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More positive financial news from the TV industry. This time it's Netflix that has reported positive and good growth numbers of Q3. Besides the financial news, Bloomberg also reported on the test of a streaming-only proposition in the US.
Netflix is often cited by analysts, together with Hulu to drive the OTT-video revolution that is currently gaining traction in the US. A 52% YoY growth of the subscribers base is proof of their partaking in the revolution and that's not all. Also Netflix's ratings are upgraded by analysts at Janney Montgomery Scott LLC, Oppenheimer & Co. and Merriman Curhan Ford & Co.
Netflix is testing a streaming only proposition in Canada, where subscribers pay C$7.99 a month for the service. Right now Netflix is testing a similar proposition in the US, if "the results meet expectations, the service will be expanded this quarter, Hastings (CEO Netflix) said on the company’s website." Besides the test, Netflix is becoming a streaming company that also offers DVD by mail. Hastings said that in the fourth quarter, “we’ll spend more on streaming content than DVD content, and we’ll deliver many more hours of entertainment via streaming than on DVD.”
Bloomberg reports the following results:
Net income rose to $38 million, or 70 cents a share, from $30.1 million, or 52 cents, a year earlier, Netflix said yesterday after markets closed. Sales climbed 31 percent to $553.2 million, beating analysts’ projections of $551.7 million.
The company said third-quarter gross margin, the share of revenue left after subscription and fulfillment costs, widened to 37.7 percent from 34.9 percent a year earlier and 39.4 percent in the second quarter. Customer turnover dropped to 3.8 percent from 4 percent in the second quarter.
Netflix raised its year-end subscriber forecast to as much as 19.7 million from up to 18.5 million previously. Sales this quarter will be $586 million to $598 million. The company projects net income of $32 million to $40 million, and earnings of 59 cents to 74 cents a share, unchanged from prior forecasts.
Click here if you want to read the complete Management's commentary and financial highlights of Q3 by Netflix (in PDF).