While Netflix's (NFLX 1.11%) slower-than-expected subscriber growth in its first quarter has received lots of attention since the results were posted earlier this week, investors shouldn't overlook the valuable insights in the streaming-TV company's earnings call. Key topics during the call included a look at Netflix's international potential, why management envies YouTube, what to expect from the U.S. market, and more.
Here are five telling quotes (via a Reuters transcript) from Netflix's first-quarter earnings call.
The internet: still a "phenomenal opportunity"
Noting that the company expects to cross the 100 million subscriber mark this weekend, one analyst asked Netflix CEO Reed Hastings about what hitting this milestone means for the company's longer-term outlook. In Hastings answer, he turned his focus to the big opportunity on the internet.
[Crossing 100 million subscribers] is a big accomplishment. But it's really just the beginning. When you look at YouTube having 1 billion active users and 1 billion hours every day, when you look at Facebook's multi-billion numbers, we see that the Internet is just a phenomenal opportunity.
Hastings was careful to emphasize that, unlike Facebook and Alphabet's (GOOG 6.58%) (GOOGL 6.74%) YouTube, Netflix is a paid service and is not ad supported. But he also noted that Netflix isn't as entrenched in international markets as these companies.
Perspective on Netflix's international potential
To help investors put Netflix's international opportunity into context, Netflix CFO David Wells noted that the company's uncanny penetration in the U.S. market bodes well for abroad potential.
I mean, if we can get -- my God, if we can get penetration levels outside the U.S. to be anywhere close to the U.S., you're implying multiple hundreds of millions of global subscribers with the U.S. [penetration] beyond 50%.
Netflix envies YouTube
Asked about user consumption on Netflix, Hastings said that while user viewing is "very large and growing," it's "nowhere near as big as YouTube's, so we definitely got YouTube envy and we've got a lot of room to go."
Netflix has good reason to envy YouTube. It's a juggernaut. With over a billion monthly active users, YouTube is not only the world's largest streaming video platform, but it's also one of the world's largest social networks. In addition, Alphabet says people watch hundreds of millions of hours of videos on YouTube and generate hundreds of billions of views every day.
Expect more growth in the U.S.
While Netflix's 1.4 million U.S. member additions in Q1 were lower than its 2.23 million domestic additions in the year-ago quarter, Hastings is still optimistic about growth potential in the U.S. market.
The U.S. market is continuing to grow very nicely. I don't see any fixed wall. I mean, of course, every incremental 10 million is a little harder than the last 10 million, but our content keeps getting better, so those forces offset each other. When you look at the last 5 years, everyone's worried every quarter about saturation in the U.S., and we just continued to grow. But it doesn't mean it's going to be inherently forever. But we certainly feel good about the near term as we're expanding and just getting bigger content budget, more shows, more marketing.
As these quotes show, one overarching theme stood out from the call: Though Netflix member growth has slowed, management is adamant that its total subscriber count is far from peaking.