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Last Update: 26-Jan-12 09:59 ET
Netflix Up 25% Following Earnings/Guidance Results
Late yesterday, Netflix (NFLX $119.28 +24.24) reported fourth quarter earnings of $0.73 per share, $0.18 better than the Capital IQ Consensus Estimate of $0.55.
Revenues rose 47.0% year/year to $876 million versus the $857.22 million consensus.
NFLX reports Q4 Domestic Streaming subs of 21.67 mln, guidance 20.0-21.5 mln; Domestic DVD subs 11.17 mln, guidance 10.3-11.3 mln; International subs 1.86 mln, guidance 1.6-2.0 mln. Co issues guidance for Q1, sees EPS of ($0.49)-(0.16) vs. ($0.27) Capital IQ Consensus Estimate; sees Q1 revs of $842-877 mln vs. $845.66 mln Capital IQ Consensus Estimate. Domestically, we grew faster than expected in streaming members (up 220k to 21.67 million) in Q4. October and November member trends were consistent with our expectations from our last earnings call, while in December, we not only returned to strongly positive net streaming additions (aided by strong seasonal gross adds) but exceeded our forecast. For Q1 to date, our domestic net additions for streaming are tracking close to our net additions in Q1 2010 of 1.7 million net additions.
Given this trend, we are comfortable with our ability to continue to expand our domestic streaming contribution margin. we are increasing our Q1 contribution margin target to ~11%. Then, consistent with our previous guidance, we expect to increase the domestic streaming contribution margin throughout the year to deliver a trend of margin expansion that averages 100 bps per quarter As we've often said, we see the biggest long term threat as TV Everywhere, and in particular, HBO GO, the leading implementation of TV Everywhere to date. Our UK and Ireland launch at the beginning of the month was very successful, and we're seeing faster member growth than we did when we launched Canada... While DVD members declined sharply over the last two quarters, the weekly rate of DVD cancellations has subsided from peak levels in September. Looking out across 2012, we expect continued attrition among our DVD members. Specifically, in Q1, we expect net losses of DVD members of ~1.5 million, with the sequential decline moderating in future quarters. As a result, we expect modest quarterly losses, as well as losses for the calendar year (co previously guided for FY12 net loss, consensus $0.26). Until we achieve our goal of returning to global profitability, we do not intend to launch additional international markets."
Revenues rose 47.0% year/year to $876 million versus the $857.22 million consensus.
NFLX reports Q4 Domestic Streaming subs of 21.67 mln, guidance 20.0-21.5 mln; Domestic DVD subs 11.17 mln, guidance 10.3-11.3 mln; International subs 1.86 mln, guidance 1.6-2.0 mln. Co issues guidance for Q1, sees EPS of ($0.49)-(0.16) vs. ($0.27) Capital IQ Consensus Estimate; sees Q1 revs of $842-877 mln vs. $845.66 mln Capital IQ Consensus Estimate. Domestically, we grew faster than expected in streaming members (up 220k to 21.67 million) in Q4. October and November member trends were consistent with our expectations from our last earnings call, while in December, we not only returned to strongly positive net streaming additions (aided by strong seasonal gross adds) but exceeded our forecast. For Q1 to date, our domestic net additions for streaming are tracking close to our net additions in Q1 2010 of 1.7 million net additions.
Given this trend, we are comfortable with our ability to continue to expand our domestic streaming contribution margin. we are increasing our Q1 contribution margin target to ~11%. Then, consistent with our previous guidance, we expect to increase the domestic streaming contribution margin throughout the year to deliver a trend of margin expansion that averages 100 bps per quarter As we've often said, we see the biggest long term threat as TV Everywhere, and in particular, HBO GO, the leading implementation of TV Everywhere to date. Our UK and Ireland launch at the beginning of the month was very successful, and we're seeing faster member growth than we did when we launched Canada... While DVD members declined sharply over the last two quarters, the weekly rate of DVD cancellations has subsided from peak levels in September. Looking out across 2012, we expect continued attrition among our DVD members. Specifically, in Q1, we expect net losses of DVD members of ~1.5 million, with the sequential decline moderating in future quarters. As a result, we expect modest quarterly losses, as well as losses for the calendar year (co previously guided for FY12 net loss, consensus $0.26). Until we achieve our goal of returning to global profitability, we do not intend to launch additional international markets."
