Netflix beats subscriber targets, shares jump over 10 pct


UPDATE 3-Netflix beats subscriber targets, shares jump over 10 pct

(Adds analyst comment, Breakingviews link, updates share price)
    By Lisa Richwine and Aishwarya VenugopalJuly 17 (Reuters) - Netflix Inc <NFLX.O> crushed Wall Street
forecasts by adding 5.2 million new streaming customers in the
second quarter and predicted continued momentum as foreign
subscriptions topped those in the United States, lifting its
stock 10.4 percent on Monday.
    Shares of the streaming-television pioneer jumped $16.82 to
$178.55 in after-hours trading, beating their all-time intraday
high of $166.87 on June 8.
    Netflix expects foreign growth to bring its first full-year
profit for overseas markets in 2017, the company said in a
letter to shareholders.
    At the end of June, Netflix for the first time recorded more
subscribers abroad than in the United States - 52.03 million vs.
51.92 million.
    A strong slate of TV series, such as "13 Reasons Why" and
the latest season of "House of Cards," brought in more customers
than Netflix had predicted for the second quarter, typically its
slowest season of the year. Wall Street had expected 3.2 million
new customers worldwide.
    Netflix added 4.14 million monthly subscribers in non-U.S.
markets, far more than the average analyst estimate of 2.59
million, according to data from analytics firm FactSet. (http://bit.ly/2usBBdF)
    In the United States, it signed up 1.07 million subscribers,
beating analysts' average estimate of 631,000.
    Netflix projected adding 3.65 million international
subscribers from July through September, compared with analysts'
consensus estimate of 3.2 million.
    The guidance assumes much of the second quarter's momentum
will continue, the letter said, though it added that Netflix's
forecasts had been too optimistic at times.
    Netflix is spending $6 billion a year on content to win new
subscribers in a quest to become the world's top movie and TV
streaming service, even as it faces a slowdown in U.S. customer
growth. It is customizing content for different countries and
adding shows in various languages.
    The Los Gatos, California-based company estimated negative
free cash flow "for many years" as it buys more content to
attract new subscribers. Netflix faces competition at home and
abroad from streaming video providers such as Amazon.com Inc's
<AMZN.O> Prime Video and Alphabet Inc's <GOOGL.O> YouTube.
    Investors are willing to tolerate the spending in exchange
for booming customer growth, said Rosenblatt Securities analyst
Alan Gould. "Most investors will take the trade-off of a 2
million (subscriber) beat."
    Revenue rose 32.3 percent to $2.79 billion in the second
    Net income rose to $65.6 million, or 15 cents per share,
from $40.8 million, or 9 cents per share, a year earlier, just
shy of analysts' forecast of 16 cents per share.

BREAKINGVIEWS-Netflix triggers shareholders' Pavlovian response
 (Reporting by Aishwarya Venugopal in Bengaluru; Editing by Anil
D'Silva and Richard Chang)
 ((Aishwarya.Venugopal@thomsonreuters.com; within U.S.
+1-646-223-8780; outside U.S. +91 80 6749 1017; Reuters
Messaging:  Aishwarya.Venugopal.thomsonreuters.com@reuters.net))


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