Netflix Profit Tops Estimates, Shares Jump 11%

(RTTNews) - Netflix Inc (NFLX) on Wednesday reported a decline in second-quarter profit, despite growth in revenues, on content expenses and the impact of a stronger dollar. However, both earnings and revenues for the quarter topped Wall Street estimates.

The online-video streaming service provider detailed a robust earnings outlook for the third quarter, but said international expansion and ramp up of content will necessitate significant spending.

Following the announcement of the results, Netflix shares gained about 11 percent in after-hours trade on the Nasdaq.

Netflix said it added 3.28 million streaming subscribers globally in the second quarter, above its expectations of 2.50 million, to end the period with 65.55 million subscribers. Region wise, it added about 0.90 million customers in the U.S. and 2.37 million internationally.

For the third quarter, Netflix expects to add 3.55 million customers globally, including 1.15 million in the U.S. and 2.40 million internationally.

Netflix has steadily expanded its international business at a time of domestic competition, and has been focusing on exclusive and original content as well.

Although, the company did not foray into new markets in the second quarter, it plans to launch additional markets; Japan in the third quarter, and Spain, Italy and Portugal in the fourth quarter. It has set its sights on China, possibly in 2016.

Netflix, based in Los Gatos, California, posted second-quarter net earnings of $26.3 million or $0.06 per share, compared with $71 million or $0.16 per share last year.

On average, 33 analysts polled by Thomson Reuters estimated earnings of $0.04 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter were $1.64 billion compared with $1.34 billion in the prior year. Thirty-six analysts had a consensus revenue estimate of $1.65 billion for the quarter.

The company saw strength in its original programming slate, which included the first seasons of Marvel's Daredevil, Sense8, Dragons: Race to the Edge and Grace and Frankie as well as season 3 of Orange is the New Black.

While profit was sturdy in its domestic streaming operations, the international business posted a loss of $92 million, compared with a loss of $15.3 million a year earlier.

For the third quarter, the company expects net earnings of $0.07 per share, while analysts currently expect $0.05 per share.

In June, Netflix announced a 7-for-1 stock split to make its stock more affordable to investors.

On Wednesday, Netflix closed regular trade at $98.13, down $2.24 or 2.23%, on a volume of 28.8 million shares on the Nasdaq. In after hours, the stock gained $10.67 or 10.87% at $108.80.