- Netflix (NASDAQ:NFLX) is flying after hours, up 8.4%, following a beat on revenues and some subscriber numbers much stronger than expected.
- The company's above-consensus forecast for Q3 subscribers (4.4M vs. expected 3.99M) reflects some expectations that Q2 momentum will continue but tempered a bit as "we are cognizant of the lessons of prior quarters when we over-forecasted and there was lumpiness in net adds, likely due to demand being pulled forward (into Q2 in this case)."
- Meanwhile, free cash flow is running out the door faster, at -$608M vs. a year-ago -$254M, and Q1's -$423M. "With our content strategy paying off in strong member, revenue and profit growth, we think it’s wise to continue to invest," it says, noting it expects FCF of -$2B to -$2.5B for 2017 and reiterates the company expects to be FCF negative for "many years," fed by debt financing.
- In a competitive look, the company says the market's broad enough for it to go from zero to 50M streaming households even as HBO keeps adding U.S. subs. "It seems our growth just expands the market. The largely exclusive nature of each service’s content means that we are not direct substitutes for each other, but rather complements."
- Now read: Netflix Earnings: It's More About What The Company Is Not Doing
Original article