NetFlix 2012 Annual Report Download - page 28

Other Data:
As of / Year Ended December 31,
2012 2011 2010 2009 2008
(in thousands)
Net consolidated streaming subscription additions
during period ............................ 9,738 — — — —
Total consolidated streaming subscriptions ....... 33,267 23,529 — — —
Net consolidated unique subscriber additions
during period ............................ 9,236 6,243 7,742 2,878 1,911
Total consolidated unique subscribers at end of
period .................................. 35,489 26,253 20,010 12,268 9,390
For purposes of determining the number of unique subscribers, domestic subscribers who have elected both a
DVD and a streaming subscription plan are considered a single unique subscriber.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
We are the world’s leading Internet television network with more than 33 million members in over 40
countries enjoying more than one billion hours of TV shows and movies per month, including original series. For
one low monthly price, our members can watch as much as they want, anytime, anywhere, on nearly any
Internet-connected screen. Additionally, in the U.S., our subscribers can receive standard definition DVDs, and
their high definition successor, Blu-ray discs (collectively referred to as “DVD”), delivered quickly to their
homes.
We are a pioneer in the Internet delivery of TV shows and movies, launching our streaming service in 2007.
Since this launch, we have developed an ecosystem for Internet-connected devices and have licensed increasing
amounts of content that enable consumers to enjoy TV shows and movies directly on their TVs, computers and
mobile devices. As a result of these efforts, we have experienced growing consumer acceptance of and interest in
the delivery of TV shows and movies directly over the Internet. Historically, our acquisition of new subscriptions
has been seasonal with the first and fourth quarters representing our strongest net subscription additions and our
second quarter representing the lowest net subscription additions in a calendar year.
Results of Operations
The following represents our consolidated performance highlights for the years ended December 31:
2012 2011 2010 Change
(in thousands, except per share data) 2012 vs. 2011 2011 vs. 2010
Revenues ............................ $3,609,282 $3,204,577 $2,162,625 13% 48%
Contribution profit .................... 498,687 762,038 511,431 (35)% 49%
Operating income ..................... 49,992 376,068 283,641 (87)% 33%
Net income .......................... 17,152 226,126 160,853 (92)% 41%
Diluted earnings per share ............... 0.29 4.16 2.96 (93)% 41%
Free cash flow (1) ..................... (58,151) 186,550 131,007 NM 42%
(1) See “Liquidity and Capital Resources” for a definition of “free cash flow” and a reconciliation of “free cash
flow” to “net cash provided by operating activities.”
Consolidated revenues for 2012 increased as compared to prior years due to growth in streaming
subscriptions. Operating income and Net income in 2012 both declined as compared to prior year reflective of
increases in both cost of revenues due to streaming content investments and marketing to support our launch into
new International markets.
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