Netflix Blows Past Earnings Estimates As Subscribers Jump 16%

Netflix on Thursday reported a 16% rise in memberships in the first quarter, reaching 269.6 million, beating Wall Street expectations. Starting next year, the company will no longer provide quarterly membership numbers or average revenue per user starting next year. CNBC reports: "As we've noted in previous letters, we're focused on revenue and operating margin as our primary financial metrics -- and engagement (i.e. time spent) as our best proxy for customer satisfaction," the company said in its quarterly letter to shareholders. "In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential." Netflix said now that it is generating substantial profit and free cash flow -- as well as developing new revenue streams like advertising and a password-sharing crackdown -- its membership numbers are not the only factor in the company's growth. It said the metric lost significance after it started to offer multiple price points for memberships. The company said it would still announce "major subscriber milestones as we cross them." Netflix also noted that it expects paid net additions to be lower in the second quarter compared to the first quarter "due to typical seasonality." Its second-quarter revenue forecast of $9.49 billion was just shy of Wall Street's estimate of $9.54 billion Shares of the company fell around 4% in extended trading. Netflix reported first-quarter net income of $2.33 billion, or $5.28 per share, versus $1.30 billion, or $2.88 per share, in the prior-year period. The company posted revenue of $9.37 billion for the quarter, up from $8.16 billion in the year-ago quarter.

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