Netflix adds 4 million members in 1Q 2014

LOS GATOS, Calif. — Netflix, Inc. (NASDAQ: NFLX) has released its first-quarter 2014 financial results.

Highlights from the letter to shareholders:

“We ended Q1 with over 48 million global members, and topped $1 billion in quarterly streaming revenue. We had higher domestic net additions than in Q1 2013, growing international success, and a big hit with Season 2 of House of Cards.

Our U.S. streaming service grew by 2.25 million net members to 35.7 million members. Our net additions for Q1 were 0.22 million more than prior year Q1. As we’ve discussed previously, U.S. net additions in Q2 will generally be lower than in the prior year Q2, even in a year with full year growth, due to increased seasonality. This Q2, we expect our domestic net additions to be about 0.11 million below the prior year Q2.

International performance in Q1 was also strong. Membership grew by 1.75 million, bringing our international total to 12.7 million members with 72% more net additions than prior year Q1. Due to rapid growth in our international segment we aren’t experiencing the same level of seasonality as in the U.S., and we anticipate over 50% y/y growth in Q2 net additions despite slight headwinds from the World Cup.

Summary results – Streaming (in millions)

                                                        F'cast
                Q1 '13  Q2 '13  Q3 '13  Q4 '13  Q1 '14  Q2 '14
                ------  ------  ------  ------  ------  ------
Total:
 Net Additions    3.05    1.24    2.73    4.07    4.00    1.46
 Total Members   36.31   37.56   40.28   44.35   48.35   49.81
 Paid Members    34.24   35.63   38.01   41.43   46.14   47.84

Domestic:
 Net Additions    2.03    0.63    1.29    2.33    2.25    0.52
 Total Members   29.17   29.81   31.09   33.42   35.67   36.19
 Paid Members    27.91   28.62   29.93   31.71   34.38   35.03

International:
 Net Additions    1.02    0.61    1.44    1.74    1.75    0.94
 Total Members    7.14    7.75    9.19   10.93   12.68   13.62
 Paid Members     6.33    7.01    8.08    9.72   11.76   12.81

Product

Today you can walk into a store, buy a new 4K television, take it home, and enjoy a limited selection of streaming 4K content from Netflix. As 4K TVs become less expensive and more accessible, we will increase our content available in 4K.

We remain very happy with the customer embrace of our MVPD set-top box integrations in Europe. This quarter we will launch the first MVPD integrations in the U.S. As we did in Europe, we will start with U.S. MVPDs that use the TiVo set-top box and try to extend to non-TiVo devices after that. From an MVPD point-of-view, they would rather have consumers use Netflix through the MVPD box and remote control than have consumers become accustomed to watching video from a smart TV or Internet TV device remote control.”