Second-Quarter 2009 Financial Highlights for Netflix (NFLX)

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NFLX » Topics » Second-Quarter 2009 Financial Highlights

This excerpt taken from the NFLX 8-K filed Oct 22, 2009.

Third-Quarter 2009 Financial Highlights

Subscribers. Netflix ended the third quarter of 2009 with approximately 11,109,000 total subscribers, representing 28 percent year-over-year growth from 8,672,000 total subscribers at the end of the third quarter of 2008 and 5 percent sequential growth from 10,599,000 subscribers at the end of the second quarter of 2009.

Net subscriber change in the quarter was an increase of 510,000 compared to an increase of 261,000 for the same period of 2008 and an increase of 289,000 for the second quarter of 2009.

Gross subscriber additions for the quarter totaled 2,180,000, representing 43 percent year-over-year growth from 1,528,000 gross subscriber additions in the third quarter of 2008 and 13 percent quarter-over-quarter growth from 1,936,000 gross subscriber additions in the second quarter of 2009.

Of the 11,109,000 total subscribers at quarter end, 98 percent, or 10,835,000, were paid subscribers. The other 2 percent, or 274,000, were free subscribers. Paid subscribers represented 98 percent of total subscribers at the end of the third quarter of 2008 and at the end of the second quarter of 2009.

Revenue for the third quarter of 2009 was $423.1 million, representing 24 percent year-over-year growth from $341.3 million for the third quarter of 2008, and a 4 percent sequential increase from $408.5 million for the second quarter of 2009.

Gross margin¹ for the third quarter of 2009 was 34.9 percent compared to 34.2 percent for the third quarter of 2008 and 34.1 percent for the second quarter of 2009.

GAAP net income for the third quarter of 2009 was $30.1 million, or $0.52 per diluted share compared to GAAP net income of $20.4 million, or $0.33 per diluted share, for the third quarter of 2008 and GAAP net income of $32.4 million, or $0.54 per diluted share, for the second quarter of 2009. GAAP net income grew 48 percent on a year-over-year basis and GAAP EPS grew 58 percent on a year-over-year basis.

Non-GAAP net income was $32.1 million, or $0.55 per diluted share, for the third quarter of 2009 compared to non-GAAP net income of $22.1 million, or $0.36 per diluted share, for the third quarter of 2008 and non-GAAP net income of $34.4 million, or $0.58 per diluted share, for the second quarter of 2009. Non-GAAP net income grew 45 percent on a year-over-year basis and non-GAAP EPS grew 53 percent on a year-over-year basis.

Non-GAAP net income equals net income on a GAAP basis before stock-based compensation expense, net of taxes.

Stock-based compensation was $3.2 million for the third quarter of 2009, compared to $3.0 million for the third quarter of 2008 and $3.3 million for the second quarter of 2009. Stock-based compensation is presented in the same lines of the Consolidated Statements of Operations as cash compensation paid to the same individuals.

Subscriber acquisition cost² for the third quarter of 2009 was $26.86 per gross subscriber addition compared to $32.21 for the same period of 2008 and $23.88 for the second quarter of 2009.

Churn³ for the third quarter of 2009 was 4.4 percent compared to 4.2 percent for the third quarter of 2008 and 4.5 percent for the second quarter of 2009. Churn includes free subscribers as well as paying subscribers who elect not to renew their monthly subscription service during the quarter.

Free cash flow⁴ for the third quarter of 2009 was $25.5 million compared to $26.2 million in the third quarter of 2008 and $26.3 million for the second quarter of 2009.

Cash provided by operating activities for the third quarter of 2009 was $78.3 million compared to $60.5 million for the third quarter of 2008 and $75.3 million for the second quarter of 2009.

¹	Gross margin is defined as revenues less cost of subscription and fulfillment expenses divided by revenues.

²	Subscriber acquisition cost is defined as the total marketing expense, which includes stock-based compensation for marketing personnel, on the Company’s Consolidated Statements of Operations divided by total gross subscriber additions during the quarter.

³	Churn is defined as customer cancellations in the quarter divided by the sum of beginning subscribers and gross subscriber additions, divided by three months.

⁴	Free cash flow is defined as cash provided by operating activities and investing activities excluding the non-operational cash flows from purchases and sales of short-term investments and cash flows from investment in business.

This excerpt taken from the NFLX 8-K filed Jul 23, 2009.

Second-Quarter 2009 Financial Highlights

Subscribers. Netflix ended the second quarter of 2009 with approximately 10,599,000 total subscribers, representing 26 percent year-over-year growth from 8,411,000 total subscribers at the end of the second quarter of 2008 and 3 percent sequential growth from 10,310,000 subscribers at the end of the first quarter of 2009.

Net subscriber change in the quarter was an increase of 289,000 compared to an increase of 168,000 for the same period of 2008 and an increase of 920,000 for the first quarter of 2009.

Gross subscriber additions for the quarter totaled 1,936,000, representing 40 percent year-over-year growth from 1,384,000 gross subscriber additions in the second quarter of 2008 and 20 percent quarter-over-quarter decline from 2,413,000 gross subscriber additions in the first quarter of 2009.

Of the 10,599,000 total subscribers at quarter end, 98 percent, or 10,375,000, were paid subscribers. The other 2 percent, or 224,000, were free subscribers. Paid subscribers represented 98 percent of total subscribers at the end of the second quarter of 2008 and at the end of the first quarter of 2009.

Revenue for the second quarter of 2009 was $408.5 million, representing 21 percent year-over-year growth from $337.6 million for the second quarter of 2008, and a 4 percent sequential increase from $394.1 million for the first quarter of 2009.

Gross margin¹ for the second quarter of 2009 was 34.1 percent compared to 31.8 percent for the second quarter of 2008 and 34.2 percent for the first quarter of 2009.

