Netflix eyes continued growth as analysts predict Q2 guidance is conservative

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CEO Reed Hastings says Netflix is expecting to cross 100 million subscribers this weekend.

Netflix came up short of its subscriber forecasts for this quarter, but the SVOD says the slower growth early in 2017 isn’t cause for concern.

“We have come to see these quarterly variances as mostly noise in the long-term growth trend and adoption of internet TV,” the company said in a statement (PDF). “For the first half of this year, for example, we expect to have 8.15 million net adds, compared to 8.42 million net adds in the first half last year.”

CEO Reed Hastings said Netflix is expecting to cross 100 million subscribers this weekend, nearly a decade out from launch. Hastings said that Netflix’s user base is still well short of some of the audiences pulled in by other web giants, but he noted that unlike YouTube and Facebook, Netflix is a pay service and not as deep into international markets.

“But we definitely see a big opportunity around the world to continue to do what we’ve been doing, which is make fantastic content, get people really excited about that content and continue to grow,” Hastings said.

Considering that Netflix ended its first quarter with 98.5 million total subscribers, Jefferies analyst John Janedis said the fact that the company already expects to crack 100 million this weekend means it has already significantly chipped away at its second-quarter growth guidance.

“From this perspective, the platform will have already reached ~40% of their 2Q guide (+3.2M subs), with growth likely somewhat front end loaded due to the early success of '13 Reasons Why',” wrote Janedis, adding that Netflix’s content slate looks strong in the back half of the second quarter, with the return of “House of Cards,” “Orange is the New Black” and “Master of None.”

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Netflix expects to add another 3.2 million subscribers and push its total to 101.95 million during the second quarter, but that could prove to be a conservative figure if current growth trends continue for the company.

"The disclosure that Netflix is going to pass the 100mn subscriber count this weekend suggests it is trending ahead of schedule towards its sub guidance for 2Q17," wrote Mark May of Citi Research in a research note.

Netflix may know something the rest of the world doesn’t in terms of its second quarter, but if 100 million subscribers is in the cards for this weekend, it certainly looks like the SVOD will move ahead of its projections.

“We’re still on a great growth path. Our content is working,” said Netflix CFO David Wells during Monday’s earnings call. “We’re pleased with our international growth and we’ve got a lot of growth left in the U.S. as well.”