Announcing its Q1 results, Netflix said it has now passed 40 million members in the US and 20 million internationally after adding 4.9 million new users in the quarter, beating its forecast of 4.1 million new members.
“In the US, we gained 2.3 million new members, well above our expectation of 1.8 million due to both acquiring and retaining more members than forecast. Internationally, we added 2.6 million members versus a forecast of 2.25 million due to stronger growth than expected across a number of markets,” said Netflix CEO Reed Hastings and CFO David Wells in a letter to shareholders.
Overall, Netflix ended the quarter with 62.3 million global streaming members. It attributed its strong US growth to its “ever-improving content” and said that retention continued to improve due to “the growing value of our service overall.”
During the quarter, Netflix launched a new season of House of Cards and new shows Unbreakable Kimmy Schmidt and Bloodline – and said all three shows would return for new seasons.
It also announced three new original films – PeeWee’s Big Holiday, Jadotville, and Beasts of No Nation. The latter, starring Idris Elba, premiere on Netflix later this year.
Netflix said that starting in Q2 it will shift some of its US marketing budget to international to “take advantage of the substantial available growth opportunities.”
“This, in the short term, drives down international contribution profits and drives up US contribution profits. We are still targeting 40% contribution margin in the US in 2020,” said Hastings and Wells.
In the quarter, total streaming revenue came to US$1.4 billion (€1.3 billion), up from US$1.07 billion a year earlier, with US$985 million coming from the US and US$415 million from international.
However, Netflix said that “the strong dollar hurt financial results during the quarter, negatively affecting international segment revenue.”
Overall, operating income came to US$97 million – exceeding Netflix’s forecast of US$79 million but down slightly year-on-year. Net income was US$24 million, compared to US$53 million a year earlier, which Netflix attributed to “currency-related transaction losses.”
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