NetFlix 2007 Annual Report Download - page 32

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Item 6. Selected Financial Data
The following selected financial data is not necessarily indicative of results of future operations and should
be read in conjunction with “Item 7, Management’s Discussion and Analysis of Financial Condition and Results
of Operations” and “Item 8, Financial Statements and Supplementary Data.”
Year ended December 31,
2007 (2) 2006 2005 (1) 2004 2003
(in thousands, except per share data)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,205,340 $996,660 $682,213 $500,611 $270,410
Total cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . 786,168 626,985 465,775 331,712 180,359
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,161 64,414 2,989 19,354 4,472
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 66,952 $ 49,082 $ 42,027 $ 21,595 $ 6,512
Net income per share:
Basic ................................. $ 1.00 $ 0.78 $ 0.79 $ 0.42 $ 0.14
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.97 $ 0.71 $ 0.64 $ 0.33 $ 0.10
Weighted-average common shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,076 62,577 53,528 51,988 47,786
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,902 69,075 65,518 64,713 62,884
Notes:
(1) Net income for the year includes a benefit of realized deferred tax assets of $34.9 million or approximately
$0.53 per diluted share, related to the recognition of the Company’s deferred tax assets (See Note 8 to Notes
to Consolidated Financial Statements). In addition, general and administrative expenses includes an accrual
of $8.1 million (net of expected insurance proceeds for reimbursement of legal defense costs of $0.9
million) related to the proposed settlement costs of the Chavez vs. Netflix, Inc. lawsuit (see Note 5 of Notes
to Consolidated Financial Statements).
(2) Operating expenses for the year includes a one-time payment received in the amount of $7.0 million as a
result of resolving a pending patent litigation with Blockbuster, Inc.
As of December 31,
2007 2006 2005 2004 2003
(in thousands)
Balance Sheet Data:
Cash and cash equivalents . . . . . . . . . $177,439 $400,430 $212,256 $174,461 $ 89,894
Short-term investments (3) . . . . . . . . . 207,703 — — — 45,297
Working capital . . . . . . . . . . . . . . . . . 203,956 234,971 106,104 92,436 75,927
Total assets . . . . . . . . . . . . . . . . . . . . . 647,020 608,779 364,681 251,793 176,012
Other liabilities . . . . . . . . . . . . . . . . . . 3,695 1,121 842 600 285
Stockholders’ equity . . . . . . . . . . . . . . 430,749 414,211 226,252 156,283 112,708
As of December 31,
2007 2006 2005 2004 2003
(in thousands, except subscriber acquisition cost)
Other Data:
Total subscribers at end of period . . . 7,479 6,316 4,179 2,610 1,487
Gross subscriber additions during
period . . . . . . . . . . . . . . . . . . . . . . . 5,340 5,250 3,729 2,716 1,571
Subscriber acquisition cost (4) . . . . . . $ 40.88 $ 42.96 $ 38.77 $ 37.02 $ 32.80
(3) Short-term investments are comprised of corporate debt securities, government and agency securities and
asset and mortgage-backed securities.
(4) Subscriber acquisition cost is defined as total marketing expenses divided by total gross subscriber additions
during the period.
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