Netflix Financials - Exibit 1 Netflix Financial Statements...

  • Liberty University
  • BUSI 690
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  • magpie2015
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Exibit 12007 (with change)AnalysisAnalysis2009(with change)AnalysisNetflix Financial Statements*(Dollars in Thousands)Income StatementSales Subscription1,205,3401,446,4081,364,6611,157,126-0.201,670,2691,562,1200.35Cost of RevenuesSubscription664,407797,288761,133637,830909,461414,589Fulfillment121,761146,113149,101116,890169,81075,978Total786,168943,401910,234754,7201,079,271490,567Gross Profit419,1720.13503,007454,427402,406-0.20590,9981,073,5531.00Operating ExpensesTech and Development71,395128,12689,87396,094-0.25114,542120,3670.25Marketing218,280268,280199,713254,866237,744318,5820.25G&A52,53255,00049,66241,25051,33324,750-0.30Restructuring0 50,000 0 25,000 0 0 Stock-based Comp00000Gain on Disposal of DVD’s7,1967,1966,3278,8584,56013,287Total Operating Expenses328,0110.07494,210332,921408,322-0.17399,059450,4120.10Operating Income91,161120,500121,506150,845191,939225,857Interest and other Income20,34015,50012,45210,3546,7288,543Interest Expense2,458 6,475 Pre-tax Income111,501136,000131,500161,199192,192234,400Taxes44,54954,332 48,47459,41876,33291,416Net Income66,9520.3681,66883,026161,1980.97115,860143,984-0.10Cash Flow SummaryCash flows for operations291,823156,731284,037135,304325,063100,304Acquisition Costs of DVD Library223,436111,718162,84955,859193,0440Purchase of property, plant and equipment44,25610,00043,7905,00045,9320Proceeds from sales of DVDs21,64040,00018,36855,00011,16474,250Free Cash Flow45,771-0.2875,01395,766129,4450.7297,251174,5540.35*All data pulled from Mergent Horizon2007 (without change)Delta (change from 2006)2008(without change)2008(with change)Delta change from 20072009 (without change)Delta change from 2008In the first year of the new business strategy, Netflix will continue to offer DVD rentals, while beginning to offer online streaming. Current subscriber trends will continue, which sees an increase of approximately 20% year over year.In year 2, Netflix will begin to phase out mail-order DVD's in favor of VOD. This may lead to an initial loss of subscribers as they struggle to understand the new VOD platform and purchase the necessary technology to take advantage of VOD.In 2009, DVD's by mail are becoming much less popular, leading to lower subscription and fullfillment costs for Netflix as the VOD platform is much easier to maintain. Subscribers are

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