Netflix's Q3 profit soars as it adds 7m customers

Netflix expects to add 28.9 million customers this year, setting a new record for the 21-year-old company. Global markets accounted for 84 per cent of new customers, and constituted 57 per cent of its overall customer base.
Netflix expects to add 28.9 million customers this year, setting a new record for the 21-year-old company. Global markets accounted for 84 per cent of new customers, and constituted 57 per cent of its overall customer base.PHOTO: REUTERS

World's largest paid online TV network beats analysts' forecast

LOS ANGELES • Netflix's Cinderella story is not over just yet.

The world's largest paid online TV network added far more subscribers than analysts forecast in the third quarter and issued an upbeat outlook for the current three months, rebounding from a slowdown earlier this year.

Netflix signed up 6.96 million customers in the quarter, according to a statement on Tuesday, boosting its global total to 137.1 million.

The results should extend Netflix's reign as one of the best-performing stocks on Wall Street, giving the company leeway to spend billions of dollars more on original programming. Netflix expects to add 28.9 million customers this year, setting a new record for the 21-year-old company. International markets accounted for 84 per cent of new customers, the company said, and constituted 57 per cent of its overall customer base.

"It was a surprisingly good quarter that caught a lot of the financial community off guard," said Mr Jim Nail, a senior analyst at Forrester Research. "Even the US number was better than I thought it would be. That's a really good number for a market that's this mature."

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. The slate included new seasons of the drama Ozark and the animated comedy BoJack Horseman, as well as the company's first Indian original series, Sacred Games, and Ghoul.

That helped lift profit more than threefold to 89 US cents a share, beating the 68 US cent average of analysts' estimates. Sales grew 34 per cent to US$4 billion (S$5.5 billion), meeting Wall Street forecasts. In all, Netflix added almost two million more subscribers than the 5.09 million Wall Street expected.

This quarter, the company expects to sign up 9.4 million new subscribers globally, far above the 7.18 million average of forecasts compiled by Bloomberg.

In the United States, where Netflix can now claim almost half of households as users, the company expects to add 1.8 million new customers in this quarter, bringing the domestic total to 60.3 million.

Netflix has upended the economics of pay TV by offering customers thousands of programmes on-demand for a monthly fee that is a fraction of the cost of a multichannel cable or satellite package.

Media companies that once sold programmes to Netflix for hundreds of millions of dollars are now building their own on-demand services to compete head on. Disney and AT&T, the parent of Warner Bros and HBO, are each looking to introduce new services next year.

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A version of this article appeared in the print edition of The Straits Times on October 18, 2018, with the headline 'Netflix's Q3 profit soars as it adds 7m customers'. Print Edition | Subscribe