GAAP net income for the second quarter of 2009 was $32.4 million, or $0.54 per diluted share compared to GAAP net income of $26.6 million, or $0.42 per diluted share, for the second quarter of 2008 and GAAP net income of $22.4 million, or $0.37 per diluted share, for the first quarter of 2009. GAAP net income grew 22 percent on a year-over-year basis and GAAP EPS grew 29 percent on a year-over-year basis.

Non-GAAP net income was $34.4 million, or $0.58 per diluted share, for the second quarter of 2009 compared to non-GAAP net income of $28.7 million, or $0.45 per diluted share, for the second quarter of 2008 and non-GAAP net income of $24.2 million, or $0.40 per diluted share, for the first quarter of 2009. Non-GAAP net income grew 20 percent on a year-over-year basis and non-GAAP EPS grew 29 percent on a year-over-year basis.

Non-GAAP net income equals net income on a GAAP basis before stock-based compensation expense, net of taxes.

Stock-based compensation was $3.3 million for the second quarter of 2009, compared to $2.9 million for the second quarter of 2008 and $3.1 million for the first quarter of 2009. Stock-based compensation is presented in the same lines of the Consolidated Statements of Operations as cash compensation paid to the same individuals.

Subscriber acquisition cost² for the second quarter of 2009 was $23.88 per gross subscriber addition compared to $28.89 for the same period of 2008 and $25.79 for the first quarter of 2009.

Churn³ for the second quarter of 2009 was 4.5 percent compared to 4.2 percent for the second quarter of 2008 and for the first quarter of 2009. Churn includes free subscribers as well as paying subscribers who elect not to renew their monthly subscription service during the quarter.

Free cash flow⁴ for the second quarter of 2009 was $26.3 million compared to $12.7 million in the second quarter of 2008 and $15.1 million for the first quarter of 2009.

Cash provided by operating activities for the second quarter of 2009 was $75.3 million compared to $67.4 million for the second quarter of 2008 and $65.6 million for the first quarter of 2009.

¹	Gross margin is defined as revenues less cost of subscription and fulfillment expenses divided by revenues.

²	Subscriber acquisition cost is defined as the total marketing expense, which includes stock-based compensation for marketing personnel, on the Company’s Consolidated Statements of Operations divided by total gross subscriber additions during the quarter.

³	Churn is defined as customer cancellations in the quarter divided by the sum of beginning subscribers and gross subscriber additions, divided by three months.

⁴	Free cash flow is defined as cash provided by operating activities and investing activities excluding the non-operational cash flows from purchases and sales of short-term investments and cash flows from investment in business.

This excerpt taken from the NFLX 8-K filed Apr 23, 2009.

First-Quarter 2009 Financial Highlights

Subscribers. Netflix ended the first quarter of 2009 with approximately 10,310,000 total subscribers, representing 25 percent year-over-year growth from 8,243,000 total subscribers at the end of the first quarter of 2008 and 10 percent sequential growth from 9,390,000 subscribers at the end of the fourth quarter of 2008.

Net subscriber change in the quarter was an increase of 920,000 compared to an increase of 764,000 for the same period of 2008 and an increase of 718,000 for the fourth quarter of 2008.

Gross subscriber additions for the quarter totaled 2,413,000, representing 30 percent year-over-year growth from 1,862,000 gross subscriber additions in the first quarter of 2008 and 16 percent quarter-over-quarter growth from 2,085,000 gross subscriber additions in the fourth quarter of 2008.

Of the 10,310,000 total subscribers at quarter end, 98 percent, or 10,116,000, were paid subscribers. The other 2 percent, or 194,000, were free subscribers. Paid subscribers represented 98 percent of total subscribers at the end of the first quarter of 2008 and at the end of the fourth quarter of 2008.

Revenue for the first quarter of 2009 was $394.1 million, representing 21 percent year-over-year growth from $326.2 million for the first quarter of 2008, and a 10 percent sequential increase from $359.6 million for the fourth quarter of 2008.

Gross margin¹ for the first quarter of 2009 was 34.2 percent compared to 31.7 percent for the first quarter of 2008 and 35.2 percent for the fourth quarter of 2008.

GAAP net income for the first quarter of 2009 was $22.4 million, or $0.37 per diluted share compared to GAAP net income of $13.3 million, or $0.21 per diluted share, for the first quarter of 2008 and GAAP net income of $22.7 million, or $0.38 per diluted share, for the fourth quarter of 2008. GAAP net income grew 68 percent on a year-over-year basis and GAAP EPS grew 76 percent on a year-over-year basis.

Non-GAAP net income was $24.2 million, or $0.40 per diluted share, for the first quarter of 2009 compared to non-GAAP net income of $15.2 million, or $0.23 per diluted share, for the first quarter of 2008 and non-GAAP net income of $24.6 million, or $0.41 per diluted share, for the fourth quarter of 2008. Non-GAAP net income grew 59 percent on a year-over-year basis and non-GAAP EPS grew 74 percent on a year-over-year basis.

Non-GAAP net income equals net income on a GAAP basis before stock-based compensation expense, net of taxes.

Stock-based compensation was $3.1 million for the first quarter of 2009 and the first quarter of 2008 and $3.2 million for the fourth quarter of 2008. Stock-based compensation is presented in the same lines of the Consolidated Statements of Operations as cash compensation paid to the same individuals.

Subscriber acquisition cost² for the first quarter of 2009 was $25.79 per gross subscriber addition compared to $29.48 for the same period of 2008 and $26.67 for the fourth quarter of 2008.

Churn³ for the first quarter of 2009 was 4.2 percent compared to 3.9 percent for the first quarter of 2008 and 4.2 percent for the fourth quarter of 2008. Churn includes free subscribers as well as paying subscribers who elect not to renew their monthly subscription service during the quarter.

