Netflix, Inc. (NASDAQ:NFLX) Q2 2019 Earnings Conference Call - Final Transcript
Jul 17, 2019 • 06:00 pm ET
Michael C. Morris
Thank you, Spencer. Good afternoon. Let's jump right into the results and the member variance from guidance in particular. What changed during the quarter versus the outlook that you provided, did made such a significant impact this quarter and you did mention the content being perhaps a factor. I think, that's really something we haven't focused on in the past in terms of driving the cyclicality. So, maybe if you could talk about those things?
You know when we're forecasting Mike, in the beginning of the quarter, we make our best estimate. And as you can see over the past three years, sometimes where forecast highs, sometimes we forecast low. This is one where we forecasted high. There was no one thing. And if I think about three years ago, we were also light and you know, we never really we're confident of the explanation, then we were $2 billion in quarterly revenue. Now, we're going on $5 billion. And so, it's easy to over interpret the quarter membership adds, which are a bit noisy. So, for the most part, we're just executing forward and trying to do the best forecast we can. Do you want to add anything that Spence?
Yeah. Thanks, Reed. Maybe I'd just add the fact that when we think about those paid net add forecast. It's really about the marginal growth. Mike, on a subscriber base, it's over 150 million members. So, we're talking about, plus or minus 1%, 2%, 3% in growth rates on subscribers on an annual basis, that are growing over 20%.
So, if we look at the trailing 12-months, we grew our member base by over 27 million members. If you take that forward to where we think we'll be at the end of Q3, we think it will be on trailing 12-months basis over 28 million members. So, we're really playing for the sustained increase in growth in our membership over time and there be some quarter-by-quarter choppiness along the way based on things like seasonality and content slate and so forth.
Michael C. Morris
Could you, can you provide a little more detail, perhaps on the gross add versus the churn dynamic in the quarter, include is the pricing dynamic, I want to get too as well, but maybe we just back up and look at gross adds versus churn and how that resulted in the net?
Yeah, sure. I mean, generally when we looked at the slowdown in subscriber growth was across all of our regions. So, you talk about our kind of top of funnel or gross adds we saw that slowed down across the board, which indicates to us some level of seasonality and kind of the overall, as we say the kind of timing of the content slate and also frankly maybe a little bit more pull forward of our subscriber growth from Q2 to Q1 because we had such a strong Q1 with 9.7 million paid net adds. But, we also did see in regions where we increased