Netflix grows strongly in Q1
April 16, 2015 11:32 AM
Netflix Inc. generated $1.57 billion in revenue online in the first quarter, an increase of 23.6% from $1.27 billion a year earlier. The video streaming service’s global push is driving much of that growth, with international streaming revenue rising 55.5% from a year ago, and domestic revenue rising 15.4%.
At the close of the first quarter Netflix Inc. had more than 62 million subscribers to its streaming video content service, or 8.0% more than the 57.4 million it had three months earlier and 28.8% more than it had a year earlier. The rise in total streaming subscribers in Q1 was more than the 1.3 million Netflix had projected. The most sizable jump in subscribers, in real numbers and by percentage, came from customers outside the United States. Netflix added 8.2 million customers from international markets from Q1 2014 to Q1 2015, a 64.6% increase. Netflix added 5.7 million domestic streaming subscribers over that 12-month period, an increase of 16.0%.
During Q1 Netflix launched its streaming service to consumers in Australia and New Zealand; it now offers streaming to consumers in more than 50 countries. In a letter to investors, Netflix executives say it will tackle Japan next.
Netflix says it will shift some of the budget currently spent marketing to U.S. consumers to its international marketing budget to take better advantage of global opportunities. Further on marketing, the company says it will spend a greater proportion of its overall marketing budget online. “This allows us to more finely target audiences and to deliver the right marketing message to the right person at the right time, particularly on mobile devices,” write CEO Reed Hastings and chief financial officer David Wells.
The better-than-expected increase in subscribers meant higher-than-expected operating costs for the quarter, which were up 20.3% year over year in Q1. Net income was $23.7 million, a decline of more than 55% from a year earlier.
While it did not disclose figures, Wells, in a Q&A with analysts broadcast on YouTube, says fewer customers are canceling subscriptions. “We saw improving retention through the quarter and that contributed to that net add performance and growth that we saw in Q1,” he says. Netflix says it plans on rolling out an improved user interface in the second half of the year that will improve how it matches members’ viewing preferences with Netflix content.
For the first quarter ended March 31, Netflix, No. 6 in the newly published Internet Retailer 2015Top 500 Guide, reported:
- Net income of $23.7 million, down 55.4% from $53.1 million in Q1 2014.
- 41.4 million domestic streaming subscribers, who together generated $984.5 million in revenue, up 23.3% from $798.6 million in Q1 2014.
- 20.9 million international streaming subscribers, who together generated $415.4 million in revenue, up 55.5% from $267.1 million in Q1 2014.
- 5.5 million domestic DVD-by-mail subscribers generated $173.2 million in revenue, down 15.3% from $204.4 million. Netflix’s domestic DVD subscribers have been declining for the past several quarters, and were down 17.9% from 6.7 million in Q1 2014.
Netflix this year moves up one position among North America’s largest e-retailers, from No. 7 in the 2014 Top 500 Guide, to No. 6 in the 2015 Top 500 Guide. It has ranked among the top 10 since 2012.