After missing subscriber growth targets last quarter, Netflix soared past them in Q2, both on the domestic and international fronts.
Netflix added a whopping 5.2 million total subscribers, versus the company forecast of 3.2 million. Netflix’s Q2 revenue and EPS were roughly in line with what Wall Street was expecting.
Netflix rose 8% in the immediate aftermath of its earnings report, hitting an all-time high in after-hours trading.
What caused Netflix’s growth to surge?
“In Q2, we underestimated the popularity of our strong slate of content which led to higher-than-expected acquisition across all major territories,” Netflix wrote in its earnings letter.
And the party will keep going in Q3, according to Netflix.
Netflix said that is “assumes much of this momentum” in subscriber growth will continue going forward, which is great news for investors, as some on Wall Street were bracing for weak guidance. Q3 will also have a favourable comparison to last year for Netflix, when Q3 saw Netflix’s price increase — dubbed “un-grandfathering” — hurt its subscriber growth.
Here are the key numbers:
- Q2 EPS (GAAP): $US0.15 per share versus Wall Street expectations of $US0.16.
- Q2 revenue: $US2.785 billion, up 32.3% year-over-year, and compared to Wall Street forecasts of $US2.76 billion.
- Q2 US subscriber growth (net additions): 1.07 million versus Wall Street expectations of 633,000, and Netflix guidance of 600,000.
- Q2 international subscriber growth (net additions): 4.14 million versus Wall Street expectations and Netflix guidance of 2.6 million.
- Q3 revenue forecast: $US2.969 billion.
- Q3 US subscriber growth forecasts (net additions): 0.75 million.
- Q3 international subscriber growth forecasts (net additions): 3.65 million.