Netflix also provided third quarter guidance that was below analyst forecasts. That's compared with analyst estimates that Netflix would have Q3 net adds of 947,000 in the U.S. For Q3, it projects 650,000 net adds in the U.S. and 4.35 million overseas. and 5.05 million internationally.
Despite the “near-term gut punch,” Netflix is still well-positioned for future growth, GBH Insights analyst Daniel Ives wrote in a note. and especially international consumers despite some softness seen in 2Q," he wrote. "As we head into the rest of 2018, we believe Netflix has a number of growth levers which should fuel the company’s next phase of strategic penetration among both U.S.
Wall Street consensus Q2 2018 estimates were for $3.94 billion in revenue and EPS of 79 cents. Netflix reported Q2 revenue of $3.91 billion, up 40% year over year, and earnings per share of 85 cents (versus 15 cents in the year-ago quarter).
Still, Netflix ended Q2 with 130.1 million global subs, up 25% year over year, with 56 million in the U.S. For the first time, Netflix generated more revenue outside the U.S.: International revenue totaled $1.92 billion and U.S. and 72.8 million elsewhere. revenue was $1.89 billion for Q2.
Netflix cited an array of competitors, starting with YouTube. The company also said "HBO and Disney are evolving to focus on internet entertainment services," while Amazon and Apple are investing in content as part of larger "ecosystem subscriptions."
"This Q2, we over-forecasted global net additions… "We had a strong but not stellar Q2," Netflix execs wrote in their quarterly letter to shareholders. as acquisition growth was slightly lower than we projected."
In announcing earnings, Netflix also touted its historic 112 nominations for this year's Primetime Emmy Awards, announced last week, stealing HBO's 17-year streak as the top-nominated network or service.
Going forward, "We anticipate more competition from the combined AT&T/WarnerMedia, from the combined Fox/Disney or Fox/Comcast as well as from international players like Germany’s ProSieben and Salto in France," the company said in the investor letter. "Our strategy is to simply keep improving, as we’ve been doing every year in the past."” />
The miss on subscribers for the second quarter "isn’t entirely surprising," according to eMarketer principal analyst Paul Verna, as rivals including Amazon, Hulu, and HBO are gaining share of the subscription-video market at Netflix’s expense.
Netflix came up well short of subscriber-growth targets for the second quarter of 2018 — sending the streamer's stock down more than 14% in after-hours trading Monday on fears its pace of expansion is slowing down.
Wall Street analysts expected 1.23 million net adds in the U.S. The company reported 670,000 streaming net adds domestically and 4.47 million internationally. and 5.11 million overseas for the period (slightly higher that Netflix's prior guidance).
Over the previous eight quarters, the company has on average topped its total net subscriber addition guidance by about 1 million, with three-quarters of that coming from international markets, according to Wedbush Securities analyst Michael Pachter. The results broke Netflix's two-year streak of over-delivering on subscriber growth.