Netflix Shares Spike 10% After The Company Reports 3.3M New Subs, Better-Than-Expected Q2 Profit

Today following the bell, Netflix announced its second-quarter financial performance, including revenue of $1.64 billion and earnings per share of $0.06. Netflix picked up 0.9 million new domestic subscribers and 2.4 million new international subscribers.

The street had expected to earn $0.04 on revenue of $1.65 billion. Down in a flat market during regular hours, Netflix is around 8 percent following its earnings beat. The company concluded its quarter with a total of more than 65 million subscribers, 42 million of which are located domestically and 23 million internationally.

The company’s growth of 3.3 million new subscribers compares favorably to a year-ago tally of 1.7 million. In fact, it’s nearly a doubling of growth. The company’s continued ability to derive new subscribers in the United States, where the service is at a far-higher saturation mark than other markets implies that the firm has a long growth road ahead of it internationally.

Compared to the year-ago quarter, Netflix’s revenue grew by more than $300 million, more than 20 percent.

The company’s earnings per share on a raw dollar basis fell sharply before accounting for the recent split, which levels out the differential to a certain extent. Ahead of its seven-for-one stock split and earnings report, Netflix hit new record highs.

The company’s DVD business, which is breathing, brought the company nearly $78 million in profit during the period.

While Netflix met on revenue expectations, and beat on profit, the company had negative free cash flow of $229 million in the second quarter, worse than its negative $163 million in free cash flow in the sequentially preceding quarter. In short, the company continues to pour capital into new content. The company has $2.4 billion in debt and $2.8 billion in cash.

The company expects to add, on a net basis, 1.15 million new domestic subscribers in the third quarter, and 2.4 million internationally. Put another way, the firm expects to see its subscriber growth grow modestly on a sequential-quarter basis.

Up sharply after hours, investors appear to be enthused at the company’s subscriber growth abroad and general financial performance. The stock should open tomorrow morning at a new record high.