8 Metrics Show How Netflix, Inc. Just Crushed It
Netflix's (NASDAQ: NFLX) fourth-quarter results are out -- and they didn't disappoint. The stock jumped 8% in after-hour trading as investors digested the better-than-expected figures from the quarter. Here's a look at the report's eight most important metrics.
Image source: Netflix.
$0.15: Netflix's earnings per share continued to improve. The streaming-video company reported EPS of $0.15, up from $0.12 in Q3 and $0.10 in the year-ago quarter. Analysts, on average, were expecting Netflix to report EPS of $0.13.
7.05 million: Netflix's streaming members increased an impressive 7.05 million, easily beating the management's forecast for 5.2 million new subscribers and even surpassing the company's 5.59 million net new members in the year-ago quarter.
1.93 million: If you thought Netflix already maxed out its domestic market, think again. The company added 1.93 million members domestically, beating management's forecast for 1.45 million net additions and marking an acceleration from the company's 1.56 additions in Q3.
Image source: Netflix.
5.12 million: Internationally, Netflix added 5.12 million members, beating its forecast for 3.75 million and even outdoing the year-ago period's 4.04 million net member additions.
395 basis points: Continuing to help offset contribution losses in Netflix's younger international markets, domestic profitability continued to increase. U.S. contribution margin expanded 395 basis points year over year to 38.2%.
47%: Internationally, Netflix is a blockbuster hit. 47% of the company's streaming members are now outside the U.S. Further, Netflix said this international growth is "very broad based geographically as our original content continued to be well-received all over the world."
$16 million: Investors have become used to Netflix losing money internationally as the company invests aggressively in the growth opportunities. But profitability prospects are already looking up. In its fourth-quarter shareholder letter, the company guided for its first international contribution profit (revenue less the cost of revenues and marketing expenses incurred), of $16 million in Q1. This forecast is up from an international contribution loss of $104 million in the year-ago quarter and a loss of $67 million this quarter.
But investors shouldn't get too used to an international contribution profit yet. Netflix said its plans to continue investing aggressively in international markets throughout the year mean it expects to return to an international contribution loss in Q2. However, management does expect its total international contribution loss in 2017 to "improve substantially year on year."
Image source: Netflix.
7%: Supporting management's expectations to become more profitable over time, the company said it anticipated its operating margin to reach 7% in 2017, representing a nice improvement over a 4% annual operating margin in the past two years. And looking beyond 2017, management said it expected its operating margin will continue to grow "for many years ahead."
Overall, Netflix's fourth-quarter results proved the company's investments are working. Original content continues to drive better-than-expected customer acquisition and international investments are solidifying Netflix's position as a major entertainment brand in countries all over the world. Meanwhile, the company's financials are headed in the right direction.
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