WASHINGTON (dpa-AFX) - Online movie renter Netflix Inc. (NFLX), said Monday its profit for the second quarter soared 57 percent from last year, driven mainly by growth in subscriber rate. However, quarterly margins remained low due to higher marketing as well as technology and development expenses. Earnings for the quarter came in ahead of estimates, while revenues fell short of expectations.
Looking ahead, the company provided earnings outlook which is indicated to be well below the market expectations. The company's share lost more than 9 percent in after-hours trade on the Nasdaq, following the news.
Los Gatos, California-based Netflix reported net income of $68.2 million or $1.26 per share for the second quarter, up from $43.5 million or $0.80 per share in the prior year quarter. On average, 27 analysts polled by Thomson Reuters expected the company to report earnings of $1.11 per share for the second quarter. Analysts' estimates typically exclude special items.
As a percentage of revenue, gross margin declined to 37.9 percent from 39.4 percent, while operating margin decreased to 14.6 percent from 14.9 percent in the year-ago quarter.
Second quarter revenues increased 52 percent to $788.61 million from $519.82 million in the same quarter last year. Twenty-nine analysts had a consensus revenue estimate of $791.48 million for the second quarter.
During the second quarter, Netflix added 1.80 million net new subscribers in the U.S., compared to 1.03 million a year earlier. The company ended the quarter with 24.6 million subscribers in the U.S., up 63.9 percent from a year ago.
Average monthly revenue per paying U.S. subscriber declined to $11.49 from $12.29 in the previous year quarter.
Domestic churn rate, which refers to the proportion of contractual customers or subscribers who leave a supplier during a given time period, was 4.2 percent, compared to 4.0 percent in the second quarter last year.
Total operating expenses for the second quarter increased to $183.5 million from $127.5 million in the prior year quarter.
For the third quarter, the company expects net income of $39 million - $58 million, or $0.72 - $1.07 per share. Revenues are expected to be in the range of $799.5 million to $828.5 million for the third quarter. Analysts expect the company to report earnings of $1.09 per share on revenues of $846.46 million for the quarter.
Netflix closed Monday's regular trading at $281.53, up $4.95 or 1.79%, on a volume of 7.30 million shares. However, in after-hours, the share lost $27.05 or 9.61%.
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