Strong Q4 with Q1 guidance ahead - PT to $303
Netflix Q4 adds of 8.3m subs were well ahead (cons. 6.4m, AE 6.3m, guidance 6.3m) and showed no impact from the quarter's ~10% price increase, implying excellent customer satisfaction and an ongoing pricing opportunity. Operating margins rose 130bp to 7.5% and were 7.2% for the year, ahead of the 7% guidance. The Q1 sub adds outlook was well ahead at 6.3m vs. cons. of 5.0m. Annualising the domestic guide of 1.45m using normal seasonality implies FY18 adds of 5.3m, in line with 2017 and showing none of the feared domestic slowdown. International is harder to extrapolate but the Q1 guide of 4.9m is a ~40% increase over Q117, implying full year adds will be up.Netflix is engaged in subscription streaming entertainment service including TV series, documentaries and feature films across a variety of genres and languages. Members can watch as much as they want, anytime, anywhere, on any internet-connected screen. Members can play, pause and resume watching, without commercials. Additionally, several members in the United States subscribe to the company's DVD-by-mail service. The company improves its streaming content with a focus on a programming mix of content. The company's members can download a selection of titles for offline viewing. The company operates its business as a global operating segment.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.
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