Netflix (NFLX) Slammed After Disappointing Q2, Sees Lower Net Additions in Q3 Due to Pricing Change
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Revenue Growth %: +17.2%
Financial Fact:
Interest expense: -6.74M
Today's EPS Names:
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Shares of Netflix (Nasdaq: NFLX) are under heavy pressure late Monday after reporting disappointing second-quarter results and providing a weak third-quarter outlook due to the company’s recent pricing change.
The company reported EPS of $1.26, up 58 percent from last year and 15 cents better than the consensus of $1.11. Revenue for the quarter was $789 million, which missed the consensus of $791.5 million.
Netflix added 1.8 million domestic subscribers in the quarter, less than the 3.3 million added in the first quarter, but 75 percent above the 1.03 million added in the same quarter last year. The company now has a total of 24.6 million domestic subscribers.
With 75 percent of new subscribers signing up for the steaming only plan, average subscription price reverted to a slight quarter-over-quarter decline.
Domestic operating margin rose to 16.3 percent during the quarter. This is above the 16 percent reported in the first quarter and above the company's 14 percent target. This is a result of the savings generated from declining DVD demand.
The company sees third-quarter EPS of $0.72-$1.07, below the consensus of $1.08. The company sees third-quarter revenue of $799.5 million to $828.5 million, versus the consensus of $846.5 million.
Commenting on the recent price increase, the company stated it was "expected and unfortunate that our DVD subscribers who also use streaming don’t like our price." Netflix notes some subscribers will cancel Netflix or downgrade their Netflix plans.
The company estimates by end of the third quarter in the U.S., Netflix will have about 22 million people subscribing to its streaming service, about 15 million people subscribing to the DVD service, and about 25 million total U.S. subscribers (with about 12 million people subscribing to both streaming and DVD).
In the third quarter, Netflix sees only the negative impact of the pricing change. The company expects domestic net additions in the quarter to be lower than the year-ago quarter, and because of the timing of the price change, revenue will only grow slightly on a sequential basis. In the fourth quarter, the company expects domestic net additions to return to a pattern of year-over-year growth.
Commenting on competition, the company said they aren't planning to bid on Hulu because most of its revenue is from providing free ad-supported streaming of current season TV shows, which is not our focus. They also said they haven't detected much competitor from Amazon (Nasdaq: AMZN) Prime so far.
Shares of Netflix are down about 8 percent in after-hours trade.
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The company reported EPS of $1.26, up 58 percent from last year and 15 cents better than the consensus of $1.11. Revenue for the quarter was $789 million, which missed the consensus of $791.5 million.
Netflix added 1.8 million domestic subscribers in the quarter, less than the 3.3 million added in the first quarter, but 75 percent above the 1.03 million added in the same quarter last year. The company now has a total of 24.6 million domestic subscribers.
With 75 percent of new subscribers signing up for the steaming only plan, average subscription price reverted to a slight quarter-over-quarter decline.
Domestic operating margin rose to 16.3 percent during the quarter. This is above the 16 percent reported in the first quarter and above the company's 14 percent target. This is a result of the savings generated from declining DVD demand.
The company sees third-quarter EPS of $0.72-$1.07, below the consensus of $1.08. The company sees third-quarter revenue of $799.5 million to $828.5 million, versus the consensus of $846.5 million.
Commenting on the recent price increase, the company stated it was "expected and unfortunate that our DVD subscribers who also use streaming don’t like our price." Netflix notes some subscribers will cancel Netflix or downgrade their Netflix plans.
The company estimates by end of the third quarter in the U.S., Netflix will have about 22 million people subscribing to its streaming service, about 15 million people subscribing to the DVD service, and about 25 million total U.S. subscribers (with about 12 million people subscribing to both streaming and DVD).
In the third quarter, Netflix sees only the negative impact of the pricing change. The company expects domestic net additions in the quarter to be lower than the year-ago quarter, and because of the timing of the price change, revenue will only grow slightly on a sequential basis. In the fourth quarter, the company expects domestic net additions to return to a pattern of year-over-year growth.
Commenting on competition, the company said they aren't planning to bid on Hulu because most of its revenue is from providing free ad-supported streaming of current season TV shows, which is not our focus. They also said they haven't detected much competitor from Amazon (Nasdaq: AMZN) Prime so far.
Shares of Netflix are down about 8 percent in after-hours trade.
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