Longtime investors in Netflix (NASDAQ:NFLX) have hit pay dirt, as stock in the streaming giant has quadrupled just over the past three years. It's done even better over the longer periods, returning nearly 500% and 6,230% over five and 10 years, respectively. 

You might be surprised to learn then that Netflix's stock price has barely budged since mid-January, range-bound over concerns about upcoming competition from the likes of Disney and NBCUniversal, a division of Comcast, and word that the service will be losing one of its most popular shows, The Office, to NBC in 2021.

Netflix is scheduled to report the financial results of its 2019 second quarter after the market closes on Wednesday, July 17. Let's look at several metrics investors should be watching closely when the company reports earnings.

The Netflix logo in a lighted nook with flowers on either side.

Image source: Netflix.

1. It's all about the subscribers

The single most followed measure among Netflix investors is the company's subscriber growth, because every other metric is tied to the rise of its paying customers. During the first quarter, the streaming leader added nearly 10 million new subscribers globally -- the greatest number of quarterly additions the company's history. That number included 1.74 million domestic customers and 7.86 million in international markets, so that will be a tough act to follow.

Netflix is forecasting slowing growth in the second quarter, expecting to add just 5 million new worldwide subscribers, a decline from the 5.45 million that joined in the year ago quarter. Management has historically been conservative with its guidance, so there may be room to the upside for this number.

2. An eye on the top line

As the result of customers who are worldwide flocking to Netflix, revenue growth has historically been strong. The company is anticipating that revenue will increase 26% year over year, climbing to just short of $5 billion for the quarter. Top-line growth is being boosted not only by additional customers but also by a higher average selling price per customer, as Netflix has been rolling out a price increase to existing subscribers -- and much of that will have taken effect during the second quarter.

3. Improving margins

Netflix is also expecting more of its revenue to fall to the bottom line. The company forecast operating income of $616 million, up 60% for the $384 million it generated in the year-ago quarter. That's not only better on an absolute basis, but management is also expecting an uptick in operating margin, coming in at 12.5%, up from 11.8% in the year-ago quarter.

4. Climbing contribution margin

Contribution margin is another way investors can track Netflix's continuing progress. The measure, which is revenue minus the cost of revenue and marketing expenses as a percentage of revenue, has steadily increased over the years and should continue its upward trajectory. The metric is expected to come in at 34.9% in Netflix's domestic market, and the company expects that to rise to 15.5% internationally for the coming quarter.

5. Cash flow progress

At the end of 2018, Netflix said it expected free cash flow (FCF) in 2019 to be similar to last year's levels, at negative-$3 billion. The company reversed course during the first quarter, saying it now expects the deficit to be "modestly higher," at about negative-$3.5 billion. Management is still expecting FCF to improve in 2020 and each year thereafter, so it's worth watching this metric to ensure the company stays on track.

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