Netflix 3Q Net Up 26% On Higher Rev; Lifts 4Q Sales ViewFont size: A | A | A4:43 PM ET 10/20/10 | Dow Jones
DOW JONES NEWSWIRES
Netflix Inc. (NFLX) said Wednesday that its third-quarter earnings improved 26%, topping its expectations as revenue and margins grew and subscriber-acquisition costs fell.
Shares climbed 7.5% to $164.70 in after-hours trading.
Subscriber-acquisition costs, a metric closely watched by investors in the online movie rental company, declined 26%. The churn rate--a measure of customer cancellations and free subscribers--decreased to 3.8% from 4.4%.
The company also hiked its year-end subscriber target to a range of 19 million to 19.7 million from a previous target of 17.7 million to 18.5 million. Netflix ended the third quarter with 16.9 million subscribers, up 13% during the period and 52% higher than a year earlier.
The growth has led to a stock surge the past two years. Shares have nearly tripled in 2010 alone.
Netflix now predicts fourth-quarter revenue of $586 million to $598 million, up from a prior estimate of $580 million to $596 million. It forecast profit of 59 cents to 74 cents per share.
Netflix has consistently recorded improved profits as it attracts subscribers and expands its library to compete with DVD kiosks and new digital players. The company has also announced recent streaming video deals with NBC Universal and Epix, which is a joint venture with Viacom Inc.'s (VIA) Paramount Pictures, Metro-Goldwyn-Mayer Inc. and Lions Gate Entertainment Corp. (LGF). Still, analysts have expressed concern about the prospects of greater costs and increased competition.
Netflix reported a third-quarter profit of $38 million, or 70 cents a share, up from $30.1 million, or 52 cents a share, a year earlier. Excluding items such as stock-based compensation, earnings grew to 78 cents from 55 cents as revenue increased 31% to $553.2 million.
In July, the company projected earnings of 61 cents to 74 cents per share on revenue of $546 million to $554 million.
Gross margin grew to 37.7% from 34.9%.
-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com |
