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Netflix Adds Record 4.9M Subs, Tops 62M Globally

15 Apr, 2015 By: Erik Gruenwedel

Company seeking shareholder approval for stock split as shares exceed $533 in after-hours trading

Netflix’s expected stock split may soon become a reality after the subscription streaming pioneer April 15 hit another fiscal-quarter home run. It reported record quarterly subscriber additions of 4.9 million, topping 62 million subs globally, including 40 million in the United States.

The Los Gatos, Calif.-based service saw first-quarter (ended March 31) global revenue of $1.4 billion, compared with revenue of $1 billion during the prior-year period. Domestic revenue topped $985 million, compared with $799 million a year ago.

Netflix’s lone “setback” was the strong U.S. dollar, which negatively affected international revenue (down $48 million year-over-year) and generated a $15 million contribution loss internationally.

The international segment, which added 2.6 million members to a base of 20 million, posted revenue of $415 million, compared with $267 million a year ago. Negative contribution margin increased to 15.6% from 13.1%.

Content license obligations topped $9.8 billion, up $2.7 billion year-over-year. Indeed, free cash declined $163 million in the quarter due to costs associated with original content.

“We will continue to invest aggressively in original content, which is cash intensive,” CEO Reed Hastings and CFO David Wells wrote in the investor newsletter

Meanwhile, by-mail disc rentals continued to impress without much fanfare. The segment generated $85 million in contribution income, or 48.8% of Netflix’s profit. That's nearly 18% above the contribution margin for domestic streaming. Packaged media ended the period with 5.5 million subscribers, down from 7.9 million subs a year ago.

“Our DVD-by-mail business in the U.S. remains appealing to a core user base and means the tail on this business should be quite long,” Hastings and Wells wrote.

Netflix shares leapt more than 12% to $533 per share in after-hours trading — out the range of many investors. As a result, Hastings and Wells said Netflix is seeking shareholder approval for a stock split to make shares more “accessible” (affordable) to investors.


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