Netflix Inc (NFLX)

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Netflix Management Talks Subscribers, International Content, and Emmys
By: Motley Fool | July 28, 2018

There's a lot more to the streaming giant's results than just the usual financial metrics.

All eyes were on Netflix (NASDAQ:NFLX) in mid-July as the company reported the results of its second quarter. The company added 5.15 million new subscribers, down slightly from the prior-year period's growth, and well below the 6.2 million the company had forecast just last quarter. Revenue of $3.91 billion grew 40% year over year, though it also came in below expectations. Earnings per share of $0.85 grew 467% compared to the prior-year quarter, beating the $0.79 the company guided for.

There was much more detail in the company's shareholder letter and the quarterly earnings interview with analysts. Netflix executives discussed a number of topics of interest to investors, including its rare subscriber miss, the worldwide appeal of its international content, and beating HBO in Emmy nominations.

It's all about the subscribers
The most pressing question on the minds of many investors was about the rare shortfall of subscriber additions relative to the company's forecast. CFO David Wells addressed the issue, saying, "After four consecutive quarters of under-forecasting the business, we over-forecasted the business."

A review of the forecast compared to actual results in each of the previous four quarters shows that Netflix has indeed generally vastly underestimated the number of customers that would be joining the service, making this quarter a rare miss.

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