Netflix Shares Fall After Streaming Service Reports Lower Than Expected Subscriber Numbers

Netflix

The California-based company added 670,000 net subscribers in the USA, far below the 1.19 million net additions expected by analysts polled by Thomson Reuters.

Subscriber additions: 5.1 million total - 670,000 in the USA and 4.47 million internationally. Heading into earnings, the company said it had added 7.4 million new customers overall in the first quarter and the company was projecting to add another 6.2 million this quarter. Netflix, based in Los Gatos, California, didn't specify why it fell short last quarter, beyond citing the difficulty of forecasting growth in 190 countries around the world.

"We never did find an explanation to that other than lumpiness in the business", Chief Executive Officer Reed Hastings said.

The Netflix logo is shown in this 2014 illustration photograph. Ever since Netflix released "House of Cards", the company has credited new seasons of original series with luring new customers. While most of the company's revenue growth comes from worldwide markets, the vast majority of its costs remain dollar-denominated. That compares with consensus estimates for 1.2 million and 5.04 million, respectively.

Wall Street analysts had expected Netflix revenue to be slightly higher.

Netflix has spent billions of dollars on original content, backing films or shows from creators from a gamut of countries and cultures as it strives for broad appeal as a global television service. The company debuted its first Danish and first Indian dramas in the quarter, and it plans to release a new foreign-language program at least once a week next year.

Analysts had been modeling $3.94 billion in revenue and EPS of 79 cents. Netflix has borrowed money repeatedly to pay for its programming, and expects to spend between $3 billion and $4 billion more in cash than it will generate in 2018.

"We had a strong but not stellar Q2", Netflix execs wrote in their quarterly letter to shareholders.

"Right now, Netflix is still miles ahead of its closest competitor, but there is going to be a giant bulls-eye on Netflix's back during the next 18 to 24 months", Ives predicted in an interview.

"Our strategy is to simply keep improving", Hastings said in the letter to shareholders, "as we've been doing every year in the past".

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