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Home / Business / Netflix is ​​seeing strong growth among new subscribers

Netflix is ​​seeing strong growth among new subscribers



Netflix Inc.


NFLX 3.98%

exceeded expectations for new subscribers in the third quarter and reported strong user growth in international markets as it continues to invest heavily in its global programming offerings.

Netflix shares rose more than 11% in after-hours trading on robust subscriber growth after closing at $ 346.40, up 4% on a broader market rally on Tuesday.

Maintaining a quick subscriber subscriptions clip is the key to Netflix's ability to cover its fast-growing content costs. Netflix has announced that it will book content spend of up to $ 8 billion this year. Analysts estimate it will spend up to $ 4 billion more on shows and films to be released in the future this year, bringing total content spending to about $ 1

2 billion

Amazon.de
Inc.

and HBO.

For the third quarter, Netflix added 6.96 million new subscribers worldwide, outstripping the company's 5 million forecast for the July period, and forecasting the 5.18 million analysts surveyed by FactSet. With these additions, Netflix increases its global subscriber base to 137 million.

Unexpectedly high user growth is likely to dampen investor concerns following the recent earnings report that Netflix's momentum has slowed. Particularly in the relatively mature US market, where growth slowed somewhat year-on-year, Netflix significantly outperformed its guidance of 1.09 million domestic customers, compared to 850,000 subscribers in the same quarter last year.

Netflix announced that it will deduct quarter-end reporting on how many subscribers signed up for free trials. The company said it will focus on paid subscribers in the future, in part because the company's internal forecasts for paid subscribers are more accurate than its overall subscribers' forecasts, including those for free trials.

Five years after his strategy of investing in original programs and going beyond the licensing of competing media companies, Netflix said his internal studio is Netflix's largest single-content content provider for cash-based content. As the company rapidly expands its range of original shows and films, the company said it would bring $ 1 billion in production over the next 10 years to a new production facility in Albuquerque, NM, which would handle around 1,000 production jobs each year ,

In a letter to shareholders, Netflix said he was aware of the threat of competition from "massive" rivals

AT & T
Inc.

Warner Media,

Walt Disney
Co.

and

Apple
Inc.,

All have plans for subscription services that offer premium original programs. "Our job is to make Netflix stand out so that consumers, when they have free time, choose to spend with our service," the company said.

Netflix said that since it provides more diversification in countries and languages, even its biggest hits are only a "low single digit" percentage of total streaming hours. "Our growth in one quarter is not due to a single piece of content," the company wrote.

Nonetheless, the company invests in areas such as romantic comedies, where it sees opportunities to share Hollywood. More than 80 million of his accounts have seen one or more of the romantic comedies released this summer, including "To All the Boys I've Ever Loved" and "Set It Up"

"We want to assure investors have the same high level of confidence in the underlying economic aspects as our cash holdings in the past, "the company said.

For the third quarter, Netflix posted a profit of $ 403 million, or 89 cents per share, compared to $ 129.6 million, or 29 cents per share, the year before. According to FactSet, analysts forecast 68 cents per share.

Quarterly revenue increased 34% year-on-year to $ 4 billion, in line with analyst estimates. International streaming revenues increased 49% to $ 1.97 billion, while domestic revenues increased 25% to $ 1.94 billion.

Netflix gained 5.9 million new overseas customers and 1.1 million US domestic subscribers during the quarter over the period.

The company expects to gain an additional 9.4 million customers in the fourth quarter, up 13% from the 8.3 million added a year ago. According to FactSet, analysts had predicted 8.25 million additional subscribers.

Corrections and Enhancements
Netflix sales increased 34% year over year to $ 4 billion in the third quarter. This corresponds to analyst estimates. An earlier version of this article misrepresented the company's sales numbers.

Write to Shalini Ramachandran at shalini.ramachandran@wsj.com and Micah Maidenberg at micah.maidenberg@wsj.com


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