A quick glance at Netflix's (NASDAQ:NFLX) stock-price performance in 2017 highlights the obvious: The streaming-TV company had a great year. Soaring 55% in 2017, the stock obliterated the S&P 500's 19% gain -- and Netflix's fundamental performance was equally as astounding.

After recently reporting its fourth-quarter results, investors now have a complete picture of how Netflix's business performed in 2017. Here's a look at 10 startling -- and telling -- metrics from the year.

Netflix Originals

Image source: Netflix.


Netflix put to rest any concerns about its profitability in 2017. Net income surged from $187 million in 2016 to a record $559 million in 2017. This brought earnings per share to $1.25, up a whopping 190% compared to 2016 earnings per share of $0.43.

Netflix's profitability benefited primarily from improved scale and profitability internationally.


Netflix's international streaming revenue increased an impressive 58% year over year in 2017, playing a primary role in the company's 32% year-over-year growth in revenue during the period.

Highlighting the growing importance of its international markets, Netflix's international revenue accounted for 44% of consolidated revenue by the end of 2017. This was up from 36% of consolidated revenue in 2016.


Netflix's domestic market, however, shouldn't be counted out yet as a significant growth driver. Helped by growth in members and revenue per paying member (higher membership fees), Netflix's domestic streaming revenue increased 21% year over year.

23.8 million members

Netflix added a record 23.8 million new streaming members in 2017, accelerating meaningfully compared to the 19 million it added in 2016 and the 17.4 million it added in 2015. This brought global streaming members at the end of 2017 to 117.6 million, up from 93.8 million in 2016.


Netflix's international members in 2017 increased by 29% year over year, well over the 22% year-over-year rise Netflix saw in its international members in 2016.


Netflix's contribution margin, or its revenue less cost of revenue and marketing expenses as a percentage of total revenue, for its domestic streaming business was 37% -- a percentage point higher than the strong 36% contribution margin the regional segment boasted in 2016.


Netflix's international contribution margin of 4% was far below its domestic contribution margin, but its improvement over previous periods is astronomical. Netflix's international contribution margin in 2015 and 2016 was negative 17% and negative 10%, respectively.

This improved contribution margin for its international streaming segment meant Netflix's international streaming contribution profit swelled from negative $309 million in 2016 to positive $227 million in 2017.

Netflix streaming on multiple devices

Image source: Netflix.


Netflix's operating margin, which management says is its primary measure of profitability, was 7% in 2017. This was up significantly from an operating margin of 4% in 2016, helping explain Netflix's sharp increase in net income and earnings per share.


Netflix's members are using its service more than ever, with average streaming hours per member growing 9% in 2017


Even as Netflix plans to spend $7.5 billion to $8 billion on content on a profit-and-loss basis in 2018, management still expects profitability to rise nicely. The company guided for an operating margin of 10% in 2018, up from 7% in 2017.

While investors shouldn't expect Netflix's stock price to continue rising as rapidly as it has, they can take comfort in the strong growth of the company's underlying business. Netflix's fast-growing international operations, improving profitability, and plans for aggressive spending in 2018, even as it expects profitability to improve, show how Netflix is firing on all cylinders.

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