Netflix has hit it out of the park again, reporting the addition of 7.41 million net new global subscribers in the first quarter, up 50% from a year ago and nearly 1 million above the consensus prediction of Wall Street analysts.
The company now has 125 million subscribers around the world, up from 117.6 million a year ago, and 56.7 million in the U.S., where just shy of 2 million were added in the quarter. Total revenue jumped 43% over the prior-year period, to $3.7 billion.
Netflix said revenue gained at “the fastest pace in the history of our streaming business, due to a 25% increase in average paid streaming memberships and a 14% rise in ASP,” or average subscription price.
The streaming service continues to hit the gas on adding new programming, putting 18 new original series onto the platform in the quarter, plus 11 new seasons for returning shows. In the first quarter a year ago, Netflix added 11 new series and three new go-rounds for existing ones.
Netflix’s quarterly letter to shareholders could hardly contain execs’ pride in the results. Even before the first table of numbers, the letter started off with this: “We strive to entertain and to bring joy to people across the world through amazing stories. Our 125 million members provided us with $3.6 billion in streaming revenue in Q1. Our job is to spend this money wisely to increase our members’ delight.”
The “delight” quotient is a subjective matter, but by several objective measures, it was another stellar quarter for the streaming giant. Operating margins hit 12.1%, a high-water mark among recent quarters, and net income reached $290 million, up 63% from a year ago. Execs cited the timing of content spending for the higher-than-expected profits.
In one of the few blemishes on the quarterly report, which executives will amplify during a conference call later this afternoon, the company’s letter to shareholders included an acknowledgement of the current dust-up with Cannes organizers. While it doesn’t show up in an earnings release, the impasse has an effect on the brand in terms of filmmaker relationships, given the prestige and publicity associated with a theatrical debut on the Croisette.
“We regret our films not being able to compete at this year’s Cannes film festival,” the letter said. “The festival adopted a new rule that means if a film is in competition at Cannes, it can not be watched on Netflix in France for
the following three years . We would never want to do that to our French members. We will continue to celebrate our films and filmmakers at other festivals around the world but unfortunately we will have to sit out Cannes for now so that our growing French membership can continue to enjoy our original films.”
Netflix stock lost ground on the day, despite overall market advances, closing down more than 1% to $307.78. Nevertheless, it has gained a remarkable 62% in 2018 to date.