Netflix reassures with growth but hits pause in China
US on-demand television service Netflix posted earnings that dispelled investor concerns about growth and said it was shifting tack in China due to a “challenging” regulatory environment there.
Netflix shares soared nearly 20 percent to US$119.60 in after-market trades that followed the release of quarterly earnings figures that showed revenues topped $2 billion for the first time in a 39pc increase from the same period a year earlier.
Netflix said that it gained 3.57 million paid subscribers to its streaming service in the quarter, with most of those coming from outside the United States.
The company finished the quarter with 86.74 million subscribers, higher than it had expected.
Of that number, 39.25 million subscribers were international, in a sign that the company was gaining momentum as a global television service.
Netflix was optimistic for the current quarter, forecasting a gain of 5.2 million subscribers, with 3.75 million of them from countries other than the US.
Netflix credited a strong line-up of original programming including ’Stranger Things’ and ‘Narcos’ helping win fans to the service.
The earnings report reassured investors after growth of only 1.68 million subscribers in the previous quarter dampened enthusiasm for shares on Wall Street.
Netflix is the world’s leading internet television network, boasting a presence in nearly every country after a expanding globally early last year.
The on-demand television service credited with giving rise to “binge viewing” has won devotees with its own hits such as ‘House of Cards’ and ‘Orange is the New Black’.
Notably missing from Netflix’s global footprint is China.
“The regulatory environment for foreign digital content services in China has become challenging,” Netflix said a letter to shareholders.
“We now plan to license content to existing online service providers in China rather than operate our own service in China in the near term.”
For the recently ended quarter, Netflix revenue climbed 32pc to $2.3 billion and net income leapt 75pc to $52 million.
Per share earnings for the quarter and that forecast for the remainder of the year were better than what was expected by analysts. –