NetFlix 2002 Annual Report Download - page 3

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I’m pleased to report to you that 2002 was a truly remarkable year for Netflix. In this, our
first year as a public company, we met or exceeded all of the financial and operational
goals we had set for ourselves 12 months earlier. During a time of continuing uncertainty
in the technology and financial markets, we were one of only eight technology companies
to successfully complete an initial public offering in 2002. And in each of our three subse-
quent reporting periods as a public company, we outperformed investor expectations for
key financial metrics, including revenues, expenses, EBITDA, and free cash flow.
In this climate, the strength of our business model has been resoundingly validated by con-
sumers who, in ever increasing numbers, have found significant enjoyment and value in our
online movie rental service. In this letter, I will explain to you how this model works, why it
is working so well, and why we believe it will ultimately change the way people experience
and enjoy watching movies at home.
First, I’d like to share with you a few highlights from our past year.
During 2002, we experienced the kind of rapid growth that many technology companies
promised just a few short years ago but few delivered.
In 2002, we doubled our revenue to $152.8 million, from $75.9 million in 2001. We ended
the year with approximately 857,000 total subscribers (more than 1 million as of this
writing), up 88 percent over the previous year. With positive free cash flow of $15.8 million
for 2002 and $104 million of cash and short term investments, we have, and intend to
maintain, an extremely strong balance sheet.
THE PERFORMANCE OF THE YEAR.
Fiscal Year 2002
REED HASTINGS
Chief Executive Officer, President, and Co-Founder
FELLOW
shareholders