The entertainment technology company’s results were still way up from a year ago, when it posted earnings of 6 cents per share on revenue of $1.96 billion. But the results fell slightly short even of Netflix’s own forecasts of adding 5.2 million subscribers in the first quarter — 1.5 million domestic streamers and 3.7 million internationally.
The company said the 22 percent year-over-year decrease in international subscriber additions was in part “lapping” last year’s massive global expansion.
Subscriber growth is a key metric for analysts. Domestic growth can signal that the company’s core market has yet to mature, analysts said, while the international market has shown the most rapid new growthprospects.
The California-based company is now dumping cash into original content to maintain its dominance over its growing field of rivals. The company’s had $423 million negative free cash flow during the quarter, wider than the $261 million negative free cash flow a year ago. Netflix expects to have $2 billion in negative free cash flow this year.
Netflix said in the fall that it plans to spend $6 billion on content this year, above last year’s predicted spending from companies like Amazon and CBS. Netflix also said in January it plans to produce 1,000 hours of premium original content this year — even as tech giants like Apple try their hand at original shows.
Still, the company’s cash burn has been a concern for some on Wall Street. The company is spending over $1 billion in 2017 just on marketing, and streaming content obligations have swollen to $15.3 billion, up from $12.3 billion a year ago.
“We continue to believe that Netflix cash burn is important and is largely overlooked by investors,” Wedbush analyst Michael Pachter said in a note ahead of the earnings release.
