Netflix Inc. Reports Operating Results (10-Q)
Netflix Inc has a market cap of $5.88 billion; its shares were traded at around $83.71 with a P/E ratio of 24.9 and P/S ratio of 1.8. Netflix Inc had an annual average earning growth of 55.3% over the past 5 years.
Highlight of Business Operations:Consolidated revenues for the first quarter of 2012 were flat as compared to the fourth quarter of 2011 and consolidated net income (loss) decreased by 113.0% to a consolidated net loss of $4.6 million. We expect consolidated revenues to increase at a modest pace sequentially in future quarters driven by the growth in global streaming subscriptions and partially offset by a decline in domestic DVD. We believe that the consolidated net loss will decline in the second quarter of 2012 and we may be at or near consolidated net income. Future investments in new international markets, such as that which we have planned to launch in the fourth quarter of 2012, may result in future consolidated net losses.
In the Domestic streaming segment, we derive revenues from services consisting solely of streaming content offered through a subscription plan priced at $7.99 per month. In the Domestic DVD segment, we derive revenues from our DVDs-by-mail subscription services. The price per plan for DVDs-by-mail varies from $7.99 to $43.99 per month based on the number of DVDs that a subscriber may have out at any given point. Customers electing access to high definition Blu-ray discs in addition to standard definition DVDs pay a surcharge ranging
The $151.2 million increase in our consolidated revenues was due to the $120.1 million increase in domestic revenues and a $31.1 million increase in international revenues. Domestic revenues increased 17.0% as a result of the 20.8% growth in the domestic average number of unique paying subscribers driven by new streaming subscriptions. This increase was offset in part by a 3.2% decline in domestic average monthly revenue per unique paying subscriber, resulting from the popularity of the streaming subscription and a decline in the percentage of unique paying subscribers electing both a streaming and a DVD subscription. During the three months ended March 31, 2012, 87.8% of our new gross domestic unique subscribers chose only a streaming subscription compared to 54.4% in the three months ended March 31, 2011. As of March 31, 2012, only 28.5% of our domestic unique subscribers had both a streaming and DVD subscription compared to 81.4% as of March 31, 2011.
Free cash flow for the three months ended March 31, 2012 as compared to the three months ended March 31, 2011 decreased $77.2 million primarily due to a decrease of $57.7 million in net income as adjusted for non-cash stock based compensation, a decrease of $14.1 million in the cash flow from deferred revenue and an increase of $18.6 million in excess tax payments over tax provision (benefit). This was partially offset by a decrease in both the excess content payments over content expenses and excess property and equipment payments over depreciation expense. Payments for content increased $225.6 million while content expenses increased $234.6 million.
Free cash flow for the three months ended March 31, 2012 as compared to the three months ended December 31, 2011 decreased $31.8 million primarily due to a decrease of $38.5 million in net income as adjusted for non-cash stock based compensation coupled with an increase of $7.3 million in excess tax payments over tax provision (benefit). This was partially offset by an increase in the cash flow from deferred revenue of $13.9 million. Payments for content increased $47.7 million while content expenses increased $55.2 million.
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