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Netflix Tops 50M Subs Globally, Posts $71M Profit

21 Jul, 2014 By: Erik Gruenwedel

Netflix's old and new corporate logos

Streaming pioneer slows disc rental declines, bowing retail gift cards in the fall

Netflix continues to fire on all cylinders, topping 50 million subscribers globally for the first time and posting a $71 million profit for the second quarter (ended June 30).

The Los Gatos, Calif.-based rental service added 1.69 million subscribers globally, including 570,000 in the United States, and 1.12 million internationally. Netflix ended the period with nearly 48 million paid members.

Netflix’s foreign operations ended the quarter with 13.8 million subs, which was up 78% from the prior-year period. It reduced its operating loss from $66 million in the prior-year period to $15 million. The company expects to increase international losses to $42 million in the third quarter as it readies expansion into Germany, France, Austria, Switzerland, Belgium and Luxembourg in September.

Netflix expects to add 3.69 million subs in Q3, with the majority (64%) coming from abroad.

“Even after our upcoming expansion in Europe, we’ll only address about one-third (271 million of 728 million) of current global broadband households, providing a great opportunity to build on our international success beyond 2014,” CEO Reed Hastings and CFO David Wells co-wrote in the investor letter. “Our broad success from Argentina to Finland has convinced us to further invest aggressively [globally].”

The company’s legacy disc business continues to flourish despite corporate’s ongoing focus on subscription streaming. The disc business ended the quarter with 6.3 million subs, generating contribution income of $92.8 million. More importantly, Netflix said disc rental declines slowed nearly 18% to 391,000, compared with 475,000 during the prior-year period.

Netflix said it would begin selling retail gift cards for the first time beginning in the fall. The cards feature Netflix's revised logo from the red block with white letters to the cleaner red letter.

Finally, Netflix said the second season of women’s dramedy “Orange Is the New Black” was the most watched original series during the second quarter.

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