period of slowing subscriber additions, as most freeloading password sharers are now paying customers.
ARM, which Netflix defines as “streaming revenue divided by the average number of streaming paid memberships divided by the number of months in the period,” rose just 1% year over year in the quarter.

Netflix shares fell 4% in after-hours trading, in part because of a weaker full-year revenue growth outlook than some analysts estimated. Netflix forecast revenue growth of 16% in the second quarter but just 13% to 15% for the full year.
Investors typically don’t like less transparency. It’s particularly notable Netflix is cutting back on granular membership information, which the company used to pride itself on — including offering regional breakdowns that were more specific than all of its competitors. Apple and Amazon have never offered quarterly subscriber information for its streaming services.
Still, forcing Wall Street to focus on revenue and profit, rather than user growth, is also evidence of Netflix’s maturity as a company. For more than a decade, the streamer has been viewed as a disruptor to legacy media.
Now, about five years into “the streaming wars,” Netflix is the dominant incumbent.
“In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential,” Netflix said in its shareholder letter. “But now we’re generating very substantial profit and free cash flow (FCF). We are also developing new revenue streams like advertising and our extra member feature, so memberships are just one component of our growth.””In addition, as we’ve evolved our pricing and plans from a single to multiple tiers with different price points depending on the country, each incremental paid membership has a very different business impact,” the company added.
Netflix has the luxury of focusing on profit, revenue and free cash flow because the company’s finances are far healthier than most legacy media companies. For example, year-over-year revenue climbed 15%.
Operating income grew by 54%, and operating margin rose by 7 percentage points to 28%. These gains far outpace companies such as Warner Bros. Discovery, Disney, Paramount Global and Comcast’s NBCUniversal, which have money-losing (or barely profitable) streaming services and declining traditional TV businesses.
That calls into question whether other media companies will follow Netflix’s lead and stop reporting subscriber numbers for their streaming services. Many of the legacy media companies haven’t started their password-sharing crackdowns like Netflix. That may mean they have more growth to come, which investors would likely want to see.
“We’ve evolved and we’re going to continue to evolve,” said Netflix co-CEO Greg Peters during the company’s earnings call. “It means that the historical math we used to do is increasingly less accurate” in assessing the state of the business, he added.
Disclosure: Comcast NBCUniversal is the parent company of CNBC.

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WATCH: Netflix’s quarterly subs performance ‘really impressive,’ says Evercore’s Mark Mahaney More

Netflix beat quarterly earnings and revenue estimates.
The company said subscribers jumped 16% from the year-earlier period, but added it would no longer report paid memberships starting next year.
Netflix has focused more on growing profit rather than boosting subscribers.

A couple sits in front of a television with the Netflix logo on it.
Picture Alliance | Picture Alliance | Getty Images

LOS ANGELES — Netflix will no longer provide quarterly membership numbers or average revenue per user starting next year, the company said Thursday as it reported earnings that beat on the top and bottom lines.
Total memberships rose 16% in the first quarter, reaching 269.6 million, well above the 264.2 million Wall Street had expected. However, the quarter marks one of the last glimpses investors will get of the company’s subscriber base going forward.

“As we’ve noted in previous letters, we’re focused on revenue and operating margin as our primary financial metrics — and engagement (i.e. time spent) as our best proxy for customer satisfaction,” the company said in its quarterly letter to shareholders. “In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential.”
Netflix said now that it is generating substantial profit and free cash flow — as well as developing new revenue streams like advertising and a password-sharing crackdown — its membership numbers are not the only factor in the company’s growth. It said the metric lost significance after it started to offer multiple price points for memberships.
The company said it would still announce “major subscriber milestones as we cross them.”
Netflix also noted that it expects paid net additions to be lower in the second quarter compared to the first quarter “due to typical seasonality.” Its second-quarter revenue forecast of $9.49 billion was just shy of Wall Street’s estimate of $9.54 billion
Shares of the company fell around 4% in extended trading.

