Netflix aims for 12 million subscribers by year end

The recession has been kind to Netflix as the company continues to post stellar financial results and adds hunkered down consumers to its subscriber base. Netflix also hopes to hit the 12 million subscriber mark by the end of the year.

The recession has been kind to Netflix as the company continues to post stellar financial results and adds hunkered down consumers to its subscriber base. Netflix also hopes to hit the 12 million subscriber mark by the end of the year.

Simply put, Netflix reinforced its recession-resistant image with a strong second quarter (statement). Netflix reported second quarter earnings of $32.4 million, or 54 cents a share, on revenue of $408.5 million, up 21 percent from a year ago. Non-GAAP earnings for the second quarter were 58 cents a share. Wall Street was expecting earnings of 50 cents a share on revenue of $409.7 million.

Among the key metrics:

  • Netflix ended the quarter with 10.6 million subscribers, up 26 percent from a year ago.
  • Gross margins improved to 34.1 percent in the second quarter, up from 31.2 percent a year ago. Sequentially margins were flat.
  • It cost Netflix $23.99 per gross subscriber addition, down from $28.89 a year ago and $25.79 in the first quarter.
  • Churn for the second quarter was 4.5 percent, up from 4.2 percent for the second quarter.

Netflix also delivered a solid outlook. For the third quarter, Netflix is targeting 10.9 million to 11.1 million subscribers, revenue of $416 million to $422 million and earnings of 39 cents a share to 47 cents a share. Those results were a little better to in line with estimates. For the year Netflix gave the following outlook:

  • Subscribers of 11.6 million to 12 million, up from 11.2 million to 11.8 million.
  • Revenue of $1.65 billion to $1.67 billion, up from $1.63 billion to $1.67 billion.
  • Earnings of $1.65 to $1.82 a share, up from $1.56 to $1.72 a share.

Overall, Netflix had a good quarter. Nevertheless investors aren't sure what to make of it. There was a $4 swing in afterhours trading.

Also see: Rumor mill: Netflix would be a good fit for Amazon, but...

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