Netflix was expected to do well because of the pandemic, but it has surpassed the expectation of every analyst

With everyone locked in their homes Netflix was expected to do well all over the world and had optimistic 7M net new subscribers in the prediction for first quarter of 2020, but surpassing that expectation Netflix has accounted for as much as 15.77M subscribers. Which brings Netflix’s total count to 182M paid subscribers around the world.

Meanwhile, the company also reported revenue of $5.77 billion and earnings per share of $1.57 — roughly in line with Wall Street predictions on revenue and slightly behind EPS predictions of $1.65.

In its investor letter, Netflix outlines three main impacts that the pandemic has had on its finances:

First, our membership growth has temporarily accelerated due to home confinement. Second, our international revenue will be less than previously forecast due to the dollar rising sharply. Third, due to the production shutdown, some cash spending on content will be delayed, improving our free cash flow, and some title releases will be delayed, typically by a quarter.

Netflix is being modest and said that they consider this a spike in the business because of the external factor and projects modest 7M new subscribers for next quarter.

“No one knows how long it will be until we can safely restart physical production in various countries, and, once we can, what international travel will be possible, and how negotiations for various resources (e.g., talent, stages, and post-production) will play out,” the investor letter says. “The impact on us is less cash spending this year as some content projects are pushed out. We are working hard to complete the content we know our members want and we’re complementing this effort with additional licensed films and series.”

Upcoming and ongoing productions are stopped for now, hence cash flow is good. So, Netflix said that they will be looking to acquire content from production houses that is already being produced. Also, many license deals are in pipeline.

They announced acquisitions like the KumailNanjiani-Issa Rae comedy “The Lovebirds” (originally slated for a theatrical release) and the Millie Bobby Brown mystery “Enola Holmes,” as well as new shows like “Space Force” and “Hollywood.”