Netflix Profit Rises, But Stock Down

(RTTNews) - Online video service provider Netflix Inc. (NFLX) Monday reported a higher second-quarter profit, on increased domestic and international subscribers, mainly benefiting from the launch of the comedy series, "Arrested Development." Quarterly earnings topped Wall Street estimates, while revenues fell shy of expectations.

Investors were unimpressed with the results and the company's stock slid 7.5 percent in after-hours trade on the Nasdaq.

Los Gatos, California-based Netflix said it added 630,000 domestic customers to end the quarter with about 30 million domestic subscribers. This compares with 24 million domestic members a year ago.

The company added 605,000 international customers to end the quarter with 7.75 million members, up from 3.6 million members a year ago. The company said it will enhance investments in the international markets.

DVD members for the quarter totaled 7.51 million, even as the company is pruning this business.

Netflix has been investing in movie rights and television shows, and has expanded its audience base, due to original content such as "House of Cards" and "Arrested Development".

The company posted second-quarter revenues of $1.069 billion, compared with $889 million last year. On average, 29 analysts polled by Thomson Reuters estimated revenues of $1.07 billion for the quarter.

Net income for the quarter was $29.5 million or $0.49 per share, compared with $6 million or $0.11 per share last year. Analysts on consensus estimated earnings of $0.40 per share for the quarter.

Among major deals, on July 8, Netflix extended its multi-year licensing deal with media company CBS Corp. (CBS-A, CBS), and inked a subscription video-on-demand agreement with Twentieth Century Fox Television. The company also signed a deal with DreamWorks Animation (DWA) for new original TV series, and has an expanded agreement with Hasbro Inc. (HAS).

For the third quarter, Netflix expects net income of $18 million to $34 million, or $0.30 to $0.56 per share. The company expects domestic streaming revenues of $693 million to $701 million, international streaming revenues of $170 million to $184 million, and domestic DVD contribution profit of $96 million to $108 million.

Analysts currently expect earnings of $0.45 per share on revenues of $1.10 billion for the third quarter.

The company expects third-quarter domestic streaming members of 30.5 million to 31.3 million and international members of 8.3 million to 9 million.

NFLX closed Monday at $261.96, down 0.99%, on a volume of 5.3 million shares. In after-hours, the stock dropped $19.63 or 7.49% at $247.23.