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Earnings: Netflix Grows Subscribers, Revenues; Invests In Streaming

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Analysts were expecting strong Q2 numbers from Netflix (NSDQ: NFLX) — and even though revenues came in slightly under the consensus of $409 million — the DVD rental company lived up to the expectations.

It gained 289,000 subscribers, kept churn (or cancellations) relatively flat at 4.5 percent, and lowered subscriber acquisition costs to $23.88. (That’s down from $28.89 in Q208, and $25.79 in the previous quarter).

More streaming partners and subscribers: Netflix said there was “strong growth” in terms of the number of streaming video subscribers (as opposed to people that just rent movies by mail) — but didn’t break out a percentage. During the earnings call, CEO Reed Hastings said the company was “on pace” to have its streaming platform bundled into an increasing number of devices every quarter, since having a variety of device options was key to maintaining that growth in streaming subscriptions.

Streaming limitations: Netflix plans to continue investing in streaming, but aside from a trial, it won’t be launching a standalone option any time soon. Release windows are keeping the on-demand library too thin, and viewers want access to new releases. “We don’t have all the [streaming] content we have on DVD,” Hastings said. “Our subscribers want streaming-only, but with a lot of content, so for now, they’re happy with the mail/streaming hybrid.”

2Q 2009 2Q 2008 Analysts’ Estimates For 2009
EPS $0.54 $0.42 $0.52
Net Income $32.4M $26.6M
Revenue $408.5M $337.6M $409.7M

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