Netflix NFLX +1.76% biggest hits give viewers up close and personal looks at two American institutions. House of Cards portrays the dark side of power in the federal government, while Orange is the New Black pulls back the curtain on the good, the bad and the ugly of our prison system. In its latest earnings report, however, the California based video streaming powerhouse made it clear that its ambition lies far beyond American shores.
Netflix reported $1.34 billion in second quarter revenue, up 36.9% from the same period last year with international streaming contributing $307 million, more than double international revenue a year ago. Overall net income came in at $71 million, up from just $29 million a year ago but slightly below Wall Street analysts’ consensus estimate. Earnings per share were $1.15, a penny ahead of the Street’s $1.14 estimate.
The company finished the second quarter with 50 million subscribers, adding 1.69 million from the end of the first quarter. This closely watched statistic also came in ahead of the company’s previous estimate for 49.8 million. Most of the growth came from outside of the United States with 1.12 million new international subscribers for a total of 13.8 million international members.
Looking to the third quarter, the company expects revenue to come in at $1.2 billion, with $877 million coming from domestic streaming and $347 million from international. Net income is anticipated to be $55 million and earnings per share 89 cents. By the end of the quarter Netflix anticipates a total of 53.74 million adding 3.69 million members with more than 60% of them coming from abroad.
That is because this September Netflix will launch in Germany, France, Austria, Switzerland, Belgium and Luxembourg. In a letter to shareholders Monday Netflix CEO Reed Hastings and CFO David Wells, noted,
This launch into markets with over 60 million broadband households will significantly increase our European presence and raise our current international addressable market to over 180 million broadband households, or 2x the number of current U.S. broadband households.Our international contribution loss of ($15.3) million has been rapidly approaching contribution profitability as we see improvements across all existing markets. Our broad success from Argentina to Finland has convinced us to further invest aggressively in global expansion.”
On the content front, Hastings and Wells called Orange is the New Black Season 2 release, “every bit the global media event we had hoped for.” In the month after the full season came out it was the most watch series in every Netflix territory with many people even re-watching the first season. They added, “Reflecting the increasingly global nature of the Netflix service, we now have original series in production around the world, involving some of the best storytellers working in television and film today.”
Netflix shares initially popped about 2% following the after hours release, before settling at gains of less than 1% to about $453.70 about 45 minutes after the release. The slight gain added to upward momentum throughout the day that sharply contrasted the overall market downturn.
The stock gained 300% in 2013 and is up close to 23% year-to-date. The S&P 500 Index is up just under 7% in the same period. Netflix’s momentum has been largely positive since the streaming company reported first quarter earnings in April. In late May shares crossed the $400 mark for the first time helping cofounder and CEO Reed Hastings join the billionaire ranks. FORBES’Brian Solomon reported,
Most of Hastings’ fortune is tied up in Netflix stock and options, which Forbes calculates at over $900 million. His total estimated net worth surpasses $1 billion when you factor in his other assets, including about $120 million in post-tax profits from stock sales over the last 5 years.”
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