Netflix Inc (NASDAQ:NFLX), an online movie rental company, has reported higher first quarter profit with sharp jump and revenue and margins as well. but, gave disappointing outlook for the current quarter. Below is the details of earnings.
Netflix said profit in the quarter ended March 31 totaled $60.2 million, or $1.11 a share, up from $32.3 million, or 59 cents a share, a year earlier. The company said its revenue surged 46% to $718.6 million.
Still, Netflix shares, which are up more than 40% so far this year, fell 5.3% to $238.38 in after-hours trading after the company said it expected earnings between 93 cents and $1.15 a share in its second quarter. Analysts polled by Thomson Reuters expected $1.19 a share.
The Los Gatos, Calif.-based company, which rents both physical DVDs and streamed movies, blamed the forecast in part on licenses it needs to acquire for delivering movies and television shows over the Internet. The company said it is spending more in order to have a broader library of content available for users.
"It's only a question of 'is our check big enough?'" Netflix Chief Executive Reed Hastings said on a conference call with investors.
The increased spending could impact profits more than investors initially expected, analysts say.
"No one knows what to make of it," said Wedbush analyst Michael Pachter. "For the first time, they're talking about the streaming content costs growing dramatically, and now it's reflected in their guidance for the quarter."
Pachter, who has had a sell rating on Netflix for more than a year, said he hopes the company will be more transparent about its streaming costs.
The disappointing outlook is an unusual hiccup for the Internet streaming giant, which has become a darling of Wall Street on speculation that the company would lead the charge of customers ditching satellite and cable subscriptions for Web-delivered video instead. Indeed, Netflix reported it counted 23.6 million customers at the end of the quarter, a bit more than the nation's largest cable provider Comcast Corp. (CMCSA) but a little shy of Time Warner Inc.'s (TWX) HBO's 28.2 million subscribers.
Netflix said it doesn't view itself as a threat to the traditional television industry, but rather a companion product that can pull in additional revenue for content providers.
U.S. subscriber acquisition costs, a metric closely watched by investors, fell 33%. The churn rate in the U.S.--a measure of customer cancellations and free subscribers--grew to 3.9% from 3.8% a year ago.
Meanwhile, the company said it ended the quarter with 22.8 million U.S. subscribers, up 17% sequentially and 63% higher than a year earlier. Globally, Netflix had 23.6 million subscribers, up 69% on year.
Gross margin widened to 39% from 37.8%.
( Source: Dow jones Newswire, WSJ)
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