Shares of Netflix hit a record high on Monday after the company reported fourth-quarter results that beat expectations as users in the U.S. and international streaming markets soared. The company grew 32.6% YoY to 3.4 billion U.S. dollars, in line with our expectation. The international user base of the company once again grew rapidly. The growth of domestic subscriber base remained stable at double-digit low. Here we stress the key points.
We have a Netflix company with a $ 187 price estimate, which is lower than the current market price.
Streaming media growth is still strong
Streaming revenues rose 35% to $ 3.18 billion as the company’s user base, which includes U.S. and international streaming services, grew faster than expected. US streaming media revenue rose 16% to 16.3 billion US dollars. Paid members increased by 10.2% to 52.8 million (up 4.9 million from the previous year and 1.5 million), bringing the total membership to 54.57 million (up 5.3 million and 1.98 million respectively), up 11%. The net increase in US users exceeded expectations, indicating that the country’s layoffs remain strong. However, the profitability of streaming media business in the United States dropped marginally to 34.4%.
International streaming revenue increased 63% from a year earlier to $ 1.55 billion. In the fourth quarter, the total number of international streaming media services reached 62.8 million (18.5 million increase year-on-year and 6.3 million increase quarter-on-quarter), while the number of paying subscribers increased to 57.8 million (16.6 million increase over the previous year and up 5.2 million from the previous year). In addition, the contribution margin rose to 8.7%, mainly due to the postponement of content transactions to subsequent quarters.
Netflix’s user base in a similar trend driven by 2018 may be further strong growth. In the first quarter, the company expects its revenue to grow 32% to $ 3.69 billion. The company expects a total of 6.35 million subscribers in the first quarter, which is actually pretty conservative considering the growth of the international streaming business. We have created an interactive dashboard to illustrate Q1’s expectations. You can modify the basic assumptions to propose different scenarios for the quarter.