Netflix programming binge pays off with subscriber surge


Netflix Inc's blitz of original programs 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 fears about competition from Apple Inc and Amazon.com Inc.

Shares of Netflix jumped more than 7 percent 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 percent.

"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, one 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.

In the first three months of the year, Netflix boosted original programming by 85 percent from a year earlier to a record 483 hours, according to Cowen & Co analysts.

The slate included science fiction series "Altered Carbon" and Marvel action drama "Jessica Jones."

Non-English programming also is gaining traction, Netflix said. That includes "O Mecanismo," which is on pace to become one of the service's most-viewed original series in Brazil, and Spanish language heist thriller "La Casa de Papel" the most-watched non-English series ever on Netflix.

For the just-ended quarter, revenue grew 40 percent year-over-year to $3.7 billion, the fastest pace in the company's history. The average cost of a Netflix membership rose 14 percent during that time.

"Subscribers are accelerating even at higher pricing," BTIG analyst Richard Greenfield said. "Content spend is having a direct effect on its subscriber growth."

In a quarterly letter to shareholders, Netflix said it will"continue to raise debt as needed to fund our increase in original content," adding that its debt levels were "quite modest as a percentage of our enterprise value."

The company's market capitalization stands at $137.2 billion, more than double a year earlier.

But it faces growing competition as technology companies such as Apple and Amazon pour money into premium programming, international rivals jump into streaming and traditional media companies pursue digital customers.

Walt Disney Co will stop supplying new movies to Netflix starting next year and will start its own streaming service for families.

Netflix has signed up more than half of all U.S. broadband households and is building its customer base globally. At the end of March, its customer ranks had swelled to 125 million.

Investors have appeared bullish on the company's ability to add more members. Netflix recently traded at 93 times expected earnings for the next 12 months, versus Amazon at 133 times earnings and Disney at 17 times earnings, according to Thomson Reuters data.

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 percent year-over-year to $3.7 billion, the fastest pace in the company's history, thanks to the increase in new subscribers and a 14 percent rise in the average cost of a Netflix membership.

© (c) Copyright Thomson Reuters 2018.

©2018 GPlusMedia Inc.

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Netflix is great but they seriously need to improve mylist, interface usability, recommendations etc. And stop adding only 1 part of a trilogy. Either make all part available or nothing.

Also Altered Carbon was so so.

3 ( +3 / -0 )

Yeah, NetFlix is pretty awesome. They deserve all the praise they get. NetFlix can be brutal though. They cut Sense8 and I know that upset a lot of people. On the other hand, shows like Altered Carbon, Star Trek Discovery, and A Series of Unfortunate Events are all binge-worthy. Can't forget Stranger Things!

They didn't even mention the Stand-Up Comedy programs in this article. It is so refreshing to see Stand-Up Comedy this far across the Pacific.

1 ( +1 / -0 )

They didn't even mention the Stand-Up Comedy programs in this article. It is so refreshing to see Stand-Up Comedy this far across the Pacific.

Yes, I saw this when checking out the comedies category last night, so so many standups. add to mylist, add to mylist, add to my list.

1 ( +1 / -0 )

I love Netflix! They haven't weaned me off of Youtube, but they did curb my youtubing a bit. And that in itself is incredible!

0 ( +1 / -1 )

Tried to subscribe a few times, but they won't/can't send me the code required for registration. They need to get their act together. I'll just stick with Prime and cable.

0 ( +0 / -0 )

Can you watch all NetFlix programming in Japan without censorship ? Or like the Apple Store, is it simply a subset of things, with local content added ?

0 ( +0 / -0 )

@mmwkdw: yes, at least I havent noticed any censorship. Local content is also available. Id recommend signing up for a trial period to see what content they have.

0 ( +0 / -0 )

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