Netflix earnings, subscriber additions beat estimates
By Iain Gilbert
Date: Wednesday 17 Apr 2019
(Sharecast News) - Streaming giant Netflix reeled in more new subscribers in the first three months of the year than it had ever before, adding 9.6m new users.
Netflix saw 1.74m Americans and 7.86m people across the globe sign up to the streaming service over the latest three-month stretch, a better than expected gain which left the outfit with a total of nearly 149m subscribers.
However, Netflix expects that pace to slow going forward, projecting an increase of just 5m during its next fiscal quarter, well below analysts' forecasts.
In dollar terms, Netflix recorded a 22% year-on-year increase in revenues to $4.52bn, which was slightly above Wall Street's consensus estimate of $4.50bn and earnings per share of $0.76 per share, versus analysts' estimates of $0.57.
But Netflix continued to burn through cash in the quarter, with free cash flow coming in at -$460m, marking a significant widening when compared to the -$287m posted a year earlier.
The Californian company now expects its 2019 free cash flow deficit to be "modestly higher" than it had previously guided for at -$3.5bn due to "higher cash taxes related to the change in our corporate structure and additional investments in real estate and other infrastructure."
Looking ahead, Netflix, which is rolling out a $2 price hike for monthly access per user across the US, Brazil, Mexico and parts of Europe, expects to see average revenue per subscriber increase 2% in the second quarter, with total revenue increasing 26% to $4.93bn.
Discussing Netflix's generally solid performance, Markets.com analyst Neil Wilson highlighted two main reasons to be cautious.
"Price hikes are be rolling out across a number of key geographies and this gives management enough reason to be conservative about net new subscriber adds.
"Meanwhile, we should also look at an increasingly competitive space with Disney and Apple recently announcing their own streaming platforms. Further, we should anticipate certain plateaus in the growth cycle."
As of 0825 BST, Netflix shares had dipped 0.82% in after-hours trading to $356.50.
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