EmailNetflix (NFLX $253.16 -28.37) reported second quarter earnings of
$1.26 per share, $0.14 better than the Capital IQ Consensus Estimate of $1.12.
Revenues rose 51.7% year/year to $788.6 million versus the $791.2 million
consensus.
NFLX sees third quarter total subscribers of 24.6 million to 25.4 million .
Also, in the third quarter, the company is expecting to see earnings of $0.72 to
$1.07 versus the $1.08 Capital IQ Consensus Estimate; sees third quarter
revenues of $799.5 million to $828.5 million versus the $845.58 million Capital
IQ Consensus Estimate.
Pricing Commentary: "It is expected and unfortunate that our DVD subscribers who
also use streaming don't like our price change, which can be as much as a 60%
increase for them from $9.99 to $15.98, when it goes into effect for each
subscriber upon their renewal date in September. Some subscribers will cancel
Netflix or downgrade their Netflix plans. We expect most to stay with us because
each of our $7.99 plans is an incredible value. We hate making our subscribers
upset with us, but we feel like we provide a fantastic service and we're working
hard to further improve the quality and range of our streaming content in the
fourth quarter and beyond."
Pricing Changes and Effect on Subscribers: "In the third quarter we will see
only the negative impact of the pricing change, given that the announcement was
early in the quarter and that the increases won't take effect until late in the
quarter (September 15th on average). We expect domestic net additions in the
third quarter to be lower than the previous year third quarter, and because of
the timing of the price change, revenues will only grow slightly on a sequential
basis. In the fourth quarter, we expect domestic net additions to return to a
pattern of year-over-year growth while revenue will reflect a full quarter's
impact of the pricing changes, which could result in the fourth quarter being
our first billion dollar global revenue quarter, driven by strong U.S.
performance."
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