Netflix reports Q3 profit
But the company said its subscription growth with slowNetflix made a nice profit but also said Monday that its subscription growth will slow, providing evidence that the DVD-rental industry could be harmed by a faltering economy.
Netflix said its third-quarter profit rose 30% to $20.4 million on revenue that was up 16% to $341 million. The results beat expectations on the bottom line but not the top line.
The company said it added 261,000 subscribers to 8.7 million, 23% more than it had at the same time a year ago. The most recent addition, though, fell short of original guidance of 8.8 million.
CEO Reed Hastings said on a conference call with analysts that the economy has taken a turn for the worse since July, when the company saw no negative effects on its business. Now, though, slower growth is the forecast from Netflix, and its goal of 9.7 million subscribers by year’s end is in doubt.
Hastings also talked up a recent deal with Starz Play, a broadband service. That deal — which lets Netflix stream Starz content to its subscribers — could be a precursor to a more robust offering, one that might eventually make Netflix a competitor with cable and satellite TV services.
Netflix also said that by the end of the current quarter it expects 500,000 of its subscribers will opt for paying $1 extra per month to get Blu-ray Disc DVDs instead of the old-fashioned kind.
Hastings also said that Redbox and other DVD kiosks are not hampering its business. In areas where Redbox kiosks become popular, he said, there is no noticeable increase in Netflix churn.
Shares of Netflix rose 2.2% in the regular trading session to $23.80 and were flat after-hours.