July 24, 2009, 12:00 AM

Netflix posts a 21% increase in Q2 revenue as subscribers grow by 26%

The online DVD rental company said revenue for the second quarter ended June 30 rose 21% year-over-year to $408.5 million, as net income increased 22% to $26.6 million and the number of subscribers grew 26% to 10.6 million.

Netflix Inc., the online DVD rental company, said revenue for the second quarter ended June 30 rose 21% year-over-year to $408.5 million from $337.6 million, as net income increased 22% to $26.6 million and the number of subscribers grew 26% to 10.6 million.

"We continued to execute very well in the second quarter and are on track to deliver a record 2009," says Reed Hastings, Netflix co-founder and chief executive officer. "As our subscriber base and disc shipments continue to expand, and as we offer more opportunities to watch instantly via the Internet, we believe we are striking the right balance between growth, investment and earnings."

Netflix, No. 18 in the Internet Retailer Top 500 Guide, says its cost of acquiring a subscriber declined 17% to an average of $23.88 from 28.89 a year ago. New subscribers totaled 1.94 million in Q2, up 40% from 1.38 million in Q2 of 2008.

The Q2 churn rate of subscribers, which reflects the number of subscribers who don’t renew their subscriptions, increased to 4.5% from 4.2% in the year-ago quarter. That left Netflix with a net increase in this year’s second quarter of 289,000 subscribers, up 72% from 168,000 net new subscribers in last year’s second quarter.

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