[ACCESSWIRE]
Upcoming AWS Coverage on DISH Network
LONDON, UK / ACCESSWIRE / January 20, 2017 / Active Wall St. announces its post-earnings coverage on Netflix, Inc. (NASDAQ: NFLX). The Company posted its fourth quarter and fiscal 2016 results on January 18, 2017. The streaming giant outperformed top- and bottom-line market estimates. Register with us now for your free membership at:
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One of Netflix's competitors within the CATV Systems space, DISH Network Corp. (NASDAQ: DISH), is estimated to report earnings on February 16, 2017. AWS will be initiating a research report on DISH Network following the release of its earnings results.
Today, AWS is promoting its earnings coverage on NFLX; touching on DISH. Get our free coverage by signing up to:
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Earnings Reviewed
In Q4 2016, Netflix's revenue totaled $2.48 billion compared to $1.82 billion in the year ago same period and slightly above analysts' estimates of $2.47 billion in revenue. The Company's contribution profit rose 74% on a y-o-y basis to $470 million. Netflix's gross-profit margin improved to 33.2% in Q4 2016 from 31.5% in Q4 2015.
For Q4 2016, Netflix's operating profit totaled $154 million against its guidance of $125 million. During the reported quarter, Netflix's net income amounted to $66.7 million, or $0.15 per share, compared to net income of $43.2 million, or $0.10 per share in the prior year's comparable quarter, thus outperforming Wall Street's forecasts of $0.13 per share. The Company noted that net income included a $22 million foreign exchange adjustment booked in other expense due to the strength of the US dollar.
In FY16, Netflix generated $8.3 billion in global streaming revenue, up 35% on a y-o-y basis and finished the year with 93.8 million members, adding 19.0 million net additions for FY16 compared to net addition of 17.4 million in FY15.
Subscriber Story
During Q4 2016, Netflix added 7.05 million net new members globally compared to 5.59 million subscriber addition in Q4 2015 and above the Company's forecast of 5.20 million additions. The Company noted that this was the largest quarter of net additions in its history and it was driven by strong acquisition trends in both US and International segments.
US Netflix added 1.93 million members in Q4 2016, which was above the 1.56 million subscribers added in Q4 2015 and exceeding its forecast of 1.45 million. Combined with 15% ASP growth, Netflix's domestic revenue increased 27% on a y-o-y basis to $1.4 billion. US contribution margin expanded 395 basis points y-o-y to 38.2%.
During Q4 2016, Netflix's International membership grew by 5.12 million compared to the addition of 4.04 million members in Q4 2015 and surpassing the Company's forecast of 3.75 million. Netflix stated that over 47% of its total members are now outside of the US. ASP for the international segment rose 13% on a y-o-y basis, excluding a $21 million negative impact from currency. International contribution loss narrowed to $67 million compared to the Company's forecast of a loss of $75 million.
Product and Partnerships
During Q4 2016, Netflix launched offline viewing, which allows members to download content to iOS and Android devices. The company stated that its goal is to make Netflix as accessible as possible to members in countries and locations with limited and/or expensive bandwidth, and stated that it is satisfied with the initial results.
Cash Flow & Balance Sheet
During Q4 2016, Netflix's free cash flow totaled negative $639 million as compared to negative $276 million in Q4 2015 and negative $506 million in Q3 2016. The Company stated that the sequential increase was primarily due to the timing of content payments, including its growing slate of self-produced originals. For FY017, Netflix is expecting free cash flow to be approximately negative $2 billion, as compared to negative $1.7 billion in FY16. The company expects free cash flow loss to improve in Q1 2017.
In the press release, Netflix stated that it is funding its working capital needs through the debt market. In October, 2016, the Company raised $1 billion of senior notes with a coupon of 4.375%; this will reduce weighted average cost of capital. Netflix stated that it will continue to be a regular issuer of debt to finance its investment in original content as it balances cash needs with the carrying cost of interest expense.
Outlook
For Q1 2017, Netflix is projecting net subscriber addition of 5.2 million, with 1.5 million addition expected in the US, while international net gain is forecasted to be 3.7 million internationally. The Company stated that it expects a greater membership impact from its content slate in H2 2017. For Q1 2017, Netflix is forecasting a 9% operating margin, higher than its FY17 target due to the timing of content spend, including moving House of Cards season 5 from Q1 2017 to Q2 2017.
Stock Performance
On Thursday, Netflix's stock closed the trading session at $138.41, climbing 3.86% from its previous closing price of $133.26. A total volume of 23.17 million shares have exchanged hands, which was higher than the 3-month average volume of 7.77 million shares. Netflix's stock price advanced 16.52% in the last three months, 57.45% in the past six months, and 28.47% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have surged 11.80%. The stock currently has a market cap of $59.37 billion.
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