Netflix’s subscriber base is exploding as people holed up at home to avoid the coronavirus become video-bingeing couch potatoes.
The Los Gatos, Calif.-based video-streaming giant added a record 15.8 million paying streaming customers in the first quarter of 2020 — more than twice the 7 million it had forecast in January before the coronavirus pandemic struck worldwide.
The company, which debuted its bizarre documentary series “Tiger King” last quarter, said it had 182.9 million paid subscribers globally at the end of the first quarter.
“Membership growth has temporarily accelerated due to home confinement,” Netflix said in its quarterly shareholder letter Tuesday. “We expect viewing to decline and membership growth to decelerate as home confinement ends, which we hope is soon.”
The company added that due to the shutdown of Hollywood productions, a positive byproduct is that “some cash spending on content will be delayed, improving our free cash flow, and some title releases will be delayed, typically by a quarter.”
Analysts’ estimates for Netflix’s “quarantine bump” have ranged from 7 million to as much as 10 million. Shares of the streamer, which have surged about 35 percent this year, were up 4 percent in trading after the bell.
“After record subscriber additions, Netflix is and will continue to be the media company least impacted by COVID-19,” said eMarketer analyst Eric Haggstrom. “Their business is a near-perfect fit to a population that is suddenly housebound. Virus related lockdowns have reaccelerated Netflix’s subscriber growth around the world.”
Despite the lockdowns, Haggstrom said Netflix is facing “headwinds moving forward from a poor economic environment, but a significant chunk of consumer entertainment budgets have been opened up from the closures of movie theatres, sporting events, restaurants and bars.” He said the company will likely see minimal if any negative impacts moving forward.
Netflix said it expects to add 7.5 million paid subscribers globally in the second quarter compared with analysts’ estimates of 3.8 million.
During the first quarter, Netflix saw net income more than double to $709 million, or $1.57 a diluted share compared with year-ago income of $344 million, or 76 cents. Total revenue jumped to $5.77 billion from $4.52 billion a year earlier.
Analysts were looking for EPS of $1.65 on revenue of $5.76 billion.