Netflix Inc (NASDAQ:NFLX) added 5.2 million new streaming customers in the second quarter as its investment in new TV shows and movies paid off.
The company, which has produced popular shows such as House of Cards and The Crown, said it now has about 104 million subscribers, driven by international growth.
Shares surged more than 10% in US pre-market trading.
Revenue rose 32% to US$2.8bn in the three months to June and profits jumped 60% to US$65.6mln.
Netflix attracts more foreign subscribers
For the first time Neflix had more foreign subscriptions than in the US, with international members accounting for more than half of the total.
Netflix recorded 52.0 million international subscribers compared to 51.92 million in the US.
In the second quarter, the group added 4.1 million monthly subscribers in non-US markets, beating analysts’ estimates of 2.59 million.
In the US, Netflix signed up 1.07 million subscribers, smashing expectations of 631,000.
On the back of foreign growth, the company expects to deliver its first full year profit in the overseas market in 2017.
Netflix raises forecast for negative free cash flow this year
Netflix has been spending about US$6bn a year on content to secure more customers as it faces rising competition from streaming video providers such as Amazon.com’s Prime Video and Alphabet's YouTube.
The extra spending on new programming and international expansion has seen Netflix's free cash flow turn negative in the past three years.
The company warned that it expects US$2bn to US$2.5bn of negative free cash flow this year, worse than the US$2bn it forecast last quarter.
Wedbush said in a note to investors: "We think that free cash flow burn rising from US$(920) million in 2015 to US$(1.7) billion in 2016 to the new guidance is problematic, and remain unconvinced that Netflix’s content library is sufficiently robust to justify the over US$13 billion value reflected on its balance sheet.
"We are maintaining our 'underperform rating and raising our 12-month price target to US$82 on updated estimates."