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Netflix foreign subscriptions overtake US for the 1st time, shares jump 10%

Faces competition from streaming video providers such as Amazon.com Inc's Prime Video and YouTube

Reuters 

Netflix

Inc crushed forecasts by adding 5.2 million new streaming customers in the second quarter and predicted continued momentum as foreign subscriptions topped those in the United States, lifting its stock 10.4 per cent on Monday.

of the streaming-television pioneer jumped $16.82 to $178.55 in after-hours trading, beating their all-time intraday high of $166.87 on June 8.

expects foreign growth to bring its first full-year profit for overseas markets in 2017, the company said in a letter to shareholders.

At the end of June, for the first time recorded more subscribers abroad than in the United States - 52.03 million vs. 51.92 million.

A strong slate of TV series, such as "13 Reasons Why" and the latest season of "House of Cards," brought in more customers than had predicted for the second quarter, typically its slowest season of the year. had expected 3.2 million new customers worldwide.

added 4.14 million monthly subscribers in non-US markets, far more than the average analyst estimate of 2.59 million, according to data from analytics firm FactSet. 

In the United States, it signed up 1.07 million subscribers, beating analysts' average estimate of 631,000.

projected adding 3.65 million international subscribers from July through September, compared with analysts' consensus estimate of 3.2 million.

The guidance assumes much of the second quarter's momentum will continue, the letter said, though it added that Netflix's forecasts had been too optimistic at times.

is spending $6 billion a year on content to win new subscribers in a quest to become the world's top movie and TV streaming service, even as it faces a slowdown in US customer growth. It is customising content for different countries and adding shows in various languages.

The Los Gatos, California-based company estimated negative free cash flow "for many years" as it buys more content to attract new subscribers. faces competition at home and abroad from streaming video providers such as com Inc's Prime Video and Alphabet Inc's

Investors are willing to tolerate the spending in exchange for booming customer growth, said Rosenblatt Securities analyst Alan Gould. "Most investors will take the trade-off of a 2 million (subscriber) beat."

Revenue rose 32.3 per cent to $2.79 billion in the second quarter.

Net income rose to $65.6 million, or 15 cents per share, from $40.8 million, or 9 cents per share, a year earlier, just shy of analysts' forecast of 16 cents per share.

First Published: Tue, July 18 2017. 10:27 IST
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