Netflix's first-quarter subscriber additions misses estimates

Owen Stevens
April 20, 2017

As part of its first-quarter earnings report Monday, Netflix responded to investor questions about Amazon's purchase of streaming rights for National Football League games next season. However, Netflix distinctly had a vision before those devices became so universal.

Q1 U.S. subscriber growth (net additions): 1.42 million, versus Wall Street forecasts 1.59 million, and Netflix guidance of 1.5 million. The platform aims to add 3.2 million subs in Q2 2017-600,000 in the USA and the rest internationally.

However, the company said it had 98.75 million subscribers globally at the end of March and expected to cross the 100 million mark this weekend.

The understated reaction reflects Hastings' ambition to build the world's largest video channel.

Investors have permitted Netflix to operate near break-even on the expectation that the company, which expects to top 100 million customers this week, will continue to grow rapidly, especially outside the US. Netflix, based in Los Gatos, California, has lined up a slew of high-profile releases in the coming months, including new seasons of "House of Cards", "Orange Is the New Black" and "Master of None".

Q2 subscriber growth guidance (international): 2.6 million, versus Wall Street forecasts 2.1 million. Hastings also made it clear that unlike Amazon Prime Video, Netflix has no intentions of getting into live streaming of sporting events.

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"As part of this, we are investing more in programmatic advertising with the aim of improving our ability to do individualised marketing at scale and to deliver the right ad to the right person at the right time", Netflix said.

"The model works from a consumer perspective because it is such a good value", Pachter said. The company plans to spend more on original content this year and reduce outlays on licensed material such as movies. Despite that disappointment, numerous firms boosted their price targets for Netflix stock, including uber-bears like Wedbush. It lost some long-time US subscribers after their rates went up by as much as $2 per month previous year.

According to Netflix they have experienced a net increase of 4.95 million subscribers.

Netflix is guiding for a lower second quarter, with 3.20 million net streaming adds, including 0.60 million in the USA and 2.60 million internationally. Analysts predict Netflix will make $482m on revenue of more than $11b for the entire year. Netflix burned $422.5 million of cash in Q1, and expects to issue additional debt in Q2 to help fund future losses.

"We're not as deep in worldwide as those companies".

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