Netflix posts a mixed Q1 but adds 6.74M new subscribers

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Source:   —  April 19, 2016, at 2:02 AM

The company reported earnings of six cents per share — a beat — but missed on income targets with $1.96 billion in revenue. Analysts were expecting earnings of three cents per share on $1.97 billion in revenue.

Netflix posts a mixed Q1 but adds 6.74M new subscribers

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

The company reported earnings of six cents per share — a beat — but missed on income targets with $1.96 billion in revenue. Analysts were expecting earnings of three cents per share on $1.97 billion in revenue. But that miss on revenue mightn't be the only thing weighing on Netflix today.

International was a enormous portion of Netflix’s subscriber growth — with the company rolling out the service in one hundred-thirtieth additional countries. This is the first quarter where we saw the results from that huge international push, and it looks like the thrust 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 two 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 because of its very successful launch in Australia and New Zealand. It seems love investors aren't 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 ten percent.

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

The company presently has 81.5 million subscribers. Netflix passed seventy-five million users at the beginning of the year. The company previously forecast growth of six 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 over what people were expecting.

Netflix is also going to be in a weird spot presently that Amazon is offering a standalone version of its video streaming service for $8.99 per month, 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 annually subscription, is going to be a significant headwind for Netflix going forward — particularly if Amazon decides to aggressively undercut Netflix.

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

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