Blame mediocre shows for Netflix's slow subscriber growth during Q1
Apr 21 2017 by Francis Osborne
Dwelling on the subscriber guidance, the analyst said the company's domestic subscriber guidance of 0.6 million was ahead of his estimate of 0.21 million and the consensus estimate of 0.19 million. Netflix also plans to release three big-budget movies.
The surge in subscribers of US-based Netflix comes after it invested heavily in overseas markets.
The shares rose 1.4 percent to $149.30 in extended trading after results were announced.
Netflix reported first-quarter customer numbers slightly below expectations, but said it still sees "gigantic" potential for worldwide growth. Analysts predict that Netflix will post $1.11 earnings per share for the current year.
"Buttressing this activity is the substantial earned media coverage around the Netflix brand, technology and content we generate globally through events and activities aimed at journalists and social media influencers".
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And there might also be worldwide business pressures on its parent company, 21st Century Fox , that factored into the decision. After weeks of embarrassing press for Fox News , the company has cut ties with Bill O'Reilly. "You failed him.
Netflix came up short of its subscriber forecasts for this quarter, but the SVOD says the slower growth early in 2017 isn't cause for concern. And the company said it expects to cross the 100 million member mark for its service during the coming weekend. As for the competition, Netflix isn't phased by the advent of virtual MVPDs such as Sling, PlayStation Vue, DirecTV Now, YouTube TV, and Hulu's forthcoming service.
For the quarter that ended March 31, Netflix added 3.53 million subscribers outside the United States.
Despite slightly lower than expected subscriber gains in the first quarter, Netflix is on the verge of achieving at least two major milestones this year and making other significant moves as well as it continues to churn out strong revenue and income numbers.
Netflix reported revenue of $US2.64 billion for Q1, in line with analyst forecasts, and earnings of 40 cents per share. Of course, the natural next question for Netflix viewers and shareholders was whether it, too, would embrace a sports playbook to bring in more business, as the companies are seen as direct opponents in the subscription video space. That doesn't cover the entirety of the negative FCF - with other portions categorized as pertaining to "small and growing operating margins" - but it does make up a significant portion of the negative flow.
Netflix's marketing budget has almost doubled over the past few years from $607,186 in 2014 to a forecast of more than $1 billion this year.