What happened

Shares of ViacomCBS (NASDAQ:VIAC) were trading higher early on Thursday, after the company reported results for the first quarter of 2020 that were better than originally feared. As of 12:40 p.m. EST today, shares were up 13%.

ViacomCBS Q1 highlights include a dividend that's not cut, rapid user growth for its streaming-video platforms, and an expanded distribution agreement with Google's YouTube, which is part of Alphabet.

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Image source: Getty Images.

So what

Revenue fell 6% year over year in Q1, weighed down by lost ad revenue from canceled sporting events. Net income plummeted 74% to $508 million, but this was partly due to restructuring costs from the merger of the two companies. 

So what's good about results like this? Well, analysts were expecting slightly lower revenue. But ViacomCBS saw great traction in its streaming platforms. Domestic streaming revenue surged 51% to $471 million, thanks to strong user growth. Domestic streaming subscribers, including paid subscription services like CBS All Access, grew 50% year over year. And Pluto TV, a free platform, grew users by 55% to reach 24 million subscribers. That puts Pluto TV well ahead of guidance to reach 30 million subscribers by the end of the year.

Pluto TV was helped out by many new distribution channels. And it's possible the rest of ViacomCBS' portfolio could get a similar boost, now that the company has announced an agreement with YouTube. Financial details weren't given, but the deal will bring many ViacomCBS properties to YouTube TV's large audience. 

Finally, while many companies have slashed dividends due to the coronavirus economic situation, ViacomCBS didn't mention its dividend in its press release, an indication that it's safe for now. 

Now what

Considering ViacomCBS was profitable by generally accepted accounting principles (GAAP) and generated free cash flow of $305 million, the dividend could be safer than some initially believed. Currently yielding over 6.5%, this dividend stock was certainly priced for a much worse scenario in Q1.

ViacomCBS needs to continue growing its streaming platform audience, to offset losses in cable. It has a large portfolio it can leverage, a strong advantage for the long term. But upcoming second-quarter financial results will still be strained due to reduced ad spending caused by COVID-19.