Netflix Inc.'s (NFLX) second-quarter earnings climbed 22% on increased subscriber growth and higher margins.

Shares fell 1% to $46 in after-hours trading as the online movie rental company's earnings topped expectations but the revenue fell short of the analyst estimate. The company's stock is up nearly 60% year-to-date.

The company has benefited as consumers opt for in-home movie nights over expensive evenings on the town. But it faces stiff competition from standalone DVD kiosks, and its online rental business is getting heat from companies like Amazon.com (AMZN), Apple Inc. (AAPL) and Hulu - a joint venture from General Electric Co. (GE) unit NBC Universal, Walt Disney Co. (DIS) and News Corp. (NWS).

Netflix posted earnings of $32.4 million, or 54 cents a share, compared with $26.6 million, or 42 cents a share, a year earlier.

Revenue increased 21% to $408.5 million.

The company in April forecast earnings of 44 cents to 53 cents and revenue between $403 million and $409 million, in line with analysts' estimates at the time. Analysts polled by Thomson Reuters most recently expected per-share earnings of 50 cents on revenue of $410 million.

Subscriber-acquisition costs, a closely watched metric for Netflix investors, fell 17% to $23.88 per subscriber. The company said in April it expected those costs to remain below $28 for the rest of 2009. The company's churn rate - a measure of customer cancellations - increased to 4.5% from 4.2%.

Analysts have raised concerns about customer defections to DVD kiosks like those offered by Coinstar Inc.'s (CSTR) Redbox Automated Retail LLC. Netflix Chief Executive Reed Hastings said in April he expects the kiosks to be the company's biggest competitor by the end of the year.

Gross margin rose to 34.1% from 31.8%.

Netflix ended the most recent period with 10.6 million subscribers, up 26% from a year earlier and at the high end of its April forecast of 10.4 million to 10.6 million. Quarterly growth was 3%.

Looking ahead, Netflix predicted third-quarter earnings of 39 cents to 47 cents a share on revenye of $416 million to $422 million. Analysts estimated earnings of 45 cents on revenue of $418 million.

The company boosted its full-year target, saying it expects earnings of $1.65 to $1.82 a share on revenue of $1.65 billion to $1.67 billion. Its April forecast was earnings of $1.56 to $1.72 a share on revenue of $1.63 billion to $1.67 billion.

Netflix also now expects to end the year with 11.6 million to 12 million subscribers, up from its previous forecast of 11.2 million to 11.8 million.

Wall Street forecast per-share earnings of $1.72 on $1.66 billion in revenue for the year.

 
   -By Melissa Korn and Kathy Shwiff, Dow Jones Newswires; (212) 416-2357, kathy.shwiff@dowjones.com