por admin » Lun Ene 22, 2018 11:55 pm
Netflix jumps more than 8% after adding more subscribers than expected
Anita Balakrishnan | @MsABalakrishnan
Published 8 Hours Ago Updated 5 Hours Ago
CNBC.com
Netflix's market capitalization passed $100 billion for the first time.
Netflix gained far more customers than Wall Street expected during the holiday season.
Quarterly earnings were in line with estimates, and guidance was better than expected.
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Netflix joined the $100 billion club on Monday night.
The streaming giant gained far more customers than Wall Street expected during the holiday season, it said Monday, when it reported quarterly earnings that were in line with estimates.
Shares of Netflix jumped more than 8 percent after hours, pushing the market capitalization of the company above $100 billion for the first time.
After adding 8.33 million subscribers in the fourth quarter — the highest ever — the company expects its winning streak to continue: First-quarter earnings guidance was well above estimates. Netflix is also burning less cash than Wall Street thought, as the international base became profitable.
Earnings in line, net adds blowout
EPS: 41 cents vs. 41 cents per share expected by a Thomson Reuters consensus estimate
Revenue: $3.29 billion vs. $3.28 billion expected by a Thomson Reuters consensus estimate
Domestic streaming net adds: 1.98 million vs 1.29 million expected by a StreetAccount estimate
International streaming net adds: 6.36 million vs. 5.10 million expected by a StreetAccount estimate
Total net adds: 8.33 million vs. 6.39 million expected
Free cash flow: -$524 million vs. -$742 million expected by a FactSet estimate
That's compared with earnings of 15 cents per share and revenue of $2.48 billion in the year-ago period. In October, the company said it expected fourth-quarter earnings of 41 cents per share on revenue of $3.274 billion, adding 1.25 million U.S. streaming customers and 5.05 million internationally.
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Netflix said now that it has more revenue from new members, it plans to spend $7.5 billion to $8 billion on content in 2018. That's not a plateau, either — CEO Reed Hastings expects content spending to be even higher in 2019 and 2020, he said on a conference call with analysts.
Despite spending less than projected during the fourth quarter, Netflix said it expects negative free cash flow of $3 billion to $4 billion in 2018, and said it will continue to "raise capital in the high yield market." However, the company leaned on its solid track record, noting that it does eventually expect to become free-cash-flow positive.
"We believe our big investments in content are paying off," said the company's shareholder letter announcing its earnings.
Bullish first-quarter guidance
EPS: 63 cents vs. 56 cents per share expected by a Thomson Reuters consensus estimate
Revenue: $3.69 billion vs. $3.492 billion expected by a Thomson Reuters consensus estimate
Domestic streaming net adds: 1.45 million vs. 1.27 million expected by a StreetAccount estimate
International streaming net adds: 4.9 million vs. 3.74 million expected by a StreetAccount estimate
Media consolidation casts a shadow over Netflix's future
Netflix remains the dominant over-the-top video provider by many metrics. But Monday's earnings report comes amid challenges for the company.
On one hand, prices are going up while some of the company's content investments haven't gone as planned. Netflix said in October that its $10-per-month high-definition plan would rise to $11. Meanwhile, "Bright," which the company touted as its "most ambitious film yet" in October, was panned by popular review sites.
Nonetheless, Netflix said, "Bright" has become one of the most viewed original titles ever, and will be followed by a sequel. The company said Monday it had increased marketing spending on original content and was seeing some success.
Netflix's chief content officer, Ted Sarandos, said the critics are an important part of the artistic process but are "pretty disconnected" from the way consumers viewed "Bright."
At the same time, the prospect of more competition looms on the horizon. It's been nearly six months since Disney said it planned to pull its movies from Netflix in favor of its own service. Since then, Disney also agreed to buy Twenty-First Century Fox assets, a megadeal that would give the combined company a significant stake in Netflix's rival, Hulu.
"I was as surprised as anyone else that Fox was willing to sell," Hastings said. "And to have all those cable networks together in one bundle gives them enormous pricing power."
Not only that, but Apple, Facebook, Amazon and Google's YouTube have doubled down on content.
Sarandos has said he doesn't want to get "too distracted by the competitive landscape," and that these changes were a long time coming. Analysts admit the company has some advantages, noting the popularity of shows like "The Crown" and "Stranger Things."
Hastings said he thinks that it's possible that a wave of consolidation is coming, and that he thinks Disney will be successful thanks to its super-strong brand. But he said if there is consolidation, Netflix won't be involved, and that his company will grow "just fine" without Disney's content.
"The market for entertainment time is vast and can support many successful services. In addition, entertainment services are often complementary given their unique content offerings. We believe this is largely why both we and Hulu have been able to succeed and grow," the company said.
The backlash against sexual misconduct allegations also touched Netflix during 2017 with the departure of "House of Cards" star Kevin Spacey. The company said it wrote down the value of $39 million in unreleased projects during the quarter, but did not go into specifics. But executives did note on a conference call that it was the first write-down of that magnitude, "related to the societal reset around sexual harassment."
Netflix also reiterated its challenge to the repeal of net neutrality regulations by the FCC, even though the company is partnering with a growing number of internet service providers. Rodolphe Belmer, CEO of Eutelsat, a global satellite business, will also join the Netflix board of directors.
Netflix shares are up more than 64 percent over the past year.
Disclosure: Comcast, which owns CNBC parent NBCUniversal, is a co-owner of Hulu.