In what is a traditionally a slow quarter for Netflix, the streaming giant cruised past its own expectations for new subscribers, finishing the quarter with more than 100 million global subscribers for the first time.
Netflix stock is up close to 9 percent in after-hours trading, pushing it past the company’s previous high mark set back in June. The streaming giant reported 5.2 million net new subscribers in the third quarter — 1.07 million in the U.S. and 4.14 million internationally. Those figures came in above estimates that Netflix would add 3.2 million new subscribers worldwide for the quarter, including 2.6 million internationally and 600,000 in the U.S. Netflix now has 103.95 million global members.
Netflix came in with a mixed bag for revenue and earnings, but the figures still fell in the range of estimates offered by analysts following the company. Netflix reported diluted earnings per share of 15 cents on 2.79 billion in revenue. Analysts surveyed in advance by Yahoo Finance expected Netflix to post earnings of 16 cents per share on $2.76 billion in revenue.
Next quarter, Netflix estimates 4.4 net new editions, 3.65 million of them coming from outside the U.S. Netflix expects to report earnings 32 cents per share on $2.86 billion in revenue in the third quarter.
In terms of the streaming market, a report released in April shows Netflix is still in the lead, but it is facing plenty of competition. Amazon, YouTube and others are big players in the streaming world, and more services hit the market all the time.
In the quarterly shareholder letter, Netflix CEO Reed Hastings touched on competition, saying that the rise of streaming services like Netflix seems to be broadening the audience of potential subscribers by removing the high barriers to entry of pricey cable subscriptions. Today, he wrote, starting a TV network is as simple as building an app, and the explosion of original content means that “we are not direct substitutes for each other, but rather complements.”
Hastings added that the streaming market is big enough for plenty of players to succeed.
“We are all co-pioneers of internet TV and, together, we are replacing linear TV. The shift from linear TV to on-demand viewing is so big and there is so much leisure time, many internet TV services will be successful. 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.”
Streaming companies are responding to this huge business opportunity by spending big on original content. Netflix is outspending Amazon this year $6 billion to $4.5 billion, according to analysts at JPMorgan.
Despite the increasing competition from Amazon and others, Netflix stock has risen consistently in recent months. It hit a previous high of $166.87 in June, and is up 64 percent over the last year and 31 percent since the beginning of 2017.
A big reason for Netflix’s performance this quarter was its growth internationally, buoyed by launching in 130 additional countries last year . Hastings noted in the shareholder letter that Netflix’s international business now makes up 50.1 percent of its membership base.