Netflix Sees Net Loss, Subscriber Growth

LOS GATOS: Netflix reported its first net loss since 2005 in the first quarter, of about $5 million, though it did add 1.74 million streaming subscribers in the U.S.

This brings the total for domestic subs to 23.4 million. The domestic streaming segment delivered $57 million of contribution profit.

Internationally, Netflix surpassed 3 million total streaming subs this quarter, with 1.2 million total net additions. The non-U.S. members account for nearly 12 percent of the total pie. The largest driver in international members for Q1 was the launch of the service in the U.K. and Ireland. Netflix said its member growth in Canada "remained healthy" citing it ended the quarter with nearly double the members it had a year ago. Latin America, it said, "differs significantly from our other markets," as there is limited current OTT streaming competition, meaning that the concept of on-demand video streaming is nascent. "Our revenue and membership is growing in Latin America, and we are rapidly learning," the company said a letter to investors, signed by CEO Reed Hastings and CFO David Wells. Overall, the Q1 international revenue was $43 million, up more than three-fold from a year ago.

Looking ahead to Q2, Netflix expects that the growth in domestic streaming will help offset the decline in DVD contribution. Improved profitability in the international markets is expected to reduce the international losses by around $11 million. Therefore, Netflix is forecasting a much earlier return to global profitability than it previously anticipated on a Q2 net income.

"We’ve built an early lead in the global race to build the world’s best Internet TV network," the letter stated. "As we grow, we are trying to balance prudence and ambition while keeping a strong focus on member satisfaction. We work hard every day to make our service even better. Our rapid return to profitability, enabling further international expansion, is very gratifying."