Netflix Passes 150 Million Global Subscribers
In This Article:
Digital video veteran Netflix (NASDAQ: NFLX) reported earnings this Wednesday evening, covering the second quarter of fiscal year 2019. Subscriber additions fell short of management's guidance, and the bottom-line result was limited by a one-time tax charge related to recent restructuring.
Netflix's second-quarter results: The raw numbers
| Metric | Q2 2019 | Q2 2018 | Change |
|---|---|---|---|
| Global streaming paid memberships | 151.6 million | 124.4 million | 22% |
| Revenue | $4.92 billion | $3.91 billion | 26% |
| Net income | $271 million | $384 million | (29%) |
| GAAP earnings per share (diluted) | $0.60 | $0.85 | (29%) |
Data source: Netflix. https://s22.q4cdn.com/959853165/files/doc_financials/quarterly_reports/2019/q2/Q2-19-Shareholder-Letter-FINAL.pdf GAAP = generally accepted accounting principles.
Subscriber additions
The company added 2.7 million net new subscribers in the second quarter. In the domestic market, 2.8 million new accounts abroad paired up with 126,000 lost subscribers. That was below the 5 million additions management aimed for in guidance for this quarter. The total number of paid subs passed 150 million for the first time.
The domestic streaming segment generated $852 million of contribution profits, a 27% year-over-year increase. International contribution profits rose 121%, landing at $416 million. The waning DVD division added another $46 million, 13% below the year-ago period's tally. Contribution profit is a Netflix-specific non-GAAP measure that corresponds roughly to gross profit minus marketing costs for any given segment.
Average subscriber revenues per month
The average domestic customer paid Netflix $12.75 per month in the second quarter, up from $11.48 per month in the first quarter and $11.28 per month in the year-ago period. This 13% year-over-year increase was the result of price increases rolling out over the past several months.
Average monthly payment trends were less clear on an international level, as price increases in select markets had to balance out against rising subscriber numbers in price-sensitive markets such as Latin America and India. The current reading of $9.29 per month was a boost from $8.90 in the previous quarter and $9.36 per month in the second quarter of 2018.
Other financial points of interest
Free cash flow came in at a negative-$594 million, compared with negative-$559 million in the same reporting period of 2018. Netflix spent $3.3 billion in its production of original content and on fees for access to third-party content catalogs.
Since the cash flow came in below breakeven again, management held the door open for another round of new debt. At the end of the second quarter, Netflix balanced $5 billion of cash equivalents against $4.8 billion of current content liabilities and $12.6 billion of long-term debt.