Netflix added nearly 16 million subscribers in the first quarter of the year—more than double the estimate of Wall Street analysts—reflecting immense growth for the company as customers worldwide grappled with coronavirus lockdowns.
The precise subscriptions figure, 15.8 million, blew past what Netflix told investors to expect for the first quarter, 7 million, though that forecast was given before the COVID-19 pandemic forced governments around the world to issue shelter-in-place orders. Total global paid memberships in Q1 rose to nearly 183 million worldwide, up from 163 million the previous quarter. Year to year, subscribers increased roughly 23%.
Netflix CEO Reed Hastings began his letter to shareholders in a solemn tone, speaking of the “terrible crisis” that has unfolded in recent months before acknowledging Netflix’s current strategic position.
“At Netflix, we’re acutely aware that we are fortunate to have a service that is even more meaningful to people confined at home, and which we can operate remotely with minimal disruption in the short to medium term,” Hastings wrote. “Like other home entertainment services, we’re seeing temporarily higher viewing and increased membership growth.”
The chief executive added that Netflix expects viewing time and membership growth to decline when lockdowns come to an end. Despite a record for quarterly gains, the company projects 7.5 million new global subscribers in the second quarter—more in line with previously expected numbers—though it cautioned the forecast was “mostly guesswork” given the uncertainty of how long home confinements will persist.
Netflix in the first quarter did take some hits to its business despite the staggering subscriber growth. The appreciation of the U.S. dollar amid the coronavirus pandemic resulted in diminished revenue growth internationally, the company said. Total revenue in Q1 came out to nearly $5.78 billion, in line with the consensus estimates. Net income equaled $709 million, or $1.57 a share, just under the $1.65 figure projected by Wall Street.
“After record subscriber additions, Netflix is and will continue to be the media company least impacted by COVID-19,” said Marketer forecasting analyst Eric Haggstrom. “Their business is a near perfect fit to a population that is suddenly housebound. Netflix faces some 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 theaters, sporting events, restaurants, and bars. Netflix will likely see minimal if any negative impacts moving forward.”
As for the pop culture’s breakout hit of the first quarter, the viral true-crime documentary Tiger King: Murder, Mayhem and Madness, Netflix projects that 64 million households will have chosen to watch the series in its first four weeks. The series debuted on the streamer on March 20.