Free cash flow⁴ for the first quarter of 2009 was $15.1 million compared to $4.8 million in the first quarter of 2008 and $51.0 million for the fourth quarter of 2008.

Cash provided by operating activities for the first quarter of 2009 was $65.6 million compared to $64.1 million for the first quarter of 2008 and $92.1 million for the fourth quarter of 2008.

¹	Gross margin is defined as revenues less cost of subscription and fulfillment expenses divided by revenues.

²	Subscriber acquisition cost is defined as the total marketing expense, which includes stock-based compensation for marketing personnel, on the Company’s Consolidated Statements of Operations divided by total gross subscriber additions during the quarter.

³	Churn is defined as customer cancellations in the quarter divided by the sum of beginning subscribers and gross subscriber additions, divided by three months.

⁴	Free cash flow is defined as cash provided by operating activities and investing activities excluding the non-operational cash flows from purchases and sales of short-term investments and cash flows from investment in business.

This excerpt taken from the NFLX 8-K filed Oct 20, 2008.

Third-Quarter 2008 Financial Highlights

Subscribers. Netflix ended the third quarter of 2008 with approximately 8,672,000 total subscribers, representing 23 percent year-over-year growth from 7,028,000 total subscribers at the end of the third quarter of 2007 and 3 percent sequential growth from 8,411,000 subscribers at the end of the second quarter of 2008.

Net subscriber change in the quarter was an increase of 261,000, compared to an increase of 286,000 for the same period of 2007 and an increase of 168,000 for the second quarter of 2008.

Gross subscriber additions for the quarter totaled 1,528,000, representing 18 percent year-over-year growth from 1,297,000 gross subscriber additions in the third quarter of 2007 and 10 percent quarter-over-quarter growth from 1,384,000 gross subscriber additions in the second quarter of 2008.

Of the 8,672,000 total subscribers at quarter end, 98 percent, or 8,490,000 were paid subscribers. The other 2 percent, or 182,000, were free subscribers. Paid subscribers represented 97 percent of total subscribers at the end of the third quarter of 2007 and 98 percent of total subscribers at the end of the second quarter of 2008.

Revenue for the third quarter of 2008 was $341.3 million, representing 16 percent year-over-year growth from $294.0 million for the third quarter of 2007, and 1 percent sequential increase from $337.6 million for the second quarter of 2008.

Gross margin¹ for the third quarter of 2008 was 34.2 percent, compared to 33.9 percent for the third quarter of 2007 and 31.8 percent for the second quarter of 2008.

GAAP net income for the third quarter of 2008 was $20.4 million, or $0.33 per diluted share, compared to GAAP net income of $15.6 million, or $0.23 per diluted share, for the third quarter of 2007 and GAAP net income of $26.6 million, or $0.42 per diluted share, for the second quarter of 2008. GAAP net income grew 30 percent on a year-over-year basis and GAAP EPS grew 43 percent on a year-over-year basis.

Non-GAAP net income was $22.1 million, or $0.36 per diluted share, for the third quarter of 2008, compared to non-GAAP net income of $17.5 million, or $0.26 per diluted share, for the third quarter of 2007 and non-GAAP net income of $28.7 million, or $0.45 per diluted share, for the second quarter of 2008. Non-GAAP net income grew 27 percent on a year-over-year basis and non-GAAP EPS grew 38 percent on a year-over-year basis.

Non-GAAP net income equals net income on a GAAP basis before stock-based compensation expense, net of taxes.

Stock-based compensation for the third quarter of 2008 was $3.0 million, compared to $3.1 million in the third quarter of 2007 and $2.9 million in the second quarter of 2008. Stock-based compensation is presented in the same lines of the Consolidated Statements of Operations as cash compensation paid to the same individuals.

Subscriber acquisition cost² for the third quarter of 2008 was $32.21 per gross subscriber addition, compared to $37.89 for the same period of 2007 and $28.89 for the second quarter of 2008.

Churn³ for the third quarter of 2008 was 4.2 percent, compared to 4.2 percent for the third quarter of 2007 and for the second quarter of 2008. Churn includes free subscribers as well as paying subscribers who elect not to renew their monthly subscription service during the quarter.

Free cash flow⁴ for the third quarter of 2008 was $26.2 million, compared to $36.2 million in the third quarter of 2007 and $12.7 million for the second quarter of 2008.

Cash provided by operating activities for the third quarter of 2008 was $73.2 million, compared to $77.7 million for the third quarter of 2007 and $78.1 million for the second quarter of 2008.

¹	Gross margin is defined as revenues less cost of subscription and fulfillment expenses divided by revenues.

²	Subscriber acquisition cost is defined as the total marketing expense, which includes stock-based compensation for marketing personnel, on the Company’s Consolidated Statements of Operations divided by total gross subscriber additions during the quarter.

³	Churn is defined as customer cancellations in the quarter divided by the sum of beginning subscribers and gross subscriber additions, divided by three months.

⁴	Free cash flow is defined as cash provided by operating activities and investing activities excluding the non-operational cash flows from purchases and sales of short-term investments and cash flows from investment in business.

This excerpt taken from the NFLX 8-K filed Jul 25, 2008.

Second-Quarter 2008 Financial Highlights

Subscribers. Netflix ended the second quarter of 2008 with approximately 8,411,000 total subscribers, representing 25 percent year-over-year growth from 6,742,000 total subscribers at the end of the second quarter of 2007 and 2 percent sequential growth from 8,243,000 subscribers at the end of the first quarter of 2008.

Net subscriber change in the quarter was an increase of 168,000, compared to a decrease of 55,000 for the same period of 2007 and an increase of 764,000 for the first quarter of 2008.

Gross subscriber additions for the quarter totaled 1,384,000, representing 35 percent year-over-year growth from 1,028,000 gross subscriber additions in the second quarter of 2007 and 26 percent quarter-over-quarter decline from 1,862,000 gross subscriber additions in the first quarter of 2008.

