Netflix 2018 quarter one earnings: Company beats expectations with 7.4 million new subscribers

Aggressive expansion of new original content seems to have paid off

Netflix continued its run of growth with a first quarter of 2018 that yielded a better-than-anticipated 7.4m new subscriptions.

The company’s all-important indicator of paid subscriptions increased beyond its own forecast, suggesting that the streaming service’s aggressive strategy of adding new original content has paid off.

It reaped some $3.6 bn (£2.5bn) in revenue in the first quarter of the year, according to a newly released earnings report, an increase of 43 per cent over a year ago.

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Netflix’s stock price has soared this year, avoiding the sharp declines that have hit the technology industry. Shares rose more than six per cent in after-hours trading following the earnings report’s release.

Analysts have been bullish on its future prospects, noting a surge of original programming that has helped the company tap into a worldwide pool of potential users.

“We continue to believe long term subscriber growth and profitability will exceed current consensus expectations as Netflix realises the global scale benefits that come from its subscriber base, distribution network and content library”, Goldman Sachs analyst Heath Terry wrote in a note earlier this month.

Netflix Originals 2017: All the films and TV shows to look out for

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Netflix Originals 2017: All the films and TV shows to look out for

• 1/14 A Series of Unfortunate Events: season 1

  Starring: Neil Patrick Harris, Malina Wiessman, Will Arnett, Cobie Smulders, Patrick Warburton Release date: Out now

• 2/14 Riverdale: season 1

  Starring:KJ Apa, Lili Reinhart, Camila Mendes, Cole Srpuse, Mädchen Amick Release date: New episodes every Friday

• 3/14 iBoy

  Starring: Bill Milner, Maisie Williams, Miranda Richardson Release date: Out now

• 4/14 Santa Clarita Diet: season 1

  Starring: Drew Barrymore, Timothy Olyphant, Nathan Fillion, Patton Oswalt Release date: 3 February

• 5/14 Ultimate Beastmaster

  Hosted by: Terry Crews Release date: 24 February

• 6/14 Love: season 2

  Starring: Gillian Jacobs, Paul Rust, Claudia O'Doherty Release date: 10 March

• 7/14 Iron Fist: season 1

  Starring: Finn Jones, Jessica Henwick, David Wenham, Rosario Dawson Release date: 17 March

• 8/14 Sense8: season 2

  Starring: Toby Onwumere, Doona Bae, Jamie Clayton, Tuppence Middleton Release date: 5 May

• 9/14 House of Cards: season 5

  Starring: Kevin Spacey, Robin Wright, Neve Campbell, Joel Kinnaman Release date: 31 May

• 10/14 Dear White People: season 1

  Starring: Antoinette Robertson, Brandon P Bell, Logan Browning Release date: TBC

• 11/14 Okja

  Starring: Jake Gyllenhaal, Tilda Swinton, Lily Collins, Steven Yeun, Giancarlo Esposito Release date: TBC

• 12/14 Wet Hot American Summer: Ten Years Later

  Starring: Elizabeth Banks, Paul Rudd, Janeane Garofalo, Bradley Cooper, Amy Poehler, Alyssa Milano, Jai Courtney Release date: TBC

• 13/14 Master of None: season 2

  Starring: Aziz Ansari Release date: TBC

• 14/14 Stranger Things: season 2

  Starring: Winona Ryder, David Harbour, Finn Wolfhard, Millie Bobby Brown Release date: TBC

Earlier this year, Netflix executives announced that they intended to offer some 700 original series and 80 original movies in 2018. In its earnings release, the company noted its expanding roster of unscripted and internationally produced content.

New on Netflix – April 2018

The ramp-up has left Netflix with a persistent shortfall of free cash. The company estimated it would remain in the negative for several more years as at “rapidly grows” its spending on original content, saying it would continue to raise debt as needed.

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