Looking forward to the fourth quarter, Netflix guided its global subscriber additions to be 6.3 million users — slightly above expectations of 6.25 million net adds, Devitt continued (see his track record here). However, upside in the international subscriber guidance (5.05 million guide versus 4.63 million consensus) was partially offset by a poorer outlook for domestic subscribers (1.25 million guide versus 1.62 million consensus) due to expectations for pricing-related churn.
Netflix also expects around one-quarter of its content expensed in the P&L in 2017 will be allocated towards original programming and this metric could exceed the company's 50 percent target for 2020, the analyst added. Marketing spend is also projected to grow as new content is released throughout the fourth quarter and likely throughout 2018.
Finally, Netflix will likely show "steady improvements" in profitability across its international segment that will fuel operating leverage in 2018 and beyond as the company amortizes investments across its growing global base.
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