Netflix, Inc. (NASDAQ:NFLX) will declare its earnings results on Wednesday for the Q1 of 2015. Netflix shares remained positive throughout the week, its shares hiked up about 4% on Wednesday, after the company declared that its investors saw an exceptional 10 billion hours last quarter and the stock gained a momentum of 9% at the end of the week, making the high-profile growth company’s results to be eyeballed closely. To get a quick check on the company, let’s look at the three significant business items.
1) In the U.S, the company’s streaming business is going well, but contrasting the company’s international business, whose graph is still down. For instance, Netflix has suffered a $79 million operating loss in its international streaming business during the fourth quarter of 2014. Netflix has undergone huge losses in the form of free cash flow over the past four years, due to this unprofitable segment.
But now, Netflix is paying its full attention towards this segment by expensing more money in these newer markets, possibly heading towards a payoff cycle. Netflix hopes the record international streaming revenue, which is $425 million, well over $388 million in Q4, forecasting the improvement in operating loss to be $62 million.
On the other hand, management admits that rehabilitation of its international streaming segment will possibly take years, but this doesn’t mean that investors should wait for the segment to reach a profitable stage then invest money.
2) While the firm is approaching a saturation point in the U.S, it is getting difficult for Netflix to maintain its remarkable member growth. The company’s expectations for the net member additions in the Q1 of 2015 are 4.05 million, down from the additions (4.33 million) in Q4 of 2014.
2014 became a dream year for Netflix, as it added a record 13 million members, beating the 11.1 million mark of 2013. Netflix hopes to have 61.4 million global members following Q1 of 2015.
3) The potential seeker for Netflix investors is the company’s trending business of original content, where the company is investing huge money.
That is clear from company’s serious efforts to uplift its original content business in recent months. Since the beginning of February, Netflix has launched a total of 14 original series, kids’ shows, stand-up comedy specials, and one-hour specials. Consider some of these new, high-profile Netflix Original series launched since February: the third season of “House of Cards,” “Unbreakable Kimmy Schmidt,” “Bloodline,” and “Marvel’s Daredevil.”
Netflix original content proved to be pioneering in terms of audience attraction, awards and the cast Netflix is able to attract, but it’s also proved inexpensive for Netflix, in spite of huge up-front costs required to produce this content.
Last year our original content overall was some of our most efficient content,” Netflix said in its fourth-quarter letter to shareholders. “Our originals cost us less money, relative to our viewing metrics, than most of our licensed content, much of which is well known and created by the top studios.”
