Netflix fell about 1% after reporting its first quarter 2019 earnings after the bell on Tuesday. The company reported quarterly revenue that beat estimates but included light guidance for the following quarter.
Here are the numbers Netflix reported compared to Wall Street's expectations:
- Earnings per share: 76 cents, vs. 57 cents expected, per Refinitiv consensus estimate.
- Revenue: $4.52 billion, vs. $4.50 billion expected, per Refinitiv consensus estimate.
- Domestic paid subscriber additions: 1.74 million, vs. 1.61 million, forecast by FactSet
- International paid subscriber additions: 7.86 million, vs. 7.31 million, forecast by FactSet
Netflix provided light guidance for the second quarter of 2019. The company estimated Q2 earnings per share of $0.55 compared to the $0.99 analysts were expecting, per Refinitiv.
Netflix said its Chief Marketing Officer Kelly Bennett will retire this year. Chief Content Officer Ted Sarandos will run both content and marketing in the interim of the search for a new CMO.
The company also addressed the entrance of new streaming players like Apple and Disney in its letter to shareholders.
"We don't anticipate that these new entrants will materially affect our growth because the transition from linear to on demand entertainment is so massive and because of the differing nature of our content offerings," Netflix wrote, comparing the shift from linear viewing to streaming to that from broadcast to cable in the 1980s and 1990s. "We believe there is vast demand for watching great TV and movies and Netflix only satisfies a small portion of that demand."
Netflix reported net cash flow for the quarter of negative $380 million compared to negative $287 million during the same period last year. The company said it now expects its 2019 free cash flow deficit to be higher than the negative $3 billion previously expected, coming in at negative $3.5 billion. Netflix said the larger deficit was due to a change in corporate structure and investments in real estate and infrastructure.
The company previously said cash flow would remain consistent in 2019 compared to last year's total of negative $3 billion. Netflix said it still expects free cash flow to improve next year and the years after. The company previously said 2019 will be its peak for cash burn, after which it expects it to fall.
Netflix addressed its recent price hikes in its letter to shareholders, saying the response in the U.S. "so far is as we expected and is tracking similarly to what we saw in Canada following our Q4'18 increase, where our gross additions were unaffected, and we see some modest short-term churn effect as members consent to the price change."
The company announced just before its last earnings report that it would raise the price of its basic plan from $8 to $9, boost the price of its most popular HD standard plan from $11 to $13 and bump its 4K premium plan from $14 to $16. Netflix had previously raised prices three times, which seemed to have little effect on subscriber growth while boosting the stock price.
Netflix also discussed some of its top-performing content in its letter to shareholders. The documentary, "FYRE: The Greatest Party That Never Happened" was watched by over 20 million member households in its first month on the service, Netflix said. The scripted series "Umbrella Academy" has been watched by 45 million member household services in its first four weeks, according to Netflix. The company also mentioned some of its industry awards, including several Oscars for its feature film "Roma."
Watch: It's the moment of truth for Netflix as the final countdown to earnings is on
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