Netflix eyes continued growth as analysts predict Q2 guidance is conservative

Netflix's confidence in its existing business model was borne out by the company's results for the quarter: Revenues increased 35%, while the service added 5 million new members. The company recorded a total of 4.95 million net streaming customers additions, down from 6.74 million net adds the year earlier and just off its guidance of 5 million.

You could argue that Netflix broke through the 100 million global benchmark this quarter, but only if you also include 3.9 million subscribers to the red-envelope DVD service.

Netflix was able to beat earnings expectations, posting earnings of 40 cents per share against the Zacks Consensus Estimate of 38 cents per share. Breaking that total down, the OTT video market leader picked up 1.42 million subscribers in the U.S. and the other 3.53 million customers internationally, raising its totals in those regions to 50.85 million and 47.89 million, respectively.

Additionally, House of Cards season five was pushed into the second quarter, while new seasons of the show were previously released during past first quarters. Wall Street had been modelling for Netflix to earn 24 cents a share excluding items on sales of $2.76 billion.

Q1 worldwide subscriber growth (net additions): 3.53 million, versus Wall Street forecasts 3.9 million, and Netflix guidance of 3.7 million.

Netflix revealled it will spend more than US$1 billion in marketing its content this year as its slate of originals continues to expand, and will up its investment in programmatic advertising. On that note, CFO David Wells encouraged investors to focus more on top-line revenue and companywide operating margin.

The firm increased revenues by over a third to $2.64bn for the quarter compared to the first three months of past year, while net income rose to $178m from $28m.

The company's streaming content obligations have risen to $15.3 billion, up from $12.3 billion a year ago.

"Our viewing is very large and growing, but nowhere near as big as YouTube", Hastings said, in response to a question about how much video its customers watch on Netflix.

Netflix's marketing budget has almost doubled over the past few years from $607,186 in 2014 to a forecast of more than $1 billion this year. Both Amazon and Netflix have also been investing heavily in original programming to win subscribers to their on-demand video services.

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