Netflix doubles 2018 operating profit to $1.6 bn; annual revenues up 35%

Netflix has reported a 35 per cent growth in its annual revenues to $16 billion in 2018. Its operating profits nearly doubled to $1.6 billion. Fuelling this growth was the high member satisfaction, which propelled Netflix to end 2018 with 139 million paying memberships, up 9 million from the beginning of Q4 and up 29 million from the beginning of 2018. 

Average paid memberships and ASP rose 26 per cent and 3 per cent YoY, respectively. Exclusing the impact of F/X, international ASP increased 6 per cent YoY and 1 per cent sequentially. Foreign exchange headwinds continued to move against Netflix in the quarter, similar to the trend seen in Q3 2018. 

Q4 operating margin dipped to 5.2 per cent vis-à-vis 7.5 per cent the prior year due to the launch of several titles in the quarter. The full year 2018 operating margin of 10 per cent was in line with the target. 

Netflix’s multi-year plan is to keep significantly growing its content while increasing the revenue faster to expand its operating margins. Netflix is targeting an operating margin of 9 per cent in Q1 2019, which it expects will grow over the course of the year and the full year operating margin target for 2019 remains 13 per cent, as against 10 per cent in 2018. 

Meanwhile, Netflix has appointed Spence Neumann as the Chief Financial Officer, who takes over from David Wells. “Neumann is a veteran entertainment executive, who brings a wealth of experience and new perspectives to the company as we expand our digital content around the world,” Netflix said in a statement.