Monday, April 18, 2016

Netflix posts a mixed Q1 but adds 6.74M new subscribers

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Despite adding a record number of new users in the first quarter, Netflix is having a no good, very bad day.


The company reported earnings of 6 cents per share — a beat — but missed on revenue targets with $1.96 billion in revenue. Analysts were expecting earnings of 3 cents per share on $1.97 billion in revenue. But that miss on revenue might not be the only thing weighing on Netflix today.


International was a huge part of Netflix’s subscriber growth — with the company rolling out the service in 130 new countries. This is the first quarter where we saw the results from that big international push, and it looks like the push is working and propping up the company’s subscriber growth. The company said it added around 4.5 million new international subscribers.


Here’s the kicker on that one though: the company only expects to add 2 million new international subscribers in the second quarter this year, along with 500,000 U.S.-based subscribers. The company said its international forecast for fewer additions is due to its very successful launch in Australia and New Zealand. It seems like investors are not liking that international expansion number, given that the service is launching in so many new countries.


After reporting its first-quarter earnings, the stock is getting absolutely slammed in trading right now, down more than 10%.


As expected, Netflix had nothing to say about expanding into China.


The company now has 81.5 million subscribers. Netflix passed 75 million users at the beginning of the year. The company previously forecast growth of 6 million new members for Q1 this year. It beat its own forecast with 6.74 million new subscribers in the quarter. That came in way above what people were expecting.



Netflix is also going to be in a weird spot now that Amazon is offering a standalone version of its video streaming service for $8.99, for which there is a lot of overlap when it comes to movies and shows. That split from its standard Prime service, which is a yearly subscription, is going to be a significant headwind for Netflix going forward — especially if Amazon decides to aggressively undercut Netflix.


With all this competition, Netflix has had to increasingly bet on original content like Marvel’s Daredevil, The Unbreakable Kimmy Schmidt and other Netflix originals. That’s also going to be increasingly important as the company expands internationally while it works to expand its limited libraries in new countries.


 







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Netflix posts a mixed Q1 but adds 6.74M new subscribers
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