BUSINESS

Netflix CEO Reed Hastings Says Higher-Priced Plans In The Works

07/15/2015 04:59 EDT | Updated 07/16/2016 05:59 EDT

Netflix CEO Reed Hastings told investors on Wednesday that the company was preparing to carefully push consumers toward higher-priced plans in the U.S. in the coming years.

Share prices slipped early in the day and then soared more than 10 per cent on after-hours trading as the stronger-than-expected second-quarter results were announced. The company’s stock also split seven-for-one on Wednesday.

The Associated Press reports:

SAN FRANCISCO - Netflix's second-quarter performance followed a familiar script of rapid subscriber growth that has enthralled investors.

The world's largest Internet video service added 3.3 million worldwide streaming subscribers during the three months ending to end the period with 65.6 million customers. About 900,000 of the additional subscribers were signed up in the U.S., where Netflix now has 42.3 million customers.

The increases were far better than Netflix's management projected and represented the biggest subscriber gains during the second quarter since the company began streaming video over high-speed connections eight years ago.

By comparison, Netflix picked up 1.7 million subscribers in last year's second quarter, traditionally a time when the company has more trouble attracting new subscribers and retaining existing customers because people tend to spend more time outside with the onset of spring.

The stellar numbers provided another lift to Netflix's stock, which already has more than doubled this year. Netflix shares surged $9.27, or 9.5 per cent, to $107.40 in extended trading.

The second-quarter showing provided further evidence of Netflix's increasing clout in the entertainment industry as a steadily expanding audience embraces the concept of watching video whenever they want on Internet-connected devices instead of being confined to cable- and satellite-TV programming set to come on at a specific time.

The increasing popularity of Internet video is confronting Netflix with formidable competition from a list of rivals that includes Amazon.com and Hulu, but the Los Gatos, California, company has continued to thrive.

The company has been fending off the competition with a slate of original programming that has drawn mostly positive reviews from critics and, in some cases, won awards. The second quarter included the third season of one of Netflix's most popular series, "Orange Is The New Black," as well as the debut of a new show called "Grace and Frankie," starring Lily Tomlin and Jane Fonda.

Netflix expects to build on its recent momentum by adding nearly 3.6 million more subscribers in the current quarter ending in September.

Netflix earned $26.3 million, or 6 cents per share, in the second quarter. That was down 63 per cent from $71 million, or 16 cents per share, at the same time last year. The slide stemmed from Netflix's ongoing expansion into more international experts as it strives to reach its goal of being available through most of the world by the end of next year.

The earnings for the latest quarter were two cents per share above the estimates of analysts surveyed by FactSet.

Second-quarter revenue rose 23 per cent from last year to $1.64 billion, in line with analysts' predictions.

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