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NFLX » Topics » Fulfillment expenses

This excerpt taken from the NFLX 10-Q filed May 8, 2009.

Fulfillment Expenses

 

     Three Months Ended     Change  
     March 31,
2009		     December 31,
2008		     March 31,
2008		     Q1’09 vs.
Q1’08		     Q1’09 vs.
Q4’08		  
     (in thousands, except percentages)  

Fulfillment expenses

    $ 43,969     $ 39,211     $ 35,649     23.3 %   12.1 %

As a percentage of revenues

      11.2 %     10.9 %     10.9 %    

Three months ended March 31, 2009 as compared to the three months ended March 31, 2008

The increase in fulfillment expenses for the three months ended March 31, 2009 as compared to the same prior-year period was primarily attributable to an increase in personnel-related costs resulting from the higher volume of activities in our shipping centers and customer service location, coupled with higher credit card fees as a result of the growth in the average number of paying subscribers. In addition, the increase in fulfillment expenses was attributable to an increase in facility-related costs resulting from the addition of new shipping centers and the relocation of our central receiving and storage center.

Three months ended March 31, 2009 as compared to the three months ended December 31, 2008

The increase in fulfillment expenses for the three months ended March 31, 2009 as compared to the three months ended December 31, 2008 was primarily attributable to an increase in personnel-related costs resulting from the higher volume of activities in our shipping centers due to a seasonal increase in disc usage. In addition, the increase in fulfillment expenses was attributable to an increase in facility-related costs resulting from the relocation of our central receiving and storage center.

These excerpts taken from the NFLX 10-K filed Feb 25, 2009.

Fulfillment expenses

Fulfillment expenses represent those expenses incurred in operating and staffing our shipping and customer service centers, including costs attributable to receiving, inspecting and warehousing our content library. Fulfillment expenses also include credit card fees.

Fulfillment expenses

Fulfillment expenses represent those expenses incurred in operating and staffing our shipping and customer service centers, including costs attributable to receiving, inspecting and warehousing our content library. Fulfillment expenses also include credit card fees.

Fulfillment
expenses

Fulfillment expenses represent those expenses incurred in operating and staffing our shipping and customer service centers,
including costs attributable to receiving, inspecting and warehousing our content library. Fulfillment expenses also include credit card fees.

SIZE="2">Operating Expenses

Technology and Development.    Technology and development expenses consist of
payroll and related costs incurred in testing, maintaining and modifying our Web site, our recommendation service, developing solutions for streaming content to subscribers, telecommunications systems and infrastructure and other internal-use
software systems. Technology and development expenses also include depreciation of the computer hardware and capitalized software we use to run our Web site and store our data.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Marketing.    Marketing expenses consist primarily of advertising expenses. Advertising expenses include marketing program
expenditures and other promotional activities, including allocated costs of revenues relating to free trial periods Also included in marketing expense are payments made to our consumer electronics partners to generate new subscribers for our service
as well as payroll related expenses.

General and Administrative.    General and administrative expenses consist
of payroll and related expenses for executive, finance, content acquisition and administrative personnel, as well as recruiting, professional fees and other general corporate expenses.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Stock-Based Compensation.    Effective January 1, 2006, we adopted the fair value recognition provisions of SFAS
No. 123(R) using the modified prospective method.

We grant stock options to our employees on a monthly basis. We have elected to
grant all options as non-qualified stock options which vest immediately. As a result of immediate vesting, stock-based compensation expense determined under SFAS No. 123(R) is fully recognized on the grant date, and no estimate is required for
post-vesting option forfeitures.

Gain on disposal of DVDs.    Gain on disposal of DVDs represents the
difference between proceeds from sales of DVDs and associated cost of DVD sales. Cost of DVD sales includes the net book value of the DVDs sold, shipping charges and, where applicable, a contractually specified fee for the DVDs that are subject to
revenue sharing agreements.

 


30






Table of Contents


Fulfillment
expenses

Fulfillment expenses represent those expenses incurred in operating and staffing our shipping and customer service centers,
including costs attributable to receiving, inspecting and warehousing our content library. Fulfillment expenses also include credit card fees.

