Netflix is investing heavily in original programming to keep the U.S. business growing and support chief executive Reed Hastings’s international expansion.Paul Sakuma/The Associated Press
Netflix Inc. said its video-streaming service topped 62 million subscribers worldwide, as original shows such as House of Cards drew new viewers globally. The shares soared to a record high.
U.S. subscribers jumped by 2.28 million in the first quarter, while international accounts rose 2.6 million, the Los Gatos, Calif.-based company said Wednesday on its website. Both figures beat the company's Jan. 20 forecast. Sales grew 24 per cent to $1.57-billion (U.S.), matching analysts' projections.
Netflix is investing heavily in original programming to keep the U.S. business growing and support chief executive Reed Hastings's international expansion. While new shows such as Unbreakable Kimmy Schmidt and Bloodline drove U.S. viewing, the rise of the U.S. dollar trimmed sales and contributed to losses overseas, the company said.
"Netflix remains a subscriber growth momentum story," Paul Sweeney, a Bloomberg Intelligence analyst, said in an e-mail. "As long as domestic and international subscribers continue to grow, bulls will have a reason to buy the stock."
Netflix rose 12 per cent to $534.07 in extended trading after results were announced. If that holds Thursday, it will mark an all-time high. The stock fell 0.7 per cent to $475.46 at the close Wednesday in New York. So far this year, Netflix has advanced 39 per cent. First-quarter net income fell to $24-million, or 38 cents a share, from $53.1-million, or 86 cents, as the strong dollar contributed to losses outside the U.S. Excluding that, profit was 77 cents, the company said. Analysts forecast profit of 63 cents, the average of 35 estimates compiled by Bloomberg LP. Netflix has released a flurry of new series over the past few weeks, including Daredevil from Walt Disney Co.'s Marvel.
Mr. Hastings said on Wednesday he expects to recommend the board split Netflix stock.
Original programming is taking larger slice of Netflix's content budget. The company's obligations, which grew 30 per cent last year, now total $9.8-billion. The growth in subscribers justifies the increasing costs, according to Rich Greenfield, an analyst at BTIG Research. "They are investing in content that consumers clearly want to watch," Mr. Greenfield said. "They will continue to ramp original production to build the brand and lessen exposure to having to buy from others. Compared to an AMC or Discovery, Netflix has way more high-profile content."
Netflix rolls out its streaming service in Japan later this year, its first market in Asia.
In total, Netflix forecasts 2.5 million new subscribers this quarter.