Of the 8,411,000 total subscribers at quarter end, 98 percent, or 8,235,000 were paid subscribers. The other 2 percent, or 176,000, were free subscribers. Paid subscribers represented 98 percent of total subscribers at the end of the second quarter of 2007 and at the end of the first quarter of 2008.

Revenue for the second quarter of 2008 was $337.6 million, representing 11 percent year-over-year growth from $303.7 million for the second quarter of 2007, and 4 percent sequential increase from $326.2 million for the first quarter of 2008.

Gross margin¹ for the second quarter of 2008 was 31.8 percent, compared to 35.2 percent for the second quarter of 2007 and 31.7 percent for the first quarter of 2008.

GAAP net income for the second quarter of 2008 was $26.6 million, or $0.42 per diluted share, compared to GAAP net income of $25.6 million, or $0.37 per diluted share, for the second quarter of 2007 and GAAP net income of $13.4 million, or $0.21 per diluted share, for the first quarter of 2008. GAAP net income grew 4 percent on a year-over-year basis and GAAP EPS grew 14 percent on a year-over-year basis.

Non-GAAP net income was $28.7 million, or $0.45 per diluted share, for the second quarter of 2008, compared to non-GAAP net income of $27.2 million, or $0.39 per diluted share, for the second quarter of 2007 and non-GAAP net income of $15.2 million, or $0.23 per diluted share, for the first quarter of 2008. Non-GAAP net income grew 5 percent on a year-over-year basis and non-GAAP EPS grew 15 percent on a year-over-year basis.

Non-GAAP net income equals net income on a GAAP basis before stock-based compensation expense, net of taxes.

Stock-based compensation for the second quarter of 2008 was $2.9 million, compared to $2.8 million in the second quarter of 2007 and $3.1 million in the first quarter of 2008. Stock-based compensation is presented in the same lines of the Consolidated Statements of Operations as cash compensation paid to the same individuals.

Subscriber acquisition cost² for the second quarter of 2008 was $28.95 per gross subscriber addition, compared to $44.02 for the same period of 2007 and $29.50 for the first quarter of 2008.

Churn³ for the second quarter of 2008 was 4.2 percent, compared to 4.6 percent for the second quarter of 2007 and 3.9 percent for the first quarter of 2008. Churn includes free subscribers as well as paying subscribers who elect not to renew their monthly subscription service during the quarter.

Free cash flow⁴ for the second quarter of 2008 was $12.5 million, compared to $6.5 million in the second quarter of 2007 and $4.7 million for the first quarter of 2008.

Cash provided by operating activities for the second quarter of 2008 was $77.9 million, compared to $65.1 million for the second quarter of 2007 and $77.7 million for the first quarter of 2008.

¹	Gross margin is defined as revenues less cost of subscription and fulfillment expenses divided by revenues.

²	Subscriber acquisition cost is defined as the total marketing expense, which includes stock-based compensation for marketing personnel, on the Company’s Consolidated Statements of Operations divided by total gross subscriber additions during the quarter.

³	Churn is defined as customer cancellations in the quarter divided by the sum of beginning subscribers and gross subscriber additions, divided by three months.

⁴	Free cash flow is defined as cash provided by operating activities excluding the non-operational cash flows from purchases and sales of short-term investments, cash flows from investment in business and cash flows from financing activities.

This excerpt taken from the NFLX 8-K filed Apr 21, 2008.

First-Quarter 2008 Financial Highlights

Subscribers. Netflix ended the first quarter of 2008 with approximately 8,243,000 total subscribers, representing 21 percent year-over-year growth from 6,797,000 total subscribers at the end of the first quarter of 2007 and 10 percent sequential growth from 7,479,000 subscribers at the end of the fourth quarter of 2007.

Net subscriber change in the quarter was an increase of 764,000, compared to an increase of 481,000 for the same period of 2007 and an increase of 451,000 for the fourth quarter of 2007.

Gross subscriber additions for the quarter totaled 1,862,000, representing 23 percent year-over-year growth from 1,520,000 gross subscriber additions in the first quarter of 2007 and 25 percent quarter-over-quarter growth from 1,495,000 gross subscriber additions in the fourth quarter of 2007.

Of the 8,243,000 total subscribers at quarter end, 98 percent, or 8,102,000 were paid subscribers. The other 2 percent, or 141,000, were free subscribers. Paid subscribers represented 98 percent of total subscribers at the end of the first quarter of 2007 and at the end of the fourth quarter of 2007.

Revenue for the first quarter of 2008 was $326.2 million, representing 7 percent year-over-year growth from $305.3 million for the first quarter of 2007, and 8 percent sequential increase from $302.4 million for the fourth quarter of 2007.

Gross margin¹ for the first quarter of 2008 was 31.7 percent, compared to 36.1 percent for the first quarter of 2007 and 33.8 percent for the fourth quarter of 2007.

GAAP net income for the first quarter of 2008 was $13.4 million, or $0.21 per diluted share, compared to GAAP net income of $9.9 million, or $0.14 per diluted share, for the first quarter of 2007 and GAAP net income of $15.8 million, or $0.24 per diluted share, for the fourth quarter of 2007. GAAP net income grew 36 percent on a year-over-year basis and GAAP EPS grew 50 percent on a year-over-year basis.

Non-GAAP net income was $15.2 million, or $0.23 per diluted share, for the first quarter of 2008, compared to non-GAAP net income of $11.5 million, or $0.16 per diluted share, for the first quarter of 2007 and non-GAAP net income of $17.8 million, or $0.27 per diluted share, for the fourth quarter of 2007. Non-GAAP net income grew 32 percent on a year-over-year basis and non-GAAP EPS grew 44 percent on a year-over-year basis.

