Netflix had a stronger quarter than expected in terms of net subscriber additions, and at the same time the SVOD saw its revenues rise 32.3% annually.
Netflix added 5.2 million new subscribers during the second quarter. In the U.S. it added 1.07 million and internationally it added 4.14 million. The total for Netflix was 2 million more than the 3.2 million it predicted it would add this quarter.
“In Q2, we underestimated the popularity of our strong slate of content which led to higher-than-expected acquisition across all major territories,” wrote Netflix, adding that the 5.2 million new subs was a record for the second quarter and that subscriber growth was up 21% to 10.2 million for the first six months of the year.
Analyst Jan Dawson noted the stronger than expected results for Netflix and attributed the improvement in part to Netflix pushing back the premiere for popular drama “House of Cards.”
Netflix pushed HoC season launch back a quarter, made a big deal out of it last q, not mentioned this q. But that’s why Q2 results so strong pic.twitter.com/X6LrC3hhmi— Jan Dawson (@jandawson) July 17, 2017
Netflix earlier this year indicated that it had passed the 100 million subscriber mark after coming up short in the first quarter. Now, Netflix has eclipsed the total number of pay-TV video subscribers in the U.S.
Netflix said its growth continues despite increased competition from other streaming video platforms.
“It seems our growth just expands the market. The largely exclusive nature of each service’s content means that we are not direct substitutes for each other, but rather complements,” said Netflix in a statement.
Looking ahead to the third quarter, Netflix expects to add 4.4 million new subscribers—750,000 in the U.S. and 3.65 million internationally.
While subscriber additions outpaced Netflix’s expectations, the company also saw its revenues rise to $2.785 billion, up 32.3%. Out of that, the company generated a $66 million net income, up from the $41 million it posted in the year-ago quarter. However, operating margins were squeezed during the quarter.
Netflix said that, due to the timing of content releases, operating margin fell 516 basis points. The company said that throughout the first half of the year, its operating margin was 7.1%, on track for 7% for the full year.