Wall Street had projected EPS of 8 cents on revenue of $1.75 billion.
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Netflix Inc. reported third-quarter 2015 earnings Wednesday, with US subscriber growth missing forecasts and shares taking a tumble, proving once again that growth is its key metric and profits are secondary.
The introduction of the new credit cards, created to help prevent fraud, interrupted the payment system used by Los Gatos, California-based Netflix and its customers.
The company’s revenues were higher than ever, but so were its expenses: net revenue for Netflix during the third quarter of previous year was $59,295.
In this file image released by Netflix, Taylor Schilling, left, and Laura Prepon appear in a scene from the Netflix original series, “Orange is the New Black”. Analysts had been looking for Netflix to add 1.25 million subscribers.
“As we have indicated previously, worldwide contribution losses will grow sequentially in Q4 as we launch Spain, Italy and Portugal”, founder and CEO Reed Hastings wrote in a letter to investors.
Shares fell as much as 14 percent in late trading before recovering a few ground, down around 6 percent. But new debit and credit cards with built-in chips made it hard for Netflix to collect fees from United States subscribers, causing what it called “involuntary churn”.
Greenfield disagreed. In a response to the op-ed, he argued on his blog that Netflix’s value comes from a healthy subscriber base, not traditional ratings.
Nevertheless, Netflix appears to be determined to pull more subscribers into its streaming service by tapping another staple, news programming, Variety noted. Last week, it raised the price of its plan allowing two simultaneous streams to $9.99 a month in the US, Canada and Latin America, a $1 increase, mirroring a similar increase in Europe over the summer.
Free cash flow was negative during the quarter at -$252 million as the company continued its global expansion efforts.
Overall, Netflix surpassed 69 million subscribers and exceeded its expectations in overseas markets with 2.74 million internationally. Netflix expects to finish 2015 at around the same level as 2014.
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The firm said revenue rose to $1.74bn (£1.1bn) from $1.41bn a year earlier.
