Netflix (NFLX, Financial) blew past Wall Street estimates for the second quarter as the company announced that it added 5.2 million members. It was the highest second-quarter addition in the company's history – and 2 million more than its own forecast for the quarter.
As is the case with Netflix, any good news is bound to move the stock, and we’re already seeing it shoot past its 52-week high.
The blowout quarter was made possible due to Netflix’s above average performance in International markets, where the company added 3.65 million net members; it had expected only 2.6 million. The total membership base in the U.S. reached 51.92 million, an addition of 1.07 million, which is better than the 160,000 customers Netflix added between the first and second quarters of 2016.
The sudden acceleration in user base helped the company beat Wall Street estimates on the revenue front, but Netflix fell slightly short of earnings estimates. Netflix reported earnings per share of 15 cents against the 16 cents expected by the market while revenue touched $2.79 billion against the market expectation of $2.76 billion.
Ted Sarandos, chief content officer at Netflix, attributed the sharp increase in user base to Netflix’s ever-expanding original content. During the second-quarter earnings call he said:
“I think it was the combination of a lot of great things. ‘13 Reasons Why’ started right at the end of the quarter, rolled into some of our biggest content brands; new seasons of ‘House of Cards,’ ‘Orange Is the New Black’; ending the quarter with ‘Okja.’ So just I think it was the combination of a lot of different things, kind of a reinforcement that as long as we are programming to a wide variety of tastes and keep the quality level high that we can turn some success off of that.”
Netflix has now officially breached past the 100 million user base count as the company closed the quarter with 103.95 million members, with 99.04 million paid members. The best part about the result is that the company is now expecting to add 4.4 million users during the third quarter of 2017, which is much better than the 3.57 million users Netflix added last year.
The streaming giant is expecting its good run to continue in the International market; it predicts 3.65 million net new users during the third quarter with 750,000 from the U.S. With numbers ticking along inside and outside the U.S., increasing revenues will only allow Netflix to keep pouring money into original content, which in turn can only serve to increase its user base count around the world.
Disclosure: I have no positions in the stock mentioned above and no intention to initiate a position in the next 72 hours.
