Netflix (and it’s shareholders) had one hell of a Tax Day.
The company announced Q1 2015 earnings Wednesday, which highlighted a record-number of new subscribers, better-than-expected total subscriber numbers both domestically & internationally, and revenue of $1.57 billion.
Business Insider is reporting that Netflix stock rose 12% in after-hours trading on the positive report. The streaming service added 4.9 million new users in Q1, bringing its total to over 62 million worldwide.
Netflix has benefited heavily from its original content — including shows currently in their third season on the network, like House of Cards and Orange is the New Black, & newcomers Unbreakable Kimmy Schmidt and Bloodline (all four of which have been binge-watched in my house) — and one-off deals with NBC for The Blacklist and an exclusive multi-picture agreement with Adam Sandler.
With HBO recently jumping into the streaming arena (and other networks rumored to be looking into similar arrangements), and companies such as Hulu and Amazon arranging their own exclusive-content deals, Netflix posting positive Q1 earnings is, realistically, good for the industry as a whole. Revenue drives business decisions — with Netflix leading the pack in terms of streaming content, they have, in effect, paved the way for other companies to bet on original programming as well (which, in turn, is definitely a good thing for consumers).
The big question with Netflix in particular is when (if) the company can become profitable. Netflix reported a Free Cash Flow of -$163 million in Q1 2015 — which was mostly, according to the company, investment in the aforementioned original content. While they have expressed a desire to break-even in 2016 (and deliver global profits in 2017 & beyond), the need to continue to invest in both content deals and infrastructure isn’t going anywhere. In comparison, for networks like HBO, streaming is simply a bonus; as their content costs are balanced out by the revenue they accrue through cable deals.