Netflix programming binge pays dividends
Revenue up 40% to $3.7b in first quarter as slew of original progammes fuels spike in new subscribers
Netflix Inc’s blitz of original programmes attracted a surprisingly high 7.4 million new customers from January to March, reassuring investors who are betting the video-streaming pioneer’s massive spending will fuel growth around the world.
New shows like Altered Carbon and O Mecanismo helped Netflix smash analysts’ subscriber estimates, and its betterthan-expected second-quarter outlook soothed concerns about competition from Apple and Amazon.com.
Shares of Netflix jumped more than 7 per cent in afterhours trading on Monday to $330.30 (Dh1,213). The stock is the top performer on the S&P 500 this year, gaining than 60 per cent.
“I don’t think this is a onetime thing,” said Chaim Siegel, analyst at Elazar Advisors.
“It’s very similar to the we saw last quarter. getting better.” more results It’s
Wall Street expected Netflix to add 6.5 million new subscribers, according to FactSet data. Netflix topped that and also said it would bring in 6.2 million more customers from April through June, 1 million more than analyst predictions.
Netflix says it will spend up to $8 billion on global TV shows and movies in 2018. As it has expanded to some 190 countries, investors accepted negative free cash flow in exchange for the potential of outsize growth in future years.
“We have big plans for content growth and you should expect that to continue,” chief executive Reed Hastings said on a post-earnings webcast.
In the first three months of the year, Netflix boosted original programming by 85 per cent from a year earlier to a record 483 hours, according to Cowen & Co analysts.
For the just-ended quarter, revenue grew 40 per cent yearover-year to $3.7 billion, the fastest pace in the company’s history. The average cost of a Netflix membership rose 14 per cent during that time, and customer ranks swelled to 125 million.
“Subscribers are accelerating even at higher pricing,” BTIG analyst Richard Greenfield said.