Netflix stock soars as number of subscribers passes 100 million

SAN FRANCISCO •Netflix shareholders are watching the latest news with glee.

On Monday, the company reported that its number of subscribers rose more than expected, topping 100 million worldwide and sending shares in the on-demand television service soaring.

The share price leapt more than 10 per cent to US$178.75 in after- market trades after the Silicon Valley-based company revealed that it added 5.2 million subscribers in the recently ended quarter.

That brought the total to 103.95 million.

Most of the growth came from outside the United States, where Netflix has invested heavily in establishing itself as a global provider.

"That is what you want to see - subscriber growth," said Silicon Valley analyst Rob Enderle. "Its international efforts are paying dividends."

Netflix ended the quarter with slightly more than half of the subscriptions coming from outside the US, a first for the company.

Profit was up 61 per cent to US$66 million (S$90.3 million), Netflix said.

"We underestimated the popularity of our strong slate of content which led to higher-than-expected acquisition across all major territories," it added.

Netflix told investors it was determined to balance boldness and financial discipline as it continued to bolster its programming slate.

The company has cut shows that were not attracting sufficient numbers of viewers, taming costs as it boosted subscriber numbers in a combination that played well with investors, according to Mr Enderle.

The company remained committed to investing in original programming. Netflix said it will release 40 feature productions this year, from "big-budget popcorn films to grassroots independent cinema".

Netflix and rival Amazon Prime have been pumping money into original shows to win fans and set themselves apart in an increasingly competitive bid for viewers' time.

"The competition for entertainment time is always intense, but the silver lining is that the market is vast and diverse," Netflix said.

More than a billion hours of video are viewed daily at Google-owned YouTube, while Netflix streams a similar amount of video to subscribers over the course of a typical week, according to the company.

"The shift from linear TV to ondemand viewing is so big and there is so much leisure time that many Internet TV services will be successful," Netflix said.

"The Internet may not have been great for the music business due to piracy, but, wow, it is incredible for growing the video entertainment business around the world."

Netflix and Amazon have proven that they can break into a market against intimidating, entrenched positions of cable companies, noted Mr Enderle.

Netflix forecast that it will add 3.65 million subscribers around the world in the current quarter.

"We are making good progress with our international expansion as improving profitability in our earlier international markets helps fund significant investment in our newer territories," it said.

Netflix reported a loss of US$13 million outside the US in the recently ended quarter, but expects to end this year with an overall profit in its international operations.


A version of this article appeared in the print edition of The Straits Times on July 19, 2017, with the headline 'Netflix stock soars as number of subscribers passes 100 million'. Print Edition | Subscribe