Netflix earnings fall though streaming grows

Apr 23, 2012
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There's an odd set of numbers being posted today by Netflix as they report their earnings for the first quarter of 2012, including losses in DVD, gains in streaming, and a global revenue drop from this past quarter. There's always two (or more) ways to look at an earnings call, and this is certainly one for the books: $826 million in total domestic revenue for domestic sales only, this down from $847 million the quarter before and up from $706 million last year this same quarter. All that with significant gains in both domestic and international streaming subscribers - a surprising number, actually.

If you take a look at Netflix business this past quarter and see the streaming business only, you'll think the crew will certainly be having milkshakes and cookies tonight, on the house. On the other hand, if you look at their DVD sales, you'll not suspect such glee. Revenue went up from $52 million here in the USA to $67 million for streaming content, last quarter compared to this one, and went up from $29 million to $43 million for international streaming sales. Streaming subscriptions internationally grew from 1.86 million to 3.07 million users, this up from 0.8 million users the year before. Subscriptions domestically for streaming content grew from 21.67 million users to 23.41 million users as well.

For DVD sales though, revenue went down from $370 million to $320 million, this contributing heavily, it seems, to the overall domestic and global revenues for this quarter. Domestically Netflix did $826 million in total revenue, this down from $847 million in the last quarter of 2011. Total revenue here domestically is up, on the other hand, from $706 million posted in quarter 1 of 2011. Similar numbers are posted for international revenue, $719 million for Q1 2011, $876 million in Q4 2011, and $870 million this most recent quarter, Q1 2012.

Perhaps most striking of all the numbers posted this quarter from Netflix is their free cash flow which was up to $79 million last year this quarter and is down to $2 million this quarter. An undeniably shocking change over the course of a year. This free cash flow is in the face of Netflix loss of $5 million over the quarter.


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