Netflix Inc. (NASDAQ:NFLX) Reveals its Third Quarter Results with a few Ups and Downs

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By Ross Schwartz on October 16, 2014 Company

Netflix Inc. (NASDAQ:NFLX) posted disappointing third quarter results. The company is not only losing its subscribers, but also its stock value. Fourth quarter for the company also doesn’t look that grand.

Netflix Inc. (NASDAQ:NFLX)’s guidance for streaming international and domestic subscribers was 3.69 million for its third quarter, which turned out to be only 3.02 million. The company is hoping for about 0.80 million new subscribers in its fourth quarter; however it will be interesting to see if this could happen because HBO has emerged as Netflix Inc. (NASDAQ:NFLX)’s strong competitor.

Netflix Inc. (NASDAQ:NFLX) posted revenue of $1.41 billion and 96 cents/share earnings.

Netflix Inc. (NASDAQ:NFLX) has some good news as its revenue went up by 27.4% as compared to last year’s same quarter. This posted revenue is better by 5.1% from its second quarter revenues as well. 25% of this revenue was generated through Netflix Inc. (NASDAQ:NFLX)’s international sources. It’s revenue generated through domestic sources also went up by 25.1% as compared to last year’s third quarter. Netflix Inc. (NASDAQ:NFLX) had a decrease by 16% (year-over-year) in revenue generated through DVDs.

Netflix Inc. (NASDAQ:NFLX) had a relatively lower subscribers numbers this years as a result of which the company increased its price by 1%, which contributed to increased revenues in its third quarter. At the conclusion of its third quarter Netflix Inc. (NASDAQ:NFLX) had an overall subscribers’ base of 12.78 million (year-over-year).

Netflix Inc. (NASDAQ:NFLX) also made a few hefty investments to give its subscribers great content. The company signed a $2 million/episode deal for The Blacklist. It also bought Gotham’s video-on-demand rights from Fox, which required A Netflix Inc. (NASDAQ:NFLX) to pay over $1.75 million/episode. To increase its subscribers’ base Netflix Inc. (NASDAQ:NFLX) is investing in both adult and kids’ shows.

Netflix Inc. (NASDAQ:NFLX) is hoping to add more shows by entering into partnership with productions houses and big-shot film studios including Sony Pictures and Walt Disney etc.

Third quarter earnings may have been somewhat disappointing, but Netflix Inc. (NASDAQ:NFLX) is determined to grow and attract investors. This year it started offering its services to six new countries that brought 66 million households (broadband). It has also entered into partnerships with France based Orange and Bouygues, Germany based Deutsche Telekon and Belgium based Belgacom, which will add to its number of subscribers.

Apart from investing in popular TV shows Netflix Inc. (NASDAQ:NFLX) is also spending money to add movies to its library.

Netflix Inc. (NASDAQ:NFLX)’s contribution profit improved by 400 bps as compared to its last year’s third quarter. The main contributor to this improvement was an increase by 50.7% in contribution profit from domestic sources.

Netflix Inc. (NASDAQ:NFLX) cost for marketing as revenues percentage went up by 50 bps as compared to last year’s third quarter. Margin for its operations also increase by 260 bps in comparison to the third quarter of last year.

Net income for Netflix Inc. (NASDAQ:NFLX) reached $59.3 million, which is equal to 96 cents/share, which was better than what the company was expecting. Company’s net income in last year’s third quarter was $32 million.

Netflix Inc. (NASDAQ:NFLX)’s total cash situation at the end of its third quarter was following;