The streamer surpassed Wall Street's expectations and added nearly 16 million paid global subscribers in the first quarter of this year, beating its record of 9.6 million, set during the same quarter a year ago.
Netflix surpassed Wall Street's expectations and added nearly 16 million paid global subscribers in the first quarter of this year, beating by more than 64% the company's record of 9.6 million, set during the same quarter a year ago. With this new addition, the service now has nearly 183 million paid subscribers worldwide.
In its Q4 shareholder letter, the streaming giant had forecasted that it would add 7 million paid subscriptions in the first quarter of 2020, but that was before the coronavirus pandemic, which forced a huge amount of consumers around the world to stay at home.
Meanwhile, the company's financials were mixed: the streamer posted diluted earnings of $1.57 on revenues of $5.8 billion — up 28% from the same quarter a year ago. Wall Street had forecasted earnings of $1.64 and revenues of $5.74 billion — in line with Netflix's own guidance. Shares surged to record highs well over $450 in after-hours trading, before settling down as investors parsed the earnings report.
"There are three primary effects on our financial performance from the crisis. First, our membership growth has temporarily accelerated due to home confinement. Second, our international revenue will be less than previously forecast due to the dollar rising sharply. Third, due to the production shutdown, some cash spending on content will be delayed, improving our free cash flow, and some title releases will be delayed, typically by a quarter," Netflix said in its shareholder letter.
Furthermore, Netflix cautioned investors from expecting such startling growth to continue. "Hopefully, progress against the virus will allow governments to lift the home confinement soon. As that happens, we expect viewing and growth to decline," the company advised.
Regarding the future, Netflix now forecasts the addition of 7.5 million paid global subscribers for the second quarter. "Given the uncertainty on home confinement timing, this is mostly guesswork. The actual Q2 numbers could end up well below or well above that, depending on many factors including when people can go back to their social lives in various countries and how much people take a break from television after the lockdown," Netlix concluded.
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