Netflix earnings beat expectations, adding 3.57 million new subscribers

Netflix said drug-cartel drama Narcos, which returned for a second season in September, had "a positive impact on member acquisition across all of our markets".
Netflix said drug-cartel drama Narcos, which returned for a second season in September, had "a positive impact on member acquisition across all of our markets".

Netflix shares have jumped by as much as 20 per cent in after-hours trading following the streamer's better-than-expected earnings for the third quarter and its reeling in of 900,000 more global customers than previously forecast.

The company reported total revenue of $US2.29 billion and earnings of 12 cents a share.

Wall Street analysts had expected Netflix to post revenue of $US2.28 billion and EPS of six cents.

Netflix said it added 3.57 million new streaming subscribers, including 3.2 million overseas and 370,000 in the US.

When it released second-quarter earnings, Netflix had forecast adding 2.6 million streaming subs overall - 300,000 in the US and 2.3 million internationally.

The company's global streaming revenue for the third quarter totalled $US2.2 billion, of which 40 per cent was generated outside the US.

Operating income was $US106 million (versus Netflix's prior $US64 million estimate) while net income was $US52 million ($US22 million was forecast).

According to the company, the stronger-than-expected subscriber acquisition for the third quarter was driven by "excitement around Netflix original content".

Netflix is continuing to double down on originals. In 2017, the company said, it planned to release more than 1000 hours of premium original programming, up from about 600 hours this year.

Among its originals, Netflix called supernatural thriller Stranger Things, which launched July 15, "the blockbuster of the summer" and noted the series was produced and owned by Netflix.

For one thing, the benefit of that was "it doesn't come with the studio mark- up", Netflix chief content officer Ted Sarandos said on the earnings call.

The company also cited drug-cartel drama Narcos, which returned for a second season in September, saying it had "a positive impact on member acquisition across all of our markets".

In August, Netflix introduced the first half of Baz Luhrmann's The Get Down series about the origins of hip-hop in 1970s New York - its most expensive series ever - but according to third-party research the initial viewer response did not come close to other originals.

At an investor conference in September, chief financial officer David Wells said Netflix was shifting its content spending with the aim of having 50 per cent of the TV shows and movies on its streaming service be original productions during the next few years.

Netflix forecasts 5.2 million global net adds for the fourth quarter, including 1.45 million in the US and 3.75 million internationally.

Average revenue per subscriber for the third quarter grew over 10 per cent year- over-year in the US and international segments.

Also Monday, Netflix disclosed that - for the time being - it is no longer looking to launch its own branded service in China, citing regulatory challenges.

Get the news delivered straight to your inbox

Receive the day’s news, sport and entertainment in our daily email newsletter

SIGN UP NOW

© Copyright 2017, NZME. Publishing Limited

Assembled by: (static) on production apcf03 at 23 Feb 2017 00:18:51 Processing Time: 557ms