SIZE="2">Operating Expenses

Technology and Development.    Technology and development expenses consist of
payroll and related costs incurred in testing, maintaining and modifying our Web site, our recommendation service, developing solutions for streaming content to subscribers, telecommunications systems and infrastructure and other internal-use
software systems. Technology and development expenses also include depreciation of the computer hardware and capitalized software we use to run our Web site and store our data.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Marketing.    Marketing expenses consist primarily of advertising expenses. Advertising expenses include marketing program
expenditures and other promotional activities, including allocated costs of revenues relating to free trial periods Also included in marketing expense are payments made to our consumer electronics partners to generate new subscribers for our service
as well as payroll related expenses.

General and Administrative.    General and administrative expenses consist
of payroll and related expenses for executive, finance, content acquisition and administrative personnel, as well as recruiting, professional fees and other general corporate expenses.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Stock-Based Compensation.    Effective January 1, 2006, we adopted the fair value recognition provisions of SFAS
No. 123(R) using the modified prospective method.

We grant stock options to our employees on a monthly basis. We have elected to
grant all options as non-qualified stock options which vest immediately. As a result of immediate vesting, stock-based compensation expense determined under SFAS No. 123(R) is fully recognized on the grant date, and no estimate is required for
post-vesting option forfeitures.

Gain on disposal of DVDs.    Gain on disposal of DVDs represents the
difference between proceeds from sales of DVDs and associated cost of DVD sales. Cost of DVD sales includes the net book value of the DVDs sold, shipping charges and, where applicable, a contractually specified fee for the DVDs that are subject to
revenue sharing agreements.

 


30






Table of Contents


Fulfillment
expenses

Fulfillment expenses represent those expenses incurred in operating and staffing our shipping and customer service centers,
including costs attributable to receiving, inspecting and warehousing our content library. Fulfillment expenses also include credit card fees.

SIZE="2">Operating Expenses

Technology and Development.    Technology and development expenses consist of
payroll and related costs incurred in testing, maintaining and modifying our Web site, our recommendation service, developing solutions for streaming content to subscribers, telecommunications systems and infrastructure and other internal-use
software systems. Technology and development expenses also include depreciation of the computer hardware and capitalized software we use to run our Web site and store our data.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Marketing.    Marketing expenses consist primarily of advertising expenses. Advertising expenses include marketing program
expenditures and other promotional activities, including allocated costs of revenues relating to free trial periods Also included in marketing expense are payments made to our consumer electronics partners to generate new subscribers for our service
as well as payroll related expenses.

General and Administrative.    General and administrative expenses consist
of payroll and related expenses for executive, finance, content acquisition and administrative personnel, as well as recruiting, professional fees and other general corporate expenses.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Stock-Based Compensation.    Effective January 1, 2006, we adopted the fair value recognition provisions of SFAS
No. 123(R) using the modified prospective method.

We grant stock options to our employees on a monthly basis. We have elected to
grant all options as non-qualified stock options which vest immediately. As a result of immediate vesting, stock-based compensation expense determined under SFAS No. 123(R) is fully recognized on the grant date, and no estimate is required for
post-vesting option forfeitures.

Gain on disposal of DVDs.    Gain on disposal of DVDs represents the
difference between proceeds from sales of DVDs and associated cost of DVD sales. Cost of DVD sales includes the net book value of the DVDs sold, shipping charges and, where applicable, a contractually specified fee for the DVDs that are subject to
revenue sharing agreements.

 


30






Table of Contents


Fulfillment Expenses

 

     Year Ended December 31,  
     2008     2007     2006  
     (in thousands, except percentages)  

Fulfillment expenses

    $ 149,101     $ 121,761     $ 94,364  

As a percentage of revenues

      10.9 %     10.1 %     9.5 %

Percentage change over prior period

      22.5 %     29.0 %  

The increase in fulfillment expenses in absolute dollars in 2008 as compared to 2007, and 2007 as compared to 2006, was primarily attributable to an increase in personnel-related costs resulting from the higher volume of activities in our shipping centers and customer service location, coupled with higher credit card fees as a result of the growth in the average number of paying subscribers. In addition, the increase in fulfillment expenses was attributable to an increase in facility-related costs resulting from the addition of new shipping centers, and for 2007, the expansion of our customer service center.

