Netflix subscriber growth train to keep on rolling in Q1

Netflix sign Los Gatos
(Netflix)

Netflix will announce its first-quarter earnings after market close today, and by all accounts the streaming giant will again meet or surpass subscriber growth estimates.

Wall Street consensus predicts Netflix will add 6.45 million net total new subscribers—1.45 million in the U.S. and another 5 million international subscribers. That forecast is closely in line with Netflix’s own forecast of 1.45 million in the U.S. and 4.9 million internationally.

Of course, that estimate could be conservative on Netflix’s part. The SVOD has blown past its subscriber forecasts in the previous quarters. Netflix added about 8.3 million net new subscribers in the fourth quarter of 2017 after it predicted it would add 6.3 million. And in the quarter before that, Netflix added 5.3 million subscribers after predicting it would add 4.4 million.

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But in the year-ago quarter, Netflix fell short of its 5.2 million net adds forecast and added 4.95 million.

Jefferies analyst John Janedis said Netflix appears poised to beat consensus estimates, led by the international segment, and that it will likely affect other big media stocks.

RELATED: Netflix adds nearly 2 million U.S. subscribers in Q4

Wall Street is also predicting that Netflix’s first-quarter revenues will come in around $3.69 billion on earnings per share of $0.64, both slightly ahead of the company’s forecast.

Netflix’s projected revenue growth, which translates to about a 40% increase, could become more of an investor focus going forward as the company continues to increase its operational expenses. Netflix intends to spend between $7.5 billion and $8 billion in 2018 on original programming. The company’s marketing budget for 2018 is at $2 billion and the technology and development budget will hit $1.3 billion in 2018.

The booming content budget led BTIG analyst Rich Greenfield to question how much is enough, noting Netflix CEO Reed Hastings' recent comments about $8 billion not being as much as it sounds.

“We presume this was said in the context of how wide Netflix’s subscriber footprint now is and the global TAM. That being said, is there a level where you hit a proverbial content ceiling?” Greenfield asked in a research note.