Netflix Reports Surge in New Members
18 October 2016 - 8:10AM
Dow Jones News
Netflix Inc. reported a larger-than-expected increase in new
members as the streaming video service's recent expansion helped to
offset increased competition and price increases.
Monday's disclosure that it had added 3.57 million streaming
subscribers in the most recent period comes a quarter after it
reported the weakest subscriber expansion in two years. In July,
Netflix had projected 2.3 million in additional subscribers for the
September quarter.
Shares surged 20% to $119.76 in after-hours trading. Before
that, the stock had fallen 13% this year as the streaming video
giant has struggled to keep up the pace of subscriber growth,
despite an ambitious expansion abroad.
In the U.S., Netflix added 370,000 subscribers in the September
quarter, ahead of its forecast of 300,000, though it still slowed
sharply from the year-ago quarter when it added 880,000 domestic
subscribers.
Internationally, Netflix added 3.2 million subscribers, compared
with its guidance of 2 million. While that is a boost from the
year-ago quarter's 2.74 million subscribers, it is a relatively
small gain considering that it launched in more than 130 countries
in between.
For the current quarter, Netflix expected 1.45 million new
additions in the U.S. and 3.75 million abroad, beating analysts'
projections for an additional 1.3 million domestic subscribers and
3.3 million abroad, according to analysts surveyed by FactSet.
Netflix said in a letter to shareholders that it is going to
explore opportunities to license its shows to other online players
in China, a way to build Netflix's brand. Mr. Hastings recently
said "it doesn't look good" for Netflix's prospects of entering
China as a stand-alone streaming service.
The video company said the revenue contribution from China
licensing will be "modest." In the long term, it still hopes to
"serve the Chinese people directly, and hope to launch our service
in China eventually."
Netflix said it added more international subscribers than
expected in part because the impact of its original show and movie
premieres was "greater than anticipated across many of our
markets." The company said it expects to lose more money
internationally next quarter as it invests in more original content
across its global markets.
In addition, Netflix said it plans to boost its spending on
content to $6 billion next year from $5 billion this year, as it
increases the number of original programming hours to more than
1,000 next year from 600 hours this year. It reiterated that it
expects to start delivering material global profits next year.
The company said it ended the September quarter with about 83.3
million paid memberships.
Over all, Netflix reported third-quarter profit of $51.5
million, or 12 cents a share, up from $40.76 million, or 9 cents a
share.
Revenue rose to $2.29 billion from $2.1 billion.
Analysts surveyed by Thomson Reuters had projected earnings of 6
cents a share on $2.28 billion in revenue.
For the current quarter, Netflix projected earnings of 13 cents
a share, compared with the average analyst estimate of 7 cents a
share, according to Thomson Reuters.
Write to Maria Armental at maria.armental@wsj.com and Shalini
Ramachandran at shalini.ramachandran@wsj.com
(END) Dow Jones Newswires
October 17, 2016 16:55 ET (20:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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