Fulfillment Expenses

 

     Year Ended December 31,  
     2008     2007     2006  
     (in thousands, except percentages)  

Fulfillment expenses

    $ 149,101     $ 121,761     $ 94,364  

As a percentage of revenues

      10.9 %     10.1 %     9.5 %

Percentage change over prior period

      22.5 %     29.0 %  

The increase in fulfillment expenses in absolute dollars in 2008 as compared to 2007, and 2007 as compared to 2006, was primarily attributable to an increase in personnel-related costs resulting from the higher volume of activities in our shipping centers and customer service location, coupled with higher credit card fees as a result of the growth in the average number of paying subscribers. In addition, the increase in fulfillment expenses was attributable to an increase in facility-related costs resulting from the addition of new shipping centers, and for 2007, the expansion of our customer service center.

Fulfillment Expenses

 

















































































   Year Ended December 31, 
   2008  2007  2006 
   (in thousands, except percentages) 

Fulfillment expenses

  $149,101  $121,761  $94,364 

As a percentage of revenues

   10.9%  10.1%  9.5%

Percentage change over prior period

   22.5%  29.0% 

The increase in fulfillment expenses in absolute dollars in 2008 as compared to 2007, and 2007 as
compared to 2006, was primarily attributable to an increase in personnel-related costs resulting from the higher volume of activities in our shipping centers and customer service location, coupled with higher credit card fees as a result of the
growth in the average number of paying subscribers. In addition, the increase in fulfillment expenses was attributable to an increase in facility-related costs resulting from the addition of new shipping centers, and for 2007, the expansion of our
customer service center.

Fulfillment Expenses

 

















































































   Year Ended December 31, 
   2008  2007  2006 
   (in thousands, except percentages) 

Fulfillment expenses

  $149,101  $121,761  $94,364 

As a percentage of revenues

   10.9%  10.1%  9.5%

Percentage change over prior period

   22.5%  29.0% 

The increase in fulfillment expenses in absolute dollars in 2008 as compared to 2007, and 2007 as
compared to 2006, was primarily attributable to an increase in personnel-related costs resulting from the higher volume of activities in our shipping centers and customer service location, coupled with higher credit card fees as a result of the
growth in the average number of paying subscribers. In addition, the increase in fulfillment expenses was attributable to an increase in facility-related costs resulting from the addition of new shipping centers, and for 2007, the expansion of our
customer service center.

Fulfillment Expenses

 

















































































   Year Ended December 31, 
   2008  2007  2006 
   (in thousands, except percentages) 

Fulfillment expenses

  $149,101  $121,761  $94,364 

As a percentage of revenues

   10.9%  10.1%  9.5%

Percentage change over prior period

   22.5%  29.0% 

The increase in fulfillment expenses in absolute dollars in 2008 as compared to 2007, and 2007 as
compared to 2006, was primarily attributable to an increase in personnel-related costs resulting from the higher volume of activities in our shipping centers and customer service location, coupled with higher credit card fees as a result of the
growth in the average number of paying subscribers. In addition, the increase in fulfillment expenses was attributable to an increase in facility-related costs resulting from the addition of new shipping centers, and for 2007, the expansion of our
customer service center.

This excerpt taken from the NFLX 10-Q filed Nov 3, 2008.

Fulfillment Expenses

 

     Three Months Ended     Change     Nine Months Ended     Change  
     September 30,
2008		     June 30,
2008		     September 30,
2007		     Q3’08 vs.
Q3’07		     Q3’08 vs
Q2’08		     September 30,
2008		     September 30,
2007		     Q3’08 vs.
Q3’07		  
     (in thousands, except percentages)  

Fulfillment expenses

    $ 37,923     $ 36,318     $ 30,746     23.3 %   4.4 %   $ 109,890     $ 90,384     21.6 %

As a percentage of revenues

      11.1 %     10.8 %     10.5 %         10.9 %     10.0 %  

Three and nine months ended September 30, 2008 as compared to the three and nine months ended September 30, 2007

The increase in fulfillment expenses for the three and nine months ended September 30, 2008 as compared to the same prior-year periods was primarily attributable to an increase in personnel-related costs resulting from the higher volume of activities in our shipping centers and customer service location, coupled with higher credit card fees as a result of the increase in revenues from subscriptions. In addition, the increase in fulfillment expenses was attributable to additional facility-related costs resulting from the addition of new shipping centers.

