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Netflix stellar earnings fuelled by success of Stranger Things

City A.M. Monday, 17 October 2016 ()
After much doom and gloom ahead of Netflix's third quarter update today, shares soared 20 per cent in after-hours trading after stronger than expected earnings.

Global streaming revenue surpassed $2bn for the first time - up 36 per cent year-on-year, which Netflix attributed to its strong original content, including Stranger Things and the second series of Narcos. It will release over 600 hours of original content this year and aim to top 1,000 in 2017.

Of that revenue, 40 per cent was generated overseas. The streaming giant has made a concerted effort to expand - launching in 130 countries in January.

*Read more*: This is how much corporation tax Netflix paid in the UK last year

Subscriber growth was an area of particular good news for the firm. It added 3.2m international members, compared to its forecast of two million. 

US subscriber growth had been disappointing of late. For the second quarter, it added 160,000 net domestic subscribers which was significantly below its forecast of 500,000. 

But for Q3, the signs were more positive. Netflix added 400,000 members in the US, which was up on the firms forecast of 300,000.

For the first nine months of 2016, it has added 12 million global members - the same as for the equivalent period in 2015.

*Read more*: Netflix shares dive as punters and investors switch off

Amid the positive news, there was an acknowledgement of the challenges China had continued to pose. Netflix had hoped it would prove a gateway to success, but in a letter to shareholders, Netflix said: "The regulatory environment for foreign digital content services in China has become challenging. We now plan to licence content to existing online service providers rather than operate our own service in China in the near term. We expect revenue from this licencing will be modest."

It said it hoped to launch the service in the country "eventually".
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News video: Netflix Boast Huge Numbers Thanks To 'Stranger Things'

Netflix Boast Huge Numbers Thanks To 'Stranger Things' 00:36

‘Stranger Things’ Helps Netflix Subscriber Numbers Rebound in Q3 Netflix unveiled its third-quarter 2016 financials Monday after the U.S. stock markets closed, revealing 86.74 million subscribers, topping its internal goal. Wall Street had forecast earnings per share (EPS) of 6 cents on $2.28...

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