Netflix signed up more new paying subscribers than expected during the first quarter, attracting 9.6 million new accounts during the period _ the highest add in the company's history.
But investors shrugged off the good news, sending the stock lower in after-hours trading Tuesday as the streaming giant offered weak guidance for the coming quarter.
The Los Gatos, Calif.-based company reported robust earnings of 76 cents per share, easily beating guidance of 56 cents per share, with revenue coming in at $4.52 billion, outpacing guidance of $4.49 billion. The results marked significant growth from the year-ago quarter, which saw earnings of 64 cents per share on revenue of $3.70 billion.
Tuesday's results beat Wall Street expectations. Analysts polled by FactSet had estimated earnings of 58 cents per share on revenue of $4.50 billion for the period.
Markets tend to watch Netflix's new subscriptions as the most reliable indicator of future profitability. For the quarter, the digital entertainment streaming giant brought in a record 9.6 million new paying subscribers, up nearly 16 percent from 8.3 million in the year-ago period.
Despite the strong results, Netflix shareholders were spooked by less than stellar guidance for the second quarter.
Netflix predicted just 5 million new paid subscribers for next quarter, down from 5.5 million in the second quarter of last year. Analysts polled by Factset estimated nearly 6 million net adds in the second quarter.
The company also forecast earnings of 55 cents per share for the quarter, down from 85 cents in the year-ago period.
As a result, shares of Netflix dropped during after-hours trading on Tuesday. The stock was down as much as 3 percent immediately after the closing bell but pulled back slightly. The stock was down 1.5 percent in after-hours trading after closing Tuesday 3 percent higher at $359.46.
Netflix suggested that some of the uncertainty could be attributed to price hikes that were announced at the start of the quarter. "We see some modest short-term churn effect as members consent to the price change," the company wrote in a note to shareholders.
The streamer announced in January that it would be hiking prices across the board for its U.S. customers, with the most popular plan rising to $12.99 a month, from $10.99.
The quarter was a notable one for Netflix, as its original movie "Roma" took home three Academy Awards in February. It was the company's strongest showing at the Oscars, though it ultimately lost out on the award for best picture.
Though Netflix has dominated the industry, investors are closely watching the potential impact of Walt Disney Co.'s planned streaming service, Disney+.