Here are Netflix’s first-quarter results:

Earnings per share: $5.28 vs. $4.52 expected by LSEG
Revenue: $9.37 billion vs. $9.28 billion expected by LSEG
Total memberships: 269.6 million vs. 264.2 million expected, according to Street Account

Netflix reported first-quarter net income of $2.33 billion, or $5.28 per share, versus $1.30 billion, or $2.88 per share, in the prior-year period.
The company posted revenue of $9.37 billion for the quarter, up from $8.16 billion in the year-ago quarter.
The streaming company is navigating its transformation from targeting subscriber growth to focusing on profit, as it uses price hikes, a crackdown on password sharing and an ad-supported tier to boost revenue. Investors are looking for signs that these efforts are still boosting Netflix and seeking more details about the company’s foray into video games.
Netflix could also provide more insight into its partnership with TKO Group Holdings to bring WWE to the platform. The company has teased that it would like to expand its live sports offerings.
“We’re in the very early days of developing our live programming and I would look at this as an expansion of the types of content we offer, the way we expanded to film and unscripted and animation and most recently games,” said co-CEO Ted Sarandos during Thursday’s earnings call. “We believe that these kind of event cultural moments like the Jake Paul and Mike Tyson fight are just that kind of television, and we want to be part of winning over those moments with our members as well, so that for me is the excitement part of this.”
As of Thursday morning, the company’s stock was up 27% year to date and around 85% over the last 12 months.

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The Nordstrom family wants to take the company private and has formed a special committee to evaluate bids.
The 123-year-old department store unsuccessfully tried to take the company private in 2017.
Department stores face an uncertain future as the retail industry changes and brands look to drive sales outside of wholesale channels.

A sign marks the location of a Nordstrom store in a shopping mall on March 20, 2024 in Chicago, Illinois. 
Scott Olson | Getty Images

The Nordstrom family is once again considering taking the department store private and has formed a special committee to evaluate bids, it announced on Thursday. 
CEO Erik Nordstrom and president Pete Nordstrom recently told the company’s board of directors that it’s interested in pursuing a take private deal for the 123-year-old department store, Nordstrom said in a news release. 

As a result, the board formed a special committee of independent and disinterested directors who will evaluate proposals from the two Nordstrom brothers and any others from outside parties. 
The company said that Nordstrom’s board “is committed to enhancing shareholder value” and the committee will determine if any potential bids are in the best interest of the company and its owners. 
The department store warned that there’s no assurance a deal will happen or be approved. 
In 2017, private-equity firm Leonard Green & Partners came close to taking the company private but the deal ultimately fell apart. 
At the time, management was hoping going private would allow it to make the investments it needed to help it adapt to a shifting retail landscape without the constant scrutiny that comes with a public company. 

The announcement comes as department stores face an uncertain future and grapple with declining sales. Many of the brands that have long relied on department stores to drive their revenue are now focusing on their own stores and websites and are less interested in working with wholesalers. 
Nordstrom’s interest in going private was first reported by Reuters last month. Shares rose about 2% in extended trading after the news was announced and are up about 1.5% year to date, as of Thursday’s close. More

The average rate on the popular 30-year fixed mortgage sits around 7.5%, the highest level since mid-November of last year, according to Mortgage News Daily.
Even with rates higher, however, mortgage applications to purchase a home rose 5% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

Homes in Rocklin, California, on Tuesday, Dec. 6, 2022.
David Paul Morris | Bloomberg | Getty Images

The average rate on the popular 30-year fixed mortgage crossed over 7% on April 1, according to Mortgage News Daily, and it just kept going. It now sits right around 7.5%, the highest level since mid-November of last year.
Rates hit their highest level in a few decades last October, causing home sales to grind to a halt. Builders jumped to buy down rates for their customers and managed to do better than existing home sellers.

Rates then fell through mid-January to the mid-6% range and held there into February, causing a surge in home sales. But then they began rising again.
“By mid-February, a pick-up in inflation reset expectations, putting mortgage rates back on an upward trend, and more recent data and comments from Fed Chair [Jerome] Powell have only underscored inflation concerns,” said Danielle Hale, chief economist for Realtor.com. “Sales data over the next few months is likely to reflect the impact of now-higher mortgage rates.”

Even with rates higher, however, mortgage applications to purchase a home rose 5% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Demand was still 10% lower than the same week one year ago, even with rates now 70 basis points higher than they were a year ago.
“Despite these higher rates, application activity picked up, possibly as some borrowers decided to act in case rates continue to rise,” said Joel Kan, MBA’s chief economist.
That may be short-lived, however, as affordability weakens even further. While there is more supply on the market now than there was a year ago, it is still at a very low level historically. That has caused homes to move faster as the competition increases. Anyone waiting for rates to drop significantly may be waiting for a while.
“Recent economic data shows that the economy and job market remain strong, which is likely to keep mortgage rates at these elevated levels for the near future,”  said Bob Broeksmit, MBA’s president and CEO.

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