April 23, 2012, 5:40 PM

Netflix reports a loss as Q1 sales rise by 21%

The $4.58 million loss was less than the e-retailer had predicted.

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Sales rose to $869.8 million in Q1 at Netflix.

A big increase in revenue was not enough to hold back a first quarter loss for Netflix Inc.

For the first quarter ended March 31, Netflix, No. 13 in the Internet Retailer Top 500 Guide, reported:

  • Sales grew by 21.0% to $869.8 million from $718.6 million in the first quarter of 2011.
  • A net loss of $4.58 million compared with net income of $60.23 million.
  • The number of paid subscribers increased 13.0% to 24.4 million from 21.6 million.

The increase in subscribers might indicate Netflix is recovering from last year’s pricing and business model changes that alienated many of the video rental service’s members.

Earlier this year, Netflix told investors its first quarter 2012 loss might range from $27 million to $9 million. Profits from domestic and international streaming helped minimize the loss, CEO Reed Hastings told investors on today’s earnings call. The company also had slightly lower technology and development and administrative expenses, he said.

Netflix faces stiff competition, especially for online streaming as Verizon Communications Inc., in a joint venture with DVD rental company Redbox Automated Retail LLC, announced a streaming video service to launch later this year. Amazon.com Inc. also added more programs to its streaming video service.

Online video service Hulu also is catching Hastings’ eye. “While we have 10 times more domestic paid members, and we added over three times more domestic net additions than Hulu in Q1, we do watch them carefully,” Hastings said. Just as Netflix does with Amazon, he added.

For the second quarter, Netflix expects sales to range from $873 million to $895 million and its income to range from a $6 million loss to an $8 million profit.

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