Netflix, the online video-streaming service, reported revenue of $1.57 billion in its first quarter, on earnings of 38 cents per share.
Analysts expected earnings of 69 cents per share, according to Thomson Financial. The results compare to $1.27 billion and 86 cents per share in the year-ago quarter.
Despite the lower earnings per share numbers, investors applauded the results. In after-hours trading, Netflix shares rose 13%, to a record $534.
The good news for Netflix: strong subscriber numbers. Netflix says it added 4.9 million new ones in the quarter, up from the 4 million analysts had expected.
“There’s still a lot of upside potential,” Mark Mahaney, an analyst with RBC Capital Markets, said in a note to investors.
Netflix offers recent movies, and original fare, including the award-winning House of Cards and Orange is the New Black, which returns for a third season in June.
Netflix, which is riding the wave of interest among “cord cutters” looking to save money by ditching cable, has more than 65 million subscribers for its monthly service and has a big new competitor, HBO.
The longtime pay TV channel, which has more than 114 million subscribers worldwide, now competes with Netflix for video streaming. The new HBO Now app is available to consumers via Apple TV, a $69 set-top box from Apple. It’s the first time HBO has offered its services to consumers without having to subscribe to cable.
“While Netflix has convinced the media industry that they simply want to become HBO faster than HBO can become Netflix, we believe Netflix’s ambitions are far larger,” says Rich Greenfield, an analyst with BTIG. “Netflix is clearly focused on replacing linear television with on-demand, ad-free programming on a worldwide basis.”
In a note to investors earlier this year, Netflix CEO Reed Hastings pointed out the differences between the app and HBO on TV. “The content offering includes only HBO and other original series, and not the breadth of movie content HBO offers in the U.S.,” he said.
SOURCE: USA Today – Jefferson Graham