Non-GAAP net income equals net income on a GAAP basis before stock-based compensation expense, net of taxes.

Stock-based compensation for the first quarter of 2008 was $3.1 million, compared to $2.8 million in the first quarter of 2007 and $3.2 million in the fourth quarter of 2007. Stock-based compensation is presented in the same lines of the Consolidated Statements of Operations as cash compensation paid to the same individuals.

Subscriber acquisition cost² for the first quarter of 2008 was $29.50 per gross subscriber addition, compared to $47.46 for the same period of 2007 and $34.60 for the fourth quarter of 2007.

Churn³ for the first quarter of 2008 was 3.9 percent, compared to 4.4 percent for the first quarter of 2007 and 4.1 percent for the fourth quarter of 2007. Churn includes free subscribers as well as paying subscribers who elect not to renew their monthly subscription service during the quarter.

Free cash flow⁴ for the first quarter of 2008 was positive $4.7 million, compared to negative $18.0 million in the first quarter of 2007 and positive $21.0 million for the fourth quarter of 2007.

Cash provided by operating activities for the first quarter of 2008 was $77.7 million, compared to $63.0 million for the first quarter of 2007 and $86.1 million for the fourth quarter of 2007.

¹	Gross margin is defined as revenues less cost of subscription and fulfillment expenses divided by revenues.

²	Subscriber acquisition cost is defined as the total marketing expense, which includes stock-based compensation for marketing personnel, on the Company’s Consolidated Statements of Operations divided by total gross subscriber additions during the quarter.

³	Churn is defined as customer cancellations in the quarter divided by the sum of beginning subscribers and gross subscriber additions, divided by three months.

⁴	Free cash flow is defined as cash provided by operating activities excluding the non-operational cash flows from purchases and sales of short-term investments, cash flows from investment in business and cash flows from financing activities.

This excerpt taken from the NFLX 8-K filed Oct 22, 2007.

Third-Quarter 2007 Financial Highlights

Revenue for the third quarter of 2007 was $294.0 million, representing 15 percent year-over-year growth from $256.0 million for the third quarter of 2006, and 3 percent sequential decline from $303.7 million for the second quarter of 2007.

GAAP net income for the third quarter of 2007 was $15.7 million, or $0.23 per diluted share, compared to GAAP net income of $12.8 million, or $0.18 per diluted share, for the third quarter of 2006 and GAAP net income of $25.6 million, or $0.37 per diluted share, for the second quarter of 2007.

Non-GAAP net income was $17.6 million, or $0.26 per diluted share, for the third quarter of 2007, compared to non-GAAP net income of $14.6 million, or $0.21 per diluted share, for the third quarter of 2006 and non-GAAP net income of $27.2 million, or $0.39 per diluted share, for the second quarter of 2007.

Non-GAAP net income equals net income on a GAAP basis before stock-based compensation expense, net of taxes.

Gross margin¹ for the third quarter of 2007 was 33.9 percent, compared to 38.0 percent for the third quarter of 2006 and 35.2 percent for the second quarter of 2007.

Free cash flow² for the third quarter of 2007 was $36.1 million, compared to $22.3 million in the third quarter of 2006 and $6.5 million for the second quarter of 2007.

Cash provided by operating activities for the third quarter of 2007 was $77.6 million, compared to $61.5 million for the third quarter of 2006 and $65.1 million for the second quarter of 2007.

Subscribers. Netflix ended the third quarter of 2007 with approximately 7,028,000 total subscribers, representing 24 percent year-over-year growth from 5,662,000 total subscribers at the end of the third quarter of 2006 and 4 percent sequential growth from 6,742,000 subscribers at the end of the second quarter of 2007.

Net subscriber change in the quarter was an increase of 286,000, compared to an increase of 493,000 for the same period of 2006 and a decrease of 55,000 for the second quarter of 2007.

Gross subscriber additions for the quarter totaled 1,297,000, representing 1 percent year-over-year decline from 1,310,000 gross subscriber additions in the third quarter of 2006 and 26 percent quarter-over-quarter growth from 1,028,000 gross subscriber additions in the second quarter of 2007.

Of the 7,028,000 total subscribers at quarter end, 97 percent, or 6,845,000, were paid subscribers. The other 3 percent, or 183,000, were free subscribers. Paid subscribers represented 97 percent of total subscribers at the end of the third quarter of 2006 and 98 percent of total subscribers at the end of the second quarter of 2007.

Subscriber acquisition cost³ for the third quarter of 2007 was $37.91 per gross subscriber addition, compared to $45.32 for the same period of 2006 and $44.02 for the second quarter of 2007.

Churn⁴ for the third quarter of 2007 and 2006 was 4.2 percent, compared to 4.6 percent for the second quarter of 2007. Churn includes free subscribers as well as paying subscribers who elect not to renew their monthly subscription service during the quarter.

Stock-based compensation for the third quarter of 2007 was $3.1 million, compared to $3.2 million in the third quarter of 2006 and compared to $2.8 million in the second quarter of 2007. Stock-based compensation is presented in the same lines of the Statements of Operations as cash compensation paid to the same individuals.

¹	Gross margin is defined as revenues less cost of subscription and fulfillment expenses.

²	Free cash flow is defined as cash provided by operating activities less cash used in investing activities excluding purchases and sales of short-term investments.

³	Subscriber acquisition cost is defined as the total marketing expense, which includes stock-based compensation for marketing personnel, on the Company’s Statements of Operations divided by total gross subscriber additions during the quarter.

⁴	Churn is defined as customer cancellations in the quarter divided by the sum of beginning subscribers and gross subscriber additions, divided by three months.

This excerpt taken from the NFLX 8-K filed Jul 23, 2007.

Second-Quarter 2007 Financial Highlights

Revenue for the second quarter of 2007 was $303.7 million, representing 27 percent year-over-year growth from $239.4 million for the second quarter of 2006, and 1 percent sequential decline from $305.3 million for the first quarter of 2007.

