Netflix Q1 Report Exceeds ExpectationsBy: Mike Fossum - April 24, 2012
It was recently reported that Netflix CEO Reed Hastings might’ve raised a few eyebrows with the 68% increase in stock options he’d received in 2011, but the company’s Q1 earnings report might validate the founder’s $8.8 million in shares – for the second year in a row, Netflix has exceeded analyst expectations, and logged $870 million in revenue, with a loss of only 8 cents per share.
Wall Street has projected a decline of roughly $0.27 per share, and revenues of $866 million. While Netflix posted roughly $4 million more than expected, stocks also did better, and Hastings and CFO David Wells expect more growth, as the company gets ready to expand in the European market, sometime in Q4. Likewise, there were 3 million new subscribers to Netflix, putting its domestic user base at 23.41 million, though 1.21 million came from the international market. And even though the company was preparing to take a hit with their streaming service subscription rates after Starz wanted $200 million to renew its licensing contract with the service (after initially charging only $8 million 4 years before), the company has seen “no discernible change in churn or viewing levels.”
While Netflix users haven’t been able to watch popular Starz programs like Spartacus, they seem to be alright going with other shows in the catalog. As for subscribers to physical DVD rentals, user base is again down another 1.08 million – in Q4 2011, an additional 2.76 million were lost. With Netflix’s Qwikster debacle long-over, the trend toward streaming content might just be a sign of the times. While most of the content of the service is DVD-only, 140,000 DVD movie titles compared to 60,000 for download, streaming seems to be where home entertainment is heading. And as Netflix works out more of its licensing problems with Hollywood, more growth is likely.