Netflix is reporting its Q1 earnings on Monday after market close. We will have analysis of the results including subscribers, revenue, and EPS.
- Netflix beat subscriber growth targets on both the international and domestic fronts, turning in a Q1-record 7.41 million net subscriber additions.
- It reported revenue in-line with Wall Street estimates and the company's own forecasts.
- Netflix's guidance for Q2 subscriber additions should also have investors smiling.
Netflix blew past its subscriber growth targets in its Q1 earnings report Monday, and the stock rose over 6% in after-hours trading. The streaming giant added 7.41 million subscribers in total: Its biggest Q1 ever.
The company turned in revenue results in-line with Wall Street and company estimates, at $3.7 billion.
Investors should also be pleased about Netflix's guidance for Q2, an area of concern for some analysts going into this earnings report (because of a few factors including lack of buzzworthy original content in Q2). Netflix's estimates for both domestic and international subscriber growth were well above what Wall Street was expecting.
Netflix's continued subscriber growth has been pushed forward by the strength of its original TV shows, both in quality and quantity. In Q1, Netflix released a few high-profile originals like sci-fi series "Altered Carbon," David Letterman's new talk show, the "Queer Eye" reboot, and a new season of "Marvel's Jessica Jones."
Netflix pointed to its "wide variety" of formats catering to its members' "diverse tastes," in its letter to shareholders.
Netflix has also jumped into movies in a serious way in 2018, and plans to release 80 original films this year. This hasn't been without its problems, as Netflix has publicly sparred with the Cannes Film Festival and recently decided to not screen any of its original films there (which it also mentioned in the letter). Hollywood insiders are split on whether this will affect Netflix's business in a tangible way.
In its letter, Netflix also highlighted its overall deal with superstar "hit-maker" Ryan Murphy, as well as similar ones with Shonda Rhimes, Shawn Levy, and Jenji Kohan. Netflix said these kinds of deals allow it to "reduce our reliance on third-party studios and forego the corresponding license premiums we’ve historically paid."
But all these original TV shows, movies, and superstar showrunners haven't come cheap. Netflix has said it will spend $8 billion on content in 2018 and expects negative free cash flow to rise to $3-$4 billion.
Here are the key numbers for Netflix's Q1 earnings:
- Q1 revenue: $3.7 billion, in-line with Wall Street estimates of $3.69 billion, and company guidance of $3.69 billion. It was up 40% year-over-year.
- Q1 EPS (GAAP): $0.64, in-line with Wall Street estimates of $0.64.
- Q1 US subscriber growth (net additions): 1.96 million, versus Wall Street estimates of 1.45 million, and company guidance of 1.45 million.
- Q1 international subscriber growth (net additions): 5.46 million, versus Wall Street estimates of 4.98 million, and company guidance of 4.9 million.
- Q2 US subscriber growth guidance (net additions): 1.2 million, versus Wall Street estimates of 963,000.
- Q2 international subscriber growth guidance (net additions): 5 million, versus Wall Street estimates of 3.87 million.