Summary
Netflix, Inc. reported strong revenue growth of 30.7% for the third quarter of 2010 compared to the same period last year, reaching $553.2 million. This growth was primarily driven by a significant 43.5% increase in average paying subscribers, indicating robust demand for its combined streaming and DVD-by-mail service. Despite the subscriber growth, average monthly revenue per paying subscriber declined by 8.9% due to the increasing popularity of lower-priced plans. The company demonstrated improved profitability, with net income rising by 26.0% year-over-year to $38.0 million and diluted earnings per share increasing to $0.70. Financially, Netflix ended the quarter with $113.1 million in cash and cash equivalents. The company continued to invest heavily in its content library, particularly for streaming, which led to an increase in cost of revenues. Operating expenses also saw an increase, driven by technology and development, and marketing investments aimed at expanding its subscriber base. Despite these investments, the company managed its costs effectively, leading to an expanded gross margin of 37.7% and a solid increase in operating income. The company also reaffirmed its commitment to returning value to shareholders with an ongoing stock repurchase program.
Financial Highlights
45 data points| Revenue | $553.22M |
| Cost of Revenue | $344.47M |
| Gross Profit | $208.75M |
| R&D Expenses | $42.11M |
| Operating Expenses | $139.25M |
| Operating Income | $69.50M |
| Interest Expense | $4.95M |
| Net Income | $37.97M |
| EPS (Basic) | $0.01 |
| EPS (Diluted) | $0.01 |
| Shares Outstanding (Basic) | 3.65B |
| Shares Outstanding (Diluted) | 3.78B |
Key Highlights
- 1Revenue increased by 30.7% to $553.2 million for the three months ended September 30, 2010, compared to the prior year period.
- 2Total subscribers grew to 16,933,000 by the end of the third quarter of 2010, a 52.4% increase year-over-year.
- 3Net income for the quarter was $37.97 million, a 26.0% increase compared to $30.14 million in the same period last year.
- 4Diluted earnings per share rose to $0.70 for the three months ended September 30, 2010, up from $0.52 in the prior year quarter.
- 5Gross margin improved to 37.7% from 34.9% in the year-ago quarter, driven by subscriber growth and content cost efficiencies.
- 6Investments in streaming content acquisition and delivery infrastructure continue, impacting cost of revenues but supporting subscriber growth.
- 7The company is actively repurchasing its common stock, with $240.6 million remaining authorization under its current program.