Netflix subscriber growth falls short of estimates

|By:, SA News Editor

Netflix (NASDAQ:NFLX) announces it brought in 1.42M net subscribers in the U.S. during Q4 vs. 1.59M consensus and 1.93M in Q4.

Global streaming additions were 3.53M vs. 3.90M consensus.

The total Netflix membership count at the end of the quarter was 98.75M.

Q1 U.S. streaming contribution margin rose 300 bps Q/Q to 41.2%. The international contribution margin rate was 4.1%.

Q1 operating margin was 9.7% vs. 2.5% a year ago.

Q1 free cash flow came in at -$423M vs. -$639M in Q4.

Q2 subscriber growth guidance is for 600K U.S. adds and 2.60M global.

Netflix says it sees a 4.4% operating margin in Q2, influenced by the timing of content spending. The company also plans to spend heavily on marketing, guiding for over a $1B marketing spend for the full year.

NFLX on capital structure: "Our debt to total cap ratio, at under 10%, is quite conservative compared to most of our media peers at 30-70%, and conservative compared to efficient capital structure theory. Thus we will continue to add long-term debt as needed to finance our expansion of original content, including in Q2."

Q1 shareholder letter (.pdf)

Netflix earnings interview webcast via YouTube

NFLX-3.42% AH to $142.21 to give back most of today's gain from before the bell.