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Mark Your Calendar: Netflix Inc. Earnings

Image source: Netflix.

Profitability

While Netflix's contribution margin for its international segment will likely continue to be negative throughout the next few years as the company spends heavily on expansion, Netflix is showing the strength of its business model in the U.S. recently by rapidly increasing its contribution margin for the segment. The company predicts its U.S. streaming segment will report a record-high contribution margin of 30.1% in Q1, up significantly from its 23.4% contribution margin in the year-ago quarter.

Netflix said in its fourth-quarter letter to shareholders that this trend will continue throughout the year and in the long-term.

We have built in flexibility to our business model in terms of how quickly we grow content and marketing spend, so we intend to keep US contribution margins growing even with lower membership growth. This year we plan to increase US contribution margins from 30% in Q1 to about 32% in Q1 2016 to about 34% in Q1 2017, etc. We'll reevaluate the margin progression model again in early 2020 when we hopefully achieve 40% contribution margins.

Overall, investors will be looking for signs that Netflix' member growth isn't stagnating and for evidence the company is still heading toward higher levels of profitability.

Netflix earnings release will go live shortly after market close on Wednesday, April 15. Stay tuned at The Motley Fool for more pre-Netflix earnings coverage as well as Foolish post-earnings analysis.

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The article Mark Your Calendar: Netflix Inc. Earnings originally appeared on Fool.com.

Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends Netflix and Walt Disney. The Motley Fool owns shares of Netflix and Walt Disney. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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