January 24, 2008, 12:00 AM

Netflix sails past $1 billion in e-commerce revenue in 2007

Following a 9% increase in fourth quarter e-commerce revenue to $302.4 million, Netlix also grew its total revenue to $1.25 billion from $996.7 million in 2006.

Paul Demery

Managing Editor, B2B E-commerce

The past year turned into a horse race between Netflix Inc. and Blockbuster Inc. for subscribers in the online video market. Now Netflix is revealing how its tale of the tape went in 2007.

In 2007, Netflix grew its total revenue to $1.25 billion from $996.7 million in 2006. The company, No. 18 in the Internet Retailer Top 500 Guide, also reported full-year net income of $66.9 million, up from $49 million in the prior year.

In the fourth quarter Neflix also reported net income of $15.8 million on sales of $302.4 million vs. net income of $14.8 million on sales of $277.2 million in Q4 of 2006. Netflix ended the fourth quarter of 2007 with approximately 7.5 million total subscribers, representing 18% year-over-year growth from 6.3 million total subscribers at the end of the fourth quarter of 2006. “We achieved strong results in 2007 – ending with subscribers up 18%, revenue up 21% and net income up 36% despite facing tough competition for much of the year and investing strategically in our online video initiatives,” says Reed Hastings, Netflix co-founder and chief executive officer.

Netflix is working to diversify its business base and gain market share in the video digital download market. Earlier this month Netflix began offering most of its subscribers unlimited streaming of movies and TV episodes on their PCs. All subscribers on unlimited rental plans will be able to stream as many movies and TV episodes as they want on their PCs for free. “The emergence of a bundled service that enables our subscribers to receive DVDs through the mail fast and movies and TV episodes over the Internet instantly, positions us to achieve solid growth in 2008 and over the long term,” Hastings says.

In 2008, Netflix expects its total number of subscribers to range from 8.4 million to 8.9 million. The company also projects revenue for the year to range from $1.3 billion to $1.35 billion and GAAP net income from $75 million to $83 million.



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