Jul 16, 2019

What investors are looking for in Netflix’s Q2 earnings

Expand chart
Data: Company and analyst reports; Chart: Axios Visuals

Netflix reports Q2 earnings at market close tomorrow. Analysts don't expect looming competition from streaming competitors to threaten its Q2 growth targets of 0.3 million domestic subscriber adds and 4.7 million international subscriber adds this quarter.

What to watch: Investors will be looking at how price hikes that went into effect this past quarter impact subscriber growth. They will also want to know how those price hikes affected Netflix's free cash flow deficit, which is expected to be roughly the same as it was last year — roughly a negative $3.5 billion.

  • Netflix recently revealed viewing statistics for the third season of "Stranger Things" as well as its new movie "Murder Mystery."
  • Expect questions about the operating costs that are going into driving the success of these hits, including the evolution of Netflix's marketing strategy, which was on full display for the third season of "Stranger Things."

Driving the news: New data from research firm MoffettNathanson suggests that many of Netflix's most popular shows are actually its originals, like "House of Cards" or "Stranger Things," not rented catalog hits that the streaming giant is expected to lose, like "The Office" and "Friends."

Why it matters: Analysts have argued that Netflix's growth has been contingent on its ability to hook users with new content and then keep them from churning with old content. The new data suggests Netflix will survive without some of the hits it rented from its competitors over the years.

Worthy of your time: The Streaming Wars: Its Models, Surprises, and Remaining Opportunities by Matthew Ball

Go deeper

Netflix's reliance on big hits will be a hurdle for future growth

Data: FactSet; Chart: Axios Visuals

Netflix's ambition is to replace television — to be the thing you turn on out of force of habit as you sink into your couch, whether or not you really have any idea what you want to watch. With a large enough library, and detailed enough data about your viewing preferences, Netflix should always be able to find something to entertain you.

Driving the news: The company disappointed the market with its second-quarter earnings report this week. International subscribers grew more slowly than anticipated, while the number of U.S. subscribers actually fell.

Go deeperArrowJul 21, 2019

Netflix stock sinks after U.S. subscriber loss

Netflix stock was down more than 10% in after-hours trading Wednesday following the company's announcement that it lost over 100,000 U.S. subscribers last quarter. It was expected to gain roughly 300,000 subscribers.

Why it matters: Analysts weren't expecting the streaming giant to lose subscribers, especially since rival streaming services, like HBO Max, Disney + and NBCUniversal's new service, aren't expected to launch for another year or so.

Go deeperArrowJul 17, 2019

Netflix looks abroad for continued growth as more competitors emerge

Illustration: Sarah Grillo/Axios

Efforts to dethrone Netflix abroad are underway, as more money pours into upstarts looking to compete locally against the streaming giant.

Why it matters: Netflix's user base is nearing saturation in the U.S., so it needs to continue growing abroad if it ever wants a chance at profitability.

Go deeperArrowJul 23, 2019