Netflix reported Monday that its fourth-quarter profit rose 45 percent on the strength of lower marketing costs and the growth of its Internet streaming service.
Netflix CEO Reed Hastings credited the company's "Watch Instantly" streaming feature with fueling subscriber growth.
"It's very clear that streaming is energizing our growth," Hastings told analysts during a conference call.
For the quarter ended December 31, the company reported that it earned $22.7 million, or 38 cents a share, compared with $15.7 million, or 23 cents a share a year ago. Revenue at the Los Gatos, Calif.-based movie rental service increased 19 percent to $359.6 million from $302.4 million a year earlier.
Analysts on average had expected fourth-quarter net earnings of 34 cents per share, excluding stock-based compensation, on revenue of $354.3 million.
Netflix recorded about 9.39 million subscribers at the end of the fourth quarter, a 26 percent increase over the 7.48 million customers it reported for the year ago period. The company also said it expects to finish 2009 with 10.6 million to 11.3 million total subscribers.
The company's fourth-quarter margins grew to 35.2 percent from 33.8 percent a year ago as marketing costs declined. Netflix reported that its customer acquisition costs were $26.67 per each subscriber, down from $34.58 a year earlier.
Meanwhile, cancellations increased slightly, to 4.2 percent, compared with 4.1 percent a year earlier.
The company also announced a $175 million stock buyback program for 2009.
Shares of the company's stock jumped 7.4 percent to $32.38 in after-hours trading.