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NFLX Plunges After Missing Sales, Subs And Earnings; Cuts Forecast; Burns Quarter Billion Dollars
Following more than a year in which Netflix pulled an Amazon quite successfully, burning through tens then hundreds of millions in cash but promising ever loftier growth, moments ago the magic finally ended, when Reed Hastings' company reported Q3 revenue of of $1.581 billion, wildly missing not only consensus expectations of $1.75 billion, but its own Q2 forecast of $1.593 billion, while also missing the bottom line estimate of $0.08, generating just 7 cents in Earnings.
Far worse, the "growth" company also missed the Q3 domestic subs forecast even more, generating just 0.88 million new US subs, down from 0.98 million a year ago, and both its own forecast of 1.15 million, and Wall Street's of 1.25 million. The explanation was rather laughable:
We added 0.88 million new US members in the quarter compared to 0.98 million prior year and a forecast of 1.15 million. Our over-forecast in the US for Q3 was due to slightly higher-than-expected involuntary churn (inability to collect), which we believe was driven in part by the ongoing transition to chip-based credit and debit cards.
"Inability to collect" $7.99?
Of course, the other far more likely explanation, that the company "could not collect" simply because US consumers are broke and can't even afford a paltry $7.99 for commoditized TV streams, is far less palatable.
Finally, not only did the company miss Q3 results, but it also guided far lower than expected, and is now expecting 1.65 million domestic streaming subs, below the 1.81 million estimate.
And while the company added a solid 2.7 million international subs, NFLX continues to burn a ton of cash here, with the contribution margin on international streaming now at -13.1%. And there will be much more losses:
As we have indicated previously, international contribution losses will grow sequentially in Q4 as we launch Spain, Italy and Portugal. We have announced our expansion to South Korea, Hong Kong, Taiwan and Singapore in early 2016. Our plan remains to run around break-even through 2016 and to deliver material profits thereafter.
Good luck with that plan.
The summary financials breakdown and projections were as follows:
If and when fundamentals matters once again, the following chart will be very interesting to all: in Q3, NFLX burner a record $252 million in cash, bringing its total cash burn in the past 12 months to a gargantuan $722 million.
Good luck generating even one dollar of free cash flow with this "growth" company. And since the company has a generous $2.6 billion in cash and investments, it will continue burning cash for a long time before its investors finally riot and demand some cash return on their investment.
And finally, moving away from the cash flow statement to the balance sheet, NFLX also revealed that its off-balance sheet total "streaming content obligations" have now risen to a gargantuan $10.4 billion, up $1.5 billion from a year ago. This is greater than the company's entire balance sheet.
The stock, which crashed 14% immediately after the results, has recovered some of the losses. Will the BTFDers reemerge and take NFLX into the green after what is a terrible quarter, or will gravity finally prevail?
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There goes my shitpile gift cards...
Denninger has the perfect name for NFLX:
"Cash Furnace."
should be a +3% day tomorrow!
"House of Cards" - truly a NetFlix original.
My My My My My Whoa
My Kuroda...
Dude.
LITUVY
I don't understand...can't he just borrow a couple billion at zero and do stock buybacks?
Maybe he should do a stock offering to fund a share buyback. Why not? This market's already reached peak absurdity.
Brilliant!!! (Say it with a British accent)
Hey you could be CFO with that plan.
they're basing loses on churn to chip based credit cards. Which is bullshit because chip only matters for those who shop at a real store, not online.
Plus won't people miss their Netflix by not paying? Makes no sense.
the only answer is the amazon model. burn more cash.
bit torrent has nothing to do with it. kids nowadays! thank god anarchy is a universal human suffering. lol.
Amzn is perverse they lose money on all retail for 20 years now making it hard for retailers to stay in business? Why, because their stock goes up and that's all that matters.
So while the rest of the retail world has to conform to fundurmentals they get a pass.
And it helps nobody in the real economy.
Amazon are fucking bullshit. The way they treat their staff is horrid too. They are controlled to the second every minute of their shift. Probably a testing site for .gov after the breakdown.
Long gravity
Losing money is bad right? Or is it good? I'm so confused. Ah, fuck it.., buy, buy, buy!
Twitter laying off 8% of their workforce, Wal-Mart taking a dive. After hearing how good the economy is from the Democratic candidates last night there must be some mistake. Netflix should just make sure it accepts EBT and then we'll see the 4th quarter bounce!
bbut ...the owners of the Hedge Fund Hotel just love these guys at a 250 P/E .....
I used to buy stuff until Bernanke stole all my fucking interest income. Fuck you Ben you little cunt
Pffftt.., who needs stuff anyway? You should be grateful to the fed for making you feel wealthy.
@Berspankme
And remember that everytime you buy a bag of chips that's smaller than 5 years ago yet more exspensive that you are paying your little slice of blood money that kept the TBTF banks whole. But you know... Because, the Shining City on the Hill...
I used to buy stuff too ..
I used to have a bank account ..
A fairly large one ..
I used to have a good size home all to myself. No wife. No kids. A 65" all to myself. That was 10+ years ago ..
I used to have a 20' Sea Ray. They took the lake too. This year, just got it back. Is that an omen I'm about to get my boat back soon?
I used to have an acre of investment land. Hoping to either build on it (no less than 3000 sq. ft.) or sell it for no less than 100% profit. Was force to sell it for only a 40% profit after 3 years.
