Netflix, Inc. (NASDAQ:NFLX) is set to post its first quarter 2014 earnings on Monday, April 21, where RBC Capital Markets analysts expect the company to post revenue of $1.27 billion and GAAP EPS of $0.79, which is in line with the consensus estimates of $1.27 billion and $0.81.

Netflix

In a report on April 17, 2014, RBC Capital Markets analysts (Mark S. Mahaney, Brian Peak, Rohit Kulkarni and Kevin Potterton) expect the second quarter guidance to also match consensus estimates, but view international expansion as a “wildcard” for EPS.

Strong data points

ComScore published U.S. traffic trends for January and February that showed the U.S. desktop unique visitors dropped 3% year over year compared to the growth of 8% year over year in the fourth quarter “on a material 9pt tougher comp.” For the first quarter, Netflix, Inc. (NASDAQ:NFLX) witnessed 56% growth in average monthly mobile unique visitors for its U.S. web site compared to 50% in the fourth quarter. Total mobile minutes surged 82% year over year compared to 71% year over year growth in the fourth quarter.

RBC conducted its proprietary U.S. and U.K. Internet user surveys to analyze the Netflix, Inc. (NASDAQ:NFLX)’s current consumer value proposition. The report says that the online video streaming company has marked a level of sustainable scale, growth and profitability that is not showing in its stock price.

Lower losses in international segment

In the Subscription metrics segment, the analysts are expecting 2.25 million net new United States subscribers, a decline of 200,000 DVD subscribers and addition of 1.6 million new international streaming subscribers. On the Domestic streaming contribution margins, the analysts are expecting a 24.9% segment contribution margin, which implies a robust 51% year over year growth in Netflix’s first quarter domestic streaming contribution profit.

In the international segment, Netflix, Inc. (NASDAQ:NFLX) is expected to post losses of $42 million, a decline from its $57 million loss in the fourth quarter, and also down from the highest loss of $105 million in the fourth quarter of 2012.

Outperform rating for Netflix

Analysts view Netflix, Inc. (NASDAQ:NFLX) as one of the strongest catalysts in the growth of online video viewing and in internet connected devices like tablets, smartphones, Internet TVs on the basis of proprietary survey.

“Finally, we view the last-five-quarter material expansion in U.S. contribution margins as demonstrating the company’s profitability, with its fixed cost content nature and historically declining churn rates suggesting further margin expansion.”

RBC Capital Markets analysts have an Outperform rating on Netflix, Inc. (NASDAQ:NFLX) with a price target of $500.