Netflix is finally taking India seriously, its earnings numbers show

Ruben Ruiz
October 18, 2018

The leap in subscribers marked a sharp turnaround from three months ago, when investors sent Netflix shares tumbling 14 percent after it missed Wall Street's subscriber growth targets.

Last month's carrier billing deal with Hathway Broadband will give Hathway subscribers a new set top box with inbuilt Netflix, and a shortcut button on the remote to launch the Netflix app. In the third quarter, Netflix released 676 hours of new programming, according to Cowen, more than double a year earlier.

In the current quarter, Netflix is forecasting net new subscribers of 9.4 million, including 1.8 million new subscribers in its domestic market and 7.6 million in global markets. The four make up the so-called FANG group of high-growth companies that in recent months has lost some of its momentum following market-leading gains in recent years.

Shares of the company were up 10 percent at $381.21 before the bell. Diluted earnings per share checked in a $0.89 per share versus $0.29 per share during the same time in 2017. It invests billions in original programming and uses those new TV shows and movies to lure subscribers.

"We've come a long way in the five years since launching original content on Netflix", the statement said. Netflix released its first Indian original series, "Sacred Games", in the quarter, as well as new Japanese shows.

Chief Executive Reed Hastings, who has pegged Netflix's content spending at $8 billion this year alone, told investors his firm is in for a battle.

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"It was a surprisingly good quarter that caught a lot of the financial community off guard", said Jim Nail, a senior analyst at Forrester Research.

Analysts estimate that it added about 676 hours of original programming in the U.S. in the most recent quarter - 135% more than in the same period a year ago. Sales grew 34 per cent to US$4 billion, meeting Wall Street forecasts.

Hargreaves is less optimistic over the company's ability to raise its profit margins over the long term due to the company's fourth-quarter forecast for contribution profit, a measure of profitability.

Analysts keep setting the ceiling and Netflix keeps crashing through it. While most of that still funds shows licensed from other companies, original programs account for a growing share. Disney and AT&T Inc, the parent of Warner Bros. and HBO, are each looking to introduce new services next year - after completing takeovers of other companies worth a combined $160 billion.

Is Netflix anxious about competition yet?

Other reports by GizPress

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