Today Netflix revealed their second quarter earnings with non-GAAP earnings per share (EPS) of $0.06 and revenue of $1.64 billion. Analysts had estimated earnings of $0.04 per share on revenue of $1.65 billion.
Netflix also increased its U.S. subscribers by .9 million for a total of 42 million. Internationally, Netflix gained 2.4 million members, bringing its total outside of the U.S. to 23 million. Both benchmarks exceed expectations CEO Reed Hastings set last quarter.
Ahead of the earnings announcement, Netflix’s stock closed down 2 percent at $97.96 a share following a 7-to-1 stock split on Tuesday night. Prior to the split, Netflix had one of the most expensive stocks on the market, with each share of stock worth $702.60. As of this writing, Netflix stock is up nearly 10 percent in after-hours trading.
Last quarter Netflix met analyst expectations for revenue and surpassed them on earnings. It also delivered on its promise to boost subscribers by 4 million. However, profits were slim.
Some were worried that the launch of HBO’s streaming service, HBO Now, would hinder Netflix’s ability to grow. However, during an earnings call last quarter, Hastings didn’t seem concerned about the launch of competitors:
“What you’re seeing is Internet video drawing more people in, thinking, ‘Hey, I’ve got to check that out’,” Hastings said, adding, “All the Internet video services are great values.”
Netflix has been investing heavily both in new markets and in original programming like House of Cards, The Unbreakable Kimmy Schmidt, and Orange is the New Black. So much so it has negative free cash flow of $229 million (compared with $163 million last quarter).
Considering Netflix stock growth this year, investors seem to be happy to let Netflix spend, so long as it continues to grow.
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