UPDATE with post-market stock changes: Netflix shares are up 1.4% in post-market trading, after initially falling about 1%, as investors sorted through its release of Q1 results that exceeded analysts’ financial forecasts — but disappointed in subscriber growth.

The company reported a huge increase in net income, to $178.2 million from $27.7 million in the period last year. Revenues were up 35% to $2.64 billion. The top line was right about where analysts expected, and earnings, at 40 cents a share, topped the Street’s prediction for 37 cents.

But the company added 1.42 million domestic streaming subscriptions, below the 1.59 million company watchers anticipated. International was up 3.53 million, while analysts looked for 3.68 million.

In a note to shareholders, CEO Reed Hastings said profit margins improved in Q1, and subscriptions fell short in part because season 5 of House Of Cards moved to Q2.

“We have come to see these quarterly variances as mostly noise in the long-term growth trend and adoption of Internet TV,” he says.

As for Netflix’s original movie initiatives, Hastings says he hopes to “attract and delight members at better economics relative to licensing movies under traditional windowing.”

Early releases including Siege Of Jadotville and Adam Sandler’s Sandy Wexler “have been successful by this measure.” But others, “such as Crouching Tiger, Hidden Dragon: Sword Of Destiny, have not.”

Bright Will Smith
Netflix/Screenshot

The CEO adds that since Netflix subscribers fund the films, “they should be the first to see them. But we are also open to supporting the large theater chains, such as AMC and Regal in the U.S., if they want to offer our films, such as our upcoming Will Smith film Bright, in theaters simultaneous to Netflix. Let consumers choose.”

To boost its international reach, this month Netflix is adding Thai, Romanian and Hebrew to the 24 languages it supports.

Netflix plans to spend more than $1 billion on marketing this year. But it’s burning cash with its huge outlays for original and acquired programming: It lost $423 million in free cash flow in Q1, a 62% increase versus the period last year.

Hastings says he isn’t worried about the growth of live streaming services including DirecTV Now and YouTube TV. They “will likely be more directly competitive to existing [pay TV] services since they offer a subset of the same channels at $30-$60 per month.”

By contrast, Netflix, “is largely complementary to pay TV packages.”

And Hastings has little interest in offering sports following Amazon’s deal to offer NFL Thursday night games.

“That is not a strategy that we think is smart for us since we believe we can earn more viewing and satisfaction from spending that money on movies and TV shows,” he says.

He’s upbeat about investments in stand-up comedy. “Dave Chappelle: Collection 1 was our most viewed comedy special ever,” Hastings says. “We are also finding this to be true in international markets as well, with comedian Gad Elmaleh’s Gad Gone Wild a breakout hit in France last quarter.”