Illustration: Rebecca Zisser/Axios
Netflix stock beat Wall Street expectations for user growth and revenue in the first quarter of 2018, adding 7.41 million new subscribers to bring its total worldwide to 125 million.
Why it matters: A strong Q4 had analysts and investors worried that the streaming giant wouldn’t be able to recreate its blockbuster success.
But, but, but: Netflix plans to drop a whopping $7.5 billion to $8 billion on content for 2018, with executives forecasting that free cash flow will be roughly negative $3-$4 billion in 2018. They expect this trend to continue for several years as they pour cash into original content.
The blockbuster earnings are especially important given the chaos surrounding user privacy and saturation within the digital ad market that’s dominated largely by Google and Facebook.
Netflix CEO Reed Hastings told investors that his company spends more like a media company than a tech company: “We’ll spend over $10 billion on content and marketing and $1.3 billion on tech.”
“I’m very glad that we built the business not to be ad-supported but to be subscription… Just objectively, we’re much more of a media company in that way than pure tech. Now of course, we want to be great at both, but again, we’re really pretty different from the pure tech companies.”
The company remained tight-lipped about its M&A strategy, but noted that they are always “on the lookout for new IP.”