LOS GATOS, Calif. -- Netflix, Inc. (Nasdaq: NFLX) today reported results for the second quarter ended June 30, 2010.
"Our rate of subscriber growth continues to accelerate and we added more than a million net new subscribers for the third consecutive quarter," said Netflix Co-Founder and CEO Reed Hastings. "Consumers are clearly enthralled by our offering of unlimited movies and TV shows streamed over the Internet."
Second-Quarter 2010 Financial Highlights
Subscribers. Netflix ended the second quarter of 2010 with approximately 15,001,000 total subscribers, representing 42 percent year-over-year growth from 10,599,000 total subscribers at the end of the second quarter of 2009 and 7 percent sequential growth from 13,967,000 subscribers at the end of the first quarter of 2010.
Net subscriber change in the quarter was an increase of 1,034,000 compared to an increase of 289,000 for the same period of 2009 and an increase of 1,699,000 for the first quarter of 2010.
Gross subscriber additions for the quarter totaled 3,059,000, representing 58 percent year-over-year growth from 1,936,000 gross subscriber additions in the second quarter of 2009 and 12 percent quarter-over-quarter decline from 3,492,000 gross subscriber additions in the first quarter of 2010.
Of the 15,001,000 total subscribers at quarter end, 97 percent, or 14,577,000, were paid subscribers. The other 3 percent, or 424,000, were free subscribers. Paid subscribers represented 98 percent of total subscribers at the end of the second quarter of 2009 and at the end of the first quarter of 2010.
Revenue for the second quarter of 2010 was $519.8 million, representing 27 percent year-over-year growth from $408.5 million for the second quarter of 2009, and 5 percent sequential growth from $493.7 million for the first quarter of 2010.
Gross margin(1) for the second quarter of 2010 was 39.4 percent compared to 34.1 percent for the second quarter of 2009 and 37.8 percent for the first quarter of 2010.
GAAP net income for the second quarter of 2010 was $43.5 million, or $0.80 per diluted share compared to GAAP net income of $32.4 million, or $0.54 per diluted share, for the second quarter of 2009 and GAAP net income of $32.3 million, or $0.59 per diluted share, for the first quarter of 2010. GAAP net income grew 34 percent on a year-over-year basis and GAAP EPS grew 48 percent on a year-over-year basis.
Percentage of subscribers who watched instantly more than 15 minutes of a TV episode or movie in the second quarter of 2010 was 61 percent compared to 37 percent for the same period of 2009 and 55 percent for the first quarter of 2010.
Subscriber acquisition cost(2) for the second quarter of 2010 was $24.37 per gross subscriber addition compared to $23.88 for the same period of 2009 and $21.54 for the first quarter of 2010.
Churn(3) for the second quarter of 2010 was 4.0 percent compared to 4.5 percent for the second quarter of 2009 and 3.8 percent for the first quarter of 2010. Churn includes free subscribers as well as paying subscribers who elect not to renew their monthly subscription service during the quarter.
Free cash flow(4) for the second quarter of 2010 was $34.2 million compared to $26.3 million for the second quarter of 2009 and $37.6 million for the first quarter of 2010.
Last twelve-month free cash flow for the second quarter of 2010 was $127.5 million compared to $118.6 million for the second quarter of 2009 and $119.6 million for the first quarter of 2010.
Cash provided by operating activities for the second quarter of 2010 was $60.3 million compared to $75.3 million for the second quarter of 2009 and $77.2 million for the first quarter of 2010.
The Company's performance expectations for the third and fourth quarters of 2010 and full-year 2010 are as follows:
* Ending subscribers of 16.3 million to 16.7 million
* Revenue of $546 million to $554 million
* GAAP net income of $33 million to $40 million
* GAAP EPS of $0.61 to $0.74 per diluted share
* Ending subscribers of 17.7 million to 18.5 million
* Revenue of $580 million to $596 million
* GAAP net income of $32 million to $40 million
* GAAP EPS of $0.58 to $0.73 per diluted share
* Ending subscribers of 17.7 million to 18.5 million, up from 16.5 million to 17.3 million
* Revenue of $2.14 billion to $2.16 billion, up from $2.11 billion to $2.16 billion
* GAAP net income of $141 million to $156 million, up from $132 million to $144 million
* GAAP EPS of $2.58 to $2.86 per diluted share, up from $2.41 to $2.63 per diluted share
CHICAGO -- NEC Display Solutions of America, a leading provider of commercial LCD display and projector solutions, announced today that its entire line (NC1200C, NC2000C and NC3200S) of digital cinema projectors are the first in the industry to reach full Digital Cinema Initiatives (DCI) Compliance. The new projectors include the NC1200C at 9,000 lumens of brightness for screen sizes of up to 46-feet wide, the NC2000C at 17,000 lumens for screens up to 65-feet wide and the ultra-bright NC3200S at 31,000 lumens for screens up to 105-feet wide.
The tests were completed by the Research Institute for Digital Media and Content at Keio University (hereafter, DMC) in Japan, which is one of three entities licensed by Digital Cinema Initiatives, LLC to perform the CTP tests. NEC's digital cinema projectors were certified in:
. (*1) Digital Cinema System Specification (DCSS) Version 1.2 as of March 7, 2008
. (*2) DCSS CTP Version 1.1 as of May 8, 2009
"We are beyond proud to be the first digital cinema manufacturer to have achieved this significant accomplishment," said Pierre Richer, President and C.O.O. of NEC Display Solutions. "To have a full product line that meets the needs of today's exhibitors is not only essential, but expected. NEC continually proves its place in the industry by capitalizing on stringent standards and providing innovative programs to enhance our products."
"We are very pleased to confirm that all the NEC digital cinema projectors (NC1200C, NC2000C and NC3200S), featuring Texas Instruments' Series 2 DLP Cinema® technology have passed all the requirements of the CTP," said Kunitake Kaneko, assistant professor of DMC.
Sterling, Virginia -- GDC Technology ("GDC"), a world leading digital cinema solution provider, is pleased to announce the signing of an exclusive server deployment agreement with EPIC Theatres, a Florida-based theatre chain. Under this agreement, GDC will be the sole server provider for EPIC's new all-digital theatre in Palm Coast, Florida. A total of 14 GDC servers were deployed, and the installation was successfully completed in time for the grand opening on June 29, 2010.
Founded in 2003, EPIC Theatres is operated by third and fourth generation exhibitors whose family built its first theatre in 1947. It currently operates 67 screens located at six sites in three southern states in the US. With a vision fixed firmly on the future, the privately held motion picture theatre circuit is always at the forefront of technology, to bring the best cinematic experience to its audiences. EPIC has embarked on an expansion program which will see the addition of more than 40 digital screens to its operations over the next two years.
"EPIC began its digital conversion program with GDC servers and we are extremely pleased to have made the right choice," said Clint DeMarsh, VP of purchasing for EPIC Theatres. "The great functionality and superb reliability offered by GDC servers is truly impressive. Equally commendable is GDC's 24/7 call service center, ensuring support is always at hand. We are happy with the GDC package and have decided to stick with it in the Palm Coast project."
"EPIC is an extremely valued customer to GDC since they recognized our strengths and had faith in us when we were relatively new to the US market, for which we are tremendously grateful," said Dr. Man-Nang CHONG, founder and CEO of GDC Technology. "The Palm Coast project has further strengthened our strategic partnership in digital cinema, and we look forward to many more years of mutually successful collaboration with EPIC Theatres."