Netflix has reached a point where quarter to quarter growth remains somewhat flat.
That’s not to say the streaming giant isn’t making money, because it is. In its quarterly earnings report for the period March to June 2018, Netflix reported revenue of $3.91 billion. That figure represents a year-on-year growth of 40.3 percent, but shareholders and investors were looking for more.
The main reason for that is that Netflix forecasted higher earnings and greater subscriber growth than it achieved.
Speaking of subscribers, numbers grew slightly during March and June. In the US, net additions to the service amount to just 670 000 new memberships, internationally the firm only saw 4.47 million new additions.
The trouble is that those figures are well below the 6.2 million net additions Netflix projected in Q1 2018 and, upon announcing these figures, CNBC reports that Netflix shares fell decreased in value by 14 percent.
“Some analysts were worried the company could not sustain its share price growth, which is over 100 percent year-to-date. They also raised concerns as competitors like Amazon ramp up their streaming efforts, while others like Disney and AT&T are prepared to invest in more digital content,” wrote CNBC.
Netflix chief executive officer Reed Hastings says that this shortfall is not unusual but pointing to an exact reason for missing its mark is tricky.
“We’ve seen this movie of Q2 shortfall before about two years ago in 2016. We never did find an explanation for that but we continued to perform after that,” said Hastings.
The firm also said that it looks at growth on a 12 month basis rather than a quarter-to-quarter basis.
“We tend to focus on 12 month rolling over 12 month rolling not a particular quarter,” added Netflix chief financial officer David Wells.
“We’ve been through these cycles of growth and we think the background fact of people adopting internet entertainment, including increasingly more international adoption is going to drive really strong year-on-year growth,” said Wells.
The reasons for stagnant earnings are varied, from competition in the streaming space to real life competitions such as the FIFA World Cup capturing the world’s attention. That having been said Netflix is still growing, despite how incremental that growth might’ve been this last quarter.
Perhaps the 112 Emmy nominations Netflix earned will help push its numbers up for the Q3 report.[Image CC by 2.0 – Mike K]