Coming into Netflix's (NASDAQ:NFLX) first-quarter earnings report, investors were looking for reassurance that the streaming leader was still the champ following big announcements from rivals such as Apple (NASDAQ:AAPL) and Disney (NYSE:DIS)
Netflix did not disappoint. The streaming entertainment service added a record number of subscribers for a single quarter, growing its total count by 9.6 million to 153.9 million worldwide. The previous record was 8.84 million in the fourth quarter of 2018.
The company beat forecasts as revenue increased 22.2%, or 28% in constant currency, to $4.52 billion, topping its guidance of $4.49 billion and the analyst consensus of $4.5 billion. Earnings per share unexpectedly rose -- thanks in part to the timing of content payments -- increasing from $0.64 to $0.76. That was ahead of Netflix's forecast of $0.56 a share and the analyst mark at $0.57.
Subscriber additions were particularly strong internationally, at 7.86 million, compared with 1.74 million new members in the U.S., as Netflix continues to transition into a global brand.
Management broke with custom and shared viewer data from some of its top-performing shows and movies during the quarter. Umbrella Academy scored 45 million views in its first four weeks on the site; Triple Frontier, starring Ben Affleck, had 52 million views in its first four weeks; and The Highwaymen, starring Kevin Costner and Woody Harrelson, was watched by 40 million households in its first month. Netflix also touted some of its international programming, including Kingdom, its first large-scale South Korean series.
In the report, management acknowledged the competitive entries from Apple and Disney, but CEO Reed Hastings characteristically played down the challenges, saying, "We don't anticipate that these new entrants will materially affect our growth, because the transition from linear to on demand entertainment is so massive and because of the differing nature of our content offerings."
The only real down note in the earnings report came in the company's second-quarter guidance, which called for just 5 million new subscribers -- 4.7 million international and 0.3 million domestic. That would be below the 5.45 million the company added in the second quarter of 2018. It also projected earnings per share of $0.55 for Q2, compared with analyst expectations of $0.99. The notes on guidance are probably what caused the stock to trade down 1.9% after hours on Thursday.
Still, even as investors may be anxious about the threat from Apple and Disney, they should be pleased with the latest report. Netflix is executing its strategy effectively, and subscriber growth continues to accelerate.