Netflix subscriptions far outpace expectations, shares up 9 percent

[July 16, 2015]   By Lisa Richwine and Anya George Tharakan

(Reuters) - Netflix Inc added nearly a third more subscribers than expected in the second quarter, sending its shares up 9.4 percent as the video streaming service said its investment in original television programs and movies was paying off.

Net subscriber additions rose about 94 percent year over year to about 3.3 million in the second quarter, beating the company's forecast of 2.5 million.

The distributor of "House of Cards" said its new original shows were drawing customers faster than it had forecast.

Netflix also is aggressively expanding around the world, accounting for the bulk of new subscriptions. A trend of slowing U.S. growth was halted in the quarter as the number of new U.S. customers rose about 50 percent higher than the company had forecast.

The company by the end of 2016 plans to reach 200 countries, including China, where it said it was "continuing to explore options."

“Subscriber growth was huge domestically and internationally,” said FBR Capital Markets analyst Barton Crockett. “The technology, the breadth of content and the quality of content is really working in their favor.”

The company, which approved a 7-for-1 stock split in June, added 2.4 million customers in international markets in the quarter, taking its total to more than 65 million users worldwide.

Netflix forecast adding about 1.2 million customers in the United States in the current quarter. It said it expected to add about 3.6 million subscribers worldwide.

Revenue jumped 22.7 percent to $1.64 billion in the second quarter ended June 30, from $1.34 billion a year earlier, the company said. (http://bit.ly/1TD548i)

The company's net income fell to $26.3 million, or 6 cents per share, from $71 million, or 16 cents per share a year earlier, hit by the costs of its overseas expansion.

Analysts on average had expected a profit of 4 cents per share on revenue of $1.65 billion, according to Thomson Reuters I/B/E/S.

Shares rose to $107.38, up 9.4 percent, in after hours trade.

Netflix also said it supported Charter Communications Inc's proposal to buy rival cable operator Time Warner Cable Inc, after Charter committed to open and free interconnection across its network.

(Reporting by Anya George Tharakan in Bengaluru, Lisa Richwine in Los Angeles and Peter Henderson in San Francisco; Editing by Simon Jennings and Cynthia Osterman)

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