No one is applauding the recession, but at least Netflix
The DVD-rental specialist closed out its latest quarter with nearly 10.6 million subscribers, or 289,000 more than it had at the end of March. Revenue soared 21% to $408.5 million. Earnings checked in at $0.54 a share, comfortably ahead of both the $0.42 profit it rang up a year ago and the $0.50 target that analysts were banking on.
Churn inched higher during the quarter, but subscriber acquisition costs continue to plunge. But that's a fair trade-off. The unsure economy may find movie buffs stopping and restarting their Netflix subscriptions more often, but it's also getting cheaper for Netflix to smoke out new leads.
The delicious reward at the end of the three-month meal is that free cash flow more than doubled to $26.3 million.
Forging ahead against the fierce headwinds has Netflix bumping up its guidance for all of 2009.
Metric |
New Guidance |
Previous Guidance |
---|---|---|
Revenue |
$1.65-$1.67 billion |
$1.63-$1.67 billion |
Subscribers |
11.6-12 million |
11.2-11.8 million |
EPS |
$1.65-$1.82 |
$1.56-$1.72 |
What's the secret? It's not just the flicks, because Wall Street sees real-world leader Blockbuster
Netflix simply has the best model, with a sweet perceived value. Paying $17 a month for unlimited DVD rentals (with no more than three out at a time) and bottomless streams from its growing digital library is a better deal than a single night out at the movies. Apple
This explains why hardware gadget makers such as Microsoft
Unfortunately for anyone dreaming of beating Netflix at its own game, every quarter finds it padding its insurmountable lead. There are now 289,000 more reasons why Netflix can't be easily vanquished than there were three months ago.
If we go by Netflix's new guidance, at least a million more accounts will be added to the service's rolls in the latter half of the year. Who says Netflix doesn't have a mighty moat?
Other headlines to rock out to:
- I Can Make You Rich in 3 Years
- A New Business Model for the Digital Age
- Reed Hastings Opens the Red Envelope
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