 

26

Table of Contents

Three months ended September 30, 2008 as compared to the three months ended June 30, 2008

The increase in fulfillment expenses for the three months ended September 30, 2008 as compared to the three months ended June 30, 2008 was primarily attributable to an increase in costs for customer service, as well as an increase in depreciation related to equipment used in our shipping centers. In addition, credit card fees increased resulting from the increase in revenues from subscriptions.

This excerpt taken from the NFLX 10-Q filed Aug 11, 2008.

Fulfillment Expenses

 

     Three Months Ended     Change     Six Months Ended     Change  
     June 30,
2008		     March 31,
2008		     June 30,
2007		     Q2’08 vs.
Q2’07		     Q2’08 vs
Q1’08		     June 30,
2008		     June 30,
2007		     Q2’08 vs.
Q2’07		  
     (in thousands, except percentages)  

Fulfillment expenses

    $ 36,318     $ 35,649     $ 29,855     21.6 %   1.9 %   $ 71,967     $ 59,638     20.7 %

As a percentage of revenues

      10.8 %     10.9 %     9.9 %         10.8 %     9.8 %  

Three and six months ended June 30, 2008 as compared to the three and six months ended June 30, 2007

The increase in fulfillment expenses for the three and six months ended June 30, 2008 as compared to the same prior-year periods was primarily attributable to an increase in personnel-related costs resulting from the higher volume of activities in our shipping centers and customer service location. In addition, the increase in fulfillment expenses was attributable to higher credit card fees as a result of the increase in revenues from subscriptions.

Three months ended June 30, 2008 as compared to the three months ended March 31, 2008

The slight increase in fulfillment expenses for the three months ended June 30, 2008 as compared to the three months ended March 31, 2008 was primarily attributable to an increase in costs for customer service, as well as higher credit card fees resulting from the increase in revenue from subscriptions.

This excerpt taken from the NFLX 10-Q filed May 6, 2008.

Fulfillment Expenses

 

     Three Months Ended    Change  
     March 31,
2008		     December 31,
2007		    March 31,
2007		    Q1’08 vs.
Q1'07		     Q1’08 vs
Q4'07		  
     (in thousands, except percentages)  

Fulfillment expenses

    $ 35,649     $ 31,377     $29,783    19.7 %   13.6 %

As a percentage of revenues

      10.9 %     10.4 %   9.8%     

Three months ended March 31, 2008 as compared to the three months ended March 31, 2007

The increase in fulfillment expenses for the three months ended March 31, 2008 as compared to the same prior-year period was primarily attributable to an increase in personnel-related costs resulting from the higher volume of activities in our shipping centers and customer service location. In addition, the increase in fulfillment expenses was attributable to an increase in facility-related costs resulting from the expansion of our customer service center and the expansion and addition of shipping centers.

Three months ended March 31, 2008 as compared to the three months ended December 31, 2007

The increase in fulfillment expenses for the three months ended March 31, 2008 as compared to the three months ended December 31, 2007 was primarily attributable to an increase in personnel-related costs resulting from the higher volume of activities in our shipping centers and customer service location due to a seasonal increase in disc usage. In addition, the increase in fulfillment expenses was attributable to an increase in facility-related costs resulting from the expansion and addition of shipping centers.

These excerpts taken from the NFLX 10-K filed Feb 28, 2008.

Fulfillment Expenses

 

     Year Ended December 31,  
     2007     2006     2005  
     (in thousands, except percentages)  

Fulfillment expenses

    $ 121,761     $ 94,364     $ 71,987  

As a percentage of revenues

      10.1 %     9.5 %     10.6 %

Percentage change over prior period

      29.0 %     31.1 %  

The increase in fulfillment expenses in absolute dollars in 2007 as compared to 2006 was primarily attributable to an increase in personnel-related costs resulting from the higher volume of activities in our customer service and shipping centers, coupled with higher credit card fees as a result of 32% growth in the average number of paying subscribers. In addition, the increase in fulfillment expenses was attributable to an increase in facility-related costs resulting from the expansion of our customer service center, the expansion of certain of our shipping centers and the addition of new ones.

