Netflix (NFLX - Free Report) reported its second-quarter earnings on Monday. However, most investors didn’t care about earnings results. Instead, the company’s massive and unexpected jump in subscriptions proved to be the most vital metric for investors.
The international and on-demand content streaming company put subscribers projections to shame on Monday when it announced it added 5.2 million subscribers in its second quarter. Coming into today’s earnings report, Wall Street predicted Netflix would gain roughly 3.2 million new subscribers.
Shares of Netflix popped 9.86% in after-hours trading to $177.89, which is well above its 52-week high. Netflix is currently a Zacks Rank #2 (Buy).
The company now boasts 104 million users around the world, and the big jump might help Netflix get back on track after a somewhat rough year.
Netflix added 1.1 million new subscribers in the U.S., which is almost double what the company projected – and its biggest quarter domestically since 2011. The Los Gatos, California-based firm added 4.1 million users outside of the U.S.
The company’s international users now account for just over half of Netflix’s total subscriber base. Netflix’s international revenue jumped 57% year-over-year.
Netflix was able to crush Wall Street's estimates, and its own, with the help of new seasons of some of its most popular shows such as "Orange is the New Black" and “House of Cards.” In the first half of 2017, net subscriber additions were up 21% year-on-year.
Prior to earnings, the company asked investors to evaluate its business on revenue growth and global operating margins. Investors didn’t oblige in the first quarter and dumped shares after Netflix posted strong earnings but lower than anticipated subscriber growth.
Now, Netflix projects that the company will continue its rapid international expansion by adding 3.65 million subscribers in the third quarter. The on-demand content giant expects to add 750,000 new members in the U.S., which would be almost double the year-ago period.
As is the case with many media companies, especially in the new social and on-demand world, growing a company’s user base is one of the most important factors currently driving both short and long-term success. While Facebook (FB - Free Report) is growing with the help of Instagram, Snapchat (SNAP - Free Report) has failed to gain users at an acceptable rate and its stock price has fallen.
The on-demand video streaming company has invested heavily in new original content, and it seems to be paying off with the hugely successful Q2 subscriber additions. And Netflix needed a strong user-base growth quarter with Amazon (AMZN - Free Report) and Hulu also adding more original content.
For more on Netflix Q2 Earnings Report Read: Netflix Misses Q2 Earnings But Crushes Subscriber Estimates, Shares Pop
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