Netflix justified the bullish upgrades on Friday by JPMorgan and Goldman Sachs in its third quarter report this morning (Tuesday) to reveal a surge in subscriber numbers, especially international customers.
Those bullish upgrades saw Netflix shares rise above $US200 for the first time ever on Friday – they closed at just over $US199. Monday they surged again ahead of the release of the report after hours to end the regular session at $202.68 up 1.6% – and jumped more than 2% in after hours trading to top $US208. They late eased to be up 1.7% at just over $US207 just after 7.30am Sydney time.
The quarterly report reveals that so strong was the rise in the quarter that for the first time ever Netflix now has more international subscribers than those in the US where it started a decade or so ago.
The company said it added 850,000 new US streaming subscribers in the third quarter to reach 52.77 million, and a huge 4.45 million new international sign-ups pushed the total to 56.48 million. All up it added more than 5.5 million subscribers and it now has more than 109 million.
The company wants to add another 6.3 million to 109.55 million in the current 4th quarter – just over 5 million internationally – to 61.53 million, and a mere 232,000 in the US to 54.02 million. Analysts saw the latter forecast a tacit admission that Netflix’s US growth surge is about done.
That helps explain why it has boosted the prices of some of its services starting this quarter. Earlier this month, Netflix unveiled a new pricing scheme, which will see the cost of its mid-tier plan go up by $US1 from $US9.99 to $US10.99 a month. Its top-tier “premium” plan will now cost $US13.99 a month, a $US2 increase over its previous price tag of $US11.99. The bottom-tier “basic” plan is unchanged at $US7.99 a month.
For the quarter total revenue gained 30.3%–the smallest increase in sales for several quarters–to $US2.98 billion and forecasts that to rise to more than $US3.2 billion in the current 4th quarter.
Directors said in the statement “We are growing nicely across the world and are on track to exceed $US11 billion in revenue in 2017. Internet entertainment is delighting consumers, and we are staying at the forefront of this once-in-a-generation opportunity.”
Netflix said expects to spend $US7 billion to $US8 billion on content in 2018, up from about $US6 billion this year.
