Netflix Inc. said its second-quarter earnings more than doubled
as the video-streaming company added more subscribers than
expected.
The second quarter traditionally provides the weakest membership
gains for Los Gatos, Calif., company, which said it added 1.69
million streaming subscribers in the three months ended June 30,
above the company's forecast of 1.46 million.
In its wide-ranging letter to shareholders, Netflix also said it
would introduce physical gift cards and reiterated its stance on
net neutrality, or the rules for how broadband providers can treat
content traveling over their networks.
Netfilx said it wants to prevent large Internet service
providers from "holding our joint customers hostage with poor
performance to extract payments from us, other Internet content
firms, and Internet transit suppliers."
The company also urged the U.S. government to block Comcast
Corp.'s pending $45 billion acquisition of Time Warner Cable Inc.,
"or at the very least, to require as condition to approving the
merger that the combined entity be prevented from charging for
interconnection."
Netflix's growth and resulting demand for bandwidth has been a
source of conflict with broadband providers over who should bear
the costs of moving large amounts of digital traffic. Earlier this
year Netflix reached deals with Comcast and Verizon Communications
Inc. to improve the performance of Netflix's streaming video
service, though the Verizon deal hasn't been fully implemented
yet.
Domestically, Netflix added 570,000 subscribers in the second
quarter as well as 1.1 million users internationally. In April, the
company had forecast adding 520,000 domestic subscribers and
940,000 overseas users.
The additions come as Netflix recently implemented a price
increase, its first since 2011. New U.S. customers will pay a $1
more a month, at $8.99, with existing customers grandfathered in
for two years. New overseas customers saw a similar increase.
The extra money will help pay for programming costs, especially
as Netflix expands into more international markets. Thanks in part
to the billions it already has committed to programming, Netflix
has grown to become the biggest stand-alone subscription
programming service in the U.S.--now with 36.24 million
users--passing some long-standing traditional TV outlets like HBO
in terms of subscribers.
Shares rose less than 1% in recent after-hours trading. Through
Monday's close, the stock has risen 71% in the past year.
For the second quarter, Netflix reported a profit of $71
million, or $1.15 a share, up from $29.5 million, or 49 cents a
share, a year earlier. Revenue increased to $1.34 billion from
$1.07 billion.
Analysts polled by Thomson Reuters expected per-share profit of
$1.16 and revenue of $1.34 billion.
For the current fiscal third quarter, Netflix projected
per-share earnings of 89 cents. Analysts polled by Thomson Reuters
recently expected $1.06 a share.
Also for the current quarter, Netflix said it expects to add a
total of 3.69 million streaming subscribers, including 1.33 million
net additions domestically and 2.3 million internationally.
Netflix has sought deals for more exclusive content to counter
increased competition from Amazon.com Inc. and other outlets and is
focusing on increasing its original programming, which includes
shows such as drama "House of Cards" and comedy "Orange Is the New
Black."
Write to Tess Stynes at tess.stynes@wsj.com
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