The increase in fulfillment expenses in absolute dollars in 2006 as compared to 2005 was primarily attributable to an increase in personnel-related costs resulting from the higher volume of activities in our customer service and shipping centers, coupled with higher credit card fees as a result of 60% growth in the average number of paying subscribers. In addition, the increase in fulfillment expenses was attributable to an increase in facility-related costs resulting from the expansion of certain of our shipping centers and the addition of new ones.

We anticipate that fulfillment expenses will increase in 2008 due to higher volume of shipped discs and continued expansion of our network of distribution centers.

Fulfillment Expenses

 

















































































   Year Ended December 31, 
   2007  2006  2005 
   (in thousands, except percentages) 

Fulfillment expenses

  $121,761  $94,364  $71,987 

As a percentage of revenues

   10.1%  9.5%  10.6%

Percentage change over prior period

   29.0%  31.1% 

The increase in fulfillment expenses in absolute dollars in 2007 as compared to 2006 was primarily
attributable to an increase in personnel-related costs resulting from the higher volume of activities in our customer service and shipping centers, coupled with higher credit card fees as a result of 32% growth in the average number of paying
subscribers. In addition, the increase in fulfillment expenses was attributable to an increase in facility-related costs resulting from the expansion of our customer service center, the expansion of certain of our shipping centers and the addition
of new ones.

The increase in fulfillment expenses in absolute dollars in 2006 as compared to 2005 was primarily attributable to an
increase in personnel-related costs resulting from the higher volume of activities in our customer service and shipping centers, coupled with higher credit card fees as a result of 60% growth in the average number of paying subscribers. In addition,
the increase in fulfillment expenses was attributable to an increase in facility-related costs resulting from the expansion of certain of our shipping centers and the addition of new ones.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">We anticipate that fulfillment expenses will increase in 2008 due to higher volume of shipped discs and continued expansion of our network of
distribution centers.

This excerpt taken from the NFLX 10-Q filed Nov 2, 2007.

Fulfillment expenses

 

     Three Months Ended     Change     Nine Months Ended     Change  
     September 30,
2006		     June 30,
2007		     September 30,
2007		     Q3’07
vs.
Q3’06		     Q3’07
vs
Q2’07		     September 30,
2006		     September 30,
2007		     Q3’07
vs.
Q3’06		  
     (in thousands, except percentages)        

Fulfillment expenses

    $ 23,583     $ 29,855     $ 30,746     30.4 %   3.0 %   $ 67,602     $ 90,384     33.7 %

As a percentage of revenues

      9.2 %     9.9 %     10.5 %         9.4 %     10.0 %  

Fulfillment expenses represent those expenses incurred in operating and staffing our shipping and customer service centers, including costs attributable to receiving, inspecting and warehousing our content library. Fulfillment expenses also include credit card fees.

Three and nine months ended September 30, 2006 as compared to the three and nine months ended September 30, 2007

The increase in fulfillment expenses for the three and nine months ended September 30, 2007 as compared to the same prior-year periods was primarily attributable to an increase in credit card fees as a result of the growth in subscriptions. In addition, increased headcount and the addition of new shipping centers resulted in higher personnel and facility related costs during the first nine months of 2007.

Three months ended June 30, 2007 as compared to the three months ended September 30, 2007

Fulfillment expenses for the three months ended September 30, 2007 slightly increased as compared to the three months ended June 30, 2007 primarily due to personnel-related costs.

 

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Table of Contents

EXCERPTS ON THIS PAGE:

10-Q
May 8, 2009
10-K (10 sections)
Feb 25, 2009
10-Q
Nov 3, 2008
10-Q
Aug 11, 2008
10-Q
May 6, 2008
10-K (2 sections)
Feb 28, 2008
10-Q
Nov 2, 2007

RELATED TOPICS for NFLX:

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