- JD Lasica/Socialmedia.biz
Netflix missed huge on domestic and international subscriber additions in its Q2 earnings on Monday.
“We are growing, but not as fast as we would like or have been,” Netflix said in a letter to shareholders.
The stock plunged over 15% immediately following the news.
Netflix also gave guidance for Q3 that was well below what Wall Street was hoping for in domestic and international additions.
Here are the numbers:
Q2 EPS (GAAP): $0.09 versus Wall Street forecasts of $0.02, and Netflix guidance of $0.02. Q2 Revenue: $2.1 billion, up 31% year-over-year, and in line with Wall Street forecasts of $2.11 billion. Q2 US subscriber growth (net additions): 160,000 versus Wall Street forecasts of 509,000, and Netflix guidance of 500,000. Q2 international subscriber growth (net additions): 1.52 million versus Wall Street forecasts of 2.15 million, and Netflix guidance of 2 million. Q3 subscriber growth guidance (domestic): Guidance of 300,000, versus Wall Street forecasts of 695,000. Q3 subscriber growth guidance (international): Guidance of 2 million, versus Wall Street forecasts 2.54 million.
Netflix blamed some of the trouble on people canceling at a higher rate than expected.
“Gross additions were on target, but churn ticked up slightly and unexpectedly,” the company wrote.
The company said that competition from the likes of Hulu and Amazon did not contribute to the miss.
Netflix also said that it did not believe that the market in the US was saturated, even though its domestic subscriber growth continued to slow.
Netflix’s international plan
There has been concern from Wall Street analysts that Netflix hasn’t been faring well in international markets, where much of the population doesn’t speak English.
While Netflix doesn’t comment on this particular point in the letter, the company said that it will “localize Netflix in Poland and Turkey with the addition of local language in the user interface, subtitles and dubbing. Localization in other markets will take place over time as economically prudent.”
Netflix also put a damper on any hope for investors on an imminent entry into China.
The company wrote:
“Unfortunately, this year the regulatory climate in China for our service has become more challenging. Disney’s streaming service, launched in conjunction with Alibaba, was closed down, as was Apple’s movie offering. We continue to explore options and, in the meantime, have plenty of work to do in our newly opened markets.”