It was only three years ago that Internet video service Netflix (NFLX) was in a tailspin. It was losing subscribers, the stock had tanked -- all due to a bet (not handled well from a customer relations perspective, arguably), that streaming would one day overtake mailed DVDs as the company's key business.
Fast forward three years and it is obvious that management was right. Netflix reported second quarter earnings after the close Monday that any CEO would be proud of. Earnings more than doubled as new episodes from one of its hit series helped surpass 50 million worldwide subscribers for the first time.
The gains announced Monday include an additional 570,000 U.S. subscribers, slightly more than Netflix's management predicted. The quarter is typically the company's slowest of the year, as people spend more time outdoors instead of watching video.
Investors applauded the second-quarter results as Netflix's stock rose $6.62 to $458.57 in extended trading. The shares have surged by 23 percent this year.
The second quarter featured one of Netflix's marquee attractions, "Orange Is The New Black," which returned for its second season in early June. As with Netflix's other original series, all 13 episodes of "Orange Is The New Black," were released simultaneously so subscribers could watch the story unfold on their own schedules.
Netflix ended June with 36.2 million subscribers in the U.S. and another 13.8 million customers in roughly 40 other countries. The Los Gatos, California company picked up 1.1 million subscribers outside the U.S. in the second quarter, a figure that also topped management's projections.
The company expects to add another 3.7 million worldwide subscribers in the current quarter ending in September, including 1.3 million U.S. customers. The company plans to start selling its Internet video service in six more European countries in September, including Germany and France.
The second-quarter performance will likely alleviate any concerns that a price increase imposed in early May would undercut Netflix's growth. Netflix raised its rates by $1 to $9 per month for Internet video streaming in the U.S., but the company eased the blow by allowing existing subscribers to continue paying the old price for at least two years.
Netflix earned $71 million, or $1.15 per share, during the April-June period. That compared to income of $29.5 million, or 49 cents per share, at the same time last year. This year's earnings per share were a penny above the average estimate among analysts surveyed by FactSet.
Revenue climbed 25 percent from last year to $1.3 billion, matching analyst projections.