Netflix, Inc. (NASDAQ:NFLX), world’s leading video streaming company, reported fiscal first quarter EPS of $0.40, higher than the expected figure of $0.37. Revenue for the quarter came in at $2.64 billion, meeting market’s expectations, while standing 34.7% higher than the year-ago-quarter’s $1.96 billion on account of nearly five million new adds and the impact of price increase in mid-2016.
NFLX added slightly over 3.5 million international subscribers in the quarter, while domestic, US-based, business accounted for the rest of the additions. The net additions were below its expected 5.2-million-mark due to moving some content releases to the second quarter from the first quarter, said the company.
And due to the same reason, NFLX said it’s expecting 3.2 million net additions in this fiscal’s Q2, nearly double the 1.68 million net additions in Q2 last year. Due to a higher watermark on account of its international launch across 130 countries in January last year, NFLX said it expects a moderation in revenue growth after the initial surge, which would reflect in this year’s results — international additions were down 22% compared to the year-ago-quarter.
Moving key content, primarily NFLX’s political drama ‘House Of Cards’, to second quarter also pushed its operating margins to 9.7%, compared to the target of 7% for 2017. However, NFLX said this will result in a drop to 4.4% in the second quarter and it’s on-track to meet the full-year target.
New key performance indicators
NFLX now has asked its shareholders to measure its performance based on revenue growth and operating margins globally instead of new adds, revenue growth and US contribution margins, which have been historically its key performance indicators as the company invested most of its earnings in established market to fund growth internationally.
The changing dynamics of measuring NFLX’s performance also reflect in analysts’ earnings projections, which show substantial EPS improvement as the rapid growth phase of the company comes to an end.