I used to have a brand new truck to tow my Sea Ray to the boat dock.
I used to have a job ..
I used to have my own address, where I got bills in the mail, to pay myself ..
I used to go grocery shopping for myself, even buying luxury items ..
Now I do the grocery shopping for my 80+ parents. I use their credit card ..
I used to have car with current registration, inspection, and insurance, and it ran quite well. At one time, I got a new vehicle every four years ..
Yeah ..
I blame NAFTA ..
I blame Yellen ..
I blame Bernanke ..
I blame Greenspan ..
I blame Volcker ..
I blame Miller ..
I blame Blumenthal ..
I blame Simon ..
I blame Burns ..
I blame Martin ..
I blame ........................... I wasn't born yet ..
END THE FUCKING FED!
so what does this mean for hollywood and other internet and msm content? follow the free-dom train. where does it go?
my favorite company-free, free and free, inc. free stuff is good stuff.
Denninger is drinkin' champagne today -- you can be sure.
it was kind of a no brainer, like green mountain roasters. timing is the genius. the real genius is shorting the first bounce real hard.
oh yeah, denninger is a fn nazi but he made it work for him.
That he totally is. You can go far in this world as a Nazi though.
Algos took control. Every time there is a vertical drop they see it as a buying opportunity and bid everything back up.
I wonder what the real numbers were?
Netflix is a bankrupt company claiming they are a internet pioneer.
What, plunging sales, revenues and earnings aren't working...it worked for Amazon for 20 years.
I proudly contribute to amazon's losses.
Not to worry. Tomorrow, when he announces that they closed a huge deal to bring the first 3 seasons of The Jeffersons to Netflix in 2017, the stock will explode 20% higher.
love me some weezie
It doesn't matter if U're a Ritz or a saltine, U're still a Cracker!
No Sanford & Son? I'm out
If you check their numbers it's pretty clear they're a hughe cash burner. I just don't understand how these companies stay affloat.
And now that it's clear their European adventure has failled, there's no more room for growth.
You won't have to try to understand for much longer.
Netfucked.
You are becoming more and more relevant by the day, ZH. Expect the bandwagon to fill any day now.
How embarrassing...
Admitting that your company is a fee vacuum attached to personal bank accounts rather than an internet content provider will completely trash your PE multiple.
"Burning through cash? It worked for us."
-Blockbuster
Been playing a negative sum game with my wife; I switched electricity providers, she dropped part of cell data plan, I killed home phone and cable portion of verizon fios bundle, she stopped dvd deliveries from netflix, I'm giving up my 20+ yr old email addr, she's punted hulu, I'm putting gym membership in hibernation, she's nixed hers. That's an easy start to saving three plus grand a year in 'services' and haven't missed any of it yet.
Use it up,
Wear it out,
Make it do,
Do without.
--Depression era mantra, as told to me by my father, who was there.
Another cabal controlled "click stock" bites the dust, and all the naive goy investors along with it.
It's baaa-aaaaack
"Pluges" $2. Yellen is now the largest shareholder.
They didn't collect my $7.99 from my new credit card because I didn't tell them about the new card. That's because their customer service, which used to be outstanding, turned to total shit a couple of years ago, and they got very arrogant to boot.
I had fired their streaming some time ago, and reduced my plan from three disks out to one at a time.
Now its no disks out at a time.
They helped me realize that I should movie less and work more.
Thanks Reid, and fuck you.
I go to putlocker and download all the tv shows and movies from netflix, amazon, hulu,etc.
http://money.cnn.com/2015/10/08/media/netflix-raising-price-standard-plan/
The popular streaming TV service is hiking the cost of its standard plan from $8.99 a month to $9.99.
Standard Disclaimer: What a difference a week makes...
(For the rest of you...be sure your computer is suited with virus protection...)
www.solarmovie.is (movies/tv)
www.geektv.me (tv only)
and more than I care to list...
Check out Kodi, installs on any pc/mac/android/linux platform and streams everything out there, movies, sports, old or new. Most is HD except the sports, mostly SD. All free. Can even be installed on Fire Stick or Fire TV set top box.
And this is why the internet will be regulated and require your SS# to log onto. Nice work.
Yes eventually the cable/sat companies will have it shut down, not soon I hope.
Plunge protection team saves the day. They're going to be working overtime this earnings season.
I cancelled Netflix in 2008 after I found out that their CEO was supporting Obama.
I hope they go under and he goes bankrupt and ends up living under an overpass.
I have completely, 100% lost interest in Hollywood productions, and not only for moral reasons (ex: their use of MK-ULTRA, to say nothing of the endless propaganda and manipulation).
Even without all those considerations in mind, I find far better things online, like the following free (donation-supported) translation of an amazingly great Chinese action/fantasy novel:
http://www.wuxiaworld.com/issth-index/
Memes are another fun thing to look up from time to time, to see what part of the internet has been having fun with the last few months (or years, if you haven't heard of 'em).
Obviously, I prefer ZH to the newspapers (and not just 'cos it's free!). Just like how old-skool newspapers are trash compared to what's actually available online (if you know how to find it), the exact same is true with Hollywood's Zio-NWO-crap: there are in fact WAY better distractions out there online, generally FOR FREE!
I Netflix PE under 200 yet?? I'm waiting for a buying opportunity....