Netflix Misses Q1 Subscriber Growth Estimate

In a rare misstep, Netflix reported first-quarter subscriber growth of 3.98 million globally, which was significantly down from a conservative company prediction of 6 million subs. The SVOD behemoth added almost 16 million subs in the previous-year period — driven by the COVID-19 pandemic.

Netflix added 448,000 subs in North America, ending the period with 73.4 million. It added more than 1.8 million subs in Europe, the Middle East and Africa to end with 68.5 million. Netflix added 357,000 subs in Latin America to finish with 37.9 million. It added 1.36 million subs in Asia Pacific, ending the quarter with 26.8 million subs. The service has 207.6 million subs worldwide.

“We don’t believe competitive intensity materially changed in the quarter or was a material factor in the variance as the over-forecast was across all of our regions,” co-CEOs Reed Hastings and Ted Sarandos wrote in the shareholder letter. “We also saw similar percentage year-over-year declines in paid net adds in all regions, whereas the level of competitive intensity varies by country.”

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Netflix expects paid membership growth to re-accelerate in the second half of 2021 as the streamer ramps up a strong back-half slate with the return of new seasons of “Sex Education,” “The Witcher,” “La Casa de Papel” (aka “Money Heist”) and “You,” as well as an array of original films, including the finale to The Kissing Booth trilogy and large-scale movies Red Notice (starring Gal Gadot, Dwayne Johnson and Ryan Reynolds) and Don’t Look Up (with a cast that includes Leonardo DiCaprio, Jennifer Lawrence, Cate Blanchett, Timothée Chalamet and Meryl Streep).

Netflix said it expects to spend $17 billion on content in 2021.

Meanwhile, Netflix scored financially, generating a $1.7 billion profit on revenue of $7.16 billion. That compared with net income of $709 million on revenue of $5.7 billion in the previous-year period. Free cash flow skyrocketed more than 400% to $692 million compared to $162 million last year.

Netflix generated $50 million in quarter from its legacy by-mail DVD and Blu-ray Disc rental service.

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