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(Bloomberg) — Netflix Inc. said its video-streaming service topped 62 million subscribers worldwide, as original shows such as “House of Cards” drew new viewers globally. The shares soared to a record high. U.S. subscribers jumped by 2.28 million in the first quarter, while international accounts rose 2.6 million, the Los Gatos, California-based company said Wednesday on its website. Both figures beat the company’s Jan. 20 forecast. Sales grew 24 percent to $1.57 billion, matching analysts’ projections. Netflix is investing heavily in original programming to keep the U.S. business growing and support Chief Executive Officer Reed Hastings’s international expansion. While new shows such as “Unbreakable Kimmy Schmidt” and “Bloodline” drove U.S. viewing, the rise of the U.S. dollar trimmed sales and contributed to losses overseas, the company said. “Netflix remains a subscriber growth momentum story,” Paul Sweeney, a Bloomberg Intelligence analyst, said in an e- mail. “As long as domestic and international subscribers continue to grow, bulls will have a reason to buy the stock.”
Netflix rose 12 percent to $534.07 in extended trading after results were announced. If that holds Thursday, it will mark an all-time high, with the market value of the company exceeding that of CBS Corp. The stock fell 0.7 percent to $475.46 at the close Wednesday in New York. So far this year, Netflix has advanced 39 percent, fourth-most among members of the Standard & Poor’s 500 Index.

Net Income

First-quarter net income fell to $24 million, or 38 cents a share, from $53.1 million, or 86 cents, as the strong dollar contributed to losses outside the U.S. Excluding that, profit was 77 cents, the company said. Analysts forecast profit of 63 cents, the average of 35 estimates compiled by Bloomberg. Netflix has released a flurry of new series over the past few weeks, including the comic-book drama “Daredevil” from Walt Disney Co.’s Marvel. While Netflix doesn’t release viewer figures, the shows have been hits with subscribers. “We think strong U.S. growth benefited from our ever- improving content, including the launch of the third season of ‘House of Cards,’” Hastings and Chief Financial Officer David Wells wrote Wednesday in a letter to shareholders. Hastings said on Wednesday he expects to recommend the board split Netflix stock. The shares have more than quadrupled in the past three years.

Program Budget

Original programming is taking larger slice of Netflix’s content budget. The company’s obligations, which grew 30 percent last year, now total $9.8 billion. The growth in subscribers justifies the increasing costs, according to Rich Greenfield, an analyst at BTIG Research.
“They are investing in content that consumers clearly want to watch,” Greenfield said. “They will continue to ramp original production to build the brand and lessen exposure to having to buy from others. Compared to an AMC or Discovery, Netflix has way more high-profile content.”
Netflix extended its service to Australia and New Zealand in March. It rolls out its streaming service in Japan later this year, its first market in Asia. The company plans to offer its service worldwide by the end of 2016, though it is unclear if that will include China. “On China, we’re just still learning about how best to approach it; we’re not sure,” Hastings said in an interview.
A report this week by UBS AG projected Netflix would reach 87 million subscribers outside the U.S. by 2020. That total now stands at 20.9 million. In total, Netflix forecasts 2.5 million new subscribers this quarter, including 600,000 in the U.S. and 1.9 million overseas.
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, rose 6.2 percent in the first quarter. The index, which is weighted against other currencies including the euro and yen, had reached on March 13 the highest since its 2004 start date.

–With assistance from Lananh Nguyen in New York.

To contact the reporter on this story: Lucas Shaw in Los Angeles at lshaw31@bloomberg.net To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net Rob Golum