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Netflix (NFLX) will report first quarter results in a Letter to Shareholders on its website soon after the bell. The earnings interview with management including Chief Executive Reed Hastings starts at 18:00 ET. 

Netflix has guided for first quarter EPS of $0.56 (vs. $0.64 last year) with an operating margin of 8.9% (-320 basis points year/year) and revenue up 21% to $4.49 bln. 

Netflix also guided for 8.9 mln global paid net subscriber additions (1.6M in the U.S. and 7.3M for the international segment) vs. 8.8 mln adds in the fourth quarter of 2018 and 8.3 mln adds in the the first quarter of 2018. That would result in 148 miln paid subs globally, up 25% yr/yr. 


Trading in a narrow range around $360/share. Netflix has a ~$158 bln market value and trades at ~53x EBITDA estimates, ~85x EPS estimates and ~8x revenue estimates for 2019. The options market implies a ~7% move in the stock tomorrow.


Reports Q1 (Mar) earnings of $0.63 per share, excluding market to market euro denomiated debt gain, $0.06 better than the S&P Capial IQ Consensus of $0.57; revenues rose 22.2% year/year to $4.52 bln vs the $4.5 bln S&P Capital IQ Consensus. 

  • Streaming paid memberships increased 26% year over year, while ARPU decreased 2% year over year due to currency headwinds. Excluding F/X, global streaming ARPU improved 3% year over year and 2% sequentially.

  • Operating margin of 10.2% exceeded our beginning-of-quarter expectation as some spending was shifted from Q1 to later in the year. 

  • Paid net adds in Q1 were 9.6 million (with 1.74m in the US and 7.86m internationally vs. guidance for 8.9 mln adds total, 1.6M in the U.S. and 7.3M for the international segment), up 16% year over year, representing a new quarterly record. 

  • Co issues guidance for Q2, sees EPS of $0.55 vs. $1.00 S&P Capital IQ Consensus; sees Q2 revs of $4.928 bln vs. $4.96 bln S&P Capital IQ Consensus.

  • For Q2'19, projects total paid net adds of 5.0m (-8% year over year and in-line with estimates), with 0.3m in the US and 4.7m for the international segment. The response to the price increase in the US so far is as they expected and is tracking similarly to what they saw in Canada following our Q4'18 increase, where our gross additions are unaffected, and we see some modest short-term churn effect as members consent to the price change. Looking forward to a strong slate of global content in the second half of the year.


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