=Netflix (NFLX) reported 4Q earnings on Tue 19 Jan 2016 (a/h)

** charts before earnings **





** charts after earnings **

Netflix beats by $0.08, reports revs in-line; international subs above guidance; guides Q3 EPS in-line :

• Reports Q4 (Dec) earnings of $0.10 per share (including $0.03 tax benefit), $0.08 better thanthe Capital IQ Consensus of $0.02; revenues rose 22.8% year/year to $1.82 bln vs the $1.83 bln Capital IQ Consensus. NFLX Q1 Sub Add Guidance- Domestic Net Adds 1.75 mln vs 2.01 mln Briefing.com consensus; International Net Adds 4.35 mln vs 3.39 mln Briefing.com consensus.
• NFLX reports Q4 Domestic Sub adds of 1.56 mln vs 1.65 mln and guidance; International subs 4.04 mln vs 3.50 mln guidance.
• Co sees Q3 EPS $0.03 vs. $0.03 Consensus.
• Please see 16:13 for additional metric details.

Key Excerpts from Shareholders Letter:

• "On earnings, we stayed profitable in Q4 despite foreign exchange headwinds, and delivered operating income of $60m and net income of $43m. We expect similar modest operating income results for Q1, assuming current foreign exchange, as we invest in our international expansion".
• "In September, we launched in Japan, followed by Spain, Portugal and Italy in October. We are very pleased with the first few months of membership growth in these markets. Our international contribution loss of $109 million in Q4 increased sequentially due to these launches. Weanticipate Q1 international losses of about $114 million".
• "Our global availability sets us up for continued growth for many years and we continue toexpect material global profits beginning in 2017".
• "In Q4, average subscriber price grew 4-5% y/y around the world, excluding the impact of foreign currency; We are seeing increased adoption of our Ultra-HD plan ($11.99) as more UHD TVs are purchased and as we are a leading source of UHD content for consumers".
• "New credit/debit card rollover continues to be a background issue".
• "In Q2 and Q3, we'll be releasing a substantial number of our US members from price grandfathering on the HD plan and they will have the option of continuing at $7.99 but now on the SD plan, or continuing on HD at $9.99 a month. Given these members have been with us at least 2 years, we expect only slightly elevated churn. Our 2020 US contribution target remains at 40% and we are already at 34%".
• "In the last remaining major market, China, we have work and uncertainty ahead. We are building relationships, understanding the market, and seeking the conditions we require to provide our service to entertainment lovers there. Our expectations are modest and long-term. We may be able to get started this year and thus deliver on "whole world by end of 2016" or it may take longer".
• "Given our expected cash needs, we are likely to raise additional debt in late 2016 or early 2017".