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Netflix reported Q1 earnings on Monday, and largely beat expectations for Q1, while missing badly on guidance for Q2.
Netflix stock is crashing, down as much as 15% in the immediate aftermath.
While Netflix’s results in the first three months of the year were strong, the company’s outlook did not go over well with investors.
Forecasts for Q2 for Netflix's international subscriber growth were were way down.
Here were the numbers.
- EPS (GAAP): 6 cents per share versus Wall Street estimates of 4 cents per share.
- Revenue: $1.96 billion versus Wall Street estimates of $1.97 billion.
- US subscriber growth (net additions): 2.23 million versus Wall Street estimates of 1.82 million.
- International subscriber growth (net additions): 4.51 million versus Wall Street estimates of 4.49 million.
Q2 subscriber growth guidance (international): 2 million net additions versus Wall Street estimates of 3.45 million net additions.
- Q2 subscriber growth guidance (US): 0.5 million net additions versus Wall Street estimates of 0.55 million net additions.
In January, Netflix went live in 130 new countries on the same day, an aggressive expansion that put it in every major market except for China (around 190 in total). This expansion was meant to jumpstart the company's subscriber growth, which many analysts believe will continue to decrease in the US in the coming months.
While Netflix beat Wall Street's expectations for international additions for this first quarter of 2016, it missed badly on forecasts for the second quarter. A source of concern internationally has been the small library of content Netflix has in certain newly launched countries.
Netflix's own narrative had focused on its compelling original content as an international draw, as it is much easier for Netflix "originals" to all its territories. Netflix executives have characterized original content as the best investment for the moving forward, and the company will release 600 hours of original content this year, including 31 original shows.
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