Netflix revenue grows 15% in the third quarter
After earlier cutting fees on two plans and revising downward its full-year financial projection, Netflix Inc. turned in a solid performance in the third quarter. For the quarter, Netflix posted revenue of $294 million, an increase of 14.8% over revenue of $256 million in Q3 2006. At the same time, net income rose by 22.6% to $15.7 million from $12.8 million in the prior year.
"In the third quarter, we remained focused on the fundamentals: improving our service quality and value for our subscribers,” says CEO Reed Hastings. "Going forward we will remain focused on making our core service even better and growing our online DVD rental business, while continuing to invest in our internet delivery initiatives."
Netflix, No. 18 in the Internet Retailer Top 500 Guide, in the second quarter cut its monthly rate by $1 on two plans that provide unlimited DVD rentals and the ability to watch movies and TV series on a PC for no additional charge. The company also revised downward its full-year financial forecast to a range of $1.17 billion to $1.185 billion, compared with an earlier spread of $1.21 billion to $1.26 billion.
Netflix ended the third quarter with approximately 7 million subscribers, representing 25% year-over-year growth from about 5.7 million total subscribers at the end of the second quarter of 2006, and a 2.9% sequential growth from about 6.8 million subscribers at the end of the second quarter of 2007. Net subscriber change in the quarter was an increase of 286,000, compared to a decrease of 55,000 for the second quarter. “Our results exceeded our guidance on all of our key metrics: subscriber growth, revenue and net income,” says Hastings.
With a better performance in the third quarter, Netflix now projects revenue to range from $297 million to $302 million for the fourth quarter and around $1.2 billion for the full year. Net income for Q4 and the year are forecast from $6 million to $11 million and from $57.2 million to $62.2 million, respectively. The company also projects that it will end the fourth quarter with up to 7.5 million paid subscribers.
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