Netflix’s subscriber growth cooled in the first quarter of 2021 after record pandemic-fueled gains last year: The streamer added about 2 million fewer customers than it previously expected.
For Q1, the company reported a gain of 3.98 million in net global streaming subscribers. That was below its previous guidance of 6 million. Meanwhile, Netflix predicted even lower gains for the current quarter — it expects to add just 1 million members in Q2. As of the end of March, Netflix had 207.4 million paid streaming customers worldwide, up 13.6%.
On the miss and lighter-than-expected Q2 guidance, Netflix shares fell more than 10% in after-hours trading.
For 2021, the company said it expects to spend more than $17 billion in cash on content — up more than 44% compared with $11.8 billion last year, when numerous productions were put on hold because of the coronavirus crisis.
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Netflix’s previous forecast of 6.0 million net new subscribers of Q1 was already well below the record 15.8 million it packed on in Q1 2010 after initial COVID-19 lockdowns a year earlier. Analysts consensus estimates had pegged 6.22 million net adds.
At the same time, Netflix’s Q1 financials topped Wall Street estimates. The company posted revenue of $7.16 billion — a quarterly record — and earnings of $3.75 per share. Analysts on average had expected Netflix to report revenue of $7.13 billion and EPS of $2.97, per Refinitiv.
What’s more, Netflix’s operating income for Q1 came in at $1.96 billion, more than double $958 million in the year-earlier period.
“We believe paid membership growth slowed due to the big COVID-19 pull forward in 2020 and a lighter content slate in the first half of this year, due to COVID-19 production delays,” the streaming giant said in its quarterly letter to shareholders.
Netflix said it continues to expect “a strong second half with the return of new seasons of some of our biggest hits and an exciting film lineup.”