Netflix sees quarterly profit more than double

Tuesday 22 July 2014 07.33
Netflix is beginning to earn more per customer following a subscription price increase
Netflix is beginning to earn more per customer following a subscription price increase

Netflix said its quarterly profit more than doubled, boosted by strong growth in US and international subscribers as a price increase for its most popular US video streaming plan did not deter new users.

Netflix added 570,000 US customers in the second fiscal quarter ended 30 June, passing 50 million worldwide subscribers for the first time. 

It added 1.12 million customers in international markets. 

The company's shares rose nearly 1% at $456.21 in after-hours trading, after Netflix also said it expected average revenue per user to rise slowly as it wins over more subscribers at the new prices.

The company in May increased the price of its most popular video streaming plan — the company's first price hike in its largest market in three years.

The company suffered a consumer exodus and stock plunge after it announced an unpopular price increase in July 2011.

Netflix executives also said they were contemplating an eventual move into China, the world's most populous country. 

"It's conspicuously large, and it's conspicuously a growing and very strong economy," David Wells, Netflix's chief financial officer, said on a video-streamed conference call with analysts. "Look for the future in terms of an answer from us in China."

Chief Executive Officer Reed Hastings cautioned that any move into China, if it happens, would occur far in the future. 

"We're not thinking about it hard right now," Hastings said in an interview. "We are really focused on Europe at this point."

The company said it planned to expand into Germany, France, Austria, Switzerland, Belgium and Luxembourg in September, taking its international addressable market to more than 180 million broadband households — double the current US market.

Netflix has invested in original series such as ‘House of Cards’ and the Emmy-nominated ‘Orange is the New Black’ to square off against competition from online video players Amazon.com and Hulu. 

The June release of a second season of ‘Orange’ helped lure customers during the quarter, Netflix said.

The company's profit rose to $71 million, or $1.15 per share, from $29.5 million, or 49 cents per share, a year earlier. 

Revenue rose to $1.34 billion from $1.07 billion.

Analysts on average had expected $1.16 per share in profit on revenue of $1.34 billion, according to Thomson Reuters IBES.

Netflix also repeated its opposition to the planned merger of Comcast Corp and Time Warner Cable. 

The company called on regulators to block the merger or place a condition that would prevent the combined company from charging interconnection fees to deliver video over their broadband networks.