Netflix Earnings Out As Company Prepares To Expand In EuropeBy: Chris Crum - July 21, 2014
Netflix just released its earnings report for the second quarter, and announced that it has surpassed 50 million global members. That means they’ve added roughly two million since last quarter. 36 million of them are in the U.S. The company expects to add 1.3 million in Q3.
Revenue was $1.34 billion. Here’s an overview of the financials.
In a letter to shareholders, CEO Reed Hastings and CFO David Wells talked about forthcoming European expansion:
Outside the U.S., we generated continued growth in all of our markets. We ended Q2 with 13.8 million international members, growing 78% y/y. In September, we’ll be launching Netflix in Germany, France, Austria, Switzerland, Belgium, and Luxembourg. This launch into markets with over 60 million broadband households will significantly increase our European presence and raise our current international addressable market to over 180 million broadband households, or 2x the number of current U.S. broadband households.
Our international contribution loss of ($15.3) million has been rapidly approaching contribution profitability as we see improvements across all existing markets. Our broad success from Argentina to Finland has convinced us to further invest aggressively in global expansion. Our European expansion this quarter will add new expenses to the segment, so we expect a consolidated contribution loss of ($42) million for the international segment in Q3. Even after our upcoming expansion in Europe, we’ll only address about one-third (271 million of 728 million1 ) of current global broadband households, providing a great opportunity to build on our international success beyond 2014. As explained in our Long Term Letter, our plan remains to run at about global break-even to fund investment in global expansion.
They also talked about the recent price changes, saying that they had minimal impact on membership growth, and that the two screen HD plan continue to be the most popular option.
Coming up next month on the original content front are the final season of The Killing, the debut of BoJack Horseman, and Mission Blue, a documentary from the director of The Cove.
They also announced that they’ll be introducing in-store gift cards in the U.S., Canada, Mexico, and Germany later this year.
Netflix continues to have 6.3 million DVD members, and the segment contributed profit of $92.8 million during the quarter. During the second quarter of last year, they lost 475,000 DVD memberships. This past quarter, they only lost 391,000.
You can find the rest of the financial info here.
Image via Netflix