Netflix global push grabs more customers than expected, shares jump

Co-founder and CEO of Netflix Reed Hastings delivers a keynote address at the 2016 CES trade show in Las Vegas, Nevada, on Jan 6, 2016.
Co-founder and CEO of Netflix Reed Hastings delivers a keynote address at the 2016 CES trade show in Las Vegas, Nevada, on Jan 6, 2016.PHOTO: REUTERS

NEW YORK (REUTERS) - Netflix's aggressive push into international markets won more customers than the video streaming service and its investors expected last quarter, sending its shares surging 7 per cent.

The dominant online video company said on Tuesday (Jan 19) it had 74.8 million subscribers at the end of December and forecast 6.1 million more through March, fuelled by its expansion this month into virtually every country except China, where it is exploring ways to launch its service.

The projection is more bullish than the 4.94 million average estimate of analysts surveyed by FactSet StreetAccount.

Shares of Netflix rose 7 per cent to US$115.42 in after-hours trading in New York.

Netflix, which started sending DVDs to customers by mail two decades ago, now offers its subscribers unlimited online access to TV shows and movies from Hollywood studios plus its own original shows such as House Of Cards and Orange Is The New Black.

Last weekend, Netflix officially launched its video streaming services in Singapore.

New customers overseas are countering slowing growth for Netflix in the United States, the company's biggest market. It added 1.56 million US subscribers in the fourth quarter, below the 1.65 million it forecast, and less than 1.9 million a year earlier.

"Our high penetration in the US seems to be making net additions harder than in the past," the company said in a quarterly letter to shareholders.

Netflix said it expects US subscribers to jump 1.75 million this quarter. The company will likely benefit from the return of hit show House Of Cards and a traditional bump in interest at the start of the year from people with new TV sets.

Internationally, Netflix added 4.04 million subscribers, compared with its estimate of 3.50 million. Netflix does not break down where its international subscribers are based.

From January to March, the company expects to add about 4.35 million international subscribers.

"The roll-out in 130 countries in early January ensures that they will have no problem hitting their international target," Wedbush Securities analyst Michael Pachter said.

Netflix said it may be able to start a service in China this year, but it may take longer. "We have work and uncertainty ahead," the company said in its investor letter. "Our expectations are modest and long-term."

Netflix said revenue rose 22.8 per cent to US$1.82 billion (S$2.6 billion) in the December quarter. Analysts on average had expected revenue of US$1.83 billion, according to Thomson Reuters.

Excluding items, Netflix earned 7 cents per share, ahead of analysts' average estimate of 2 cents per share.