GAAP net income for the second quarter of 2007 increased 50% to $25.6 million, or $0.37 per diluted share, compared to GAAP net income of $17.0 million, or $0.25 per diluted share, for the second quarter of 2006 and GAAP net income of $9.9 million, or $0.14 per diluted share, for the first quarter of 2007.

GAAP net income included a gain in the quarter related to the patent lawsuit settlement of $4.1 million, net of taxes. Excluding this net settlement gain, net income would have been $21.4 million, or $0.31 per diluted share.

Non-GAAP net income was $27.2 million, or $0.39 per diluted share, for the second quarter of 2007, compared to non-GAAP net income of $18.9 million, or $0.27 per diluted share, for the second quarter of 2006 and non-GAAP net income of $11.5 million, or $0.16 per diluted share, for the first quarter of 2007.

Non-GAAP net income equals net income on a GAAP basis before stock-based compensation expense, net of taxes. Excluding the net settlement gain in the quarter related to the patent lawsuit settlement, non-GAAP net income would have been $23.1 million, or $0.33 per diluted share.

Gross margin¹ for the second quarter of 2007 was 35.2 percent, compared to 37.1 percent for the second quarter of 2006 and 36.1 percent for the first quarter of 2007.

Free cash flow² for the second quarter of 2007 was positive $6.5 million, compared to positive $5.5 million in the second quarter of 2006 and negative $18.0 million for the first quarter of 2007.

Cash provided by operating activities for the second quarter of 2007 was $72.1 million, compared to $53.3 million for the second quarter of 2006 and $63.0 million for the first quarter of 2007.

Subscribers. Netflix ended the second quarter of 2007 with approximately 6,742,000 total subscribers, representing 30 percent year-over-year growth from 5,169,000 total subscribers at the end of the second quarter of 2006 and 1 percent sequential decline from 6,797,000 subscribers at the end of the first quarter of 2007.

Net subscriber change in the quarter was a decrease of 55,000, compared to an increase of 303,000 for the same period of 2006 and an increase of 481,000 for the first quarter of 2007.

Gross subscriber additions for the quarter totaled 1,028,000, representing 4 percent year-over-year decline from 1,070,000 gross subscriber additions in the second quarter of 2006 and 32 percent quarter-over-quarter decline from 1,520,000 gross subscriber additions in the first quarter of 2007.

Of the 6,742,000 total subscribers at quarter end, 98 percent, or 6,609,000, were paid subscribers. The other 2 percent, or 133,000, were free subscribers. Paid subscribers represented 97 percent of total subscribers at the end of the second quarter of 2006 and 98 percent of total subscribers at the end of the first quarter of 2007.

Subscriber acquisition cost³ for the second quarter of 2007 was $44.02 per gross subscriber addition, compared to $43.95 for the same period of 2006 and $47.46 for the first quarter of 2007.

Churn⁴ for the second quarter of 2007 was 4.6 percent, compared to 4.3 percent for the second quarter of 2006 and 4.4 percent for the first quarter of 2007. Churn includes free subscribers as well as paying subscribers who elect not to renew their monthly subscription service during the quarter.

Stock-based compensation for the second quarter was $2.8 million, compared to $3.1 million in the second quarter of 2006 and compared to $2.8 million in the first quarter of 2007. Stock-based compensation is presented in the same lines as cash compensation paid to the same individuals.

¹	Gross margin is defined as revenue less cost of subscription and fulfillment expenses.

²	Free cash flow is defined as cash provided by operating activities less cash used in investing activities excluding purchases and sales of short-term investments.

³	Subscriber acquisition cost is defined as the total marketing expense, which includes stock-based compensation for marketing personnel, on the Company’s Statement of Operations divided by total gross subscriber additions during the quarter.

⁴	Churn is defined as customer cancellations in the quarter divided by the sum of beginning subscribers and gross subscriber additions, divided by three months.

This excerpt taken from the NFLX 8-K filed Apr 18, 2007.

First-Quarter 2007 Financial Highlights

Revenue for the first quarter of 2007 was $305.3 million, representing 36 percent year-over-year growth from $224.1 million for the first quarter of 2006, and 10 percent sequential growth from $277.2 million for the fourth quarter of 2006.

GAAP net income for the first quarter of 2007 was $9.9 million, or $0.14 per diluted share, compared to GAAP net income of $4.4 million, or $0.07 per diluted share, for the first quarter of 2006 and GAAP net income of $14.9 million, or $0.21 per diluted share, for the fourth quarter of 2006.

Non-GAAP net income was $11.5 million, or $0.16 per diluted share, for the first quarter of 2007, compared to non-GAAP net income of $6.4 million, or $0.10 per diluted share, for the first quarter of 2006 and non-GAAP net income of $16.8 million, or $0.24 per diluted share, for the fourth quarter of 2006.

Non-GAAP net income equals net income on a GAAP basis before stock-based compensation expense, net of taxes.

Gross margin¹ for the first quarter of 2007 was 36.1 percent, compared to 33.8 percent for the first quarter of 2006 and 38.9 percent for the fourth quarter of 2006.

Free cash flow² for the first quarter of 2007 was negative $18.0 million, compared to positive $11.7 million in the first quarter of 2006 and positive $22.5 million for the fourth quarter of 2006.

¹	Gross margin is defined as revenue less cost of subscription and fulfillment expense.

Cash provided by operating activities for the first quarter of 2007 was $63.0 million, compared to $46.0 million for the first quarter of 2006 and $87.1 million for the fourth quarter of 2006.

Subscribers. Netflix ended the first quarter of 2007 with approximately 6,797,000 total subscribers, representing 40 percent year-over-year growth from 4,866,000 total subscribers at the end of the first quarter of 2006 and 8 percent sequential growth from 6,316,000 subscribers at the end of the fourth quarter of 2006.

