Netflix, Inc has released its first-quarter 2019 financial results. Netflix generated $4.5 billion in revenue, while average streaming paid memberships increased 26% year over year and ARPU decreased 2% year over year due to currency headwinds.
The company’s paid net adds subscribers in Q1 were 9.6 million (with 1.74m in the US and 7.86m internationally), up 16% year over year, representing a new quarterly record.
Streaming content obligations dipped sequentially in Q1 due in part to the timing of run-of-series commitments. In addition, as we shift to more original content, there will be greater variability in content obligations.
For Q2’19, the company has projected total paid net adds of 5.0m (-8% year over year), with 0.3m in the US and 4.7m for the international segment. This would put us at 14.6m paid net adds for the first half of 2019, up 7% year over year.
The company is looking forward to a strong slate of global content in the second half of the year, including new seasons of some of our biggest series, Stranger Things (July 4th), 13 Reasons Why, Orange is the New Black, The Crown and La Casa de Papel (aka Money Heist) as well as big films like Michael Bay’s Six Underground and Martin Scorsese’s The Irishman, and expect another year of record annual paid net adds in 2019.
The company believes that there is vast demand for watching great TV and movies and Netflix only satisfies a small portion of that demand.
The company forecast an acceleration in both streaming ARPU (+2% vs. -2%) and total revenue growth (26% vs. 22%) in Q2 as against Q1.
The company’s full year 2019 operating margin target of 13% is unchanged, which means that it expects operating margin in the second half of the year will be higher than the first half.
The company continues to see big successes across our programming categories. For the quarter, in scripted English language TV, the company premiered another big hit in Umbrella Academy, based on the comic book by Gerard Way and Gabriel Bá, which has been watched by 45 million member households in its first four weeks on service.
Later in Q2, the company will be running a test to improve our UK member experience by releasing weekly top 10
lists of the most popular content on our UK service across various programming categories.