Summary
Netflix Inc. reported strong financial performance for the first quarter of 2011, demonstrating significant year-over-year growth in key metrics. Revenue surged by 45.6% to $718.6 million, driven by a robust increase in total subscribers, which grew by 69.0% to 23.6 million. This subscriber growth fueled substantial improvements in operating income and net income, which rose by 75.2% and 86.6%, respectively. The company's strategic focus on expanding its streaming service domestically and internationally is clearly paying off, evidenced by the significant revenue growth and improving profitability margins. While the company continues to invest heavily in content acquisition, particularly for its streaming library, and marketing to support subscriber growth, its operational efficiency is improving. Fulfillment expenses as a percentage of revenue decreased, and technology and development expenses, though increasing in absolute terms to support service improvements, remained a stable percentage of revenue. The company's strong operating cash flow and free cash flow generation underscore its healthy financial position and ability to fund its growth initiatives.
Financial Highlights
46 data points| Revenue | $718.55M |
| Cost of Revenue | $438.15M |
| Gross Profit | $280.40M |
| R&D Expenses | $50.91M |
| Operating Expenses | $178.16M |
| Operating Income | $102.24M |
| Interest Expense | $4.87M |
| Net Income | $60.23M |
| EPS (Basic) | $0.02 |
| EPS (Diluted) | $0.02 |
| Shares Outstanding (Basic) | 3.69B |
| Shares Outstanding (Diluted) | 3.80B |
Key Highlights
- 1Revenue increased by 45.6% year-over-year to $718.6 million, driven by strong subscriber growth.
- 2Total subscribers grew by 69.0% to 23.6 million as of March 31, 2011.
- 3Net income significantly increased by 86.6% to $60.2 million, with diluted EPS rising from $0.59 to $1.11.
- 4Operating income saw substantial growth of 75.2% year-over-year, indicating improved profitability.
- 5Streaming content library investment increased significantly, with streaming content library gross rising from $441.6 million to $605.4 million.
- 6Marketing expenses increased to support subscriber acquisition, but subscriber acquisition cost decreased by 33.2% year-over-year.
- 7International expansion has begun, with the International segment generating $12.3 million in revenue and incurring an operating loss of $10.7 million.