Netflix, Inc. is a subscription service streaming movies and television episodes over the Internet and sending digital versatile discs by mail to more than 12 million subscribers.
Netflix's cautious outlook overshadows Q1 subscriber gains
Video rental company Netflix (NASDAQ:NFLX) late Monday posted a first-quarter loss, its first in seven years, linked to its international expansion.
Netflix also projected slower subscriber growth this quarter for its key U.S. video-streaming service, disappointing investors and sending its shares down 17 percent after hours.
For the three months ended March 31, Netflix posted revenue of $870 million, up 21 percent from a year earlier. The company had a net loss of $4.6 million or 8 cents per share in the quarter, versus a net profit of $60.2 million a year earlier.
Analysts had expected a loss of 27 cents per share, according to Thomson Reuters.
The company added 1.7 million U.S. streaming customers in the quarter for a total of 23.4 million. DVD subscribers fell by about 1.1 million to 10.1 million.
Adding customers to the instant-streaming business is crucial to the company's future as it moves away from mailing DVDs in its signature red envelopes. And sustaining strong growth in users will help offset rising costs as Netflix writes bigger checks for new movies and TV shows.
Netflix never fully recovered credibility with investors after a turbulent 2011, when a proposed price increase and plan to hive off its DVD business sparked cancellations by angry customers.
It lost more than 800,000 U.S. subscribers in the third quarter of 2011, though it rebounded by gaining back 610,000 in the last three months of the year.
While it transitions to streaming and expands around the world, Netflix faces growing competition from rivals such as Amazon.com (NASDAQ:AMZN) and Comcast's (NASDAQ:CMCSA) Streampix.
The company attributed its quarterly loss to start-up costs abroad. Netflix added 1.2 million customers in international markets during the second quarter, for a total of 3.1 million.
The company said it expected to return to profitability in the second quarter and launch in another European market in the fourth quarter of this year.