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Netflix sees stronger-than-expected subscriber growth for second quarter

By David Ng, Los Angeles Times
Published: July 17, 2017, 5:17pm

Netflix brought in more subscribers than expected for the second quarter, signaling robust customer growth for the period that has traditionally been slow for the digital streaming giant.

The company counted close to 104 million subscribers worldwide for the period that ended in June, nearly 2 percent higher than it had forecasted.

The results sent shares of Netflix soaring more than 9 percent in after-hours trading on Monday to $177.30. Shares closed Monday at $161.70, up 58 cents, or 0.36 percent.

For the quarter, Netflix reported earnings that fell slightly short of analyst estimates, while revenue exceeded expectations.

The Los Gatos, Calif.-based company posted earnings of 15 cents per share, versus the 16 cents per share expected by analysts polled by FactSet. Revenue for the period was $2.79 billion compared with the $2.76 billion estimated by analysts.

Netflix attributed the higher-than-expected subscriber growth to its strong content slate, which included new seasons of popular series including “House of Cards” and “Master of None.” In addition, series like “13 Reasons Why” and “Stranger Things” continued to draw fans.

During the quarter, the company also debuted its first original series from Spain, “Cable Girls,” which it said has attracted “significant” viewership in the U.S. and in Spanish-speaking countries worldwide.

Last week, Netflix scored 91 Emmy nominations, with big showings for “The Crown,” “Stranger Things” and “Unbreakable Kimmy Schmidt.”

The company also debuted two high-profile original movies during the quarter — “Okja,” which premiered in competition at the Cannes Film Festival in May, and “War Machine,” starring Brad Pitt.

But Netflix has recently canceled some high-profile shows, including “The Get Down” and “Sense8.”

“Series cancellations and limited write downs are ongoing, highlighting spotty execution” in the company’s original programming divisions, wrote Michael Pachter, an analyst at Wedbush, in a recent report.

But, he added, “we do not expect significant write-downs for the cancellations.”

Netflix said it is expecting its international operations to turn an annual profit for the first time this year. “We are making good progress with our international expansion,” the company said in a note to investors on Monday, saying that improving profitability in earlier overseas markets is helping to fund expansion in new territories.

The company is looking more and more to overseas subscriber growth as the domestic market reaches saturation. For the quarter, Netflix added more than 4.1 million subscribers overseas, exceeding its forecast of 2.6 million additions.

The overseas market now accounts for more than half of Netflix’s total membership base.

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