Netflix’s programming binge pays off with subscriber gain
los angeles — Netflix’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 better-than-expected second-quarter outlook soothed concerns about competition from Apple and Amazon.com.
Shares of Netflix jumped more than 7 per cent in after-hours trading on Monday to $330.30. The stock is the top performer on the S&P 500 this year, gaining more than 60 per cent.
“I don’t think this is a one-time thing,” said Chaim Siegel, analyst at Elazar Advisors. “It’s very similar to the results we saw last quarter. It’s getting better.”
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 outsized 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.
Net income rose to $290.1 million, or 64 cents per share, in the quarter ended March 31 from $178.2 million, or 40 cents per share, a year earlier.
Revenue grew 40 per cent yearover-year to $3.7 billion, the fastest pace in the company’s history.