Last quarter Netflix launched in 130 new countries. Today we found out whether the company’s ambitious expansion plan is working.
So far, the answer is: yep, for now. Netflix has 81.5 million subscribers after adding more subscribers than ever in a single quarter. (Not drastically more, mind you, but a record’s a record.)
Last quarter, Netflix said it would add 6.1 million (net) new subscribers in Q1 2016 — it added 6.74 million. Of those new subscribers, the vast majority live outside the U.S. Meanwhile, Netflix’s domestic growth continues to crawl; the company added just 2.23 million new subscribers in the U.S. this past quarter, which is above Netflix’s anticipated 1.75 million.
Here’s a closer look at the company’s overall subscriber growth over the past few years.
And how Netflix’s international growth compares to its growth in the U.S.
The Verge notes that Netflix is setting low expectations for growth next quarter: The company expects “to add 2.5 million members with 0.5 million in the US and 2.0 million internationally” — down from 2.4 million new international subscribers in Q2 2015. Investors expected more. It’s worth noting, however, that Q2 is usually a low-growth quarter for Netflix.
During the company’s earnings call, CEO Reed Hastings noted that Netflix is only available in English and accepts only international credit cards. The implication is that there’s a lot of untapped growth potential for Netflix.
Despite the growth, Netflix missed revenue expectations for the quarter, with $1.96 billion in revenue and $0.06 earnings per share. Analysts guessed the company would report $1.97 billion in revenue and earnings of $0.03 per share.
Netflix’s earnings release follows two big announcements:
- Netflix is raising prices for many users to $10 a month.
- Amazon is spinning out its Netflix competitor, Prime Video, as a standalone service. The price? A convenient $9 a month. By the way, Netflix’s Hastings said this would happen four years ago, Recode points out.
Both of these narratives factor into how investors value Netflix today and in the near future. Already, following the Amazon news, Netflix stock sank about 4 percent today before recovering by about 2 percent before the bell. In after-hours trading, the company’s stock slipped more than 11 percent.