Netflix Beats On Earnings But Shares Fall On Downbeat Guidance

Netflix earnings

Netflix Inc (NASDAQ: NFLX) announced its first quarter financial results after markets closed on Tuesday. The streaming video leader reported earnings and revenue that were above expectations, though outlook for the current quarter fell short.

Netflix added significantly more subscribers than expected during the March quarter, bringing its total paid streaming memberships to 148.9 million. The Los Gatos, California-based company added 9.6 million new subscribers in the quarter, well higher than analysts’ estimate of 9 million new subscribers.

In the U.S., the company added 1.74 million paid subscribers, surpassing analysts’ consensus estimates of 1.61 million. International paid subscriber growth came in at 7.86 million ahead of the 7.31 million forecast by analysts.

Shares of the company declined 5% in after-hours trading immediately following the earnings report. However, the shares recouped those losses to 0.80%. The stock has rallied more than 30% since the beginning of the year, amid worries over competition from Disney+ and Apple TV Plus.

NFLX Earnings & Outlook

Netflix posted earnings of $344 million, or $0.76 per share in the Q1 2019 compared with $0.64 per share in the same period last year. On average, analysts surveyed by Refinitiv were expecting adjusted earnings of $0.57 per share. Total revenue came to $4.5 billion, in line with Refinitiv consensus estimate.

For the current quarter, the company said it is anticipating net subscriber additions of 5 million. Analysts have called for net subscriber additions of 5.5 million. Netflix is projecting it will report earnings of $0.55 per share on revenues of $4.93 billion in the second quarter. Wall Street analysts are predicting that the company will come out with adjusted earnings of $0.55 per share on revenues of $4.96 billion.

Netflix Executive Comments

Executives of the company said in a letter to shareholders that they don’t expect new streaming services like Disney+ and Apple TV Plus to materially affect its growth. “We don’t anticipate that these new entrants will materially affect our growth because the transition from linear to on demand entertainment is so massive ​and because of the differing nature of our content offerings,” Netflix wrote.

“We believe we’ll all continue to grow as we each invest more in content and improve our service and as consumers continue to migrate away from linear viewing (similar to how US cable networks collectively grew for years as viewing shifted from broadcast networks during the 1980s and 1990s).”

Netflix Inc. Profile

Netflix’s primary business is a streaming video on demand service now available in almost every country worldwide except China. Netflix delivers original and third-party digital video content to PCs, Internet-connected TVs, and consumer electronic devices, including tablets, video game consoles, Apple TV, Roku, and Chromecast. In 2011, Netflix introduced DVD-only plans and separated the combined streaming and DVD plans, making it necessary for subscribers who want both to have separate plans.