Netflix's International Markets Contribute To Profit For First Time During Q1 Results, Note Analysts

By Trey Williams Markets MarketWatch Pulse

Netflix Inc. had profit contribution from its international markets for the first time ever during the first quarter, according to analysts at J.P. Morgan. The streaming company reported earnings for the first quarter on Monday and much was made of its lower-than-expected subscriber adds and increasing debt amid negative free cash flow. A key takeaway for analysts at J.P. Morgan, however, was the streaming company's operating income, which at a 9.7% margin was 7.5% above guidance. International contribution profit was $43 million, above J.P. Morgan's $17 million forecast. "We expect international profit to turn modestly negative again in upcoming quarters, but the Q1 results show the benefits of scale and confirm Netflix's commitment to 7% global operating margins in 2017, followed by what we believe will be many years of steady profit improvements," lead analyst Doug Anmuth wrote in a note to clients. Shares of Netflix have gained 19% in the year to date and nearly 36% in the last 12 months. Comparatively, the S&P 500 index is up 5% in the year and 12% over the 12-month period, while the Dow Jones Industrial Average is up more than 4% in the year and nearly 15% in the last 12 months.

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