With almost everyone stuck at home thanks to the COVID-19 pandemic, Netflix was widely expected to do well in the first quarter of 2020 — but it did even better than anticipated.
Before the current crisis, Netflix had been forecasted 7 million net new paid subscribers. It was obviously going to beat that, but Netflix came in at more than double the forecasts, with 15.77 million paid net additions, bringing its total paid subscriber count to 182.86 million.
Meanwhile, the company also reported revenue of $5.77 billion and earnings per share of $1.57 — roughly in line with Wall Street predictions on revenue and slightly behind EPS predictions of $1.65.
In his investor letter, CEO Reed Hastings outlined three main impacts that the pandemic has had on Netflix’s finances:
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
As of 4:22pm Eastern, Netflix shares were fluctuating between a slight gain and a slight loss in after-hours trading — a sign, perhaps, that that spectacular growth is exactly what investors were expecting.
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