Netflix will report its Q1 earnings on Monday after the market closes and Wall Street is expecting the streaming giant to come in at just around its guidance for the quarter.
Netflix stock has been on a tear so far this year, up over 60% in 2018. This optimism has come primarily from the company’s ballooning subscribers numbers — especially internationally — which has been the main metric Wall Street has focused on.
Netflix’s continued subscriber growth has been pushed forward by the strength of its original TV shows, both in quality and quantity. In Q1, Netflix released a few high-profile originals like sci-fi series “Altered Carbon,” David Letterman’s new talk show, the “Queer Eye” reboot, and a new season of “Marvel’s Jessica Jones.”
Netflix has also jumped into movies in a serious way, and plans to release 80 original films in 2018. This hasn’t been without its problems, as Netflix has publicly sparred with the Cannes Film Festival and recently decided to not screen any of its original films there. Hollywood insiders are split on whether this will affect Netflix’s business in a tangible way.
All these original TV shows and movies haven’t been cheap. Netflix has said it will spend $8 billion on content in 2018 and expects negative free cash flow to rise to $3 billion.
Still, Wall Street is bullish. Going into earnings, Markets Insider reports that 26 analysts have a “Buy” rating, 16 have a “Sell,” and three have a “Hold.”
But one area of concern is what subscriber numbers Netflix will forecast for Q2. RBC analyst Mark Mahaney warned in a note that Wall Street’s estimates for the June quarter “may be on the high side” given typically weak Q2 seasonality, a tough comparison to last year, and “what doesn’t clearly appear to be a rock-star spectacular Q2 new content slate.”
We’ll see what Netflix says.
Here are the key numbers for Netflix’s Q1 earnings:
- Q1 revenue: Wall Street estimates $3.69 billion versus company guidance of $3.69 billion.
- Q1 EPS (GAAP): Wall Street estimates $0.64.
- Q1 US subscriber growth (net additions): Wall Street estimates 1.45 million versus company guidance of 1.45 million.
- Q1 international subscriber growth (net additions): Wall Street estimates 4.98 million versus company guidance of 4.9 million.
- Q2 US subscriber growth guidance (net additions): Wall Street estimates 963,000.
- Q2 international subscriber growth guidance (net additions): Wall Street estimates 3.87 million.
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