Netflix (NASDAQ: NFLX), who is famous for holding its cards close to its chest when it comes to viewing figures, announced the breakdown of its domestic and international subscriber base on Monday. The report filed with the SEC contained detail information about Netflix subscriber numbers across the U.S. and Canada, Europe, Middle East and Africa, Latin America, and Asia-Pacific.
The cynic in me believes that the timing of this report is no coincidence, as just last week Netflix got downgraded by analysts who predicted a significant drop off in domestic subscribers in 2020. Could Reed Hastings & co be trying to assuage investors’ fears of increased competition from the likes of Amazon (NASDAQ:AMZN), Apple (NASDAQ: AAPL) and Disney (NYSE:DIS) and a saturated domestic market?
If so, he has certainly succeeded in smoothing out a turbulent month for the streaming giant’s share price, which is currently hovering at $315 but hit as low as $293 after getting downgraded. This is thanks to Netflix’s very promising international growth figures.
Let’s break down the numbers reported to the SEC:
|March 30th 2017||September 30th 2019||Growth Rate|
|U.S. and Canada||54.6 million||67.1 million||23%|
|Europe, Middle East and Africa||19.7 million||47.4 million||141%|
|Latin America||15.4 million||29.4 million||91%|
|Asia-Pacific||4.7 million||14.5 million||210%|
As we can see, the pace at which Netflix is growing internationally is very impressive, but is it enough to offset the inevitable slowdown of its domestic subscriber base?
International v Domestic subscribers
The report also included some great data around the average monthly revenue per subscriber. Customers from the U.S. and Canada are generating $12.36 a month on average, while those in Latin America generate just $8.21 a month. As Netflix must alter its pricing plans to cater to each region, it shows us that not all subscribers are created equal. Case and point, the company is rolling out a new offering in India for mobile-only subscriptions for $3 a month.
So, while its thundering international expansion provides easy reading for Netflix investors, it is important to dive deeper into the numbers. They may not be the panacea Hastings & Co would have you think they are. Will increased competition and slowing growth at home hamper Netflix’s bottom line? Or will the streaming giant continue on its globetrotting quest for world domination? Stranger things have happened.
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Content Manager at MyWallSt
Michael's first and favorite stock is Square, which he sees becoming a massive player in the payments industry and a leader in the war on cash.