Netflix continued to rake in subscribers, moving well above the 100 million mark despite earnings per share results that were slightly below expectations.
In the April to June quarter, Netflix pulled in 5.2 million additional customers, raising its total subscriber figure from nearly 99 million in the first quarter to a hair under 104 million. Netflix CEO Reed Hastings said Monday afternoon the addition figure was an “all-time record for Q2s.”
But that wasn’t the only milestone the company hit in the second quarter. Netflix also reported the number of international subscribers has surpassed domestic customer figures. Stateside, the company reports it has just under 51.92 million total memberships. That compares to a reported total of 52.03 million international memberships. The company indicates the latter figure is expected to grow by 3.7 million in the third quarter, and is forecasting “positive international contribution profit” for the full year 2017 – a first for its international segment.
According to Hastings, the growth continues to be driven by Netflix’s lineup of original content, including new seasons of fan favorites like “House of Cards” and “Orange Is the New Black,” and the debut of “13 Reasons Why.” All told, Netflix says it launched 14 new seasons of original series, 13 original comedy specials, six original documentaries, two original documentary series, nine original feature films, and seven original kids’ series in the second quarter.
That content, though, comes with a cost.
The company reported negative free cash flow of $608 million in the second quarter 2017 compared to negative $254 million the year prior and negative $423 million in the first quarter. The free cash flow shortfall is expected to rise from $2 billion to $2.5 billion by year’s end, Netflix indicates. But with “strong member, revenue, and profit growth,” the company says it plans to continue investing in content, particularly in owned originals. And Netflix isn’t expecting to come out of the free cash flow red anytime soon. The company’s second quarter note to investors says Netflix “expect(s) to be FCF negative for many years.”
Jumping back to that comment about revenue and profit growth, it should be noted that Netflix grew revenue by 32 percent to $2.79 billion in the second quarter and delivered diluted earnings per share of 15 cents. The revenue figure was slightly above analyst expectations of $2.76 billion, but EPS fell just shy of analysts’ forecasts of 16 cents.