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Netflix To Raise Price For New Streaming Customers

Ends Q1 With 35.67 U.S. Streaming Subs 4/21/2014 4:45 PM Eastern
TakeAway

Netflix said it would raise the monthly price for new subscribers by $1 or $2 per month, but keep existing customers at current pricing levels

Netflix reported generally strong subscriber and financial reports for the first quarter of 2014, with nearly 48.35 million streaming members around the world, 46.14 million of whom were paying, and 35.67 million streaming U.S. members, of whom 34.38 million were paying.

 

Total revenue for the quarter ending March 31, 2014, was $1.066 billion, with $98 million in operating income, and earnings per share were $0.86, beating Wall Street estimates.

 

The company also announced that it would increase streaming prices by $1 or $2 for new members but “existing members would stay at current pricing (e.g. $7.99 in the U.S.) for a generous time period.”

 

Prior to the earnings release, Wall Street analysts had been predicting $0.81 earnings per share, according to The Wall Street Journal while Estimize.com had been predicting about $0.84 earnings per share on $1.272 billion in revenue based on 52 analysts.

 

The company’s stock has swung widely in recent months as investors had pulled out of high-growth tech stocks amid concerns that these tech stocks were overvalued. After a sharp run-up last year the stock dropped from $368.17 on December 31, to a low of $326.27 on April 15.

 

It closed at $348.91 on April 21 prior to the earnings release. Netflix shares  and, in after-hours trading, was trading up at $372.55  as of 6:32 p.m. ET.

 

In a letter to shareholders, Netflix CEO Reed Hastings and CFO David Wells, reported strong membership gains with “our net additions for Q1 were 0.22 million more than prior year Q1," but cautioned that this growth would slow in the upcoming second quarter. “As we’ve discussed previously, U.S. net additions in Q2 will generally be lower than in the prior year Q2, even in a year with full year growth, due to increased seasonality. This Q2, we expect our domestic net additions to be about 0.11 million below the prior year Q2.”

 

They added that “international performance in Q1 was also strong. Membership grew by 1.75 million, bringing our international total to 12.7 million members with 72% more net additions than prior year Q1.”

 

As a result their “present international segment is on a path to achieve profitability this year,” they noted.

 

More to come after the 5 p.m. ET live video interview with Hastings, Wells and chief content officer Ted Sarandos.

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