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Netflix comes up short in Q1

After seeing explosive subscriber growth during the earlier stages of the pandemic last year, Netflix saw the other side of it in Q1 2021 as sub growth slowed dramatically during a period that also saw Netflix's pipeline of fresh content slow.

Netflix added about 3.98 million net new subs in Q1 2021, up 13.6%, extending its global total past 207.64 million. However, that result missed guidance of 6 million net additions. Netflix added a whopping 16 million net new paid streaming subs in the year-ago quarter. Netflix pulled in Q1 revenues of $7.16 billion, up 24.2%, and beat guidance of $7.12 billion.

Netflix expects a sluggish Q2, forecasting it will add 1 million paid subscribers worldwide, extending its grand total to 208.64 million.  
(Image source: Netflix)
Netflix expects a sluggish Q2, forecasting it will add 1 million paid subscribers worldwide, extending its grand total to 208.64 million.
(Image source: Netflix)

Netflix subscriber growth dipped across all regions:

  • US and Canada: Q1 2021 adds of 450,000, versus 2.31 million a year ago.
  • Europe, the Middle East and Africa: Q1 2021 adds of 1.81 million, compared to 6.96 million a year ago.
  • Latin America: Q1 2021 adds of 360,000, versus 2.9 million in the year ago period.
  • Asia Pacific: Q1 2021 adds of 1.36 million, down from 3.6 million a year earlier.

Netflix shares were down $61.12 (11.12%) to $488.45 in after-hours trading Tuesday.

Netflix attributed the subscriber slowdown to a big "pull forward" in 2020 spurred by the pandemic along with a lighter content slate in the first half of this year caused by production delays in all regions. Netflix said it expects a "strong second half" amid the return of new seasons of popular shows along with a slate of new movies. Production is now back in every major market, save for Brazil and India, the company said, noting it will spend over $17 billion on content in 2021.

"We don't believe competitive intensity materially changed in the quarter or was a material factor in the variance as the over-forecast was across all of our regions," Netflix explained in its Q1 2021 investor letter (PDF).

Netflix forecasts Q2 2021 revenues of $7.3 billion, up 18%, and expects to add 1 million paid net adds, taking its grand total to 208.64 million.

— Jeff Baumgartner, Senior Editor, Light Reading

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