Netflix Adds 6.74 Million New Subs in Q1

LOS GATOS: Netflix wrapped up Q1 with more than 81 million members, adding a record 6.74 million subs in the period, but the company is projecting a weaker second-quarter forecast.

Of Netflix’s 81.5 million members, 42 percent are now outside of the U.S. Operating income was $49 million, compared to $97 million in the year-ago quarter. Revenue was $1.8 billion.

In the U.S., the service added 2.23 million members in Q1, compared to 2.28 million a year ago, and 2.25 million two years ago. U.S. revenue rose 18 percent year-­over-­year, reflecting 14 percent growth in average paid memberships and a 3 percent increase in ARPU. U.S. contribution profit totaled $413 million or a 35.5 percent margin. International revenue increased 57 percent year-­over-­year, including the negative impact of currency (­$82 million on a year-on-year basis).

For the second quarter, Netflix expects to add 2.5 million members with 0.5 million in the U.S. and 2 million internationally (versus the prior year’s 2.4 million). In the U.S., the company is forecasting flat year-on-year contribution margin in Q2, due to a large slate of content releases and associated marketing. It expects Q2 international contribution loss to improve sequentially primarily due to recent favorable currency movements. “We anticipate that international contribution losses in the second half of 2016 will be similar to the first half, as ongoing investments offset improved profitability in our more mature markets,” the company said.