Netflix Jumps 6%: Q1 View Crushes Estimates
January 26, 2011, 4:20 PM ET
By Tiernan Ray
Netflix (NFLX) this afternoon reported Q4 revenue below analysts’ estimates, but beat comfortably on the bottom line and reported a Q1 outlook that crushed estimates.
Q4 revenue rose 34% to $596 million, missing the average $597.5 million estimate. EPS of 87 cents, however, was well ahead of the average 71-cent estimate.
Net subscriber additions were 3.08 million, well ahead of expectations for 2.5 million or so, bringing total subscriber count to 20 million at the end of the year, a 63% increase, year over year. Surprisingly, marketing spend was actually 10% lower this quarter than the prior year.
Operating income margin of 13% was better than most were estimating, likely helped by the fact that DVD shipments are turning out to be slower than expected at the start of the present quarter, saving the company delivery costs.
Netflix forecast the current quarter at 90 cents to $1.13 in EPS, well above the average 87-cent estimate. The company expects $684 million to $704 million in domestic revenue in Q1, plus $10 million to $13 million in overseas revenue. That’s well ahead of the $671 million in revenue the Street has been modeling. Subscribers are expected to reach 21.9 million to 22.8 million domestically and 750,000 to 900,000 overseas.
The company said it is targeting a 14% operating margin for “the next few quarters,” likely well above what many would expect.
The company said that given the diminished importance of gross subscriber additions and churn and cost of acquisitions, means the company will stop reporting those statistics in 2012, instead relying on net subscriber additions and operating income as the most important metrics of its business.
Netflix shares are up $10.97, or 6%, at $194 in late trading. |
