Netflix 3Q Profit Beats Estimates on Surge in Subscribers, Sales

Netflix (NFLX) said it boosted profit by 26% in the third-quarter. The largest U.S. DVD-by-mail service gained new subscribers by expanding its digital and packaged-media offerings.

Shares rose in extended trading after the company beat earnings estimates and increased its annual revenue and earnings forecast as well as its fourth-quarter sales estimates.

Net income was $38 million, or 70 cents a share, up from $30.1 million, or 52 cents, a year earlier, as revenue increased 31% to $553.2 million, Netflix said in a statement Wednesday. Excluding certain items, the company, which expanded its customer base 52% from a year earlier to 16.9 million subscribers, earned 78 cents a share, more than the 72-cent average analyst estimate in a Thomson Reuters poll.

"Our rate of subscriber growth continues to accelerate and we added more than a million net new subscribers for the third consecutive quarter," said Netflix CEO Reed Hastings in the statement.

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Netflix has been boosting revenue and pulling market share from companies such as video-store chain operator Blockbuster with its combination of by-mail DVD delivery and video streaming services in the U.S. Blockbuster last month filed Chapter 11 as part of a plan to slash the company's debt from almost $1 billion to an estimated $100 million.

With the sales increase, Netflix today boosted the low end of its 2010 revenue forecast by $10 million to $2.15 billion and forecast an earnings range with a midpoint of $2.76 a share, up from its July forecast midpoint of $2.72 a share.

Additionally, the company boosted its fourth-quarter revenue forecast to as much as $598 million from as much as $596 million.

Netflix shares increased 7.4% to $164.65 as of 4:35 Eastern time in extended trading Wednesday. The stock price has tripled this year.