Netflix Q1 profit soars 68%

San Jose, Calif. Netflix's first-quarter profit soared as more consumers signed up for its DVD-by-mail service than in any other three-month period in its history.

The company added 920,000 customers during the first three months of the year, boosting its first-quarter profit 68% to $22.4 million, compared with $13.3 million in the same period last year.

Netflix ended March with 10.3 million subscribers, up from 9.4 million in December. Revenue rose 21% to $394 million.

The performance didn't live up to the high hopes of investors, partly because the company has been spending more money to expand and improve a complementary service that streams movies over high-speed Internet connections.

In a conference call with analysts, Netflix CEO Reed Hastings discussed the growing trend of renting DVDs from store kiosks that charge as little as $1 per disc for new releases.

"By the end of the year, kiosks will likely be our number one competitor as video stores fall inversely," Hastings told analysts during the call.

Management expects Netflix's growth to slow in the second quarter , which is traditionally a sluggish period as people go on vacation and spend more time outside.