Netflix hits "Narcos" and "Stranger Things" helped attract 1.2 million more subscribers to the video streamer than it predicted for the third quarter - a surprise that drove its stock up 20 percent in after-hours trading.
It also gained more than expected in the U.S. (0.4 million v 0.3 million), with the over-performance driven primarily by stronger than expected acquisition due to excitement around Netflix original content. "In 2017, we intend to release over 1,000 hours of premium original programming, up from over 600 hours this year", the company said in a letter to shareholders.
Netflix shares soared almost 20 per cent to US$119.60 (RM502.50) in after-market trades that followed release of quarterly earnings figures that showed revenues topped US$2 billion for the first time in a 39 per cent increase from the same period a year earlier. Before that, the stock had fallen 13% this year as the streaming video giant has struggled to keep up the pace of subscriber growth, despite an ambitious expansion overseas.
In total, Netflix ended the quarter with 83.3 million paid subscribers. The other risk is that while global subscriptions are expected to be Netflix's engine of growth in the future, for now those subscribers are not profitable. Netflix generates little or no profit and its programming budget is still burning through funds.
Netflix has beaten its own low guidance for third-quarter subscriber adds in both the global (3.20 million net adds, versus guidance of 2.0 million) and USA segments (0.37 million net adds, versus guidance of 0.4 million), owing to new customer interest in original content.
Revenue increased 31.7 percent from the Q3 2015 to $2.29 billion with a profit of $51.5 million, earnings of 12 cents a share.
The company added 400,000 members in the United States during the quarter, compared to its forecast of an additional 300,000, while outside of its home market it added 3.2mln members, comfortably ahead of its forecast of 2mln. Netflix-which earlier this year launched in 130 "additional territories"-added that it now has more than 83 million paying customers on its books worldwide". Canada and the United Kingdom are two of Netflix's largest overseas customer bases, according to analysts.
Future gains will have to come without China.
It said on Monday it was dropping plans to launch a service in China in the near term, opting instead to licence its shows for "modest" revenue.