On April 18, Netflix
- 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 |
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 Makes the Right Friends
- Is Netflix the Next XM?
- Date Netflix, Marry Amazon, Kill Blockbuster
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.
