Netflix Slumps as Revenue and Guidance Disappoint

Netflix Earnings

Netflix Inc (NASDAQ: NFLX)

Netflix announced lower-than-anticipated revenue for its fiscal fourth quarter ended December 31, 2018. Shares of the company fell in after-hours trade after the disappointing revenue and a weak outlook for fiscal 2019 first quarter.

Profit at the Los Gatos, California-based firm dropped 28% to $134 million, or 30 cents per share, from $186 million, or 41 cents per share in the same period last year. The company expected earnings of 23 cents per share, while analysts surveyed by FactSet had called for adjusted earnings of 24 cents per share.

Revenue came to $4.19 billion, up 27% year over year, but fell short of estimates of $4.21 billion. The streaming giant added 8.84 million new paying customers during the quarter, surpassing expectations of 7.5 million by FactSet.

Netflix reported 1.50 million domestic streaming additions, in line with its guidance but below analysts’ consensus of 1.77 million. International streaming additions rose to 7.30 million during the quarter, beating guidance and consensus of 6.1 million and 7.23 million, respectively.

Looking ahead, the company views 8.9 million new paying customer additions for the current quarter. Analysts, on the other hand, project 7.5 million new paying customer additions based on figures compiled by FactSet.

Netflix also took a more hostile stance on competition this quarter than it has previously done. In its letter to shareholders, the streamer said, “There are thousands of competitors in this highly-fragmented market vying to entertain consumers and low barriers to entry for those with great experiences.”

Our growth is based on how good our experience is, compared to all the other screen time experiences from which consumers can choose. Our focus is not on Disney+, Amazon, or others, but on how we can improve our experience for our members,” the letter continued.

Earlier this week, the company said it would hike subscription prices for its customers in the United States. The increases are also expected to affect some countries in the Caribbean and Latin America where the company bills in U.S. dollar.

Netflix stock lost $13.69, or 3.88% to change hands at $339.50 in after-hours trade following the results. The shares ended the regular trading session at $353.19.

Netflix, Inc. Profile

Netflix, Inc. operates as an Internet subscription service company, which provides subscription service streaming movies and television episodes over the Internet and sending DVDs by mail. It operates through the following segments: Domestic Streaming, International Streaming, and Domestic DVD. The Domestic Streaming segment derives revenues from monthly membership fees for services consisting solely of streaming content to its members in the United States.

The International Streaming segment includes fees from members outside the United States. The Domestic DVD segment covers revenues from services consisting solely of DVD-by-mail. The company was founded by Marc Randolph and Wilmot Reed Hastings Jr., on August 29, 1997 and is headquartered in Los Gatos, CA. – CNN Money