Net subscriber additions in the quarter were 481,000, compared to 687,000 for the same period of 2006 and 654,000 for the fourth quarter of 2006.

During the quarter Netflix acquired 1,520,000 gross subscriber additions, representing 10 percent year-over-year growth from 1,377,000 gross subscriber additions in the first quarter of 2006 and 2 percent quarter-over-quarter growth from 1,493,000 gross subscriber additions in the fourth quarter of 2006.

Of the 6,797,000 total subscribers at quarter end, 98 percent, or 6,676,000, were paid subscribers. The other 2 percent, or 121,000, were free subscribers. Paid subscribers represented 97 percent of total subscribers at the end of the first quarter of 2006 and at the end of the fourth quarter of 2006.

Subscriber acquisition cost³ for the first quarter of 2007 was $47.46 per gross subscriber addition, compared to $38.47 for the same period of 2006 and $44.31 for the fourth quarter of 2006.

Churn⁴ for the first quarter of 2007 was 4.4 percent, compared to 4.1 percent for the first quarter of 2006 and 3.9 percent for the fourth quarter of 2006. Churn includes free subscribers as well as paying subscribers who elect not to renew their monthly subscription service during the quarter.

Stock-based compensation. In accordance with SEC Staff Accounting Bulletin No. 107, stock-based compensation is no longer presented as a separate line item on our income statement. Stock-based compensation is now presented in the same lines as cash compensation paid to the same individuals. In the first quarter, the charge related to stock-based compensation was $2.8 million, compared to $3.3 million in the first quarter of 2006 and compared to $3.1 million in the fourth quarter of 2006.

This excerpt taken from the NFLX 8-K filed Oct 23, 2006.

Third-Quarter 2006 Financial Highlights

Revenue¹ for the third quarter of 2006 was $256.0 million, representing 48 percent year-over-year growth from $172.7 million for the third quarter of 2005, and 7 percent sequential growth from $239.4 million for the second quarter of 2006.

GAAP net income for the third quarter of 2006 was $12.8 million, or $0.18 per diluted share, compared to GAAP net income of $6.9 million, or $0.11 per diluted share, for the third quarter of 2005 and GAAP net income of $17.0 million, or $0.25 per diluted share, for the second quarter of 2006. GAAP net income grew 84% on a year-over-year basis and declined 25% on a quarter-over-quarter basis for the third quarter of 2006.

Non-GAAP net income was $14.6 million, or $0.21 per diluted share, for the third quarter of 2006, compared to non-GAAP net income of $10.2 million, or $0.16 per diluted share, for the third quarter of 2005 and non-GAAP net income of $18.9 million, or $0.27 per diluted share, for the second quarter of 2006. Non-GAAP net income grew 43% on a year-over-year basis and declined 23% on a quarter-over quarter-basis for the third quarter of 2006.

¹	The Company had previously recorded proceeds from sales of previously viewed DVDs and the related cost of DVDs sales as Sales revenue and Cost of sales revenue, respectively. The Company now records the net gain on sales of DVDs as a separate line item on the income statement.

Non-GAAP net income equals net income on a GAAP basis before stock-based compensation expense, net of taxes.

Gross margin² for the third quarter of 2006 was 38.0 percent, compared to 33.1 percent for the third quarter of 2005 and 37.1 percent for the second quarter of 2006.

Stock-based compensation. In accordance with SEC Staff Accounting Bulletin No. 107, stock-based compensation is no longer presented as a separate line item on our income statement. Stock-based compensation is now presented in the same lines as cash compensation paid to the same individuals. Stock-based compensation recognized in prior periods has been reclassified to conform with the presentation in the current period. In the third quarter, the charge related to stock-based compensation was $3.2 million, compared to $3.3 million in the third quarter of 2005 and compared to $3.1 million in the second quarter of 2006.

Free cash flow³ for the third quarter of 2006 was $22.3 million, compared to $7.0 million in the third quarter of 2005 and $5.5 million for the second quarter of 2006.

Cash provided by operating activities for the third quarter of 2006 was $75.3 million, compared to $33.3 million for the third quarter of 2005 and $46.3 million for the second quarter of 2006.

Subscriber acquisition cost⁴ for the third quarter of 2006 was $45.32 per gross subscriber addition, compared to $36.33 for the same period of 2005 and $43.95 for the second quarter of 2006.

Churn⁵ for the third quarter of 2006 was 4.2 percent, compared to 4.3 percent for the third quarter of 2005 and 4.3 percent for the second quarter of 2006. Churn includes free subscribers as well as paying subscribers who elect not to renew their monthly subscription service during the quarter.

Subscribers. Netflix ended the third quarter of 2006 with approximately 5,662,000 total subscribers, representing 58 percent year-over-year growth from 3,592,000 total subscribers at the end of the third quarter of 2005 and 10 percent sequential growth from 5,169,000 subscribers at the end of the second quarter of 2006.

Net subscriber additions in the quarter were 493,000, compared to 396,000 for the same period of 2005 and 303,000 for the second quarter of 2006.

During the quarter Netflix acquired 1,310,000 gross subscriber additions, representing 42 percent year-over-year growth from 921,000 gross subscriber additions in the third quarter of 2005 and 22 percent quarter-over-quarter growth from 1,070,000 gross subscriber additions in the second quarter of 2006.

Of the 5,662,000 total subscribers at quarter end, 97 percent, or 5,489,000, were paid subscribers. The other 3 percent, or 173,000, were free subscribers. Paid subscribers represented 95 percent of total subscribers at the end of the third quarter of 2005 and 97 percent of total subscribers at the end of the second quarter of 2006.

²	Gross margin is defined as revenue less cost of subscription and fulfillment expense. The Company had previously recorded fulfillment expense as an operating expense.

