Netflix profit jumps 45 percent

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.

[sexy_sofie]

not one cent did they make from me because i refuse to use the service.

[belal12]

Any particular reason why? I've been a subscriber ever since cable prices became INHUMANE and roku created the netflix player.

[ecotopian--2008]

Video Stores everywhere are closing their doors. Looks like Netflix is on the way up.

[kpmm1999]

I love how they don't even acknowledge that the ONLY reason their profits grew and they got more subscribers is because in November XBOX started using their service. I see how they don't wanna give credit where credit is due. Maybe I'll stop using their service if they wanna be like that! <br />Yeah right. Like I'd give up streaming movies and shows.

[BigGuns149]

They also added Tivo as a partner as well for streaming their instant view catalog so I wouldn't say that adding the Xbox 360 to the mix was their only major news last quarter. That being said Hastings implicitly credits the Xbox and Tivo announcements as helping expand their membership because those deals no doubt helped boost their streaming business. That of course presumes that he didn't explicitly mention the partnerships in a non-quoted part of his conference call.

[AnthonyNYC]

Well actually they did acknowledge that the increase was mainly due to the streaming feature. <br />I used them before but with the instant watch now and my new roku box, I love the service even more and would never consider dropping it to save money. I might have if they hadn't added that instant feature, so it was good business timing on their part. And the added HD quality they just added for free, that was sweet also!

[ultimatebuster]

Kind of obvious. People are laied off, nothing to do.

[firefish45]

For someone who never thought I'd do Netflix since I like the freedom of going to Blockbuster around the corner, I'll have to say I'm proudly on the 3-DVD's at one plan.<br /><br />It's just awesome.

[biffhenerson]

Ha, you wont see this good news on the evening news. Only doom and gloom "the sky is falling" propaganda is allowed. Netflix ROCKS!