Netflix Earnings and Subscriber Growth Beat Estimates, Shares Surge

Brunilde Fioravanti
Ottobre 17, 2018

The actual total - which included about one million new subscribers in the United States and nearly 5.9 million overseas - set a record for the third quarter, Netflix said.

"It was a surprisingly good quarter that caught a lot of the financial community off guard", said Jim Nail, a senior analyst at Forrester Research.

The company said it expects to add 9.4 million net subscribers globally in its fourth and final quarter of the fiscal year.

Analysts had cut their price targets for Netflix shares ahead of its earnings report, citing a combination of the strength of the dollar, rising expenses and interest rates.

The numbers are likely to restore investor confidence in the streaming service, which when reporting second-quarter earnings in July fell short of analysts' forecast for new subscribers by more than 1 million.

The streaming company released a record 676 hours of original programming in the third quarter, according to Cowen & Co, the first time it has exceeded 500 hours in any quarter.

For the current quarter, Netflix forecast it will add 1.8 million customers in the United States and 7.6 million in global markets. Netflix expects to add 28.9 million customers this year, setting a new record for the 21-year-old company. The stock rose as much as 17 per cent in after-hours trading to US$405, and the market value of the company once again challenged media giants such as Comcast Corp., the largest United States cable provider, and Walt Disney Co, the world's largest entertainment company. The shares are up 80 per cent this year. The number of people paying for cable or satellite has fallen in recent years, denting profit at the world's largest media companies and triggering a wave of mergers. It has issued a net $7.5 billion of bonds in less than three years.

"If you've got five to 10 years more growth in your current market, you're probably optimizing value to stay in your current market and strengthen", said Reed.

Netflix plans to spend about US$8 billion on programming this year.

The company's net income rose to $402.8 million, or 89 cents per share, in the third quarter ended September 30 from $129.6 million, or 29 cents per share, a year earlier.

Worldwide territories account for most of that growth and remain the key to the company's future. Netflix doesn't break out its customers by market, with the exception of the USA, though most analysts agree the UK, Brazil, Canada and Mexico rank among the company's largest.

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