NETFLIX Subscriptions Shoot Way above Expectations
Netflix Inc added almost a third more subscribers than their expectations in the second quarter, surging its shares up 9.4% as the company reported that its investment in original television programs and movies was doing quite well.
The video streaming service recorded net subscriber additions of an estimated 94% this year to reach about 3.3 million in the second quarter. This surpassed the company’s forecast of 2.5 million subscribers.
The company said that its new original shows were attracting more customers quite faster than it expected.
Netflix has also embarked on an aggressive expansion process across the globe, accounting for the bulk of new subscribers. There has been a halt in the slowing US growth in the quarter since the number of US subscribers increased with about 50% more than what the ‘House of Cards’ distributor had forecast.
By the end of 2016, Netflix plans to reach 200 countries including China, where it has said that it was ‘’continuing to explore options.’’
According to FBR Capital Markets analyst Barton Crockett, ‘’subscriber growth has immensely increased both domestically and internationally. The technology, general quality and breadth of content is really working in the favor of Netflix.’’
According to the company’s forecast, it was expecting to add an estimated 1.2 million subscribers in the United States this quarter. On the global front, it expected to add about 3.6 million subscribers.
As a result of the unexpected surge, Netflix’s revenue hiked 22.7% to rest at $1.6 billion in the second quarter which ended June 30, from $1.34 billion in the previous year. However, the costs of the company’s ongoing overseas expansion reduced its net income to $26.3 million from $71 million. In the after-hours trade, shares were up by 9.4% to close at $107.38.
Netflix also revealed its support for Charter Communications Inc’s proposal to acquire rival cable operator Time Warner Inc. after Charter made a commitment to open and free interconnection across its network.