Netflix Inc. (NFLX, Financial) reported its first quarter of 2015 results recently; the company reported solid results for the quarter while achieving several milestones during the period. Netflix now has more than 40 million members in the U.S. while boasting 20 million additional members internationally, which adding up to around 60 million members. The company reported a drastic improvement in its original series and documentaries with a significant all time high member engagement.
For the first quarter of 2015, the company reported earnings per share of $0.77, which represents a significant beat of 14 cents on the consensus estimate of $0.63. There was reported revenue of $1.57 billion for the first quarter of 2015, which is up 6.8% sequentially, but it remains in line with the consensus estimates.
Whereas, in the first quarter of 2014, the company reported EPS of $0.86, which beats the $0.81 consensus estimate. The first quarter of 2014, revenues were $1.27 billion, which is above the $1.26 billion consensus estimate. This represents that the recently reported first quarter 2015 EPS declined by 10.46% year over year while the revenue for the first quarter 2015 grew by 23.62% year over year.
Netflix, like other companies, said weaker revenues and earnings came because of headwinds from the increasing strength of the dollar. Since then, the company noted that the dollar reduces its international revenue by $48 million using 2014 exchange rates, which is a material impact.
During the first quarter of 2015, Netflix added a record 4.9 million new members, which beat both the company guidance of 4.1 million and 4 million in the same quarter last year. With the contribution from the first quarter, the company has achieved the milestone by crossing 60 million members having 62.3 million global members presently.
Moreover, the company shared some plans for its second quarter 2015 in which it intends to shift its U.S. marketing budget to international to take advantage of the substantial available growth opportunities. This would in the short term drive down international contribution profits and drive up U.S. contribution profits.
Furthermore, Netflix subscriber base continued its upward swing with the company delivering a net gain of 2.28 million domestic streaming subscribers and 2.60 million international streaming subscribers. The company was expected to gain 4.1 million subscribers in the first quarter of 2015 but instead gained 4.88 million subscribers.
According to a research find, Netflix could reach the 100 million global subscriber levels by the end of 2014. Another research report showed that consumers spent 24.2% more time with Netflix during the last quarter compared to the same period last year.
Netflix has been investing heavily in new content while expanding aggressively into international markets. The company expects to be in 200 countries by 2017. Beginning with the political drama the House of Cards in 2013, Netflix has also generated enormous brand equity with its original series although the company does not share data on how many people actually watch them.
Netflix’s new half-hour sitcom, “Unbreakable Kimmy Schmidt” attracted widespread critical acclaim when the show was released last month. The company announced it has renewed the popular “Orange is the New Black” for a fourth season.
Netflix is facing increasing competition from rival TV streaming services including Dish Network’s (DISH, Financial) Sling TV and Time Warner’s (TWX, Financial) HBO now. Furthermore, Netflix is doing all it can to maintain its mail-based DVD distribution service as this segment only accounted for $85 million of the company’s first quarter profits which is around 5 percent of the Netflix revenue.
