Netflix Standing on the Threshold of 100 Million Subscribers

Netflix Standing on the Threshold of 100 Million Subscribers

On the upside, it posted better-than-expected adjusted earnings per share on in-line sales and guided Wall Street higher for new subscribers in the current quarter.

The 100 million subscribers milestone is a testament to how much Netflix has changed the entertainment landscape.

Netflix executives urged analysts to focus on long-term subscriber growth trends, because adding customers can be bumpy from quarter to quarter.

However, Netflix attributes the subscriber shortcomings to the slew of new content it is working on, which has also delayed the release of productions that used to debut in Q1, most notably season 5 of House of Cards.

Netflix spoke about how this fall could be blamed on the fact that it's made the decision to move some of its most popular shows to the second quarter of the year. The service is included for Netflix subscribers, and Comcast customers who do not now pay for Netflix can sign up over the X1 system and be billed monthly by Comcast. He noted that the company was up against a hard sequential comparison because the fourth quarter was particularly strong as some subscribers whose prices were raised as a result of the un-grandfathering of their plans signed back up.

In the United States the company added 1.42m subscribers, less than 1.56m expected, while internationally it added 3.53m subscribers, less than 3.7m expected.

In the wake of a series of genre-busting content and platform deals that have blurred the lines between broadcasters and subscription video-on-demand (SVOD) providers, Netflix flatly rejected the possibility of live sports programming on its platform.

With almost 100 million subscribers, Netflix assumes lead in the on-demand streaming space.

Netflix says it plans to operate with about $2 billion in negative cash flow this year to aggressively grow its original content slate. Along with original shows like the Drew Barrymore-starring "Santa Clarita Diet" and "13 Reasons Why", the streaming company looks to continue its investment in areas like films and standup specials. That doesn't cover the entirety of the negative FCF - with other portions categorized as pertaining to "small and growing operating margins" - but it does make up a significant portion of the negative flow.

Analysts from Credit Suisse, Canaccord Genuity, Stifel and Wedbush raised their price targets for Netflix. Interestingly, the company is expecting add as any as 600,000 domestic subscribers and 2.6 million global subscribers in the second quarter. The results missed estimates of adding 1.5 million domestic subscribers and 3.7 million internationally.

Netflix has expanded around the world over the last few years, betting that its USA formula would pay off in other countries. In fact, it's expected to spend $6 billion for it this year.

The Netflix logo is pictured on a television in this illustration photograph taken in Encinitas, California, U.S., January 18, 2017. Netflix also plans to release three big-budget movies.

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