Netflix nears 100m users but misses Q1 sign-up target

Reed Hastings

Considering that Netflix ended its first quarter with 98.5 million total subscribers, Jefferies analyst John Janedis said the fact that the company already expects to crack 100 million this weekend means it has already significantly chipped away at its second-quarter growth guidance. Last time we saw an announcement like that, Netflix raised $1 billion the following week. Since then its subscriber base has grown rapidly, and five million new customers signed up for its streaming service in the first three months of 2017 alone.

"That is a bit accomplishment", Netflix Chief Executive Reed Hastings said during a video briefing with analysts. "But Netflix clearly had a vision before those devices became so ubiquitous", he added.

While its subscriber growth slowed in Q1 2017, Netflix ended the period with a total of 98.7 million streaming memberships, consisting of 50.8 million in the US and 47.9 million internationally. We now model a 17% average annual decline in total U.S.net adds from 2017 to 2021 with a 21% decrease in 2017, but our projections (and consensus) may prove optimistic and problematic for the firm.

Netflix's earnings exceeded expectations, while slower-than-expected subscriber growth was offset by a better-than-expected forecast for subscriber growth in the current quarter. Worldwide additions came to 3.53 million, which was lower than its own guidance for 3.7 million.

Netflix has expanded around the world over the last few years, betting that its US formula would pay off in other countries.

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However, for all its success, Netflix still has a ways to go before it catches up with HBO, the popular pay-TV channel that has served as its role model. Hastings also says he expects the next 100 million subscribers will likely come far more quickly than the first 100 million subscribers, though he has not divulged what the timeline might look like. As for the competition, Netflix isn't phased by the advent of virtual MVPDs such as Sling, PlayStation Vue, DirecTV Now, YouTube TV, and Hulu's forthcoming service.

Netflix, Inc is a provider an Internet television network.

Its continued subscriber growth follows a decision to launch in almost every country in the world and invest heavily in original content to lure customers. Pivotal Research lifted their price target on shares of Netflix from $170.00 to $175.00 and gave the company a "buy" rating in a research report on Tuesday.

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

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