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Netflix Earnings Out, Company Announces 40 Million Subscribers

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Netflix just released its Q3 earnings report beating Wall Street expectations.

The company says it now has over 40 million members, up from less than 30 million a year ago. They added about 1.3 million during the quarter (11% higher than the year ago quarter), attributing this to original content like Orange is the New Black and Emmy nominations for its other shows. International net additions were “way up” at 1.4 million new members.

As questions remain about the company’s DVD business, they remind everyone that the DVD selection includes HBO and other pay TV content, and it “continues to be a source of satisfaction for 7.15 million domestic households.” The DVD business generated $107 million in profit for the quarter.

Here’s an overview of the results and guidance:

Netflix Earnings

Netflix Business Outlook

You can get a look at the balance sheets here.

In a letter to shareholders, CEO Reed Hastings and CFO David Wells said, “We were pleased with our global profitability for Q3. We delivered on our targets despite the faster amortization of original content, which pulled forward into Q3 about $27 million in expense from future quarters, due to more members and revenue than expected and by adjusting spending in Q3 on other items. The effect of the faster amortization of original content is small enough that we are not changing our domestic contribution margin targets (400 basis points Q over prior year Q) or our global profitability targets (stay profitable despite international investments).”

At 5PM Eastern, Hastings, Wells and Chief Content officer Ted Sarandos will host a live video discussion. You can watch it here.

Update: Netflix says it is open to getting into the movie business, but not so interested in sports right now.

Images: Netflix Investor Relations

Netflix Earnings Out, Company Announces 40 Million Subscribers
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