Netflix Q3 Profit Jumps 30 Percent But Subscriber Growth Slows

October 21, 2008 5:56 a.m. EST

San Francisco, CA (AHN) - Netflix announced Monday third quarter profits rose 30 percent helped by robust revenue growth and lower subscriber acquisition costs.

The DVD-rental company posted third quarter profits of $20.4 million or 33 cents a share, compared with $15.6 million or 23 cents a share in the same period a year earlier. Revenue totaled $341 million, up 16 percent from $294 million last year.

The results were mixed as analysts were expecting profits of 31 cents a share on revenue of $343 million, according to Thomson Reuters.

The company reduced its general and administrative costs by 9 percent to $11.7 million. Marketing costs were relatively flat from last year at $49.2 million. Netflix said the cost to acquire a subscriber fell to $32.21 from $37.89 last year.

Total subscribers grew to 8.67 million, short of the 8.8 million the company had forecasted back in July.

"Since July ... the economy has deteriorated markedly," Netflix Chief Executive Reed Hastings said on a conference call, according to the Associated Press. "It now appears that the recession means continued subscriber growth for Netflix, but not as fast as last year."

Netflix now expects to have 8.85 million to 9.15 million total subscribers at the end of the fourth quarter.

Shares of Netflix rose 2.2 percent on Monday to $23.80 a share.