Netflix Tumbles as Stock Kovid Subscriber Boom Slow

Shares of the streaming video giant are trading sharply lower after hours on Thursday, with signs that the company’s Kovid-19-driven growth is accelerating.

In the June quarter recorded on Thursday, Netflix added 10.1 million new subscribers, well above the company’s 7.5 million forecast, but it fell to 12 million or more, missing Wall Street estimates. Netflix is ​​forecasting just 2.5 million net in the September quarter, much embarrassed by analyst expectations.

In the March quarter, Netflix (ticker: NFLX) added 15.77 million net new subscribers, topping the guidance of seven million.

For the second quarter, Netflix posted revenue of $ 6.15 billion, up 24.9% from a year earlier and slightly ahead of Wall Street analyst consensus of $ 6.08 billion. $ 1.59 was a share in profits, due to a lack of consensus of $ 1.81, due to a pair of nontorming items.

The company said in a letter to shareholders, “In Q1 and Q2, we saw a huge increase in our underlying adoption capacity in the first half of this year (adding 26 million paid net vs 12 million).” . “As a result, we expect lower growth for the second half of 2020 compared to the prior year. When we navigate these turbulent circumstances, we focus on our members by improving the quality of our service and bringing new movies and shows to people’s screens. “

Netflix generated $ 1.04 billion in net cash this quarter, with $ 899 million in free cash flow, a result of reduced content development activity due to the Kovid-19 epidemic. Adjusted Ebitda (income before interest, taxes, depreciation and amortization) was $ 1.49 billion. (The company was regularly operating in the red for net cash, free cash flow and adjusted Ebitda before the epidemic.) Excluding foreign exchange, average revenue per user was 5%.

Earnings below earnings per share reflect $ 119 million of nonrecoverable losses related to foreign currency measurements of the value of the euro and $ 220 million for tax assets related to changes in California law on R&D tax, the company said. – Cash valuation allowance. Credit.

For the September quarter, Netflix is ​​offering revenue of $ 2.0 billion, up 20.6% from a year earlier, with profits of $ 2.09 per share; This corresponds to Street with $ 6.39 billion and $ 2 a share.

Meanwhile, Netflix also announced that Ted Sarandos, who remains the chief content officer, will become co-CEO with Reed Hastings. The company also named Greg Peters, who holds the additional position of Chief Operating Officer, Chief Operating Officer.

Reid Hastings said on a call from analysts that the change announced by management today does not mean he is stepping back from his leadership role. Hastings said he plans to remain in his current position for the rest of the decade.

Netflix said that it is slowly starting production in many parts of the world. It is the furthest in Asia. In Europe, the company said, it is back in production at several locations including Germany, France, Spain, Poland, Italy and the UK.

Progress in the US has been slow. Netflix said, “When we recently started production on two films in California and two stop-motion animation projects in Oregon and some of our American productions are expected, the current transition trend will create further uncertainty for our productions. ” . The company said that “parts of the world like India and parts of Latin America are even more challenging,” with plans to resume later in those areas.

Netflix said that the 2020 plan to launch original shows and films remains largely intact. “For 2021, based on our current plan, we expect stalled productions to lead to a more second half weighted content slate in terms of our larger titles, although we estimate the total of the original for the entire year. The number will still be higher by 2020, ”the company said.

Netflix said it expects full-year cash flows to be at least broken in 2020 compared to previous forecasts for losses of about $ 1 billion in 2020. For 2021, the company sees negative cash flow again, but below the $ 3.3 billion level in 2019.

The company also said that it did not expect it to reach the debt markets for the remainder of 2020, while improving its current cash balance, $ 750 million credit credit facility, and free cash flow ”and we believe Is that our need for external financing is diminishing. “

After hour trading, Netflix shares are down 9.4% at $ 478.00.

Write Eric J. at [email protected] Savitz