After a rock-solid 2017, capped by an incredible fourth quarter, it was clear going into Netflix's (NASDAQ:NFLX) first quarter that the company would really need to deliver in order to keep investors satisfied. But Netflix had no problem impressing. Its first quarter was bolstered by more expectation-crushing numbers, sending the stock up 5% in after-hours trading on Monday.
Fueled by strong growth in streaming members and a double-digit growth rate in its average subscription pricing, Netflix delivered record revenue. Furthermore, management indicated that momentum should continue in Q2, forecasting even faster revenue growth during the period.
As investors consider the implications of yet another strong quarter from Netflix, here are five metrics worth mulling over.
1. Netflix added 7.41 million new streaming members
The streaming-TV company was already on a roll when it came to member growth. In 2017, Netflix added 24 million memberships globally, up from 19 million additions in 2016.
Going into 2018, strong membership growth looks poised to continue. Netflix added 7.41 million subscribers in Q1, above management's guidance for 6.35 million new members and higher than the 7.05 million members Netflix added in the year-ago quarter. In total, Netflix's paid memberships were up 25% year over year in Q1.
"The variance relative to our guidance was driven by continued strong acquisition trends across the globe which we attribute to the growing breadth of our content and the worldwide adoption of internet entertainment," Netflix said about its strong growth in members.
2. Average subscription prices increased 14%
Providing yet another key catalyst for Netflix's first-quarter revenue growth, the company saw its average subscription prices increase by 14% year over year in Q1 as Netflix completed its staggered price increase in the U.S. during the quarter.
3. Streaming revenue surged 43%
With a 25% jump in memberships and a 14% increase in average subscription prices, it's no surprise that Netflix's revenue increased rapidly during the quarter. Total revenue was up 40.4% year over year, surpassing management's guidance for 39.8% revenue growth during the period.
Streaming revenue, which accounts for 97% of total revenue, was up 43.2% year over year -- "the fastest pace in the history of our streaming business," Netflix noted.
4. Netflix's operating margin widened to 12%
Netflix's operational leverage was highlighted yet again in its first quarter, with the streaming-TV company's operating margin rising to 12%, This was up 232 basis points compared to the year-ago period. While this operating margin crushes Netflix's guidance for an operating margin of 9.8% for the period, investors shouldn't get too excited; management said the difference in its operating margin and its guidance was primarily due to the timing of content spend.
But this doesn't mean Netflix isn't seeing notable momentum in the metric. Management revised its guidance for its full-year operating margin to a target of 10% to 11%, up from a previous target for 10%. An operating margin at this level would be significantly wider than the 7.2% operating margin Netflix had in 2017.
5. Management expects revenue growth to accelerate
Strong growth should persist in Q2, with management guiding for streaming revenue to rise 43.8% year over year. Similarly, it forecasts an acceleration in its total revenue growth, guiding for a 41.2% increase in its top line.
Netflix's international revenue growth will play a key role here. Management guided for second-quarter international revenue to rise 68% year over year to $1.94 billion, marking the first time it expects international streaming revenue to exceed U.S. streaming revenue. It's calling for U.S. streaming revenue of $1.90 billion in Q2.
Though Netflix's performance is undoubtedly impressive, it should be. The stock's premium valuation, evidenced by its price-to-sales ratio of 12, bakes in strong growth for years to come.