Netflix’s Subscriber Base Expands but Misses Expectations, Shares Fall (NFLX)
Netflix Inc. (NASDAQ: NFLX) announced late on Monday that its fiscal second-quarter profit rose as the internet streaming company continued to expand its subscribers’ base in the U.S.
Adjusted earnings beat Wall Street’s estimates and revenue was mainly in-line with expectation; however; shares tumbled 4% in afterhours trading as the growth in the streaming subscribers’ base in the fiscal second quarter missed analysts’ expectation.
The Company also warned that solid double digit growth witnessed in the past might be difficult to maintain in the future as the company translates into a mature company.
“The larger we get, the harder it is to grow,” said Netflix’s Chief Executive, Reed Hastings in a statement during a video webcast.
Meanwhile, Netflix’s DVD rental business continued to slowdown. Netflix said it lost 470,000 DVD subscribers in the fiscal second quarter. Nonetheless, the Company does not intend to shut this business.
For the fiscal second quarter ended June 30, the Los Gatos, California-based Company, reported net income of $29 million or 49 cents a share, a nearly five-fold increase from the year-earlier quarter. Revenue climbed 20% to $1.07 billion.
During the recently concluded quarter, Netflix added 630,000 news streaming subscribers in the U.S. while Wall Street’s expectation was for 700,000 net additions.
The “contribution profit margin”, a gauge on profitability (which is revenue minus the cost of revenue and marketing expenses) rose to 22.5%.
Free cash flow stood at $13 million up from $11 million, in the year-earlier period and ($42) million in the preceding quarter.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht. |
