Netflix added 15.77 million new subscribers in the first quarter, more than double the 7 million forecast by the company as more people forced to stay at home due to the coronavirus outbreak turned to the streaming service. Netflix said it expects to return to more normal growth of 7.5 million net additions in the second quarter.
Despite the strong customer growth, revenues were in line with expectations, as the strong dollar weighed on international results. Revenues were up 27.6 percent to USD 5.8 billion. Netflix said much of the subscriber growth happened in March, and as most customers benefit from the first month free, the revenue impact will be felt only from Q2.
The operating margin improved to 16.6 percent from 10.2 percent a year ago, as extra costs for home working and additional customer support were offset by the break in production. The company's net profit more than doubled year-on-year to USD 709 million, and net operating cash flow was a positive USD 260 million versus a negative USD 380 million a year earlier.
For the second quarter, Netflix forecast revenues up around 23 percent to USD 6.0 billion, an operating margin of 17.9 percent and net profit at USD 820 million.
The forecast for the full year remains an operating margin of 16 percent, despite expected slower customer growth in the second half of the year on fewer new big releases. The delay in new production will lead to an improved free cash flow for the year, of around negative USD 1 billion or better, compared to the earlier forecast of USD 2.5 billion outflow.
