LOS GATOS, Calif. – Streaming giant Netflix said Monday it missed its own forecast for subscriber additions, but still had a strong second quarter, topping the 130 million global subscriber mark.
The company added 5.2 million new customers in the quarter ended June 30th, 2018, which was the same as 2017’s Q2, but was lower than the 6.2 million in additions that it predicted.
That said, earnings, margins, and revenue were in-line with its forecasts and way up from prior year. The company took in US$3.9 billion in revenue in the quarter, a 40% jump compared to Q2 2017. Its operating margin of 11.8% compared favourably to the 4.6% of last year’s second quarter, resulting in 262% growth in operating income, said the Netflix release.
For the third quarter, Netflix is predicting global net adds of 5 million (compared with 5.3M in Q317), with 650,000 coming in the U.S. and 4.35 million from international markets.
The company used its release to hype its original content, too, including its many Emmy nominations and multiple productions now being done in various languages for the varied countries to which it streams.
Netflix also noted that its expenses will far outstrip its revenues for quite some time as it continues to build its leadership position among existing competitors, such as Amazon and YouTube, and in advance of pending ones, such as from Disney, an AT&T-funded and expanded HBO, and from regional players like France’s Salto.
Free cash flow in Q2 totaled negative $559 million, versus negative $608 million in the year ago quarter. “We continue to anticipate FCF of -$3 to -$4 billion for the full year 2018, which implies that our content cash spending will be weighted to the second half of 2018,” reads the release.
The company has said it will spend at least US$8 billion on content this calendar year, but certain analysts are expecting that number to be more like US$13 billion by year’s end.
Netflix’s chief product officer Greg Peters noted during the company’s YouTube live Q3 “interview” with financial analyst Todd Junger that it will begin a rollout of improvements to the Netflix TV experience, starting Tuesday, July 17. The upgrades will make the television experience “faster, more fun, easier to find the stories our members will love,” he said. Customers will begin seeing “a long line of incremental improvements that make that experience even greater to find the stories that you love,” he continued.
Netflix executives also reiterated the fact that they are not interested in moving into live TV (news and sports) any time soon.
