=Netflix (NFLX) reported earnings on Mon 16 July 18 (a/h)

Netflix beats by $0.06, reports rev and subscribers below guidance; guides Q3 EPS, rev and subs below consensus 

• Reports Q2 (Jun) earnings of $0.85 per share ($0.66 excluding a $85M FX gain), $0.06 better than the Capital IQ Consensus of $0.79; revenues rose 40.3% year/year to $3.91 bln vs the $3.94 bln Capital IQ Consensus. 
• "This Q2, we over-forecasted global net additions which amounted to 5.2m vs. a forecast of 6.2m and flat compared to Q2 a year ago, as acquisition growth was slightly lower than we projected. Paid net adds totaled 5.5m in Q2, compared with 4.7m last year and forecast of 6.1m. US net adds of 0.7m (vs. guidance of 1.2m) were down vs. last year's Q2-record 1.1m, but consistent with previous Q2 performance (0.5m in Q2'12, 0.6m in Q2'13, 0.6m in Q2'14, 0.9m in Q2'15, and 0.2m in Q2'16). Through the first six months of the year, our US net adds are slightly ahead of last year."
• Internationally, 4.5m net additions grew 8% year over year on broad market growth, below 5m guidance. 
• Operating margin of 11.8% (vs. 12% guidance) expanded 720 bps year over year, resulting in 262% growth in operating income
• Co issues downside guidance for Q3, sees EPS of $0.68 vs. $0.71 Capital IQ Consensus; sees Q3 revs of $3.988 bln vs. $4.12 bln Capital IQ Consensus Estimate. 
• For Q3, we forecast global net adds of 5.0m vs. ~5.6M estimates (compared with 5.3m in Q3'17), with 0.65m and 4.35m in the US and international segment, respectively. Paid net adds are forecast to be 5.2m, up from 5.0m in Q3'17.
• "For the full year 2018, current F/X rates have pushed our expectations on operating margin to be near the lower end of 10-11% target range. We continue to expect steady growth in operating margin in 2019 and beyond... We continue to anticipate FCF of -$3 to -$4 billion for the full year 2018, which implies that our content cash spending will be weighted to the second half of 2018"

Netflix earnings follow up: Down 14% after reporting Q2 results shy of its own forecast and guiding Q3 below estimates 

• Netflix is down 13% after the company reported second quarter revenue and subscribers below its own forecast.
• Revenue came in at $3.91 bln vs. the $3.93 bln forecast, subscriber additions came in at 5.1 mln vs. 6.2 mln forecast.
• EPS of $0.85 included a FX gain so you could make the case that EPS missed as well: $0.66 ex-that item vs. $0.79 forecast.
• Netflix also guided Q3 EPS revenue and subscribers just below the Street's expectations.
• Netflix stock was 'priced to perfection' and Wall Street analysts warned about risk to Q2 subscriber estimates in recent sessions.
• Earnings interview starts at 18:00.
• Stock -14% testing 20-Week moving average near 343 in the after hours.