Netflix Ends Quarter With More Than 59 Million Subscribers
Revenue and earnings per share both fell short of expectations.
Shares of Netflix were soaring 13 percent after the closing bell Wednesday after the company ended the first quarter with 59.6 million streaming subscribers, more than the 57 million it had projected.
When including non-paying subscribers, Netflix surpassed 60 million for the first time, with 62.3 million streaming customers worldwide.
Revenue was $1.57 billion and earnings per share was 38 cents, both of which were short of expectations.
"Our original series, documentaries and comedy specials are being enthusiastically received, and member engagement is at an all-time high," CEO Reed Hastings wrote in a letter to shareholders Wednesday.
Hastings said that Netflix members streamed 10 billion hours of content during the first quarter, offering "more evidence that consumers around the world are embracing the Internet TV revolution."
The company added 4.88 million new streaming subscribers during the quarter worldwide, with 2.28 million in the U.S. and 2.6 million in other countries. The numbers blew past Netflix's guidance.
Netflix said Wednesday it ended the quarter with 19.3 million paying customers in foreign countries and 40.3 million in the U.S.
In his letter to shareholders, Hastings credited House of Cards, Bloodline and Unbreakable Kimmy Schmidt for helping Netflix add more subscribers than forecasted, and he raved about the company's original content in general.
"We are delighted by the fan excitement and critical response around last Friday's launch of Marvel's Daredevil, the first of four series and a mini-series from our deal with Marvel Entertainment," he wrote. "The current quarter will also see the debut of Grace and Frankie starring legendary comedians Jane Fonda and Lily Tomlin, Sense8, an unbelievably cinematic and entertaining global dramatic thriller from the Wachowski siblings, and the third season of our groundbreaking Orange is The New Black."
Hastings said that a strong dollar was one reason for posting weaker financial results than Wall Street had expected. Investors didn't seem to mind on Wednesday, though, as the stock surged more than $60 per share during the after-hours session after closing 1 percent lower to $475.79 during regular trading.
The CEO's letter also included his opinion of HBO Now, a standalone service that launched last week for $15 a month and is widely perceived as competition to Netflix, though Hastings doesn't appear to agree.
"Netflix and HBO are not substitutes for one another given differing content," he wrote. "We think both will continue to be successful in the marketplace, as illustrated by the fact that HBO has continued to grow globally and domestically as we have rapidly grown over the past five years."
Netflix also said that it's pioneering DVD-by-mail business, still available in the U.S., was used by 5.5 million members and added $85 million in profit during the quarter.
Hastings also reiterated that he is seeking shareholder approval to increase Netflix's authorized shares; if he gets it, he'll pursue a stock split.
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