Netflix (NFLX) just reported earnings. Here’s my quick take:
- Stock closed at $119 and is currently $92 after hours.
- The big reason for the decline is probably that the company lowered next quarter’s estimate. Currently the 2011 Q4 estimate is $1.08. Management expects $0.36-$0.70.
- Total revenue:
2010 Q3 $553 million
2010 Q4 $596 million
2011 Q1 $719 million
2011 Q2 $789 million
2011 Q3 $822 million
The company grew revenue, but from the bashing the stock’s taken in the news you’d figure this was the next Blockbuster. Its not. - Total domestic paid subscribers have done this during the past year (rounded):
2010 Q4 17 million
2011 Q1 21 million
2011 Q2 23 million
2011 Q3 23 million (*the company lost 420,000 domestic subs last qtr.) - The price increase started in the beginning of september, so one of these three months were with higher prices. Here’s quarterly revenue per paid subscriber, domestic:
2011 Q1 $33.00
2011 Q2 $33.09
2011 Q3 $34.98 - International subscribers are where its at. Here’s International paid subscribers. This is what the CEO is focusing on:
2010 Q3 –
2010 Q4 333 thousand
2011 Q1 674 thousand
2011 Q2 857 thousand
2011 Q3 989 thousand
The company lists no subscribers internationally in the third quarter last year. The third quarter this year it has a million paid subscribers. - Now the shares are selling at $88. The company might earn around $4 this year, that’s 18 times earnings. Netflix expects a global consolidated loss in 2012 Q1, and 2012 estimates will no-doubt get slashed. Maybe from $6 to $1 or $2.
- I think this is a Amazon story. AMZN spent money in the late 90s/early 00s to expand, the profits came later. NFLX has to be first-to-market in these other countries. Streaming video is where the growth is overseas. With 23 million subscribers in the U.S., how many people will subscribe worldwide? The current million is the tip of the iceberg.
