Netflix Adds More Users Than Expected
April 18 2016 - 04:50PM
Dow Jones News
Netflix Inc. added a better-than-expected 6.74 million
subscribers in the first quarter, as a surge in overseas
subscribers offset slowing growth in the U.S., but the video
streaming service gave a lackluster outlook for new members in the
current period.
For the current second quarter, Netflix projected 2.5 million
total additions—500,000 in the U.S. and 2 million overseas.
The weak outlook for new members sent Netflix shares down 12% to
$94.60 in after-hours trading—despite the company reporting a
surprising increase in earnings for the first quarter. Through the
close Monday, the stock had risen 33% over the past year.
In the first three months of the year, Netflix gained 2.23
million members in the U.S. and 4,51 million members overseas. In
January, the video streaming service had forecast 6.1 million total
additions—1.75 million in the U.S. and 4.35 million overseas.
In January, the company turned on its service in an additional
130 territories, tripling its global reach to 190 countries.
Netflix said Monday that it now has 81.5 million total
subscribers.
Adding subscribers is key for the Los Gatos, Calif.-based
company because it helps to cover the company's expansion and
programming costs. Netflix has said gaining U.S. customers is
harder because of its already high penetration rate in the country.
The company has come in below its own guidance for U.S. customer
additions in each of the past two quarters.
Still, the domestic number is important because U.S. subscribers
tend to be more profitable than those overseas. Also, analysts have
raised concerns that some U.S. users may drop their membership as
grandfathered price increases end. At the same time, Netflix is
facing competition from a plethora of new streaming services like
Dish Network Corp.'s Sling TV, as well as established rivals like
Amazon.com Inc., Hulu and Time Warner Inc.'s HBO.
Overall for the March quarter, Netflix reported a profit of
$27.66 million, or 6 cents a share, compared with $23.7 million, or
5 cents a share, a year earlier. Excluding certain items, the
company reported per-share earnings of 7 cents.
Revenue rose to $1.96 billion from $1.57 billion.
Analysts surveyed by Thomson Reuters had projected a profit of 3
cents a share on $1.97 billion in revenue. Netflix, in January, had
projected earnings of 3 cents a share on revenue of $1.81
billion.
Write to Shalini Ramachandran at shalini.ramachandran@wsj.com
and Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
April 18, 2016 16:35 ET (20:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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