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Netflix Earnings Rise as Subscriber Growth Surges 24%

Netflix, the largest online DVD rental company, handily beat Wall Street targets for earnings, revenue and subscriber growth.

The company also boosted its subscriber, revenue and earnings targets for the fourth quarter and fiscal year 2007.

Shares rose 15 percent to $26.50 in after-hours trading.

Net income for the third quarter rose to $15.7 million, or 23 cents per share, from $12.8 million, or 18 cents per share, a year earlier.

Revenue rose 15 percent to $294 million from $256 million.

The Los Gatos, Calif.-based company, which pioneered online DVD rentals and controls two-thirds of the market, had previously forecast subscribers at the end of the third quarter, to total between 6.7 million and 6.9 million.

But Netflix surpassed that target, ending the quarter with about 7.03 million total subscribers, representing 24 percent year-over-year growth from about 5.7 million in the year-earlier quarter.

Subscriber acquisition costs for the third quarter of 2007, another key metric, dropped to $37.91 per gross subscriber addition, compared with $45.32 for the same period of 2006 and $44.02 for the second quarter of 2007.

Netflix shares closed at $23.01 on Nasdaq.

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