uploads///NFLX streaming memberships

Netflix Beat 4Q15 Estimates, Excelled among the S&P 500 in 2015


Jan. 20 2016, Published 9:26 a.m. ET

Earnings per share exceed expectations

Netflix (NFLX) announced its 4Q15 and fiscal 2015 results on January 19. The company reported earnings per share of $0.1, which exceeded consensus Wall Street analysts’ expectations of $0.02 per share. Netflix’s stock price rose 3.7% on January 19. It has fallen 5.7% from the start of the year.

Netflix stock was one of the top performers in the S&P 500 in 2015.

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Netflix’s performance in fiscal 2015

The company recorded total revenues of $6.7 billion in fiscal 2015. It recorded a total contribution profit of $1.3 billion in fiscal 2015 and net income of $122 million.

The company recorded total streaming revenues of $6.1 billion in fiscal 2015 with a contribution profit of $1 billion and a contribution margin of 17%.

Netflix’s 4Q15 performance

Netflix had total revenues of $1.8 billion in 4Q15 with an operating income of $60 million and a net income of $43 million in 4Q15. The company expects “similar modest operating income” for 1Q16, as its international expansion makes it vulnerable to foreign currency exchange rate fluctuations.

The company had total streaming revenues of $1.7 billion in 4Q15 with a contribution profit of $270 million and a contribution margin of 16.2%. The company’s contribution profit and contribution margin for its streaming business in 4Q15 exceeded internal estimates.

As the chart above shows, Netflix’s total streaming memberships hit the 75 million mark in 4Q15 with net additions of 5.6 million members. Netflix’s net additions of members in 4Q15 exceeded the company’s internal forecast by 0.45 million members.

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Free cash flow was negative in 4Q15

Netflix’s free cash flow was -$276 million for the fourth straight quarter in fiscal 2015 as the company continued investing in original programming.

The company recorded debt of $2.4 billion and cash and cash equivalents of $2.3 billion on its balance sheet in 4Q15—net debt of $0.1 billion.

QQQ in perspective

Netflix makes up 0.97% of the PowerShares QQQ Trust Series 1 ETF (QQQ). QQQ also invests 8.1% of its portfolio in Microsoft (MSFT), 5.5% in Amazon (AMZN), and 4.4% in Facebook (FB). If you’re interested in exposure to the television and radio sector, QQQ has 4.4% exposure to that space.


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