Netflix Inc. posted better-than-expected results Monday, but failed to impress investors accustomed to blowout quarters and bullish outlooks.
Shares of Netflix fell 5 per cent after its report, a sign that anything less than a blockbuster quarter will no longer suffice, not for a company whose stock has nearly tripled over the past year.
While Netflix posted first-quarter earnings of $60.2-million (U.S.), or $1.11 a share - up from $32.3-million, or 59 cents per share, in the period a year ago - it was the outlook that received the most attention.
The company said it would earn between 93 cents and $1.15 a share in the second quarter, compared with analyst expectations of $1.19 a share.
"Netflix is very much a momentum stock," said Brett Harriss, an analyst with Gabelli & Co. "There was probably some speculation that we'd have another blockbuster quarter and we didn't."
Netflix has raised expectations by producing out-sized subscriber additions quarter after quarter. In the first quarter, Netflix posted 3.3 million U.S. subscriber additions - plus another 29,000 new international subscribers - to bring its total to 23.6 million.
It is now the largest U.S. paid video service, surpassing Comcast Corp. and underscoring its success so far in its transition from a mail-order business to one that increasingly delivers its movies and TV shows over the Web.
Its additions were at the high end of its own forecast range. It said it would likely end the second quarter with 24.9 million to 25.9 million subscribers.
Revenue rose 46 per cent to $719-million. Analysts had expected revenue of $703.6-million, according to Thomson Reuters I/B/E/S. The earnings were 3 cents better than analysts' average forecast of $1.08 a share.
To attract more customers, Netflix has built its streaming offerings through a rush of content agreements. Recent ones include a Lions Gate deal for Mad Men, a Fox deal for Glee, and a two-year deal with CBS that adds shows such as Cheers and Frasier.
Netflix made an aggressive move into securing its own content, purchasing the distribution rights for the original series House of Cards, starring Kevin Spacey.
Netflix shares fell to $238.20 following the earnings report, after closing at $251.67, down 55 cents, during the regular Nasdaq session. They have climbed almost 44 per cent this year.