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Netflix adds a third more subscribers than expected; shares jump 7%
[BENGALURU] Streaming video pioneer Netflix Inc added over a third more subscribers than expected in the last quarter of 2016, a sign of success for its ambitious global expansion that sent its shares up 7 per cent in extended trading.
Netflix signed up 7.1 million new subscribers globally, far more than the 5.2 million analysts had expected, despite higher prices, beating targets at home and abroad, according to research firm FactSet.
Original shows like Marvel's Luke Cage and British drama The Crown performed strongly around the world, Netflix said, noting that competitors were adapting to compete.
Amazon.com Inc recently expanded its Amazon Prime Video service globally, and Britain's BBC announced plans to release entire series at once to allow the "binge watching" popularised by Netflix.
"It's becoming an internet TV world, which presents both challenges and opportunities for Netflix as we strive to earn screen time," the company said in its quarterly letter to shareholders.
Netflix, in its earnings report, said it added 5.1 million subscribers outside the United States and 1.9 million in its home market in the quarter ended Dec 31.
Analysts had forecast 3.73 million non-US additions and 1.44 million at home.
"The future battleground at home is now in keeping hold of customers as much as it is in trying to acquire new ones," said Neil Saunders, head of retail analyst firm Conlumino. "In our view, the fact that consumers have readily absorbed the price increase, and that Netflix has continued to advance its subscriber numbers in spite of it, indicates the company is now firmly in pole position in the streaming arena."
Netflix said it planned to release over 1,000 hours of original programming this year, up from 600 hours last year.
The Los Gatos, California-based company said revenue rose 35.9 per cent to US$2.48 billion in the December quarter. Analysts on average had expected US$2.47 billion, according to Thomson Reuters I/B/E/S.
The company said it expected to add 1.50 million subscribers in the United States in the current quarter, fewer than the FactSet estimate of 1.79 million.
In international markets, Netflix said it expected to add 3.70 million subscribers, above the average estimate of 3.05 million.
Up to Wednesday's close of US$133.26, Netflix's stock had risen 33.5 per cent since it reported third-quarter results in October.
Netflix rose as much as 8.2 per cent in after hours trading, adding nearly US$5 billion to the company's stock market value.