Netflix on the verge of hitting 100 million subscribers

Netflix on the verge of hitting 100 million subscribers

Netflix on the verge of hitting 100 million subscribers

Netflix (NFLX, Tech30) added 5 million members globally in the first quarter of 2017, bringing its total subscriber base to just shy of 99 million users.

The company will touch that mark this weekend if its predictions are correct. Operating margin is expected to slip from 9.7% in the first quarter to 4.4% in the second quarter, but the company reiterated its 7% target operating margin for the year.

USA paid subscribers continued to grow at a slower pace than we previously projected, with trailing 12-month paid net adds at 3.7 million in the quarter, down 32% from 5.4 million at the end of first-quarter 2016, which was down 9% versus 2015.

People were able to watch videos everywhere on their smartphones and tablets, said Michael Pachter Wedbush Securities analyst. "But Netflix clearly had a vision before those devices became so ubiquitous", he added.

Despite the growth, subscription numbers fell short of expectations - the company previously predicted 1.5 million in the US and 3.7 million internationally.

Dwelling on the subscriber guidance, the analyst said the company's domestic subscriber guidance of 0.6 million was ahead of his estimate of 0.21 million and the consensus estimate of 0.19 million.

Analysts estimated Netflix would earn 37 cents a share, up from 6 cents a share in the same quarter previous year.

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Shares of Netflix are up more than 30 percent in the past year.

The model works from a customer viewpoint because it is such a great value, Pachter said.

The video streaming service insisted that the lower-than-expected Q1 subscriber growth in both domestic and global markets did not signal any change to its long-term growth expectations.

Indeed, the company noted that the United States and other established markets have been funding worldwide expansion for several years. For the record, Netflix's overseas subscriber count totaled almost 48 million by the end of March. Netflix credits the ongoing growth to a price change in mid 2016.

Hastings also addressed the issue of market saturation, citing YouTube's announcement in February about users racking up more than 1 billion hours of video viewing every day.

In terms of revenue, Netflix saw a 35% year-over-year increase to reach $2.64 billion in the first quarter, meeting expectations, and EPS was $.40 per share, above the $0.37 that analysts expected.

Growth and competition were a key topic of discussion during the company's earnings interview.

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