125 million subscribers and counting ... Netflix’s quest for domination continues
Streaming giant tops online TV rivals with mighty, estimates-beating quarter
Netflix Inc. posted its strongest start to a year since the company went public 16 years ago, thanks to fast growth in markets across Latin America and Europe.
The company added 7.41 million subscribers in the first quarter of the year, according to a company statement Monday, easily topping analysts’ projections. Netflix now has 125 million paying customers, the most of any online TV network.
The company, the best-performing stock in the S&P 500 this year, is proving one quarter at a time that investors’ confidence in its online TV service has been justified. Netflix is using its growing subscriber base and deep pockets to poach talent from the biggest program suppliers and build a Hollywood studio for the internet age.
Shares of Netflix rose as much as 8.3 per cent to US$333.21 in extended trading after the results were announced. The stock fell 1.2 per cent to US$307.78 at the close in New York and is up 60 per cent this year.
Netflix, based in Los Gatos, Calif., said first-quarter profit rose to US64 cents a share, from US40 cents a year earlier. That met analysts’ projections of 64 cents. Sales for the quarter grew 40 per cent to US$3.70 billion, compared with Wall Street projections of US$3.69 billion.
For the current quarter, Netflix is predicting earnings of 79 cents and revenue of US$3.93 billion. That compares with analysts’ estimates of 65 cents a share in profit and sales of US$3.89 billion.
Netflix has told investors it will save money by bringing development and production in-house and avoiding the markups imposed by rival studios. But spending is still growing as the firm expands production in areas like film, unscripted series and kids programming.
Total streaming content obligations grew to US$17.9 billion in the first quarter, up from US$17.7 billion three months earlier, and that doesn’t account for the ballooning budget to market shows.
Netflix said Monday it now makes about as many unscripted shows as any cable network. The company already makes more movies than any studio, with about 80 on tap for all of 2018, and more than one standup special a week.
In February, producer Ryan Murphy agreed to leave 21st Century Fox Inc., where he made American Horror Story, for a deal at Netflix worth a reported US$300 million. Earlier, the company signed Scandal producer Shonda Rhimes, who left her longtime home at Walt Disney Co.’s ABC to make shows exclusively for Netflix.
In the last quarter, the company released the documentary miniseries Wild, Wild Country, the second season of the Marvel comic series Jessica Jones and the horror film The Cloverfield Paradox, two of about 700 titles the company planned this year.
While Netflix reports a profit, its cash flow last quarter was a negative US$287 million, and investors will be paying close attention to whether the company plans to take on more debt, as it has every year since the company started releasing original programming several years ago.
Netflix has allayed concerns about its cash burn by continuing to add subscribers, convincing investors that the spending is effective. Customers have also demonstrated they are willing to pay more for Netflix, boosting the company ’s margins in the process.
Netflix still adds the most customers every month in the U.S., according to analysts’ estimates. Last week, Comcast Corp. said it would offer Netflix subscriptions to its cable TV service, giving the world’s largest streaming platform another way to boost its viewer base in the U.S., its biggest market.