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Original content helps Netflix beat expectations on new subscribers

In the first three months of the year, Netflix boosted original programming by 85 percent from a year earlier to a record 483 hours

Reuters 

Netflix
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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 smash analysts' subscriber estimates, and its better-than-expected second-quarter outlook soothed concerns about competition from and Amazon.com Inc .

Shares of jumped more than 7 percent in after-hours trading on Monday to $330.30. The stock is the top performer on the this year, gaining more than 60 percent.

"I don't think this is a one-time thing," said Chaim Siegel, at "It's very similar to the results we saw last quarter. It's getting better."

Wall Street expected to add 6.5 million new subscribers, according to data. topped that and also said it would bring in 6.2 million more customers from April through June, 1 million more than predictions.

says it will spend up to $8 billion on 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," said on a post-earnings webcast.

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

The slate included science fiction series "Altered Carbon" and action drama ""

Non-English programming also is gaining traction, said. "O Mecanismo" 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" was the most-watched non-English series ever on Netflix, according to the company.

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 membership rose 14 percent during that time, and customer ranks swelled to 125 million.

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

In a quarterly letter to shareholders, 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 such as Apple and Amazon pour money into premium programming, rivals jump into streaming and traditional pursue digital customers.

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

Investors have appeared bullish on the company's ability to add more members. 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 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.

First Published: Tue, April 17 2018. 06:53 IST
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