Netflix Hits Its Q2 Numbers and the 50 Million Subscriber Mark

Reed Hastings, Netflix

Asa Mathat


Netflix has a very, very lofty valuation — CEO Reed Hastings himself has suggested that it’s too high — so it can’t stumble when it comes to earnings. But the streaming video company appears to have done just fine today: It reported Q2 profits of $1.15 per share and revenue of $1.34 billion. Most crucially, the company now has more than 50 million streaming subscribers worldwide.

The market was looking for $1.14 per share on revenue of $1.34 billion, 36.2 million U.S. subscribers and 13.7 million international subs. Investors, who have already placed a sky-high valuation on the stock, seemed okay with the results at first blush.

Here’s RBC analyst Mark Mahaney’s “cheat sheet” so you can gauge for yourself:

As always, CEO Reed Hastings’ quarterly letter to shareholders is filled with interesting nuggets. I’ll be highlighting some of them as I find them here:

Peter Kafka Peter Kafka July 21, 20141:09 pm

Netflix continues to not provide numbers about the way its original content has performed. But it attributes some of its success this quarter to the second season of “Orange Is the New Black”.

Peter Kafka Peter Kafka July 21, 20141:11 pm

One reason for the show’s success: Netflix pushed it hard. A campaign for the show “represents our largest content marketing push to date and we are pleased with the reaction from fans.”

Peter Kafka Peter Kafka July 21, 20141:11 pm

New European territories coming this fall, which aren’t surprising: “Germany, France, Austria, Switzerland, Belgium, and Luxembourg.”

Peter Kafka Peter Kafka July 21, 20141:13 pm

After raising prices for new subscribers this spring (existing subs will eventually see their rates rise as well), Netflix says that it saw “minimal impact on membership growth from this price change.”

Peter Kafka Peter Kafka July 21, 20141:16 pm

In the past, Hastings has used this letter to lob bombs at competitors, or, more recently, Comcast and its plans to acquire Time Warner Cable. Here he is relatively muted, or at least concise: 

“Our focus on strong net neutrality, including interconnection, is about preventing large ISPs from holding our joint customers hostage with poor performance to extract payments from us, other Internet content firms, and Internet transit suppliers such as Level 3 and Cogent. 

Our policy goals are for the FCC to not sanctify paid prioritization, and for the DOJ/FCC to block the merger of Comcast/TWC, or at the very least, to require as condition to approving the merger that the combined entity be prevented from charging for interconnection.”

Peter Kafka Peter Kafka July 21, 20141:17 pm

And that’s it! By Netflix’s standards, not much here to chew on at all. Hopefully we’ll get more interesting stuff to discuss during the earnings call at 5pm eastern. See you then.