³	Free cash flow is defined as cash provided by operating activities less cash used in investing activities excluding purchases and sales of short-term investments.

⁴	Subscriber acquisition cost is defined as the total marketing expense, which includes stock-based compensation for marketing personnel, on the Company’s Statement of Operations divided by total gross subscriber additions during the quarter.

⁵	Churn is defined as customer cancellations in the quarter divided by the sum of beginning subscribers and gross subscriber additions, divided by three months.

This excerpt taken from the NFLX 8-K filed Jul 24, 2006.

Second-Quarter 2006 Financial Highlights

Revenue¹ for the second quarter of 2006 was $239.4 million, representing 46 percent year-over-year growth from $164.0 million for the second quarter of 2005, and 7 percent sequential growth from $224.1 million for the first quarter of 2006.

GAAP net income for the second quarter of 2006 was $16.8 million, or $0.24 per diluted share, compared to GAAP net income of $5.7 million, or $0.09 per share, for the second quarter of 2005 and GAAP net income of $4.4 million, or $0.07 per diluted share, for the first quarter of 2006. GAAP net income for 2006 is a fully taxed number while 2005 was not. On a pretax basis², the second quarter profit was an all-time record.

The Company had previously recorded proceeds from sales of previously viewed DVDs and the related cost of DVDs sales as Sales revenue and Cost of sales revenue, respectively. The Company now records the net gain on sales of DVDs as a separate line item on the income statement. In the second quarter of 2006, sales from previously viewed DVDs was $2.8 million, compared to $0.5 million in the second quarter of 2005 and compared to $2.5 million in the first quarter of 2006. The cost of sales revenues for the second quarter of 2006 was $1.8 million, compared to $0.4 million in the second quarter of 2005 and compared to $1.1 million in the first quarter of 2006.

²	Pretax income is defined as income before income taxes as shown on the Company’s Statement of Operations, which line item includes stock-based compensation expense.

Non-GAAP net income was $18.7 million, or $0.27 per diluted share, for the second quarter of 2006, compared to non-GAAP net income of $9.1 million, or $0.14 per share, for the second quarter of 2005 and non-GAAP net income of $6.4 million, or $0.10 per diluted share, for the first quarter of 2006.

Non-GAAP net income equals net income on a GAAP basis before stock-based compensation expense, net of taxes.

Gross margin³ for the second quarter of 2006 was 37.1 percent, compared to 28.2 percent for the second quarter of 2005 and 33.8 percent for the first quarter of 2006.

Stock-based compensation. In accordance with SEC Staff Accounting Bulletin No. 107, stock-based compensation is no longer presented as a separate line item on our income statement. Stock-based compensation is now presented in the same lines as cash compensation paid to the same individuals. Stock-based compensation recognized in prior periods has been reclassified to conform with the presentation in the current period. In the second quarter, the charge related to stock-based compensation was $3.1 million, compared to $3.4 million in the second quarter of 2005 and compared to $3.3 million in the first quarter of 2006.

Free cash flow⁴ for the second quarter of 2006 was positive $5.5 million, compared to positive $1.8 million in the second quarter of 2005 and positive $11.7 million for the first quarter of 2006.

Cash provided by operating activities for the second quarter of 2006 was $46.3 million, compared to $36.5 million for the second quarter of 2005 and $57.6 million for the first quarter of 2006.

Subscriber acquisition cost⁵ for the second quarter of 2006 was $43.95 per gross subscriber addition, compared to $38.13 for the same period of 2005 and $38.47 for the first quarter of 2006.

Churn⁶ for the second quarter of 2006 was 4.3 percent, compared to 4.7 percent for the second quarter of 2005 and 4.1 percent for the first quarter of 2006. Churn includes free subscribers as well as paying subscribers who elect not to renew their monthly subscription service during the quarter.

Subscribers. Netflix ended the second quarter of 2006 with approximately 5,169,000 total subscribers, representing 62 percent year-over-year growth from 3,196,000 total subscribers at the end of the second quarter of 2005 and 6 percent sequential growth from 4,866,000 subscribers at the end of the first quarter of 2006.

Net subscriber additions in the quarter were 303,000, compared to 178,000 for the same period of 2005 and 687,000 for the first quarter of 2006.

During the quarter Netflix acquired 1,070,000 gross subscriber additions, representing 51 percent year-over-year growth from 707,000 gross subscriber additions in the second quarter of 2005 and 22 percent quarter-over-quarter decline from 1,377,000 gross subscriber additions in the first quarter of 2006.

Of the 5,169,000 total subscribers at quarter end, 97 percent, or 5,017,000, were paid subscribers. The other 3 percent, or 152,000, were free subscribers. Paid subscribers represented 97 percent of total subscribers at the end of the second quarter of 2005 and the first quarter of 2006.

³	Gross margin is defined as revenue less cost of subscription and fulfillment expense. The Company had previously recorded fulfillment expense as an operating expense.

⁴	Free cash flow is defined as cash provided by operating activities less cash used in investing activities excluding purchases and sales of short-term investments.

⁵	Subscriber acquisition cost is defined as the total marketing expense, which includes stock-based compensation for marketing personnel, on the Company’s Statement of Operations divided by total gross subscriber additions during the quarter.

⁶	Churn is defined as customer cancellations in the quarter divided by the sum of beginning subscribers and gross subscriber additions, divided by three months.

EXCERPTS ON THIS PAGE:

8-K	Oct 22, 2009

8-K	Jul 23, 2009

8-K	Apr 23, 2009

8-K	Oct 20, 2008

8-K	Jul 25, 2008

8-K	Apr 21, 2008

8-K	Oct 22, 2007

8-K	Jul 23, 2007

8-K	Apr 18, 2007

8-K	Oct 23, 2006

8-K	Jul 24, 2006

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