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What Netflix Investors Are Expecting for 2Q17

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What Netflix Investors Are Expecting for 2Q17 PART 1 OF 7

Where Netflix Stands in the US Streaming Industry

Netflix’s forecast for 2Q17

For fiscal 2Q17, Netflix (NFLX) expects to see revenues of $2.7 billion, which would represent 30.9% YoY (year-over-year) growth. The company expects an operating margin of 4.4%, with an operating income of $120 million.

Netflix’s expectation of a reduced operating margin of 4.4% in fiscal 2Q17, compared with 9.7% in fiscal 1Q17, has been mainly due to its decision to premiere the new season of House of Cards in 2Q17.

Where Netflix Stands in the US Streaming Industry

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Most of the new seasons of Netflix’s popular shows and newest shows will premiere in 2Q17, and so the company expects higher net additions. In fiscal 2Q17, Netflix expects 3.2 million total net additions—almost double what its total streaming net additions in memberships were in fiscal 2Q16.

In the US (SPY), Netflix expects net additions of 0.6 million members and expects to end 2Q17 with 51.5 million domestic streaming memberships. At the end of fiscal 1Q17, Netflix had 50.8 million domestic streaming memberships.

Netflix’s domestic memberships

Netflix expects domestic memberships of 51.5 million in fiscal 2Q17, which would be a QoQ (quarter-over-quarter) rise of only 1%. According to Netflix, the slower rate of QoQ growth in memberships will be mainly because of the new seasons of its popular shows moving to 2Q17.

But as Netflix reaches the mark of 50 million domestic memberships in the US, it could be finding it hard to add the next new member to its service. This could also be due to rising competition in the US, Netflix’s continuous bid to compete with newer avenues for entertainment, and its members’ time for relaxation.

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