Netflix Profit, Subscriber Growth Tops View, Stock Gains 20%

(RTTNews) - Shares of Netflix Inc. (NFLX), Monday surged a near 20 percent in extended trading session after the online-video streaming service reported a third-quarter profit that trumped analysts estimates, driven largely by higher-than-expected revenue growth and subscriber additions.

Netflix added 3.57 million subscribers globally in the quarter, easily beating its forecast of 2.30 million, to end the quarter with 86.74 million subscribers. The company added 370,000 customers in the U.S. during the quarter, well below its estimates. International subscriber additions were 3.20 million, far above its expectation of 2.00 million.

Looking forward to the fourth quarter, Netflix expects to add 5.20 million memberships, with 1.45 million in the U.S. and 3.75 million internationally, well above Wall Street analysts estimates.

The video-streaming service provider now focuses on international expansion as it faces strong competition in the US. "In the international segment, we exceeded our internal projection for net adds as the acquisition impact of our originals was greater than anticipated across many of our markets," the company said.

However, Netflix's international expansion has come with higher expenses, as marketing costs increased to $282.0 million from $208.1 million, while technology and development expenses rose to $216.0 million from $171.8 million last year.

Los Gatos, California-based Netflix's third-quarter profit surged to $51.52 million or $0.12 per share form $29.4 million or $0.07 per share last year. On average, 36 analysts polled by Thomson Reuters expected earnings of $0.06 per share for the quarter.

Netflix's revenues for the quarter rose to $2.29 billion from $1.74 billion last year. Analysts had a consensus revenue estimate of $2.28 billion for the quarter.

The company said the 36 percent growth in streaming revenue, which exceeded $2 billion for the first time, was driven by strong content slate including ?Stranger Things and the second season of Narcos.

For the fourth quarter, Netflix expects earnings of $0.13 per share, far above $0.10 per share expected by analysts.

NFLX closed Monday's trading at $99.80, down $1.67 or 1.65%, on the Nasdaq. The stock, however, gained $19.61 or 19.65% in the after-hours trade.