SAN FRANCISCO -- Netflix Inc. attracted another 3.6 million customers to its video subscription service in the first quarter, the biggest growth spurt yet in a prosperous run that has established the company as a Hollywood power broker and Wall Street darling.
The financial results announced Monday topped analyst forecasts. But management offered a cautious outlook that included a second-quarter earnings projection below analyst estimates. That caused Netflix shares to shed more than 5 percent in Monday's extended trading.
Netflix's first quarter earnings nearly doubled to $60.2 million, or $1.11 per share, during the first quarter. That was up from $32.3 million, or 59 cents per share, at the same time last year.
The performance was 4 cents per share above the average estimate among analysts surveyed by FactSet.
Revenue rose 46 percent to $719 million about $13 million above analyst estimates.
The company, which is based in Los Gatos, ended March with 23.6 million subscribers in the U.S. and Canada, up from 20 million at the end of 2010. The first-quarter surge left Netflix with more subscribers than long-established pay-TV channels such as CBS Inc.'s Showtime.
Netflix charges $8 per month to stream movies and TV shows over high-speed Internet connections. Most customers pay a little more per month so they can also rent DVDS delivered through the mail.
The company is trying to nudge its subscribers to stream video more frequently to help lower its postal expenses. In the process, Netflix hopes to free up more money to buy more compelling material for its streaming library, which is currently stocked with more than 20,000 movies and TV shows.
Netflix spent $192 million on streaming rights in the first quarter, nearly quadrupling the amount spent at the same time last year.
The company's recent success emboldened Netflix to expand its streaming service outside the U.S. After entering Canada last fall, Netflix plans to begin streaming in another international market that management will identify later this year. The company is so confident about the next step in its expansion that it is already drawing up plans to move into another country early next year.
Netflix ended March with 22.8 million subscribers in the U.S. The remaining 800,000 are in Canada.
After adding more than 3 million subscribers in each of the last two quarters, Netflix expects its growth to taper off in the spring and summer – typically a tougher time to sell subscriptions because more people are taking vacation and spending more time outside.
Netflix thinks it will add 1.3 million to 2.25 million subscribers in the second quarter. The company projected earnings as much as $1.15 per share for the period, below the average analyst estimate of $1.19, according to FactSet.
The company's shares fell $13.50, or 5.4 percent, to $238.17 in extended trading. After tripling last year, Netflix's stock price had risen more than 40 percent so far this year before the reaction to management's forecast.