- On a Q1 earnings interview, Netflix (NASDAQ:NFLX) execs pointed to international growth to justify the market's (priced-in) expectations of 60M-90M subscribers.
- "For most global Internet firms, the U.S. is 20%-35% of usage and revenue; we're not anywhere close to that yet but we're continuing to invest in international," CEO Reed Hastings said. U.S. membership of 41.4M makes up two-thirds of Netflix's current total subscribers.
- On margin outperformance (U.S. contribution margin was 31.7% vs. a forecast 30.1%) : Aside from shifting marketing dollars to international, part of it is how Netflix allocates content costs by geography. "By going faster internationally ... it's gonna provide some relief to those global originals and global projects we do have that are allocated to the U.S.," CFO David Wells says. "Our target remains the same: 40% in 2020."
- On leverage of original content: "What we're seeing is that dollars invested in our original programming are more efficient in that for every dollar spent, we get more bang for the buck in terms of hours viewed. and hours viewed leads to higher retention, more word of mouth, and more brand halo," says Chief Content Officer Ted Sarandos.
- On the question of sports, Netflix still isn't interested: "I don't know that on-demand sports is markedly better than live sports," explains Sarandos. "The Internet TV proposition is more powerful for consumers" even if someone else, perhaps a combination of leagues, picks up the live sports part of Internet distribution, Hastings says.
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NFLX now +11.5% after hours.
- Previously: Netflix jumps 12.7% on strong subscription growth (Apr. 15 2015)
- Previously: Netflix beats by $0.08, revenue in-line (Apr. 15 2015)