Netflix, Inc.(NASDAQ: NFLX) surged over 8.8% on Jan 23rd, 2018 as their memberships growth was beyond expectations. Their US memberships surged 2.0 million as compared to their forecasts of 1.25 million leading to the net adds to 5.3 million for fiscal year of 2017. ASP enhanced 5% on a year-over-year basis while the domestic contribution profit surged 5% year-over-year. Internationally they added 6.36 million memberships against the expectations of 5.05 million which is a new record for quarterly net adds for this segment.
International revenue and ASP surged 59% and 12% on a year over year, respectively without the F/X impact of +$43 million. The international segment delivered their first full year of positive contribution profit in their history.
For the fourth quarter of 2017, they reported a global net adds of 8.3 million or surged 18% against pcp, which is the highest quarter in their history against 7.05 million net adds in pcp. This number is better than their 6.3 million forecast on the back of their original content slate and the ongoing global adoption of internet entertainment.
The Average paid streaming memberships surged 25% on a year over year basis during the fourth quarter of 2017. This combined with a 9% rise in ASP, led to global streaming revenue growth of 35%. Operating income reached $245 million (or 7.5% margin) as compared to $154 million in prior corresponding year (6.2% margin) and against this metric also exceeded the expectations of their $238 million forecast. Operating margin for FY17 reached 7.2%, which is again on target with their goal at the beginning of this year.
Going forward, the group expects a net adds of 6.35 million for the first quarter of 2018 as compared to 5.0m in the year ago quarter), wherein 1.45 million will be from the US and 4.9 million internationally. The group is aiming a full year 2018 target of 10%, which is an increase of over 300 basis points on a year over year basis against the earlier year. Their heavy investments in content are paying off with average streaming hours per membership rising 9% on a year-over-year basis for FY17. The group intends to spend $7.5-$8.0 billion on content on a P&L basis in 2018