Netflix reports earnings after market close on Monday, July 16. Read more for a look at what might be expected from the video streaming giant’s Q2 report.
Netflix (NFLX) reports second-quarter earnings after market close on Monday, July 16. The stock has had a massive rally in 2018, starting the year at $196 and recently trading around $400.
As has been the case in the past several quarters, analysts have been primarily focused on the company’s international growth as domestic growth has slowed. In Q1, NFLX added 7.41 million subscribers, 1.96 million from domestic and 5.46 million from international. That was about 900,000 more than analysts had been expecting, helped by faster growth in domestic subscribers.
For Q2, management issued guidance for 6.2 million subscriber additions, for a total of 131.2 million subscribers. 5 million of that is expected to come from international growth, and 1.2 million from domestic growth.
On Monday, NFLX is expected to report adjusted EPS of $0.80 on revenue of $3.94 billion, according to third-party consensus analyst estimates. In the same period last year, NFLX reported adjusted EPS of $0.15 on revenue of $2.79 billion.
When the company last reported, revenue grew 40.4% year over year to $3.7 billion and adjusted EPS was $0.64. At the same time, free cash flows were negative $237 million. With that report, management said it expects negative free cash flow between $3 billion and $4 billion for all of 2018.
Management also said it expects negative free cash flows to continue for several years as it continues to invest heavily in creating new content. In 2018, the company said it plans to have between $7.5 to $8 billion of content expenses.
NFLX has consistently raised debt to fund that content spending. In its last earnings report, management said they will continue to raise debt as needed to fund more original content, and that they “believe debt is lower cost of capital compared to equity.”
The company priced a $1.9 billion debt offering in April, more than the $1.5 billion it had originally planned. In Q1, NFLX’s interest expense was $81.2 million, up from $46.7 million in Q1 2017.
For a look at what else is going on, check out today’s Market Update.
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