Netflix Earnings: Margins SUFFER 5th Straight Quarter, Profit FALLS

Rising costs hurt S&P 500 (NYSE:SPY) component Netflix Inc. (NASDAQ:NFLX) in the second quarter as profit dropped from a year earlier. Netflix provides subscription service, streaming movies, and TV episodes over the Internet.

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Netflix Inc. Earnings Cheat Sheet

Results: Net income for Netflix Inc. fell to $6.2 million (11 cents per share) vs. $68.2 million ($1.26 per share) a year earlier. This is a decline of 91% from the year-earlier quarter.

Revenue: Rose 12.8% to $889.2 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Netflix Inc. beat the mean analyst estimate of 4 cents per share. Analysts were expecting revenue of $888.9 million.

Key Stats:

Netflix (NASDAQ:NFLX) has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 36.2%, with the biggest boost coming in the second quarter of the last fiscal year when revenue rose 51.7% from the year earlier quarter.

Last quarter was the fifth in a row that the company saw shrinking gross margins, as they fell 10.2 percentage points from the year-earlier quarter to 27.6%. Over that time, margins have contracted on average 5.1 percentage points per quarter on a year-over-year basis.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 20 cents in the first quarter, by 18 cents in the fourth quarter of the last fiscal year, and by 21 cents in the third quarter of the last fiscal year.

Netflix (NASDAQ:NFLX) reported a profit last quarter, following a quarter of being in the red. The company booked a net loss of $35.2 million, or 63 cents per share, in the fourth quarter of the last fiscal year.

Looking Forward: Analysts appear increasingly positive about the company’s results for the next quarter. The average estimate for the third quarter has moved up from a loss of 2 cents a share to a profit of 11 cents over the last ninety days. For the fiscal year, the average estimate has moved up from a loss of 30 cents a share to a profit of 10 cents over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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