Netflix Beats The Street With Soaring Profits Bolstered By Original Series And Spike In Memberships

Anyone who owns a significant number of shares in Netflix is about to have a good day. The streaming service reported better-than-expected earnings for its fiscal third period late on Monday, which in turn sent its stock price up by as much as 20 percent in after market trading. At the time of this writing (and prior to today's opening bell), Netflix shares are valued at $117.04, up over 17 percent compared to yesterday's $99.80 closing price.

Netflix had a stellar quarter. It reported revenue of nearly $2.2 billion, an increase of 36 percent compared to the same period a year ago, and 40 percent of which came from abroad. This is the first time that Netflix's revenue has cracked $2 billion on a quarterly basis. That resulted in a quarterly profit of $52 million, more than twice the $22 million that Netflix had forecast.


A big reason why Netflix did so well was because of "excitement around Netflix original content." Shows such as Narcos, Luke Cage, and Stranger Things have been generating a lot of buzz for the streaming service, and because they're original series, Netflix is the only place you can watch them.

"We are now in the fourth year of our original content strategy and are pleased with our progress. In 2017, we intend to release over 1,000 hours of premium original programming, up from over 600 hours this year. The Internet allows us to reach audiences all over the world and, with a growing base of over 86 million members, there’s a large appetite for entertainment and a diversity of tastes to satisfy," Netflix said.

Netflix added 400,000 new members in the U.S. along in the third quarter, up from its forecast of 300,000 member additions, and 3.2 million members internationally, up from its forecast of 2 million members. The streaming service directly credited its "over performance" with its original programming.

Adding its own shows to its catalog of streaming titles is paying off in a big way. And because Netflix is bringing in so many new members, it might also help the company negotiate more favorable deals with media companies, especially if Netflix can carry this momentum into next year.

"This past quarter, we announced a global pact with 20th Century Fox Studios to license The People vs. O.J. Simpson: American Crime Story and Queen of the South and an agreement with The Walt Disney Co. to license Quantico and American Crime in the US and Canada," Netflix added. "We are also increasingly ensuring early financing and sharing windows globally with original broadcasters for series like Star Trek: Discovery from CBS, The Alienist from Paramount TV and the just-launched ABC series Designated Survivor from eOne."

Going forward, Netflix acknowledged the "immense competition" it faces for consumer screen time. It also predicted that Amazon Prime Video will become a big deal this fall. Netflix's strategy is to continue focusing on original content, which is cheaper than licensing TV shows and movies.