Netflix exceeds second-quarter expectations

Company posts $32.4 mil profit, up 22% from a year ago

NEW YORK -- Netflix posted better-than-expected second-quarter results Thursday afternoon and raised its full-year profit and subscriber forecasts again.

After the market close, Netflix posted a $32.4 million profit for the latest quarter, up 22% from the $26.6 million in the year-ago period. Revenue rose 21% to $408.5 million.

The company ended June with nearly 10.6 million subscribers, up 26% over the year-ago quarter and up 3%, or 289,000 on a net basis, compared with 10.31 million as of the end of the first quarter. That gain was bigger than the year-ago increase of 168,000.

The firm expects to finish 2009 with 11.6 million-12 million subscribers, up from its previous 11.2 million-11.8 million forecast. It also boosted the low end of its full-year revenue estimate range to $1.65 billion-$1.67 billion from $1.63 billion-$1.67 billion. Its profit projection for the year rose to $99 million- $109 million from $96 million-$106 million.

"We continued to execute very well in the second quarter and are on track to deliver a record 2009," CEO Reed Hastings said. "As our subscriber base and disc shipments continue to expand, and as we offer more opportunities to watch instantly via the Internet, we believe we are striking the right balance between growth, investment and earnings."

On the earnings call late Thursday, management said it has seen no material effect on its growth from Redbox DVD kiosks in the Houston and Salt Lake City markets that that company has focused on, arguing that kiosks hurt traditional video stores more.

Asked if Netflix's online streaming service is closer to becoming a stand-alone offer, Hastings dampened such expectations, citing a lack of content rights, especially as far as current releases go. "We don't have all the content we have on DVD," he said. "Our subscribers are very happy with a hybrid solution."

Executives also said Netflix feels it is not being hurt by the recession, even though the economic slump also isn't helping its business.