Netflix swings to Q1 earnings of US$2.69M from loss of US$4.6M a year ago as sales rise 18% to US$1.02B; company adds more than 2 million customers

Cindy Allen

LOS GATOS, California , April 22, 2013 (Bloomberg LP) – Netflix Inc., the leading online video-subscription service, posted better-than-expected gains in U.S. subscribers for the first quarter, adding more than 2 million new customers. The stock soared.

The gain brought the domestic total for the period to 29.2 million, Los Gatos, California-based Netflix said today on its website. Analysts had estimated Netflix would end March with 29 million online U.S. users, the average of seven estimates compiled by Bloomberg.

First-quarter net income, including an expense for early debt retirement, totaled $2.69 million, or 5 cents a share, compared with a loss of $4.6 million, or 8 cents, a year earlier. Sales rose 18 percent to $1.02 billion from $869.8 million a year ago, matching estimates of $1.02 billion.

Netflix jumped 18 percent to $206 in extended trading after the release. The shares rose 6.7 percent to $174.37 at the close in New York and have gained 88 percent this year, second most among stocks in the S&P 500 after Best Buy Co.

Shows such as the original political drama “House of Cards” with Kevin Spacey and Robin Wright helped attract new online subscribers in the U.S., beating the company’s January forecast of 1.3 million to 2 million.

The company has been investing in original content to bolster its library of films, TV reruns and exclusive content. The combination will help Netflix stand out from competitors such as Amazon.com Inc., the largest Web retailer, Hulu LLC and Redbox Instant by Verizon, Chairman and Chief Executive Officer Reed Hastings has said.

Netflix began showing all 13 episodes of the horror series “Hemlock Grove” on April 19. On May 26, the revived comedy “Arrested Development” will debut.

Analysts have suggested the company may tighten its subscription policies, increasing revenue potentially by limiting the sharing of accounts. As many as 10 million people watch the online video service without paying, according to Michael Pachter, a Wedbush Securities analyst in Los Angeles.

--Editors: Rob Golum, Ben Livesey

To contact the reporter on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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