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UPDATE:Netflix shares collapsed in after-hours trade, even as it reported better than expected earnings.
The company beat on the bottom line, reporting earnings per share of $0.11. Analysts polled by Bloomberg had forecast EPS of just $0.05.
Revenue improved some 13 per cent to $889 million, roughly in line with estimates.
The company added about 500,000 domestic subscribers during the period, below estimates that went as high as 800,000.
“Moreover, this quarter the Olympics are likely to have a negative impact on Netflix viewing and sign-ups. So, our Q3 guidance is 1 million to 1.8 million domestic net adds,” Netflix Chief Executive Reed Hastings said. “If we finish Q3 in the high end of that range, we would remain on track for 7 million domestic net additions for the year; otherwise it would be challenging to achieve that goal by year end.”
Netflix now projects it will end the third quarter with 24.9 to 25.7 million streaming subscribers.
At that pace, it says it would record third quarter sales between $890 and $911 million, in line with expectations for guidance of $907.5 million.
Internationally, Netflix to have 3.9 to 4.4 million streaming subscribers by the end of September, generating a larger loss than this quarter’s $89 million deficit.
Below, the full earnings release.
Entertainment giant Netflix is minutes away from announcing second quarter results, with expectations for the company to continue to post double-digit revenue growth.
Analysts polled by Bloomberg forecast the subscription television and movie provider to post sales of $888.9 million, a 13 per cent increase from its year ago results.
Expectations are for the company to eek out a $0.05 net profit during the three months ended in June, above Netflix’s own guidance of just $0.02.
Morgan Stanley’s Scott Devitt has maintained his equal-weight rating on Netflix, citing high hurdles that may be difficult for the company to overcome.
“While 7MM net adds for Domestic Streaming for 2012 implies over 30% growth year-on-year, we believe it will be a challenging bogey,” he says. “The last time Netflix grew subs by 7MM, the company had the best consumer value proposition in the US, brand equity that was best in class and was benefiting by a strong consumer electronics replacement-cycle.”
Netflix has predicted that its streaming service would add between 200,000 and 800,000 new U.S. customers, while its DVD-by-mail business loses as many as 1.1 million.
At the end of the first quarter, Netflix said it had 23.41 million domestic members, plus some 3 million international users.
Shares followed the markets lower throughout the day, off 2.3 per cent, and remain more than 72 per cent below their all-time peak of $295.
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