Netflix Nets Some Gains: Fool by Numbers

On April 18, Netflix (Nasdaq: NFLX) released first-quarter earnings for the period ended March 31.

  • Foolish contributor Rick Munarriz takes a look at this quarter's earnings here. For a look at last quarter, check out this article.
  • Revenues jumped 36.2% to $305.3 million, and net profit more than doubled, thanks to 40% growth in Netflix's total subscriber base year over year.
  • Subscriber acquisition costs rose 23.4%, while the subscriber churn rate (turnover) increased by 7.3%.
  • Even with strong growth and increased margins, the company lowered its guidance for both revenue and subscriber numbers.
  • The movie-rental business -- whether online or retail -- hasn't been a favorite of our Motley Fool CAPS community. Netflix has earned only two stars; rival Blockbuster (NYSE: BBI) and movie retailer Movie Gallery (Nasdaq: MOVI) both have the lowest one-star rating.

(Figures in millions, except per-share data.)

Income Statement Highlights

Q1 2007

Q1 2006

Change

Sales

$305.3

$224.1

36.2%

Net Profit

$9.9

$4.4

124%

EPS

$0.14

$0.07

100%

Diluted Shares

70.7

66.5

6.3%

Get back to basics with the income statement.

Margin Checkup

Q1 2007

Q1 2006

Change*

Gross Margin

36.1%

33.9%

2.3

Operating Margin

3.7%

2.1%

1.5

Net Margin

3.2%

2%

1.3

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q1 2007

Q1 2006

Change

Cash + ST Invest.

$388.0

$227.8

70.3%

Accounts Rec.

N/A

N/A

N/A

DVD Library

$114.1

$74.0

54.2%

Liabilities

Q1 2007

Q1 2006

Change

Accounts Payable

$94

$78

20.5%

Long-Term Debt

$0.0

$0.0

N/A

The balance sheet reflects the company's health.

Cash Flow Highlights

Q1 2007

Q1 2006

Change

Cash From Ops.

$63

$46

37%

Capital Expenditures

$18.0

$6.7

169.4%

Free Cash Flow

$45.0

$39.3

14.5%

Free cash flow is a Fool's best friend.

Related Foolishness:

Netflix is a current Stock Advisor recommendation, and XM Radio is a former Rule Breakers pick. Try out these or any other Foolish newsletter, free for 30 days.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean. This data has been provided by Netscribes. To provide feedback on this article, please click on the "feedback" button below.

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