Summary
Netflix's third quarter 2017 report shows robust growth, with global streaming memberships reaching 109.2 million, a 26% increase year-over-year. Revenue grew by an impressive 30% to $2.98 billion, driven by both domestic and international subscriber expansion and a 7% increase in average revenue per user, partly due to recent price adjustments. The company demonstrated significant operational leverage, with global operating income surging by 97% and net income more than doubling year-over-year. This strong financial performance underscores Netflix's continued dominance in the streaming market and its effective strategies for global expansion and revenue generation.
Financial Highlights
47 data pointsBeta
Financial Statements
Beta
| Revenue | $2.98B |
| Cost of Revenue | $2.09B |
| Gross Profit | $898.62M |
| R&D Expenses | $255.24M |
| Operating Income | $208.63M |
| Interest Expense | $60.69M |
| Net Income | $129.59M |
| EPS (Basic) | $0.03 |
| EPS (Diluted) | $0.03 |
| Shares Outstanding (Basic) | 4.32B |
| Shares Outstanding (Diluted) | 4.47B |
Key Highlights
- 1Global streaming memberships surged by 26% year-over-year to 109.2 million by the end of Q3 2017.
- 2Total revenue increased by 30% to $2.98 billion, fueled by subscriber growth and a 7% rise in average revenue per paying member.
- 3Global operating income experienced substantial growth, increasing by 97% to $208.6 million.
- 4Net income more than doubled, soaring by 152% to $129.6 million, indicating strong profitability improvements.
- 5International streaming segment revenues grew by 56% to $1.33 billion, with paid memberships up 43%, signifying strong global adoption.
- 6The domestic streaming segment saw revenue growth of 19% to $1.55 billion, with paid memberships up 10%.
- 7The company announced price increases for its standard and premium plans in the U.S. in October 2017, aiming to further boost ARPU.
Frequently Asked Questions
Netflix's revenue growth in Q3 2017 was primarily driven by the increase in the average number of paid streaming memberships globally, particularly in its international markets, and an increase in the average monthly revenue per paying membership due to price changes and plan mix.
Netflix continues to significantly invest in content acquisition, licensing, and production, especially original content. While this increases content expenses, the company's strategy aims to drive membership growth and revenue, which is shown to be outpacing cost increases in key segments like domestic streaming's contribution margin.
The company anticipates continued negative free cash flow for many years due to significant expected increases in global streaming content investments, particularly in original content. While cash used in operations decreased year-over-year for the quarter, the overall trend indicates substantial cash outflows related to content.
Foreign currency fluctuations, particularly the weakening of foreign currencies against the U.S. dollar, negatively affect reported international revenues and contribution profit. The company experienced foreign exchange losses in the period, largely due to the remeasurement of its Euro-denominated senior notes, impacting net income.