Netflix Earnings More Than Double

Netflix Inc. said its second-quarter earnings more than doubled as the video-streaming company added more subscribers than expected.

The second quarter traditionally provides the weakest membership gains for Los Gatos, Calif., company, which said it added 1.69 million streaming subscribers in the three months ended June 30, above the company's forecast of 1.46 million.

In its wide-ranging letter to shareholders, Netflix also said it would introduce physical gift cards and reiterated its stance on net neutrality, or the rules for how broadband providers can treat content traveling over their networks.

Netfilx said it wants to prevent large Internet service providers from "holding our joint customers hostage with poor performance to extract payments from us, other Internet content firms, and Internet transit suppliers."

The company also urged the U.S. government to block Comcast Corp.'s pending $45 billion acquisition of Time Warner Cable Inc., "or at the very least, to require as condition to approving the merger that the combined entity be prevented from charging for interconnection."

Netflix's growth and resulting demand for bandwidth has been a source of conflict with broadband providers over who should bear the costs of moving large amounts of digital traffic. Earlier this year Netflix reached deals with Comcast and Verizon Communications Inc. to improve the performance of Netflix's streaming video service, though the Verizon deal hasn't been fully implemented yet.

Domestically, Netflix added 570,000 subscribers in the second quarter as well as 1.1 million users internationally. In April, the company had forecast adding 520,000 domestic subscribers and 940,000 overseas users.

The additions come as Netflix recently implemented a price increase, its first since 2011. New U.S. customers will pay a $1 more a month, at $8.99, with existing customers grandfathered in for two years. New overseas customers saw a similar increase.

The extra money will help pay for programming costs, especially as Netflix expands into more international markets. Thanks in part to the billions it already has committed to programming, Netflix has grown to become the biggest stand-alone subscription programming service in the U.S.--now with 36.24 million users--passing some long-standing traditional TV outlets like HBO in terms of subscribers.

Shares rose less than 1% in recent after-hours trading. Through Monday's close, the stock has risen 71% in the past year.

For the second quarter, Netflix reported a profit of $71 million, or $1.15 a share, up from $29.5 million, or 49 cents a share, a year earlier. Revenue increased to $1.34 billion from $1.07 billion.

Analysts polled by Thomson Reuters expected per-share profit of $1.16 and revenue of $1.34 billion.

For the current fiscal third quarter, Netflix projected per-share earnings of 89 cents. Analysts polled by Thomson Reuters recently expected $1.06 a share.

Also for the current quarter, Netflix said it expects to add a total of 3.69 million streaming subscribers, including 1.33 million net additions domestically and 2.3 million internationally.

Netflix has sought deals for more exclusive content to counter increased competition from Amazon.com Inc. and other outlets and is focusing on increasing its original programming, which includes shows such as drama "House of Cards" and comedy "Orange Is the New Black."

Write to Tess Stynes at [e-mail]

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