Wall Street thinks Netflix may be lowballing its subscriber numbers

Andrew Cummings
April 20, 2017

Netflix reported revenue of $US2.64 billion for Q1, in line with analyst forecasts, and earnings of 40 cents per share.

This means the streaming company is paying virtually no tax outside of the United States, where it made a taxable profit of $606 million from revenues of $1.47 billion.

The streaming firm added 4.95 million new subscribers in the quarter, fewer than the 5.2 million it had forecast.

Though its success is notable, Netflix, even if it reaches the 100 million subscriber count, will still play catch up to HBO's 134 million subscribers globally, which includes customers paying for an on-demand iteration of HBO, inspired by the success of Netflix's business model. Analysts on average had estimated 3.68 million additions, according to research firm FactSet. Netflix guided to Q2 US and global net additions of 600,000 and 2.6 million, respectively, both above previous expectations, driven in part by an anticipated stronger content line-up, including new seasons of House of Cards, Orange Is the New Black, and the just launched 13 Reasons Why.

Almost 10 years after Netflix began offering online streaming of movies and TV shows, the company says it's all set to hit the 100-million subscribers mark.

"Netflix's subscription growth may be slowing, but that's because its user base is pretty saturated in the U.S. Per Nielsen", claimed Axios on Tuesday.

The streaming giant had forecast an addition of 5.2 million new subscribers from January through March 2017, compared with 6.74 million added during those three months previous year.

Netflix noted rapid growth in Latin America, Europe and North America.

In the U.S., revenues and profits both grew, hitting $1.5 billion and $606 million respectively. The shares rose 1.4 percent to $149.30 in extended trading after results were announced.

"That is not a strategy that we think is smart for us since we believe we can earn more viewing and satisfaction from spending that money on movies and TV shows", Netflix wrote in the shareholder letter. "They largely figured out how to do the whole original series binge viewing thing that Netflix pioneered".

Netflix planned to spend a billion dollars this year on marketing aimed at attracting members. "We have YouTube envy", Hastings joked. We use cookies to improve your browsing experience. Starting this year, we can be primarily measured by revenue growth and (global) operating margins as our primary metrics.

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