Netflix Profit Soars On Strong Subscriber Growth; Stock Up 15%

(RTTNews) - Online video service provider Netflix Inc (NFLX), Tuesday reported a surge in profit for the fourth quarter, driven largely by higher revenues and better-than-expected increase in subscriber additions. Investors cheered the results, sending Netflix stock soaring 15 percent on the Nasdaq.

The Los Gatos, California-based company added 4.33 million streaming subscribers in the fourth quarter, above its forecast of 4.05 million, to end the quarter with 57.39 million subscribers. Moving ahead, the company expects to end the first-quarter with 61.4 million global members.

The company added about 1.90 million customers in the U.S. reaching 39.11 million subscribers at the quarter-end, while international growth surpassed domestic growth with Netflix adding 2.43 million customers internationally, bringing total members to 18.28 million.

The video-streaming service provider has turned its focus to expand in international markets as it faces strong competition in the US. The company said its initial international markets-- Canada, Latin America, the UK, Ireland, the Nordic countries and the Netherlands-- "achieved contribution profitability in third quarter and continues to grow." In September, Netflix further expanded to France, Germany, Austria, Switzerland, Belgium and Luxembourg.

"Progress has been so strong that we now believe we can complete our global expansion over the next two years, while staying profitable, which is earlier than we expected. We then intend to generate material global profits from 2017 onwards," said Netflix in a communique to investors signed by Chief Executive Reed Hastings and Financial Chief David Wells.

Netflix's fourth-quarter profit rose to $83.4 million or $1.35 per share from $48.4 million or $0.79 per share last year. On average, 35 analysts polled by Thomson Reuters expected earnings of $0.45 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the fourth quarter grew to $1.48 billion from $1.18 billion a year ago. Thirty-seven analysts had a consensus revenue estimate of $1.48 billion for the quarter.

NFLX closed Tuesday's trading at $348.80, up $11.46 or 3.40%. The stock further gained $52.20 or 14.97% in the after-hours trade.