Netflix reaches 125 mln subscribers after strong Q1

Netflix said it reached a first quarter record of 7.41 million streaming subscribers added, with 1.96 million coming from the US and 5.46 million elsewhere. The total number of subscribers amounted to 125 million, up from over 117 million in the previous quarter and almost 98 million a year ago, including almost 57 million in the US and over 68 million outside. The results passed company expectations of 6.3 million additions. Netflix also reached record revenue growth, pushed by its strong show at international, which now accounts for 50 percent of revenues and 55 percent of subscribers. 

Revenues for the company jumped over 40 percent from the year earlier to USD 3.70 billion from 2.63 billion, with total streaming revenues rising over 43 percent to USD 3.60 billion. Revenues lifted to USD 1.82 billion from 1.47 billion in the US and to USD 1.78 billion from 1.04 billion elsewhere. 

Group operating profit advanced to USD 447 million from 257 million, with the operating margin going up to 12.1 percent from 9.7 percent and the net profit going higher to USD 290 million from 178 million. Earnings per share went up to USD 0.64 from 0.40. The contribution profit (gross results after marketing costs) for US streaming advanced to USD 697 million from 6.6 million with the contribution margin slipping to 38.3 percent from 41.2 percent. Elsewhere, the contribution profit leaped to USD 272 million from 43 million, with the contribution margin also surging, to 15.3 percent from 4.1 percent. 

Free cash flow was a negative USD 287 million, narrowing sharply from the negative 524 million recorded in Q3 and negative 423 million the year before. The company has about USD 2.6 billion in cash and said it will continue to raise debt as needed to fund original content. The company will keep its budget for own content at USD 7.5-8 billion. 

For the second quarter, the company sees a small slowdown in the number of additions, expected at 6.2 million, including 1.2 million in the US and 5.0 million international. The operating margin is forecast at 12 percent, with the full operating margin seen at 10-11 percent. Netflix says content and marketing spend will likely be weighted towards the second half of the year. 

The company is guiding for total revenues of USD 3.93 billion, an operating profit and margin of USD 469 million and 41.2 percent respectively, a net profit of USD 358 million and diluted EPS of USD 0.79. Total streaming revenues are forecast at USD 3.84 billion, with US streaming revenues seen at USD 1.89 billion and international streaming revenues at USD 1.94 billion. The contribution profit in the US should reach USD 751 million while abroad, it should go to USD 274 million.