Netflix nears 100m users but misses Q1 sign-up target

Danny Woods
April 21, 2017

Beating analyst predictions of 2.4 million additional users for what is generally regarded as the slow quarter, the company managed to gain 3.2 million, Reuters reports.

Netflix has expanded around the world over the last few years, betting that its US formula would pay off in other countries.

Loop Capital Markets has a Buy rating on the shares Netflix, while it lifted its price target for the shares to $172 from $162.

Netflix said that its decision to push the launch of House of Cards season five from Q1 to Q2 had a knock-on effect on sign-ups, and that worldwide additions dropped 22% year-on-year as its January 2016 launch in 130 countries caused a "surge in demand".

"We have come to see these quarterly variances as mostly noise in the long-term growth trend and adoption of internet TV", Netflix said in a letter released along with the earnings figures. Both Amazon and Netflix have also been investing heavily in original programming to win subscribers to their on-demand video services. Consolidated revenues rose to $2.6 billion, delivering a net profit of $178 million. Wall Street had been modelling for Netflix to earn 24 cents a share excluding items on sales of $2.76 billion.

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By this weekend, the firm is expected to reach about 100 million subscribers globally.

The company also posted $2.64 billion in revenue - which met estimates and is up 34 percent from last year - and diluted earnings per share of $0.40, which beat estimates and is up from $0.06 last year.

"We've said previously subsequent seasons of show that are very popular tend to have more impact on the business than introducing brand new IP [intellectual property]", explained Netflix Chief Content Officer Ted Sarandos during the webcast.

"Investors ask us about Amazon's move into NFL football", the company said in a statement as it released its Q1 2017 results. "We are making good strides in improving our content offering to match local tastes in Asia, Middle East, and Africa, but have much progress to make, like in Latin America a few years ago".

Second, with its growth in the saturating United States market steadily slowing down while its global growth continues apace after expanding its reach to 190 countries last year, Netflix is on course to have more customers outside its American home base than inside for the first time by the end of this year.

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