EmailStory Stocks®
Archive
Last Update: 24-Oct-12 08:52 ET
NetFlix shares plunge 15% following disappointing earnings
Netflix (NFLX $57.00 -11.22) reported third quarter earnings of $0.13 per share, $0.09 better than the Capital IQ consensus of $0.04; revenues rose 10.1% year/year to $905 million versus the the $905.02 million consensus. The company issues in-line guidance for fourth quarter with EPS of $(0.23)-0.04 versus ($0.10) consensus and revenues of $919-943 versus the $943.22 million consensus. Domestic Streaming. Subs Q3 25.10 mln vs Guidance of 24.9-25.7 mln (Net adds 1.16 mln vs Guidance of 1.0-1.8 mln adds) Paid Subs Q3 23.8 mln vs Guidance of 23.5-24.1 mln. Revenue Q3 $556 mln vs Guidance of $552-559 mln Contribution Profit Q3 $91 million versus.
Guidance of $85-95 mln Contribution Margin Q3 16.4% vs Guidance of 16.6% "For Q4, we are targeting 17%, an improvement of 60 basis points quarter over quarter and 600 basis points year over year from 10.9% last Q4." Net additions were at the high end of our guidance range, reflecting stronger than forecasted subscriber growth in each of our international markets.... Latin America: The biggest issue holding back much stronger growth is payments. For a variety of reasons, many Latin American broadband households are leery of, or unable to, provide debit/credit cards that can be accepted over the Internet. It will take longer than we had planned to get to profitability in Latin America, but we are confident that this will be a very large and profitable market for us long term. In Q4, as we launched the Nordics, we expect international contribution losses to increase to approximately $113 million (guidance midpoint) as we will have incremental content and marketing expenses but minimal revenue yet from this market. We intend this (Q4) to be our peak quarter of international losses, and expect international losses will decline quarter by quarter next year. Once we've substantially reduced international losses, and with Netflix then being solidly profitable on a global basis, we will launch our next round of international expansion.
Guidance of $85-95 mln Contribution Margin Q3 16.4% vs Guidance of 16.6% "For Q4, we are targeting 17%, an improvement of 60 basis points quarter over quarter and 600 basis points year over year from 10.9% last Q4." Net additions were at the high end of our guidance range, reflecting stronger than forecasted subscriber growth in each of our international markets.... Latin America: The biggest issue holding back much stronger growth is payments. For a variety of reasons, many Latin American broadband households are leery of, or unable to, provide debit/credit cards that can be accepted over the Internet. It will take longer than we had planned to get to profitability in Latin America, but we are confident that this will be a very large and profitable market for us long term. In Q4, as we launched the Nordics, we expect international contribution losses to increase to approximately $113 million (guidance midpoint) as we will have incremental content and marketing expenses but minimal revenue yet from this market. We intend this (Q4) to be our peak quarter of international losses, and expect international losses will decline quarter by quarter next year. Once we've substantially reduced international losses, and with Netflix then being solidly profitable on a global basis, we will launch our next round of international expansion.
