Netflix reassures with growth but hits pause in China


San Francisco (AFP)

US on-demand television service Netflix on Monday posted earnings that dispelled concerns about growth and said it was shifting tack in China due to a "challenging" regulatory environment.

Netflix shares soared nearly 20 percent to $119.60 in after-market trades that followed release of quarterly earnings figures that showed revenues topped $2 billion for the first time in a 39 percent increase from the same period a year earlier.

Netflix said that it gained 3.57 million paid subscribers to its streaming service in the quarter, with most of those coming from outside the United States.

The company finished the quarter with 86.74 million subscribers, higher than it had expected.

Of that number, 39.25 million subscribers were international, in a sign that the company was gaining momentum as a global television service.

Netflix was optimistic for the current quarter, forecasting a gain 5.2 million subscribers, with 3.75 million of them from countries other than the US.

Netflix credited a strong line-up of original programming including "Stranger Things" and "Narcos" with helping win fans to the service.

The earnings report reassured investors after growth of only 1.68 million subscribers in the previous quarter dampened enthusiasm for shares on Wall Street.

Netflix is the world's leading internet television network, boasting a presence in nearly every country after a expanding globally early last year.

The on-demand television service credited with giving rise to "binge viewing" has won devotees with its own hits such as "House of Cards" and "Orange is the New Black."

Netflix has also been winning over superhero fans with original programs made in collaboration with Marvel.

Notably missing from Netflix's global footprint is China.

"The regulatory environment for foreign digital content services in China has become challenging," Netflix said a letter to shareholders.

"We now plan to license content to existing online service providers in China rather than operate our own service in China in the near term."

Netflix said it expected revenue from licensing content to providers in China to be modest, and that it still has "a long term desire to serve the Chinese people directly" with its own service there.

For the recently ended quarter, Netflix revenue climbed 32 percent to $2.3 billion and net income leapt 75 percent to $52 million. Per share earnings for the quarter and that forecast for the remainder of the year were better than what was expected by analysts.