NetFlix added another 3.6 million subscribers in the first quarter to take customers for its video service to a total 23.6 million. That includes 3.3 million new customers in its home market the US and 300,000 in Canada, where it now has a total base of 800,000. Revenues rose 46 percent from a year earlier to USD 719 million, and net profit was up 88 percent to USD 60 million or USD 1.11 per share. Free cash flow doubled from a year earlier to USD 79 million. The company said it expects quarterly subscriber additions in the rest of the year to continue to exceed year-earlier figures, but by not as much as the nearly two times reported in Q1. As streaming use continues to outweigh DVD rentals, Netflix is investing the extra revenues in increased content, in addition to marketing. This may also include commissioning "two or three similar but smaller" series like the recently announced original series House of Cards. Netflix increased its outlook for expected operating losses from international markets in the second half to USD 50-70 million, as it launches a second international service. It said it has also started preparations for launching in a third international market in early 2012. The company ended March with USD 343 million in cash and said it will continue with selective repurchasing of its shares. For Q2, Netfliex forecast domestic subscribers rising to 24.0-24.8 million, revenues of USD 762-778 million and operating profit of USD 100-116 million. The Canadian market is expected to reach 900,000 to 1.05 million customers, revenues of USD 16-20 million and operating losses of USD 10-14 million and then move to a positive operating margin in Q3. Overall Netflix expects net profit of USD 50-62 million and EPS at USD 0.93-1.15 in the second quarter, with the operating margin in line with its target of 14 percent.
