Netflix subscribers rise to 137 million

BoJack Horseman is one of Netflix’s biggest critical successes

Netflix shares soared almost 14% after it unveiled a stellar set of quarterly results, securing almost seven million new customers over the past three months.

The House of Cards and BoJack Horseman streamer now has more than 137 million subscribers around the world after it added one million new customers in the US and an additional 5.9 million elsewhere.

The numbers come on the back of disappointing results during the second quarter of the year, which had caused some analysts to question the SVoD giant’s growth trajectory.

However, new seasons of BoJack and Ozark plus new series including Insatiable and Maniac appear to have drawn customers in, helping Netflix to comfortably beat predictions that it would attract around five million new subscribers in Q3.

Analysts estimate that the streamer has added more than 650 hours of original programming to its slate in the US over the last three months, helping to bring in subscribers and sending revenues to almost US$4bn, up 34% on the same time last year.

Profits came in at US$403m and the streamer said it would continue to invest heavily in content, with its current annual spend standing at US$8bn. However, that is resulting in a negative free cash flow – the amount of cash generated after investments – of US$3bn.

“We recognise we are making huge cash investments in content and we want to assure our investors that we have the same high confidence in the underlying economics as our cash investments in the past,” the company told investors.

Netflix said it would also start providing subscriber numbers without those using free trials, which account for around seven million customers.

Hargreaves Lansdown analyst George Salmon described the numbers as a “strong set of results” and pointed to Netflix’s prediction of adding 9.4 million more customers in the final quarter as “well above prior expectations.”

“If video killed the radio star, Netflix is well on the way to taking cable’s crown,” he added.

Media analyst Paolo Pescatore said “normal service” had been resumed at the streamer and that its “strong growth in its overseas market is encouraging,” adding: “This bodes well, as the company typically performs well over the next couple of quarters.”

Competitors are lining up to take on the SVoD giant, however, with Disney preparing to launch its service next year and a US$30bn annual content spend being rumoured.

Elsewhere, AT&T’s WarnerMedia division is readying a streaming service that could encompass content from HBO, Turner and Warner Bros, while retail giant Walmart is also looking at launching an OTT offering to compete with rivals such as Amazon.

Pescatore added that the increasing competition would require Netflix to bolster its partnerships with those that host its service.

“All of its rivals are now making huge bets on video and it cannot afford to be left behind. It now needs to rely more than ever on its extensive cable and telco relationships,” he said.